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Home My WebLink AboutIntertie Grant Agreement 1993INTERTIE GRANT AGREEMENT TX This Agreement is entered into this 2 day of October, 1993, by Golden Valley Electric Association, Inc. ("GVEA"), Fairbanks’ Municipal Utilities System ("FMUS"), Municipality of Anchorage d/b/a Anchorage Municipal Light and Power ("ML&P"), Chugach Electric Association, Inc. ("CEA"), Alaska Electric Generation and Transmission Cooperative, Inc. ("AEG&T"), on behalf of its members (Matanuska Electric Association, Inc. ("MEA"), and Homer Electric Association, Inc. ("HEA"), "Additional Parties"), and City of Seward ("Seward") ("Participating Utilities" within the meaning of Section 2 of SB 126), and the State of Alaska, Department of Administration ("DOA"), and the Alaska Industrial Development and Export Authority (“AIDEA”). The parties agree as follows: 1 Purpose. The purpose of this Agreement is to satisfy the statutory conditions precedent to DOA’s transfer of the grant funds and to provide for the expeditious transfer of such funds to the grant recipients for the purpose of partial funding of the design and construction of new electric transmission interties between Healy and Fairbanks and between Anchorage and the Kenai Peninsula. Specifically, this Agreement is intended to satisfy the conditions of SB 126 §§ 1(b) and (c) and §§ 2(b) and (c). Ze Additional Agreements. The Participating Utilities hereby agree that any additional agreements (whether among the Participating Utilities or with other entities) that may be necessary or useful to carry out the purposes of this Agreement and SB 126 shall be negotiated in good faith. Such additional agreement(s) shall address ownership participation ("Participation Agreement"), project management, and project operation. 35 Ownership. Pursuant to this and any other necessary agreements, the Participating Utilities shall hold undivided ownership interest as tenants in common in the proportion set forth in Attachment 1 to this Agreement, such proportions being based on the relationship of the Participants’ 1990/1991/1992 three-year average non-coincident peak demand to the sum of the Participating Utilities' 1990/1991/1992 three-year average non-coincident system peak demands unless the Participating Utilities agree to a different allocation of specific project capacity in the Participation Agreement. All intertie costs shall be borne by those Participating Utilities which execute Participation Agreements with respect to such Interties. 4. Statutory Conditions. The Participating Utilities hereby agree to the conditions of SB 126, specifically set forth below. 4.1 Design and Construction Costs. The Participating Utilities agree to pay the design and construction costs of the Healy-Fairbanks transmission intertie that exceed $43,200,000 and the design and construction costs for the Anchorage-Kenai Peninsula transmission intertie that exceed $46,800,000 [SB 126 §§ 1(b)(1) and 2(b)(1)]. 4.2 O&M Costs. The Participating Utilities agree to pay the operation and maintenance (O&M) costs for the Healy-Fairbanks and the Anchorage-Kenai Peninsula interties [SB 126 §§ 1(b)(2) and 2(b)(2)]. 4.3. Rates. The costs of construction of the Anchorage-Kenai Peninsula intertie in excess of $46,800,000 plus accrued interest, the cost of operation and maintenance of that intertie, and other costs approved by the Participants shall first be recovered through a 1.5 mill/kWh charge for all energy generated by the Bradley Lake Hydroelectric Project. The costs of construction of the Healy-Fairbanks intertie in excess of $43,200,000 plus accrued interest, the cost of operation and maintenance of that intertie, and other costs approved by the Participants shall first be recovered through a 1.5 mill/kWh charge for energy generated by the Bradley Lake Hydroelectric Project for the benefit of receiving utilities in Fairbanks and an additional 1.5 mill/kWh charge to be paid by the receiving utility for 60 percent of the non-Bradley Lake energy transmitted on the existing GVEA transmission line and the new northern intertie between Healy and Fairbanks. Remaining costs of the two interties not recovered by the above 1.5 mill/kWh charges shall be allocated among the Participating Utilities in the proportion set forth in Attachment 1. 4.4 Access and Wheeling. All Participating Utilities agree to provide the other Participating Utilities access both on the new intertie and over the Participating Utilities' systems to and from the intertie for the purpose of assured access to resources, economy energy transactions, and other similar uses. Terms and rates for such access shall be resolved in the Participation Agreement. Resulting rates will be submitted to the Alaska Public Utilities Commission, if required, but this Agreement is not conditional upon APUC approval of such rates. 4.5. Warranties. The Participating Utilities hereby represent and warrant that they have either resolved all material terms and conditions relating to the development, use, and operation of the interties and to the access to the systems to and from the interties or have appropriate forums or procedures, as applicable, to resolve such issues in a fair and equitable fashion. D5 Design and Construction Management. The Participating Utilities agree to contract with GVEA to design and construct the Healy-Fairbanks power transmission intertie and agree to contract with CEA to design and construct the Anchorage-Kenai Peninsula power transmission intertie, subject to the availability of adequate financing and in accordance with Prudent Utility Practices and construction agreements which contain provisions for adequate oversight to maintain quality and cost control, and to ensure that total project costs do not exceed amounts budgeted by the Participants' Group and its Participating Utility members. Consistent with the above conditions, it is agreed and understood that GVEA and CEA, as contractors, will be free to subcontract all or any portion of the work associated with the design and construction of the above projects. If, for any reason, GVEA and/