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Home My WebLink AboutLaws of AK Hydro Chaperter 19 Act 1993LAWS OF ALASKA 1993 Source Chapter No. HCS CSSB _126(FIN) 19 AN ACT Making appropriations for grants and loans for hydroelectric projects including power transmission interties, to capitalize certain funds for energy grant and loan programs in the state, including the power cost equalization and rural electric capitalization fund, to the Department of Community and Regional Affairs for operating costs related to power projects and programs and to capitalize the Railbelt energy fund. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: THE ACT FOLLOWS ON PAGE 1 Approved by the Governor: May 13, 1993 Actual Effective Date: August 11, 1993 10 il 12 Chapter 19 AN ACT Making appropriations for grants and loans for hydroelectric projects including power transmission interties, to capitalize certain funds for energy grant and loan programs in the state, including the power cost equalization and rural electric capitalization fund, to the Department of Community and Regional Affairs for operating costs related to power projects and programs and to capitalize the Railbelt energy fund. * Section 1. (a) Subject to the conditions set out in (b) and (c) of this section, the sum of $43,200,000 is appropriated from the Railbelt intertie reserve (sec. 159, ch. 208, SLA 1990) to the Department of Administration for payments as a grant under AS 37.05.316 to Golden Valley Electric Association for the benefit of all the utilities participating in the intertie for design and construction of a power transmission intertie of at least 138 kilovolts between Healy and Fairbanks. -1- HCS CSSB 126(FIN) CcCenranwnese Bn = wo y ed _ —_— SSSRENRKREERRSVCSIAASESERES Chapter 19 (b) The appropriation made by (a) of this section is contingent upon the execution of a written agreement between the electric utilities participating in the Healy-Fairbanks power transmission intertie, the Department of Administration, and the Alaska Industrial Development and Export Authority that provides that the participating utility or utilities agree to : (1) pay the design and construction costs for the Healy-Fairbanks power transmission intertie that exceed $43,200,000; (2) pay the operation and maintenance costs of the Healy-Fairbanks power transmission intertie; and (3) allocate, in proportion to the system peak demands of the utilities participating in the intertie, less a 1.5 mill per kilowatt hour charge for all energy assessed to the line paid by the receiving utility, (A) the costs of construction that exceed the amount of the grant under this section; (B) the operation and maintenance costs; and (C) the costs that may reasonably be charged for services provided, including transmission to the intertie. (c) The appropriation made by (a) of this section is contingent upon the execution of a written agreement between the electric utilities participating in the intertie and the department in which Golden Valley Electric Association agrees to provide the other participating utilities access to the intertie for the purpose of assured access to resources, economy energy transactions, and other similar uses. * Sec. 2. (a) Subject to the conditions set out in (b) and (c) of this section, the sum of $46,800,000 is appropriated from the Railbelt intertie reserve (sec. 159, ch. 208, SLA 1990) to the Department of Administration for payment as a grant under AS 37.05.316 to Chugach Electric Association for the benefit of all the utilities participating in the intertie for design and construction of a power transmission intertie of at least 138 kilovolts between Anchorage and the Kenai Peninsula. (b) The appropriation made by (a) of this section is contingent upon the execution of a written agreement between the electric utilities participating in the Anchorage-Kenai Peninsula power transmission intertie, the Department of Administration, and the Alaska HCS CSSB 126(FIN) -2- Cc nrrdtan & wn = SYSRRSRRRPRBRRBERESRREEREZE = S Nahe aonesceexe dF UBEOun 8S Chapter 19 Industrial Development and Export Authority that provides that the participating utility or utilities agree to (1) pay the design and construction costs for the Anchorage-Kenai Peninsula power transmission intertie that exceed $46,800,000; (2) pay the operation and maintenance costs of the Anchorage-Kenai Peninsula power transmission intertie; and (3) allocate, in proportion to the system peak demands of the utilities participating in the intertie less a 1.5 mill per kilowatt hour charge for all energy generated by the Bradley Lake hydroelectric project purchased by the receiving utility, (A) the costs of construction that exceed the amount of the grant under this section; (B) the operation and maintenance costs; and (C) the costs that may reasonably be charged for services provided, including transmission to the intertie. (c) The appropriation made by (a) of this section is contingent upon the execution of a written agreement between the electric utilities participating in the intertie and the department in which Chugach Electric Association agrees to provide the other participating utilities access to the intertie for the purpose of assured access to resources, economy energy transactions, and other similar uses. * Sec. 3. The balance in the Railbelt intertie reserve, after the appropriations made by secs. 1 and 2 of this Act are paid, is appropriated to the Railbelt energy fund (AS 37.05.520). * Sec. 4. (a) Subject to the conditions set out in (b) - (d) of this section, the sum of $35,000,000 is appropriated from the Railbelt energy fund (AS 37.05.520) for deposit in the power project fund (AS 42.45.010) for payment as a loan under AS 42.45.010 to the participating utilities for the design and construction of a power transmission intertie of at least 138 kilovolts between Sutton and Glennallen. (b) Notwithstanding AS 42.45.010(g), repayments of principal and interest on the loan for which an appropriation is made under (a) of this section are appropriated to the Railbelt energy fund (AS 37.05.520). (c) The appropriation made by (a) of this section is contingent on the participating utility or utilities and the Department of Community and Regional Affairs entering into an -3- HCS CSSB 126(FIN) Cry an & wr SSsseRENRReERenp,esseReraanereaogres Chapter 19 agreement for a loan at zero interest for a term of 50 years. (d) The appropriation made by (a) of this section is contingent upon the completion of a feasibility study and finance plan satisfactory to the Department of Community and Regional Affairs as set out in former AS 44.83.181. (e) In this section, "participating utilities" means the utility or utilities participating in the design, construction, operation, and maintenance of the power transmission intertie between Sutton and Glennallen. * Sec. 5. (a) Subject to the conditions set out in (b) and (c) of this section, the sum of $20,000,000 is appropriated from the Railbelt energy fund (AS 37.05.520) for deposit in the power project fund (AS 42.45.010) for payment as a loan under AS 42.45.010 to the participating utilities for design and construction of a power transmission intertie of at least 115 kilovolts between the Swan Lake and Tyee Lake hydroelectric projects. (b) Notwithstanding AS 42.45.010(g), repayments of principal and interest on the loan for which an appropriation is made under (a) of this section are appropriated to the Railbelt energy fund (AS 37.05.520). (c) The appropriation made by (a) of this section is contingent on the participating utility or utilities and the Department of Community and Regional Affairs entering into an agreement for a loan at three percent interest for a term of 15 years. (d) In this section, "participating utilities" mean the utilities participating in the design, construction, operation, and maintenance of the power transmission intertie between the Swan Lake and Tyee Lake hydroelectric projects. * Sec. 6. The sum of $3,900,000 is appropriated from the general fund to the Department of Community and Regional Affairs for operating costs for carrying out its powers and duties under AS 42.45 and AS 44.47.050(19) and (20). Sec. 7. The unexpended and unobligated balances of the following appropriations are repealed and reappropriated to the Railbelt energy fund (AS 37.05.520): (1) that portion of the appropriation made by sec. 25, ch. 80, SLA 1979, page 66, line 38, as amended by sec. 448(a), ch. 105, SLA 1985, and sec. 275(a), ch. 130, SLA 1986, that is allocated by sec. 25, ch. 80, SLA 1979, page 67, line 5 (Bradley Lake hydro project - $80,000); (2) that portion of the appropriation made by sec. 1(a), ch. 90, SLA 1981, as HCS CSSB 126(FIN) -4- cent ane wn = YBSRARRRERBRESSESRAECRES Chapter 19 amended by sec. 69, ch. 92, SLA 1981, and sec. 236, ch. 141, SLA 1982, that is allocated by sec. 1(a)(1), ch. 90, SLA 1981, as amended by sec. 69, ch. 92, SLA 1981 (Bradley Lake - $5,000,000); (3) that portion of the appropriation made by sec. 1(b), ch. 90, SLA 1981, as amended by sec. 69, ch. 92, SLA 1981, and sec. 236, ch. 141, SLA 1982, that is allocated by sec. 1(b)(1), ch. 90, SLA 1981, as amended by sec. 69, ch. 92, SLA 1981 (Bradley Lake - $10,000,000); (4) sec. 241, ch. 141, SLA 1982 (Bradley Lake hydroelectric project - $3,000,000); (5) AS 44.83.420, repealed by sec. 318, ch. 171, SLA 1984 (Bradley Lake hydroelectric project); (6) sec. 5, ch. 41, SLA 1986 (Bradley Lake hydroelectric project - $50,000,000); (7) sec. 3, ch. 128, SLA 1986, page 8, line 7, as amended by sec. 1, ch. 96, SLA 1987 (Alaska Power Authority, Bradley Lake hydroelectric project - $50,000,000); (8) sec. 6, ch. 172, SLA 1988 (Bradley Lake power project - $7,000,000). * Sec. 8. (a) The sum of $13,200,000 is appropriated from the general fund to the Railbelt energy fund (AS 37.05.520). (b) The sum of $66,900,000 is appropriated from the general fund to the Railbelt energy fund (AS 37.05.520). (c) The sum of $66,900,000 is appropriated from the Railbelt energy fund (AS 37.05.520) to the power cost equalization and rural electric capitalization fund (AS 42.45.100) to capitalize the fund. * Sec. 9. The sum of $5,000,000 is appropriated from the general fund to the Department of Community and Regional Affairs for payment as a grant under AS 37.05.316 to the Iliamna-New Halen-Nondalton Electric Cooperative for the design and construction of a 700 kilowatt hydroelectric power project on the Tazimina River and for the associated distribution system. * Sec. 10. The balances in the following funds on the effective date of this section are appropriated from the named former funds or accounts under the Alaska Energy Authority to the named funds established in the Department of Community and Regional Affairs to -5- HCS CSSB 126(FIN) Cet an & wn = Pee ee eee ee PBNRRERRRSSPEVIRABARERCRTS Chapter 19 capitalize the funds: ALASKA ENERGY FUND OR ACCOUNT DEPARTMENTAL FUND Power cost equalization fund Power cost equalization and rural electric (AS 44.83.162) capitalization fund (AS 42.45.100) Power project fund (AS 44.83.170) Power project fund (AS 42.45.010) Rural electrification revolving Rural electrification revolving loan fund (AS 44.83.361) loan fund (AS 42.45.020) Power development revolving loan fund Four dam pool transfer fund (AS 44.83.500) (AS 42.45.050) Bulk fuel revolving loan fund Bulk fuel revolving loan fund (AS 44.83.600) (AS 42.45.250) * Sec. 11. The sum of $3,000,000 is appropriated from the general fund to the power project fund (AS 42.45.010) for payment as a loan to the City of Seward for completion of the electric transmission line from Seward to the Lawing substation. * Sec. 12. A sum equal to the amounts deposited in the Southeast energy fund (AS 42.45.040) beginning on the effective date of this Act and ending on June 30, 1994, is appropriated from the Southeast energy fund to the Department of Administration for payment as a grant under AS 37.05.316 to the Ketchikan Public Utilities for expenses related to the power transmission intertie between the Swan Lake and Tyee Lake hydroelectric projects. * Sec. 13. The sum of $126,600 is appropriated from federal receipts to the Department of Community and Regional Affairs for federally authorized energy programs and projects. * Sec. 14. A sum equal to the retained money held by the Alaska Energy Authority that is related to the authority’s rural programs is transferred and appropriated to the Department of Community and Regional Affairs for the purposes originally intended and for other energy- related purposes and projects. * Sec. 15. This Act takes effect only if the Eighteenth Alaska State Legislature enacts an Act that gives the Department of Community and Regional Affairs responsibility for rural power projects and programs. HCS CSSB 126(FIN) -6- LAWS OF ALASKA 1993 Source Chapter No. HCS CSSB _106(FIN) 18 AN ACT Transferring certain projects of and amending and transferring programs of the Alaska Energy Authority to the Department of Community and Regional Affairs; relating to the Alaska Energy Authority; permitting the Alaska Industrial Development and Export Authority to issue revenue bonds for certain plants or facilities for energy resources; permitting utilities to form joint action agencies; authorizing the Alaska Industrial Development and Export Authority to issue revenue bonds for power transmission interties; relating to rates for a public utility that sends or receives power over certain power transmission interties; relating to the power cost equalization and capital improvement fund; amending the purpose of the Railbelt energy fund. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: THE ACT FOLLOWS ON PAGE 1 Approved by the Governor: May 13, 1993 Actual Effective Date: August 11, 1993 10 ll Chapter 18 AN ACT Transferring certain projects of and amending and transferring programs of the Alaska Energy Authority to the Department of Community and Regional Affairs; relating to the Alaska Energy Authority; permitting the Alaska Industrial Development and Export Authority to issue revenue bonds for certain plants or facilities for energy resources; permitting utilities to form joint action agencies; authorizing the Alaska Industrial Development and Export Authority to issue revenue bonds for power transmission interties; relating to rates for a public utility that sends or receives power over certain power transmission interties; relating to the power cost equalization and capital improvement fund; amending the purpose of the Railbelt energy fund. * Section 1. FINDINGS AND INTENT. (a) The legislature finds that adequate, reliable, -l- HCS CSSB 106(FIN) eCnrrytanewn = RR ee ee eee ee =m ScCeSeIAANA EAH ES RREBLKB 27 29 31 Chapter 18 electric service at affordable rates is a necessary ingredient of a modem society and a Prosperous developing economy. The legislature further finds that at the current stage of social and economic development in the state, direct participation by the state is necessary to assist in the development of a regional electric transmission infrastructure and to assist in holding rates in high cost service areas to affordable levels. (b) The legislature recognizes the high cost of electric power in rural Alaska and intends that funding for power cost equalization from the general fund and from the power cost equalization and rural electric capitalization fund remain at a minimum of $17,000,000 annually through the year 2013. The legislature further intends that this long-term commitment to the power cost equalization program will permit and encourage the electric utility industry and its lenders to develop the plans, make the investments, and take other actions that are necessary or prudent to meet the utility needs of residents in rural Alaska. * Sec. 2. AS 37.05.520 is amended to read: Sec. 37.05.520. RAILBELT ENERGY FUND. There is established in the general fund the Railbelt energy fund. The fund consists of money appropriated to it by the legislature. The Department of Revenue shall manage the fund. Interest received on money in the fund shall be accounted for separately and may be appropriated into the fund annually. The legislature may appropriate money from the fund for programs, projects, and other expenditures to assist in meeting Railbelt energy needs, including projects for retrofitting state-owned buildings and facilities for energy conservation. * Sec. 3. AS 42.05.141(b) is amended to read: (b) The commission shall perform the duties assigned to it under AS 42.45.100 - 42.45.190 [AS 44.83.162]. * Sec. 4. AS 42.05.431 is amended by adding a new subsection to read: (h) When setting or reviewing rates for a public utility that sends or receives power over the power transmission interties between Fairbanks and Healy or between Anchorage and the Kenai Peninsula, the commission shall consider those costs that have not been directly assigned to other individual generating utilities by the utility responsible for the construction of the intertie to have been incurred for the system existing on the effective date of this subsection. HCS CSSB 106(FIN) 2 Cartan e wn = w n nv ins Ne NR by _— SFSSBRBNREREORRESUVCRVIARARESCR ES Chapter 18 * Sec. 5. AS 42 is amended by adding a new chapter to read: CHAPTER 45. RURAL AND STATEWIDE ENERGY PROGRAMS. ARTICLE 1. POWER ASSISTANCE PROGRAMS. Sec. 42.45.010. POWER PROJECT FUND. (a) The power project fund is established as a separate fund. The fund shall be distinct from any other money or funds of the department and includes only money appropriated by the legislature and money deposited under (g) of this section. (b) Subject to AS 42.45.060, the department may make loans from the power project fund (1) to electric utilities, regional electric authorities, municipalities, regional and village corporations, village councils, independent power producers, and nonprofit marketing cooperatives to pay the costs of (A) reconnaissance studies, feasibility studies, license and permit applications, preconstruction engineering, and design of power projects; (B) constructing, equipping, modifying, improving, and expanding small-scale power production facilities that are designed to produce less than 10 megawatts of power, conservation facilities, bulk fuel storage facilities, and transmission and distribution facilities, including energy production, transmission and distribution, and waste energy conservation facilities that depend on fossil fuel, wind power, tidal, geothermal, biomass, hydroelectric, solar, or other nonnuclear energy sources; and (C) reconnaissance studies, preconstruction engineering, design, construction, equipping, modification, and expansion of potable water supply including surface storage and groundwater sources and transmission of water from surface storage to existing distribution systems; (2) to a borrower for a power project if (A) the loan is entered into under a leveraged lease financing arrangement; (B) the party that will be responsible for the power project is an electric utility, regional electric authority, municipality, regional or village corporation, village council, independent power producer, or nonprofit 3 HCS CSSB 106(FIN) Cen awe ww = Ree ee Be ee ee ee =e SCR IYANE BONES RBNRREKK 29 31 Chapter 18 marketing cooperative; and (C) the borrower seeking the loan demonstrates to the department that the financing arrangement for the power project will reduce project financing costs below costs of comparable public power projects. © Before making a loan from the power project fund, the department shall, by regulation, specify (1) standards for the eligibility of borrowers and the types of projects to be financed with loans; (2) standards regarding the technical and economic viability and revenue self-sufficiency of eligible projects; (3) collateral or other security required for loans; (4) the terms and conditions of loans; (5) criteria to establish financial feasibility and to measure the amount of state assistance necessary for particular projects to meet the financial feasibility criteria; and (6) other relevant criteria, standards, or procedures. (d) A loan made by the department shall be made according to the standards, criteria, and procedures established by regulation under this section. (e) Repayment of the loans shall be secured in any manner that the department determines is feasible to assure prompt repayment under a loan agreement entered into with the borrower. The department may make an unsecured loan from the power project fund to a borrower regulated by the Alaska Public Utilities Commission under AS 42.05 if the borrower has a substantial history of repaying long-term loans and the capacity to repay the loan. Under a loan agreement, repayment may be deferred for 10 years or until the project for which the loan is made has achieved earnings from its operations sufficient to pay the loan, whichever is earlier. (f) Power projects are subject to the following limitations on interest and specific restrictions: (1) power projects for which loans are outstanding from the former water resources revolving loan fund (former AS 45.86) on July 13, 1978, may receive additional financing from the power project fund; if granted, HCS CSSB 106(FIN) -4- Cond an es wn = RR ee ee ee ee ee =BSeCeCIXAAEANHES RRESEK 27 29 31 Chapter 18 (A) the term of the additional financing may not exceed 50 years; (B) the interest of the additional financing must be at a rate of not less than three or more than five percent a year on the unpaid balance; (C) the grant of the additional financing must be conditioned on the repayment of loan principal and interest to begin on the earlier of (i) the date of the start of commercial operation of the project; or (ii) 10 years from the date the loan is granted; (2) a loan for a power project (A) may not be granted for a term that exceeds 50 years; and (B) shall be granted at an interest rate that is not less than zero percent and that is the lesser of (i) a rate equal to the percentage that is the average weekly yield of municipal bonds for the 12 months preceding the date of the loan, as determined by the department from municipal bond yield rates reported in the 30-year revenue index of the Weekly Bond Buyer; or (ii) a rate determined by the department that allows the project to meet criteria of financial feasibility established under (c) of this section. (g) Loan repayments and interest earned by loans from the power project fund shall be deposited in the power project fund unless an appropriation to fund the loan directs otherwise. (h) The legislature may forgive the repayment of a loan made from the power project fund for a reconnaissance study or a feasibility study when the department finds that the power project for which the loan was made is not feasible. (i) Money in the power project fund may be used by the legislature to make appropriations for costs of administering the fund. Sec. 42.45.020. RURAL ELECTRIFICATION REVOLVING LOAN FUND. (a) The rural electrification revolving loan fund is established in the department. The gs HCS CSSB 106(FIN) Cer ntran es wn = en Se eYA AHR HNeE S RREeRE 27 29 31 Chapter 18 fund consists of (1) appropriations made to the fund; and (2) repayments of principal and interest on loans made under this section. — (b) Subject to AS 42.45.060, the department may make loans from the rural electrification revolving loan fund to electric utilities certified by the Alaska Public Utilities Commission. A loan from the fund may be made only for the purpose of extending new electric service into an area of the state that an electric utility may serve under a certificate of public convenience and necessity issued by the Alaska Public Utilities Commission. A loan may be made from the fund to an electric utility if the utility invests the money necessary to provide one pole, one span of line, one transformer, and one service drop for each consumer for whom immediate service would be provided by the extension of electric service. However, a loan may not be made from the fund unless (1) the loan is recommended by a loan advisory committee appointed under AS 42.45.030; and (2) the extension of electric service would provide immediate service to at least three consumers. (c) A loan from the rural electrification revolving loan fund shall bear an annual rate of interest of two percent of the unpaid balance of the loan. (d) When the department makes a loan under this section, the electric utility receiving the loan shall, (1) in addition to the rates that it is authorized to charge, charge the consumers served by the electric service extended with the loan proceeds an amount sufficient to pay the interest costs of the loan; (2) pay to the department annually an amount equal to (A) interest of two percent on the unpaid balance of the loan; and (B) payments on the unpaid balance of the principal of the loan for each new consumer served by the electric service extended with the loan proceeds; payments on the unpaid balance of the principal of the loan shall be HCS CSSB 106(FIN) -6- Cert aneawn = RPE eee ee ee ee =SCeorIANAKEKSHeES RBXNRREKK 29 31 Chapter 18 made at a rate equal to the difference between the actual cost of making the service connection to the consumers and the minimum investment per consumer required of the utility before a loan is made under (b) of this section. (e) The department shall (1) adopt regulations necessary to carry out the provisions of this section; (2) administer the rural electrification revolving loan fund; and (3) submit to the legislature within the first 10 days of each regular legislative session a report of actions taken by the department under this section and an accounting of the rural electrification revolving loan fund. (f) Money in the rural electrification revolving loan fund may be used by the legislature to make appropriations for costs of administering the fund. (g) On June 30 of each fiscal year the unexpended and unobligated cash balance of the fund that is attributable to loans owned by the fund lapses into the general fund. (h) In this section, (1) “consumer” means a person or a governmental agency, if the person or governmental agency requests and offers to pay for electrical service to a facility or part of a facility; the department shall consider a person who, or a governmental agency that, offers to pay for electrical service to several facilities to be a separate consumer for each facility, if each facility is physically separate from another facility, other than through electric service lines, and if the person or governmental agency requests and offers to pay for electrical service to each facility; (2) "facility" means a structure capable of receiving and using electrical energy; and (3) "governmental agency" includes, with respect to the state or federal government or a municipal government, a legislative body, board of regents, administrative body, board, commission, committee, subcommittee, authority, council, agency, public corporation, school board, department, division, bureau, or other subordinate unit, whether advisory or otherwise, of the state, federal, or municipal government. -7- HCS CSSB 106(FIN) Cortana wn = mee BrEseseRerIaanrEaoeres RBNRRER ree Chapter 18 Sec. 42.45.030. LOAN ADVISORY COMMITTEE. When an application for a rural electrification loan is submitted to the department under AS 42.45.020, the department shall appoint a local advisory committee from persons residing in the area that the applicant utility is certified to serve. The loan advisory committee shall consider the loan application and shall recommend whether the loan application is to be approved or disapproved. The loan advisory committee may make a favorable recommendation only if it determines that development in the area of the proposed extension of electric service is likely to provide for full repayment of the loan under AS 42.45.020(d) within 10 years. In making that determination, the committee shall consider (1) permanence of the premises to be served by the extension; (2) land use patterns in the area; (3) access for the line that would be installed with loan proceeds; (4) availability of other utility service in the area; and (5) the economic feasibility of the extension of electric service with the proceeds of the loan. Sec. 42.45.040. SOUTHEAST ENERGY FUND. The Southeast energy fund is established as a separate fund. The fund consists of money transferred to it under AS 42.45.050. The department may make grants from the Southeast energy fund to utilities participating in the power transmission intertie between the Swan Lake and Tyee Lake hydroelectric projects for power projects, for repayment of loans, and for payments on bonds. Sec. 42.45.050. FOUR DAM POOL TRANSFER FUND. (a) The four dam pool transfer fund is established in the department. The fund consists of repayments of principal and income that would have been deposited in the former power development revolving loan fund under former AS 44.83.500. (b) Subject to appropriation, the department shall transfer the balance of the four dam pool transfer fund each month in accordance with this subsection. Subject to appropriation (1) 40 percent of the balance in the four dam pool transfer fund shall be transferred to the power cost equalization and rural electric capitalization fund to HCS CSSB 106(FIN) Cort aneawn = SFSSRENRERRRORESSCRIRABDECHREAS Chapter 18 be used for power cost equalization and rural electric projects; (2) 40 percent of the balance in the four dam pool transfer fund shall be transferred to the Southeast energy fund to be used for power projects for utilities participating in the power transmission intertie between the Swan Lake and Tyee Lake hydroelectric projects; and (3) 20 percent of the balance in the four dam pool transfer fund shall be transferred to the power project fund to be used for statewide utility projects. Sec. 42.45.060. APPROVAL BY LOAN COMMITTEE AND LEGISLATURE. (a) A loan committee consisting of seven members is established. The committee is composed of the commissioner of community and regional affairs, the commissioner of commerce and economic development, the director of management and budget, or the designees of the commissioners or the director, and four public members. (b) The public members of the committee are appointed by and serve at the pleasure of the governor. Public members serve staggered four-year terms. Only one public member may be appointed from each judicial district described in AS 22.10.010. Public members of the committee serve without compensation but are entitled to travel and per diem as provided for members of boards and commissions under AS 39.20.180. A public member of the committee serves until a successor is appointed. An appointment to fill a vacancy among the public members on the committee is for the remainder of the unexpired term. (c) The commissioner of community and regional affairs serves as chair of the committee. The committee may elect other officers as necessary. A majority of the members of the committee constitute a quorum and may exercise the powers of the committee. (d) A meeting by an electronic medium as provided in this subsection has the same legal effect as a meeting in person. The committee may meet and transact business by an electronic medium if (1) public notice of the time and locations where the meeting will be held by an electronic medium has been given in the same manner as if the meeting were held in a single location; HCS CSSB 106(FIN) Cory an es wre w Pn by ~~ RRR ee ee eee ee SSRBRNRRERRESVCRSIVIARARDEGEES Chapter 18 (2) participants and members of the public in attendance can hear and have the same right to participate in the meeting as if the meeting were conducted in person; and (3) copies of pertinent reference materials, statutes, regulations, and audio-visual materials are reasonably available to participants and to the public. (e) A member of the committee may not vote on a resolution of the committee relating to a lease or contract to be entered into by the department under this chapter if the member is a party to the lease or contract or has a direct ownership or equity interest in a firm, partnership, corporation, or association that is a party to the contract or lease. When abstaining from voting, the member must disclose the reason for the abstention. A member who is a member of an electric cooperative that is organized under or subject to AS 10.25 (Electric and Telephone Cooperative Act) may vote on a resolution relating to a contract or lease to which that cooperative is a party. The member shall disclose the cooperative membership at the time of voting. A resolution of the committee that is approved by a majority of the members present who are not barred from voting under this subsection is a valid action of the committee for all Purposes. (f) Except for loans from the bulk fuel revolving loan fund (AS 42.45.250), the department shall submit the loans that the department proposes to approve under this chapter to the committee for the committee’s review. The department may not enter into a loan for an amount equal to or greater than $500,000 unless the committee approves the loan or unless the loan has received legislative approval under (g) of this section. The department may not enter into a loan for an amount less than $500,000 for a period of 30 days after submission of the proposal to the committee. If, within the 30 days, the committee notifies the department that it intends to review a loan for less than $500,000, the department may not enter into the loan unless it is approved by the committee. (g) The department may not enter into a loan for a major project unless it has legislative approval of the project and the amount. An appropriation for the loan that names the project subject to this subsection constitutes approval under this subsection. Projects subject to legislative approval under this subsection include HCS CSSB 106(FIN) -10- Corian ewn = SSsSRENRRRERREBSEREIRGDECRSS Chapter 18 (1) a project in which the cumulative state monetary involvement, through loans, grants, and bonds, is at least $5,000,000; or (2) a project for which a loan of more than $5,000,000 has been Tequested. ARTICLE 2. POWER COST EQUALIZATION AND RURAL ELECTRIC CAPITALIZATION. Sec. 42.45.100. POWER COST EQUALIZATION AND RURAL ELECTRIC CAPITALIZATION FUND. (a) The power cost equalization and rural electric capitalization fund is established as a separate fund for the purpose of (1) equalizing power cost per kilowatt-hour statewide at a cost close to or equal to the mean of the cost per kilowatt-hour in Anchorage, Fairbanks, and Juneau by paying money from the fund to eligible electric utilities in the state; and (2) to make grants to eligible utilities under AS 42.45.180 to improve the performance of the utility. (b) The fund shall be administered by the department as a fund distinct from the other funds of the department. The fund is composed of (1) money appropriated to provide power cost equalization to eligible electric utilities and to provide grants for utility improvements; and (2) interest earned on those appropriations. (c) The fund is not a dedicated fund. Sec. 42.45.110. ENTITLEMENT TO POWER COST EQUALIZATION. (a) The costs used to calculate the amount of power cost equalization for all electric utilities eligible under AS 42.45.100 - 42.45.150 include all allowable costs, except return on equity, used by the Alaska Public Utilities Commission to determine the revenue requirement for electric utilities subject to rate regulation under AS 42.05. The costs used in determining the power cost equalization per kilowatt-hour shall exclude any other type of assistance that reduces the customer’s costs of power on a kilowatt-hour basis and that is provided to the electric utility within 60 days before the commission determines the power cost equalization per kilowatt-hour of the electric utility. In calculating power cost equalization, the commission may not consider validated costs or kilowatt-hour sales associated with a United States Department of -11- HCS CSSB 106(FIN) Cer an es wr w Noy iS eS ee SFSBRBNRRERBRHESVRVIADECRES Chapter 18 Defense facility. (b) An eligible electric utility is entitled to receive power cost equalization (1) for sales of power to local community facilities, calculated in the aggregate for each community served by the electric utility, for actual consumption of not more than 70 kilowatt-hours per month for each resident of the community; the number of community residents shall be determined under AS 29.60.020; and (2) for actual consumption of not more than 700 kilowatt-hours per month sold to each customer in all classes served by the electric utility except (A) customers of the utility under (1) of this subsection; and (B) customers that are state or federal offices or state or federal facilities other than public schools. (c) The amount of power cost equalization provided per kilowatt-hour under (b) of this section may not exceed 95 percent of the power costs, or the average rate per eligible kilowatt-hour sold, whichever is less, as determined by the department. However, (1) during the state fiscal year that began July 1, 1993, the power costs for which power cost equalization were paid to an electric utility were limited to minimum power costs of more than 9.5 cents per kilowatt-hour and less than 52.5 cents per kilowatt-hour; (2) during each following state fiscal year, the department shall adjust the power costs for which power cost equalization may be paid to an electric utility based on the weighted average retail residential rate in Anchorage, Fairbanks, and Juneau; and (3) the power cost equalization per kilowatt-hour may be determined for a utility without historical kilowatt-hour sales data by using kilowatt-hours generated. (d) An electric utility whose customers receive power cost equalization under AS 42.45.100 - 42.45.150 shall set out in its tariff the rates without the power cost equalization and the amount of power cost equalization per kilowatt-hour sold. The rate charged to the customer shall be the difference between the two amounts. Power cost equalization paid under AS 42.45.100 - 42.45.150 shall be used to reduce the cost HCS CSSB 106(FIN) -12- cCaondr an & wn = YBSRRRRRRERESSESKRRESEES Chapter 18 of all power sold to local community facilities, in the aggregate, to the extent of 70 kilowatt-hours per month per resident of the community, and to reduce the cost of the first 700 kilowatt-hours per customer per month for all other classes served by the electric utility except state and federal offices and state and federal facilities other than public schools. (e) The power cost equalization program shall be administered by the department based on a determination by the department under (a) and (c) of this section of power cost equalization per kilowatt-hour for each eligible electric utility. (f) The department may not deny an eligible electric utility power cost equalization because complete cost information is not available. The department shall assist an eligible electric utility that is exempt from rate regulation under AS 42.05 to provide the cost information the department considers necessary to comply with AS 42.45.100 - 42.45.150. Only power costs that are supportable may be considered in calculating power cost equalization. Each electric utility is responsible for keeping records that provide the information necessary to comply with AS 42.45.100 - 42.45.150 including records of monthly kilowatt-hour sales or generation, monthly fuel balances, fuel purchases, and monthly utility fuel consumption. (g) The department shall determine the cost of fuel for each eligible electric utility using the procedure for approving fuel cost rate adjustments of electric utilities subject to rate regulation under AS 42.05. (h) Each electric utility receiving power cost equalization approved by the department shall (1) report monthly to the department within the time and in the form the department requires; and (2) use operational equipment designed to meter individual utility customer power consumption and to determine and record the utility’s overall fuel consumption. | (i) The department shall review the report required under (h) of this section. After review and approval of the report, the department shall, subject to appropriation, pay to each eligible electric utility an amount equal to the power cost equalization per kilowatt-hour determined under (a) and (c) of this section, multiplied by the number -13- HCS CSSB 106(FIN) Cord an & wn Ree eee ee ee ee Be SCe2BIAAAREBAHES ReEBR 27 28 29 31 Chapter 18 of kilowatt-hours eligible for power cost equalization that were sold during the preceding month to all customers of the utility under (b) of this section. Payment shall be made by the department within 30 days after receipt from the utility of the report required under (h) of this section. If appropriations are insufficient for payment in full, the amount paid to each electric utility is reduced on a pro rata basis. Sec. 42.45.120. NOTICE TO CUSTOMERS. If an electric utility receives power cost equalization under AS 42.45.100 - 42.45.150, the utility shall either give to its electric service customers eligible under this program, for each period for which the payment is received, (1) the following notice: NOTICE TO CUSTOMER For the current billing period the utility will be paid under the State of Alaska’s power cost equalization program (AS 42.45.100) to assist the utility and its customers in reducing the high cost of generation of electric energy. Your total electrical service cost Sere Less state equalization Bode Your charge Syssiss ; or (2) a notice approved by the department that provides electric service customers the same information provided by the notice in (1) of this section. Sec. 42.45.130. COST MINIMIZATION. (a) In order to qualify for power cost equalization, each electric utility shall make every reasonable effort to minimize administrative, operating, and overhead costs, including using the best available technology consistent with sound utility management practices. In reviewing applications for power cost equalization, the department may require the elimination of unnecessary operating expenses. Each eligible electric utility shall cooperate with appropriate state agencies to implement cost-effective energy conservation measures and to plan for and implement feasible alternatives to diesel generation. (b) In this section, "energy conservation measures" include weatherization and other insulating methods, utilization of waste heat, appropriate sizing of new generating equipment, and other programs of the state or federal government intended and HCS CSSB 106(FIN) -14- eC wmrrtane wn = Rye Be ee ee ee ee = SSCe IAN ERE WHE S hers 27 28 29 31 Chapter 18 available for energy conservation. Sec. 42.45.140. CUSTOMER PETITIONS. If the department receives a petition requesting power cost equalization, signed by at least 25 percent of the customers of an electric utility that is subject to rate regulation under AS 42.05 and that has not applied for power cost equalization under AS 42.45.100 - 42.45.150, the department shall require the utility to submit a power cost equalization application. Upon a determination of eligibility for power cost equalization, the utility, as a part of its service, shall receive power cost equalization and pass power cost equalization benefits to its customers under AS 42.45.100 - 42.45.150. Sec. 42.45.150. | DEFINITIONS FOR AS 42.45.100 - 42.45.150. In AS 42.45.100 - 42.45.150, (1) “community facility” means a water and sewer facility, public outdoor lighting, charitable educational facility, or community building whose operations are not paid for by the state, the federal government, or private commercial interests; (2) “eligible electric utility" or "electric utility" means a public, cooperative, or other corporation, company, individual, or association of individuals, and includes the lessees, trustees, or receivers appointed by a court, that (A) owns, operates, manages, or controls a plant or system for the furnishing, by generation, transmission or distribution, of electric service to the public for compensation; (B) during calendar year 1983, had a residential consumption level of power eligible for power cost equalization under former AS 44.83 of less than 7,500 megawatt hours or had a residential consumption level of power eligible for power cost equalization under former AS 44.83 of less than 15,000 megawatt hours if the utility served two or more municipalities or unincorporated communities; and (C) during calendar year 1984, used diesel fired generators to produce more than 75 percent of the electrical consumption of the utility; an electric utility that is a subsidiary of another electric utility is an “eligible electric utility" if the operations of the subsidiary, considered separately, meet -15- HCS CSSB 106(FIN) Cr rtawnewrn = Ree eee ee eee KF SCeBIAADEBHES RREGR 27 29 31 Chapter 18 the eligibility requirements of AS 42.45.100 - 42.45.150; if an electric utility did not receive power cost assistance in 1983 but is otherwise eligible for power cost equalization under AS 42.45.100 - 42.45.150, the utility is an gible electric utility"; : (3) "power costs" means costs used in determining power cost equalization under AS 42.45.110(a) and (c). Sec. 42.45.160. ADJUSTMENTS TO POWER COST EQUALIZATION. (a) The commission may adjust the power cost equalization per kilowatt-hour, determined under AS 42.45.100 - 42.45.150, payable to an electric utility that is subject to rate regulation under AS 42.05 if the (1) commission has approved a fuel cost rate adjustment caused by an increase or decrease in the electric utility’s cost of fuel; (2) commission has approved a permanent or interim rate increase or decrease that establishes a higher or lower power cost; (3) authority has discovered, in reviewing the monthly data submitted by the electric utility, discrepancies that require adjustment of the power cost equalization; or (4) authority determines that appropriations are insufficient to finance full payments to eligible electric utilities. (b) An electric utility that is eligible to receive power cost equalization under this section and that receives power cost equalization per kilowatt-hour approved by the department shall report monthly to the department within the time and in the form the department requires. An electric utility shall report (1) the power cost equalization per kilowatt-hour approved by the department; (2) the total kilowatt-hours sold to each class of customer during the preceding month; (3) the total kilowatt-hours eligible for power cost equalization under this section sold to each class of customer during the preceding month; (4) the total kilowatt-hours generated during the preceding month, if available; HCS CSSB 106(FIN) -16- Cert ananae wn = PBREREBERBSEREEREEBES Be SSCHSIAAN ER WHE S a 27 29 31 Chapter 18 (5) any department approved amendments to the schedule of rates in effect during the preceding month; and (6) an increase or decrease in the current unit price of fuel from the base price used by the department in determining power costs if the change is expected to result in a subsequent power cost equalization adjustment. (c) The provisions of AS 42.45.100 - 42.45.150 relating to the determination of the amount of power cost equalization and payment of the equalization assistance apply to equalization assistance under this section. Sec. 42.45.170. EQUALIZATION ASSISTANCE TO UNREGULATED UTILITIES. (a) An electric utility that is not subject to rate regulation by the Alaska Public Utilities Commission under AS 42.05 may receive power cost equalization if the utility is otherwise eligible for equalization assistance under AS 42.45.100 - 42.45.150 and if the utility (1) files with the department financial data necessary to determine the power cost equalization per kilowatt-hour as prescribed by the department and that is in compliance with AS 42.45.100 - 42.45.150; (2) reports monthly to the department, within the time and in the form required, the information required in (b) of this section; (3) sets rates (A) that consider the power cost equalization provided under AS 42.45.100 - 42.45.150 by subtracting from its revenue requirements for electric services the power cost equalization per kilowatt-hour that it is eligible to receive; and (B) under which the power cost equalization provided in AS 42.45.060 - 42.45.110 is applied as a credit only against the cost of kilowatt-hours eligible for equalization assistance under AS 42.45.100 - 42.45.150 that are consumed by each customer in any month; (4) allows audits that the department determines are necessary to ensure compliance with this section; and (5) furnishes its electric service customers eligible under this program a notice as specified in AS 42.45.120. -17- HCS CSSB 106(FIN) Cert an ea wn = SBRBRBNSRRYBBRBARRBSRBSRERERESBES ~_ . aa BanvrwSuexeriane BNE S Chapter 18 (b) An electric utility that is eligible to receive power cost equalization under this section shall report in accordance with (a)(2) of this section (1) the power cost equalization per kilowatt-hour approved by the department; : (2) the total kilowatt-hours sold to each class of customer during the preceding month; (3) the total kilowatt-hours eligible for power cost equalization under this section sold to each class of customer during the preceding month; (4) the total kilowatt-hours generated during the preceding month, if available; (5) any amendments to the schedule of rates in effect during the preceding month; and (6) an increase or decrease in the current unit price of fuel from the base price used by the department in determining power costs if the change is expected to result in a subsequent equalization assistance level adjustment. (c) An electric utility that is eligible to receive power cost equalization under this section may have its power cost equalization per kilowatt-hour determination changed by the department if the department (1) has verified an increase or decrease in the electric utility’s cost of fuel; (2) has verified an increase in rates based on an increase in costs; (3) has discovered, in reviewing the monthly data submitted by the electric utility, discrepancies that require adjustment of the power cost equalization; or (4) determines that appropriations are insufficient to finance full payments to eligible electric utilities. (d) The provisions of AS 42.45.100 - 42.45.150 relating to the determination of the amount of power cost equalization and payment of the equalization assistance apply to equalization assistance under this section. (e) An application for power cost equalization by an electric utility that is eligible to receive power cost under this section does not extend the jurisdiction of the Alaska Public Utilities Commission beyond that established by AS 42.05. HCS CSSB 106(FIN) -18- Cen anan & wr = PBSBSREIRRDEGREES BNURRECRB 29 31 Chapter 18 Sec. 42.45.180. GRANTS FOR UTILITY IMPROVEMENTS. (a) The department may make a grant from the fund for an eligible utility for a small power project that will reduce the cost of generating or transmitting power to the customers of the utility. The amount of the gran t may not exceed 75 percent of the cost of the project. The department may not make a grant under this section unless the eligible Sen amen utility has secured financing for 25 percent of the cost of the project from a source nal eect allo ~ GARR 0S ARNT a Sea _ provided under (c) of this section. (b) The department may not allocate more than three percent of the balance _ in the fund to grants under this section in a fiscal year. _ (c) In determining whether an eligible utility has secured financing for 25 percent of the cost of the project from a source other than the power cost equalization and rural electric capitalization fund, the department shall accept solicited and unsolicited proposals for third party financing or for a joint venture between the utility and an entity from the private sector provided that the private sector participant has (1) a valid state business license; (2) a resolution or letter of agreement executed by the eligible utility agreeing to participation by the private sector participant; (3) a business plan that illustrates how the proposed project will reduce the cost of generating or transmitting power to the customers of the utility. (d) In this section, (1) “eligible utility" has the meaning given in AS 42.45.150; (2) "project" includes zl (A) power generation systems; - (B) transmission systems; < (C) distribution systems; (D) metering systems; (E) energy store systems; “ (F) energy conservation programs; and (G) bulk fuel storage facilities; (3) “small power project" means a new or modified project that will -19- HCS CSSB 106(FIN) Cretan & wr = RR ee ee Be ee ee 2BRBRBUARRRERBKRRSSRVIRRDEGREES Chapter 18 either generate, store, or conserve no more than 1.5 megawatts of power or provide a metering system, transmission system, distribution system, or bulk fuel storage facility that has an estimated cost of less than $3,000,000. Sec. 42.45.190. DEFINITION FOR AS 42.45.100 - 42.45.190. In AS 42.45.100 - 42.45.190, "fund" means the power cost equalization and rural electric _ capitalization fund established under AS 42.45.100. ARTICLE 3. ELECTRICAL SERVICE EXTENSION FUND. Sec. 42.45.200. ELECTRICAL SERVICE EXTENSION FUND ESTABLISHED. (a) The electrical service extension fund is established as a separate fund in the department. The fund consists only of money appropriated to it by the legislature. (b) The department may make grants from the electrical service extension fund to certificated electric utilities and to electric utilities exempt from certification under AS 42.05.71], as a first priority, to pay for costs of site preparation and construction for the extension of electrical service to private residences and small businesses not currently served by an electric utility and, as a second priority, for making improvements to existing utilities. The amount of a grant made under this section may not exceed 60 percent of the total cost of construction of the project. The costs considered in making a grant may not include costs of planning, feasibility studies, or design. (c) An electric utility that has received a grant under this section may charge a connection fee for initial connection to the electrical service made available because of the construction. The connection fee for each residential or commercial structure shall conform to the line extension policy of the utility. (d) The department shall adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this section. (e) In this section, "certificated" means holding a certificate of public convenience and necessity issued by the Alaska Public Utilities Commission under AS 42.05. ARTICLE 4. BULK FUEL REVOLVING LOAN FUND. Sec. 42.45.250. BULK FUEL REVOLVING LOAN FUND. (a) The bulk fuel HCS CSSB 106(FIN) -20- Conran es wn = Rye Be ee ee eee =e SCH IAA ERE BNeES RENVRREBR 29 31 Chapter 18 revolving loan fund is established in the department to assist communities in purchasing bulk fuel. A community, or a private individual who has written endorsement from the governing body of the community, is eligible for a loan from the bulk fuel revolving loan fund for a bulk fuel purchase. (b) Money in the fund may be used by the legislature to make appropriations for costs of administering this section. (c) The foreclosure expense account is established as a special account within the bulk fuel revolving loan fund. This account is established as a reserve from fund equity. (d) The department may spend money credited to the foreclosure expense account when necessary to protect the state’s security interest in collateral on loans made under this section or to defray expenses incurred during foreclosure proceedings after a default by an obligor. (e) Loans made from the bulk fuel revolving loan fund to one borrower in any fiscal year are not subject to AS 42.45.060 and (1) may not exceed $100,000; (2) shall be repaid in one year or less; and (3) may not exceed 90 percent of the wholesale price of the fuel purchased. (f) Interest may be charged on a loan made from the bulk fuel revolving loan fund. Interest shall be charged on a loan at a rate equal to the percentage of the average weekly yield of municipal bonds for the 12 months preceding the date of the loan, as determined by the department from municipal bond yield rates reported in the 30-year revenue index of the Weekly Bond Buyer. However, if the department finds that a community cannot afford to repay a portion of interest on a loan, and makes a determination in writing, the department may reduce or eliminate the interest rate applicable to the loan. (g) Repayments of the principal, the interest, and the money chargeable to principal or interest that is collected through liquidation by foreclosure or other process on a loan made under this section shall be paid into the bulk fuel revolving loan fund. The fund is not a dedicated fund. -21- HCS CSSB 106(FIN) Cc wrrdt an & wn w NYRR RN NKR De Be ee ee ee ee SsRseRNRRRERBRERESVCRWIAGDEBHES Chapter 18 (h) The department may contract for the administration of the bulk fuel loan program established in this section. (i) The department shall dispose of property acquired through default or foreclosure of a loan made under this section. Disposal shall be made in a manner that serves the best interests of the state, and may include the amortization of payments over a period of years. (j) The department may adopt regulations necessary to carry out the provisions of this section, including regulations to establish reasonable fees for services provided and charges for collecting the fees. (k) The department may collect the fees and collection charges established under (i) of this section and shall deposit the money in the general fund. (1) In this section, (1) "bulk fuel storage facility" means a storage tank capable of holding at least 10,000 gallons of petroleum fuel; and (2) “community” means an organized municipality or an unincorporated village that is a social unit, with a population of less than 2,000 people. ARTICLE 5. JOINT ACTION AGENCIES. Sec. 42.45.300. JOINT ACTION AGENCIES. Two or more public utilities may form a joint action agency for the purpose of participation in the design, construction, operation, and maintenance of a generating or transmission facility and to secure financing for carrying out the design, construction, operation, and maintenance of the facility. A joint action agency may request the Alaska Industrial Development and Export Authority to issue revenue bonds for projects of the agency. A joint action agency has the powers of a public utility under AS 42.05. ARTICLE 6. MISCELLANEOUS PROVISIONS. Sec. 42.45.400. ASSISTANCE TO RURAL UTILITIES. The department shall provide technical assistance to rural utilities including catastrophe prevention programs and other training programs for utility projects. The department shall provide rural utilities with the technical assistance and training that the utilities need to improve the efficiency, safety, and reliability of their power systems and to prevent emergency situations from developing. At a minimum, the assistance and training must include HCS CSSB 106(FIN) -22- Conan eae wn RPRBSEESRRESSES _ SCerwriawe Bes BNRRERKB 29 31 Chapter 18 information on (1) reducing distribution line losses; (2) installation of generators that are more fuel efficient; (3) preventative maintenance programs; (4) safety inspections; (5) installing and maintaining waste heat systems; (6) improved metering systems; (7) improved management and administration; and (8) coordinating regional activities, including circuit rider maintenance programs. (b) In providing rural utilities with technical assistance and training, the department shall give priority to contracting with the private sector for these services. Sec. 42.45.410. RELATIONSHIP WITH PRIVATE SECTOR. The department shall, to the maximum extent feasible, carry out its powers and duties under this chapter by entering into contracts with appropriate entities in the private sector. ARTICLE 7. GENERAL PROVISIONS. Sec. 42.45.990. DEFINITIONS. In this chapter, unless the context otherwise requires, (1) “department” means the Department of Community and Regional Affairs; (2) "feasibility study" (A) means a study conducted to establish the economic and environmental practicality of completing a proposed power project; (B) includes engineering and design work to meet the requirements for submission of a license application for a proposed new project to the Federal Energy Regulatory Commission; (3) "power" includes electrical energy generated, distributed, bought, or sold for lighting, heating, power, and every other useful purpose; (4) “power project" or "project" means a plant, works, system, or facility, together with related or necessary facilities and appurtenances, including a divided or undivided interest in or a right to the capacity of a power project or project, -23- HCS CSSB 106(FIN) Cerdrane wn Pee eee ee ee SSBRBRBRARRERBRRSVCREVDAAEPBRES Chapter 18 that is used or is useful for the purpose of (A) electrical or thermal energy production other than nuclear energy production; (B) waste energy utilization and energy conservation; or (C) transmission, purchase, sale, exchange, and interchange of electrical or thermal energy, including district heating or interties; (5) “reconnaissance study" means a study conducted to assess the present and future electrical and thermal energy needs of an area. * Sec. 6. AS 44.47.050(a) is amended to read: (a) The department may (1) advise and assist local governments; (2) serve as staff for the Local Boundary Commission; (3) conduct studies and carry out experimental and pilot projects for the purpose of developing solutions to community and regional problems; (4) promote cooperative solutions to problems affecting more than one community or region, including joint service agreements, regional compacts, and other forms of cooperation; (5) serve as a clearinghouse for information useful in solution of community and regional problems, and channel to the appropriate authority requests for information and services; (6) advise and assist community and regional governments on matters of finance, including but not limited to bond marketing and procurement of federal funds; (7) prepare suggested guidelines relating to the content of notice of bond sale advertisements, prospectuses, and other bonding matters issued by local governments; (8) administer state funds appropriated for the benefit of unorganized regions within the state, allowing for maximum participation by local advisory councils and similar bodies; (9) carry out those administrative functions in the unorganized borough that the legislature may prescribe; HCS CSSB 106(FIN) -24- Cent ane wn = BBRBESSSEIRARTEORES RR 27 29 31 Chapter 18 (10) study existing and proposed laws and state activities that affect community and regional affairs and submit to the governor recommended changes in those laws and activities; (11) coordinate activities of the state that affect community and regional affairs; (12) assist in the development of new communities and serve as the agent of the state for purposes of participation in federal programs relating to new communities; (13) supervise planning, management, and other activities required for local eligibility for financial aid under those federal and state programs that [WHICH] provide assistance to community and regional governments; (14) administer state and, as appropriate, federal programs for revenue sharing, grants, and other forms of financial assistance to community and regional governments; (15) provide staff assistance, as requested, to the Rural Affairs Commission; (16) apply for, receive, and use funds from federal and other sources, public or private, for use in carrying out the powers and duties of the department; (17) request and utilize the resources of other agencies of state government in carrying out the purposes of this chapter to the extent such utilization is more efficient than maintaining departmental staff, reimbursing the other agencies when appropriate; (18) [REPEALED (19)] advise and assist municipalities on procedures of assessment, valuation, and taxation, and notify municipalities of major errors in those procedures; (19)_carry out the powers and duties assigned it under AS 42.45; (20) carry out other functions and duties, consistent with law, necessary or appropriate to accomplish the purpose of this chapter. * Sec. 7. AS 44.83.030 is repealed and reenacted to read: Sec. 44.83.030. MEMBERSHIP OF THE AUTHORITY. The directors of the Alaska Energy Authority are the members of the Alaska Industrial Development and -25- HCS CSSB 106(FIN) Ceo rdrananewn = we by iy SS ee oe SSBSENHRRREBREBERVIARTEEORESES Chapter 18 Export Authority. * Sec. 8. AS 44.83.040(a) is amended to read: (a) The chair and vice-chair of the Alaska Industrial Development and Export Authority shall serve as officers of the Alaska Energy Authority (DIRECTORS SHALL ELECT ONE OF THEIR NUMBER AS CHAIRMAN AND MAY ELECT OTHER OFFICERS THEY DETERMINE DESIRABLE]. The powers of the Alaska Energy Authority [AUTHORITY] are vested in the directors, and three {FOUR] directors of the authority constitute a quorum. Action may be taken and motions and resolutions adopted by the Alaska Energy Authority [AUTHORITY] at a meeting by the affirmative vote of a majority of the directors. The directors of the Alaska Energy Authority [AUTHORITY] serve without compensation, but they shall receive the same travel pay and per diem as provided by law for board members under AS 39.20.180. * Sec. 9. AS 44.83.070 is amended to read: Sec. 44.83.070. PURPOSE OF THE AUTHORITY. The purpose of the authority is to promote, develop, and advance the general prosperity and economic welfare of the people of the state by providing a means of (CONSTRUCTING, ACQUIRING,] financing and operating power projects and facilities that recover and use waste energy. * Sec. 10. AS 44.83.080 is amended to read: Sec. 44.83.080. POWERS OF THE AUTHORITY. In furtherance of its corporate purposes, the authority has the following powers in addition to its other powers: (1) to sue and be sued; (2) to have a seal and alter it at pleasure; (3) to make and alter bylaws for its organization and internal management; (4) to adopt regulations governing the exercise of its corporate powers; (5) to [ACQUIRE, WHETHER BY CONSTRUCTION, PURCHASE, GIFT OR LEASE, AND TO] improve, equip, operate, and maintain power projects; (6) to issue bonds to carry out any of its corporate purposes and HCS CSSB 106(FIN) -26- Cnr rtane wn = we » RPP PRR N me SSBSRNHRRKRERBRESSCREVIRABDECRSS Chapter 18 powers, including [THE ACQUISITION OR CONSTRUCTION OF A PROJECT TO BE OWNED OR LEASED, AS LESSOR OR LESSEE, BY THE AUTHORITY, OR BY ANOTHER PERSON, OR THE ACQUISITION OF ANY INTEREST IN A PROJECT OR ANY RIGHT TO CAPACITY OF A PROJECT,] the establishment or increase of reserves to secure or to pay the bonds or interest on them, and the payment of all other costs or expenses of the authority incident to and necessary or convenient to carry out its corporate purposes and powers; (7) to sell, lease as lessor or lessee, exchange, donate, convey, or encumber in any manner by mortgage or by creation of any other security interest, real or personal property owned by it, or in which it has an interest, when, in the judgment of the authority, the action is in furtherance of its corporate purposes; (8) to accept gifts, grants, or loans from, and enter into contracts or other transactions regarding them, with any person; (9) to deposit or invest its funds, subject to agreements with bondholders; (10) to enter into contracts with the United States or any person and, subject to the laws of the United States and subject to concurrence of the legislature, with a foreign country or its agencies, for the financing, [CONSTRUCTION, ACQUISITION,] operation, and maintenance of all or any part of a power project, either inside or outside the state, and for the sale or transmission of power from a project or any right to the capacity of it or for the security of any bonds of the authority issued or to be issued for the project; (11) to enter into contracts with any person and with the United States, and, subject to the laws of the United States and subject to the concurrence of the legislature, with a foreign country or its agencies for the purchase, sale, exchange, transmission, or use of power from a project, or any right to the capacity of it; (12) to apply to the appropriate agencies of the state, the United States, and to a foreign country and any other proper agency for the permits, licenses, or approvals as may be necessary, and to [CONSTRUCT,] maintain and operate power projects in accordance with the licenses or permits, and to obtain, hold, and use the licenses and permits in the same manner as any other person or operating unit; -27- HCS CSSB 106(FIN) Cr rdtanw es wn BERRNXRREBRESSESRRTGEES Chapter 18 (13) [TO PERFORM RECONNAISSANCE STUDIES, FEASIBILITY STUDIES, AND ENGINEERING AND DESIGN WITH RESPECT TO POWER PROJECTS; (14)] to enter into contracts or agreements with respect to the exercise of any of its powers, and do all things necessary or convenient to carry out its corporate purposes and exercise the powers granted in this chapter; (44) (15) TO EXERCISE THE POWER OF EMINENT DOMAIN IN ACCORDANCE WITH AS 09.55.240 - 09.55.460; (16)] to recommend to the legislature (A) [THE ISSUANCE OF GENERAL OBLIGATION BONDS OF THE STATE TO FINANCE THE CONSTRUCTION OF A POWER PROJECT IF THE AUTHORITY FIRST DETERMINES THAT THE PROJECT CANNOT BE FINANCED BY REVENUE BONDS OF THE AUTHORITY AT REASONABLE RATES OF INTEREST; (B)] the pledge of the credit of the state to guarantee repayment of all or any portion of revenue bonds issued to assist in construction of power projects; (B) ((©] an appropriation from the general fund (i) for debt service on bonds or other project purposes; or (ii) to reduce the amount of debt financing for the project; [((D) AN APPROPRIATION TO THE POWER PROJECT FUND FOR A POWER PROJECT; (E) REPEALED (F) DEVELOPMENT OF A PROJECT UNDER FINANCING ARRANGEMENTS WITH OTHER ENTITIES USING LEVERAGED LEASES OR OTHER FINANCING METHODS; (G) AN APPROPRIATION FOR A POWER PROJECT ACQUIRED OR CONSTRUCTED UNDER AS 44.83.380 - 44.83.425 (ENERGY PROGRAM FOR ALASKA)]. HCS CSSB 106(FIN) -28- Cort anane wn = Rye ee ee ee ee Be SCeHeIYANE HH ES REBR 27 29 31 Chapter 18 * Sec. 11. AS 44.83.090(a) is amended to read: (a) The authority shall, in addition to the other methods that [WHICH] it may find advantageous, provide a method by which municipal electric, rural electric, cooperative electric, or private electric utilities and regional electric authorities, or other persons authorized by law to engage in the distribution of electricity may secure a reasonable share of the power generated by a project, or any interest in a project, or for any right to the power and shall sell the power or cause the power to be sold at the lowest reasonable prices that [WHICH] cover the full cost of the electricity or services, including capital and operating costs, debt coverage as considered appropriate by the authority, and other charges that may be authorized by this chapter. Except for a contract or lease entered into under former AS 44.83.380 - 44.83.425, a contract or lease for the sale, transmission, and distribution of power generated by a project or any right to the capacity of it shall provide: (1) for payment of all operating and maintenance expenses of a project and costs of renewals, replacements, and improvements of it; (2) for interest on and amortization charges sufficient to retire bonds of the authority issued for the project and reserves for them, plus a debt service coverage factor as may be determined by the authority to be necessary for the marketability of its bonds; (3) for monitoring of the project by the authority or its agents; (4) for full and complete disclosure to the authority of all factors of costs in the transmission and distribution of power, so that rates to any persons may be fixed initially in the contract or lease and may be adjusted from time to time on the basis of true cost data; (5) for periodic revisions of the service and rates to persons on the basis of accurate cost data obtained by the accounting methods and systems approved by the directors and in furtherance and effectuation of the policy declared in this chapter, (6) for the cancellation and termination of a contract or lease upon violation of its terms by any person; (7) for security for performance as the authority may consider -29- HCS CSSB 106(FIN) cCnrrtr an & wn = ee KB SSeS IAANKR SHES ReEBK 27 29 31 Chapter 18 practicable and advisable, including provisions assuring the continuance of the distribution and transmission of power generated by a project and the use of its facilities for these purposes; and (8) other terms not inconsistent with the provisions and policy of this chapter as the authority may consider advisable. * Sec. 12. AS 44.83.110(b) is amended to read: (b) Notwithstanding any other provisions of this chapter, the trust indenture, trust agreement, secured loan agreement, or other instrument or the resolution constituting a contract with bondholders shall contain a covenant by the authority that it will at all times maintain rates, fees, or charges sufficient to pay, and that a contract entered into by the authority for the sale, transmission, or distribution of power shall contain rates, fees, or charges sufficient to pay the costs of operation and maintenance of the project, the principal of and interest on bonds issued under the trust agreement as the same severally become due and payable, to provide for debt service coverage as considered necessary by the authority for the marketing of its bonds and to provide for renewals, replacements, and improvements of the project, and to maintain reserves required by the terms of the trust agreement. This subsection does not require a covenant that varies from a covenant entered into in accordance with the provisions of former AS 44.83.380 - 44.83.425. * Sec. 13. AS 44.83.382(a) is amended to read: (a) A power development fund is established in the Alaska Energy Authority to carry out the purposes of former AS 44.83.380 - 44.83.425. * Sec. 14. AS 44.83.384(a) is amended to read: (a) The fund may be used by the authority to provide money for (1) [RECONNAISSANCE AND FEASIBILITY STUDIES AND POWER PROJECT FINANCE PLANS PREPARED UNDER AS 44.83.177 - 44.83.181; (2) THE COST OF A POWER PROJECT, INCLUDING BUT NOT LIMITED TO COSTS OF ACQUIRING NECESSARY LICENSES, PREPARING ENGINEERING DESIGNS, OBTAINING LAND, AND CONSTRUCTING THE POWER PROJECT; HCS CSSB 106(FIN) -30- Cmorrtriawnweawn = Pee ee ee ee ee Seen ANDSNES RESRE SSseue Chapter 18 (3)] the defeasance of bonds, or the payment of debt service on loans for or on an issue of bonds sold in connection with a power project constructed or acquired before the effective date of this section; (2) ((4)] _ the cost of operating and maintaining power projects constructed or acquired before the effective date of this section; and {3) [(5)] debt service on power projects constructed or acquired before the effective date of this section. * Sec. 15. AS 44.83.388(a) is amended to read: (a) The authority shall maintain records of power project allocations from the fund for each power project (1) approved in accordance with former AS 44.83.185; and (2) for which an allocation is made from an appropriation made by the legislature without specifying an appropriation to a project. * Sec. 16. AS 44.83.396(a) is amended to read: (a) A power project that was [IS] acquired or constructed as part of the former energy program for Alaska is owned, and shall be administered, by the authority. * Sec. 17. AS 44.83.398(a) is amended to read: (a) The authority shall sell power produced from power projects acquired or constructed under the former energy program for Alaska. For purposes of this section, Tyee Lake, Swan Lake, Solomon Gulch, and Terror Lake hydroelectric facilities are considered to be one power project. This power project is referred to as the initial project. * Sec. 18. AS 44.83.398(f) is amended to read: (f) The provisions of (b) of this section do not apply to an intertie that is authorized as a separate project under former AS 44.83.380. The authority shall establish and maintain separate power rate schedules applicable to each intertie that it has acquired or constructed as a separate power project under the energy program for Alaska. The power rate schedules shall produce sufficient revenue from utilities connected by the intertie to pay (1) operation, maintenance, and equipment replacement costs of the intertie; (2) debt service of the intertie; and (3) safety inspections and -31- HCS CSSB 106(FIN) Cm rdtan es wn = y iJ Ne NY Fe Se Se —_— et 2SSRBRBNRRERBRERESSCRVIRBDEBCHEAS Chapter 18 investigations of the intertie by the authority. If the authority determines that an intertie has ceased to function as a separate project and has become a part of one or more other power projects as a transmission line, the power rate schedules established under this subsection shall be terminated and a wholesale power rate applicable to the former intertie shall be calculated under (b) of this section for the project or projects of which it has become a part. * Sec. 19. AS 44.83.510(a) is amended to read: (a) [THE AUTHORITY MAY BORROW FROM THE FUND FOR THE PURPOSE OF FINANCING A POWER PROJECT ACQUIRED OR CONSTRUCTED BY THE AUTHORITY UNDER THE ENERGY PROGRAM FOR ALASKA (AS 44.83.380 - 44.83.425).] Repayment of a loan from the former power development revolving loan fund must be made with the proceeds from the sale of power from projects in the former energy program for Alaska. Except as provided in AS 44.83.398(i), the payments required to be made by the authority on a loan from the fund constitute debt service for the purpose of calculating the wholesale power rate in AS 44.83.398(b)(1). * Sec. 20. AS 44.83.530 is amended to read: Sec. 44.83.530. DEFINITIONS. In AS 44.83.500 - 44.83.530, (1) "fund" means the former power development revolving loan fund; and (2) "power project" means a project acquired or constructed under the former energy program for Alaska, AS 44.83.380 - 44.83.425. * Sec. 21. AS 44.83.930(a) is amended to read: (a) When a project is operated by the authority, the authority shall enter into one or more contracts for the sale of electrical power, energy, transmission capacity, or service from the project. Unless the contract is entered into under former AS 44.83.380 - 44.83.425, a contract entered into under this section must meet all requirements of AS 44.83.090. * Sec. 22. AS 44.83.990(3) is amended to read: (3) "feasibility study" (A) means a study conducted for the purpose of establishing the HCS CSSB 106(FIN) -32- Cen ane wn = Rye we ee ee ee ee = SeCeI~AAKRHAHRES RRESR 27 29 31 Chapter 18 economic and environmental practicality of completing a proposed power project under former AS 44.83.181; (B) includes engineering and design work to meet the requirements for submission of a license application for a proposed new project to the Federal Energy Regulatory Commission; * Sec. 23. AS 44.88.105(d) is amended to read: (d) The chairman of the authority shall annually, no later than January 2, certify in writing to the governor and the legislature the amount, if any, required to restore a capital reserve fund to the capital reserve fund requirement. The legislature may appropriate to the authority the amount certified by the chairman of the authority. The authority shall deposit the amounts appropriated under this subsection during a fiscal year in the proper capital reserve fund. Nothing in this section creates a debt or liability of the state. In this subsection, "capital reserve fund" means a capital reserve fund that (1) is created under this section on or before January 1, 1989; [, OR] (2) secures refunding bonds if the refunding bonds are issued to refund bonds that are secured by a capital reserve fund created under this section on or before January 1, 1989; or (3) secures bonds issued on or after the effective date of this section for a power transmission intertie. * Sec. 24. AS 44.88.155(d) is amended to read: (d) A loan participation purchased by the authority with assets of the enterprise development account or with proceeds of bonds secured by assets of the enterprise development account (1) may not exceed $10,000,000; however, in the case of a loan participation for a power transmission intertie, the loan participation may exceed 10,000,000 with legislative aj al; (2) may not be purchased unless (A) the project applicant is not, or, if the applicant is not a single proprietorship, all members of the business enterprise or enterprises constituting the project applicant are not, in default on another loan made by -33- HCS CSSB 106(FIN) Cnrnrdtane wn = - RBBRESVPREVAREEOEES a 27 29 31 Chapter 18 the state or by a public corporation of the state; and (B) at least 20 percent of the principal amount of the loan is retained by the loan originator; (3) may not be purchased if the loan to be purchased exceeds the cost of the project or 75 percent of the appraised value of the project, whichever is less, unless the amount of the loan in excess of this limit is federally insured or guaranteed or is insured by a qualified mortgage insurance company; (4) may not be purchased if the participation in the loan to be purchased is for a term longer than three-quarters of the authority’s estimate of the life of the project or 25 years from the date the loan is made, whichever is earlier; however, in the case of a loan participation for a power transmission intertie, the term may not be longer than 50 years from the date the loan is made; (5) may be made only if the participation in the loan to be purchased contains amortization provisions; the amortization provisions (A) must be complete and satisfactory to the authority and require periodic payments by the borrower; (B) may allow the loan originator to amortize the portion of the loan retained by the loan originator using a shorter amortization schedule than the amortization schedule for the portion of the loan held by the authority if (i) in the authority’s opinion, the project financed can support the increased debt service; and (ii) the accelerated amortization schedule is required to induce the originator to make the loan; (6) may be made only if the participation in the loan to be purchased is in the form and contains the terms and provisions with respect to insurance, repairs, alterations, payment of taxes and assessments, default reserves, delinquency charges, default remedies, acceleration of maturity, secondary liens, and other matters the authority prescribes; and (7) may be made only if the participation in the loan to be purchased is secured as to repayment by a mortgage or other security instrument in the manner the authority determines is feasible to assure timely repayment under a loan agreement HCS CSSB 106(FIN) -34- Cert anan eae wn = eb NY NR YY NN NDP SF Se eS -_ —_— SSRBRBNRRERBKRRESSSEIRREERES Chapter 18 entered into with the borrower. * Sec. 25. AS 44.88.155(g) is amended to read: (g) Notwithstanding any other provision of this section, the authority may waive or modify the requirements of this section as it considers appropriate and prudent in order to finance a project if the authority intends to own the project or in order to finance a power transmission intertie project. * Sec. 26. AS 44.88.900(10) is amended to read: (10) "project" means (A) a plant or facility used or intended for use in connection with making, processing, preparing, transporting, or producing in any manner, goods, products, or substances of any kind or nature or in connection with developing or utilizing a natural resource, or extracting, smelting, transporting, converting, assembling, or producing in any manner, minerals, raw materials, chemicals, compounds, alloys, fibers, commodities and materials, products, or substances of any kind or nature; (B) a plant or facility used or intended for use in connection with a business enterprise; (C) commercial activity by a small enterprise; (D) a plant or facility demonstrating technological advances of new methods and procedures and prototype commercial applications for the exploration, development, production, transportation, conversion, and use of energy resources; (E) infrastructure for a new tourism destination facility or for the expansion of a tourism destination facility; F) a plant or facility, other _than_a_plant_or_facilit described _in_(D) of this paragraph, for the generation, transmission, development, transportation, conversion, or use of energy resources; * Sec. 27. AS 39.50.200(b)(46) and AS 44.83.045 are repealed. * Sec. 28. AS 39.50.200(b)(46); AS 44.83.010, 44.83.105, 44.83. 162, 44.83.163, 44.83.164, 44.83.165, 44.83.170, 44.83.177, 44.83.179, 44.83.181, 44.83.183, 44.83.185, 44.83.187, 44.83.189, 44.83.300, 44.83.310, 44.83.320, 44.83.325, 44.83.330, 44.83.340, 44.83.350, -35- HCS CSSB 106(FIN) Card anan & ww y SS ee SSBRNRRRPRBRESTREDVDRBDEBHEES Chapter 18 44.83.360, 44.83.361, 44.83.363, 44.83.370, 44.83.380, 44.83.384(b), 44.83.384(c), 44.83.390, 44.83.392, 44.83.400, 44.83.410, 44.83.500, 44.83.510(b), 44.83.520, 44.83.600, 44.83.605. 44.83.610, 44.83.615, 44.83.620, 44.83.625, 44.83.630, 44.83.650, 44.83.990(8), and 44.83.990(9) are repealed. * Sec. 29. The Alaska Industrial Development and Export Authority may issue bonds to finance the acquisition, design, and construction of a power transmission intertie of at least 138 kilovolts between Healy and Fairbanks and owned, for the benefit of all of the utilities participating in the intertie, by Golden Valley Electric Association, Inc. The principal amount of the bonds may not exceed $60,000,000. * Sec. 30. The Alaska Industrial Development and Export Authority may issue bonds to finance the acquisition, design, and construction of a power transmission intertie of at least 138 kilovolts between Anchorage and the Kenai Peninsula to be owned, for the benefit of all of the utilities participating in the interties, by Chugach Electric Association, Inc. The principal amount of the bonds may not exceed $60,000,000. * Sec. 31. The Alaska Industrial Development and Export Authority may issue bonds to finance the acquisition, design, and construction of a power transmission intertie of at least 115 kilovolts between the Swan Lake and Tyee Lake hydroelectric projects and owned, for the benefit of all of the utilities participating in the intertie, by Ketchikan Public Utilities. The principal amount of the bonds may not exceed $40,000,000. * Sec. 32. The Alaska Industrial Development and Export Authority may issue bonds to finance the acquisition, design, and construction of a power transmission intertie of at least 138 kilovolts between Sutton and Glennallen and owned, for the benefit of all of the utilities participating in the intertie, by Copper Valley Electric Association. The principal amount of the bonds may not exceed $25,000,000. * Sec. 33. APPLICABILITY. The repeal of statutes by sec. 28 of this Act does not affect existing bonds or actions that have been taken under the repealed provisions. * Sec. 34. TRANSITION. All litigation, hearings, investigations, and other proceedings pending under a law amended or repealed by this Act, or in connection with functions transferred by this Act, continue in effect and may be continued and completed by the Alaska Energy Authority or the Department of Community and Regional Affairs, as appropriate, notwithstanding a transfer or amendment or repeal provided for in this Act. Certificates, HCS CSSB 106(FIN) -36- Cet anan wn = SSSRENRRERRESSEREITRAEBSE SS Chapter 18 orders, and regulations issued or adopted under authority of a law amended or repealed by this Act remain in effect for the term issued, or until revoked, vacated, or otherwise modified under the provisions of this Act. All contracts, rights, liabilities, bonds, notes, or other obligations created by or under a law amended or repealed by this Act, and in effect on the effective date of this Act remain in effect notwithstanding this Act’s taking effect. The Department of Community and Regional . Affairs shall assume, for those programs and projects transferred to it, the licenses, contracts, “rights, liabilities, notes, or other obligations of the former Alaska Energy Authority with the same limitations and provisions as under a license, contract, right, liability, note, or other obligation of the former Alaska Energy Authority, Real property, records, equipment, and other property of the Alaska Energy Authority related to the programs and projects transferred to the department shall be transferred to the Department of Community and Regional Affairs. * Sec. 35. TRANSITIONAL PROVISION CONCERNING EMPLOYEES OF THE ALASKA ENERGY AUTHORITY. When the Department of Community and Regional Affairs determines that continued employment of certain employees of the Alaska Energy Authority is necessary to continue uninterrupted service to programs, facilities, and power projects formerly owned by the Alaska Energy Authority that have been transferred to the department under this Act, the department may continue the employment of those employees. * Sec. 36. INITIAL TERMS OF LOAN COMMITTEE. Notwithstanding AS 42.45.060(b), enacted by sec. 5 of this Act, the initial terms of two of the public members of the loan committee established under AS 42.45.060 shall be for two years. The remaining two public members shall serve four-year terms as provided in AS 42.45.060. * Sec. 37. CONTRACTS WITH PRIVATE SECTOR. The Alaska Energy Authority shall, to the maximum extent feasible, enter into contracts with public utilities and other entities to carry out its duties with respect to the maintenance and operation of power projects owned by the Alaska Energy Authority. * Sec. 38. ORDERLY TRANSFER OF FUNCTIONS. (a) Notwithstanding the effective date of this Act, the governor, the Department of Community and Regional Affairs, the Alaska Energy Authority, and the office of management and budget shall implement this Act in an orderly fashion. The transfer of rural programs operated by the Alaska Energy Authority to the Department of Community and Regional Affairs must be completed no later than -37- HCS CSSB 106(FIN) Cnmnidtanan ek wn = Chapter 18 December 31, 1993. Until a program is transferred under this section, the Alaska Energy Authority may continue to administer that program under the former provisions of AS 44.83, notwithstanding the repeal of provisions of AS 44.83 in sec. 28 of this Act. (b) The Alaska Energy Authority shall assist the members of the Alaska Industrial Development and Export Authority to prepare for the powers and duties granted to them under this Act. * Sec. 39. In accordance with AS 01.10.030, if a provision of this Act, or the application of a provision of this Act to a person or circumstance, is held invalid, the remainder of this Act and the application to other persons or circumstances shall not be affected thereby. HCS CSSB 106(FIN) -38-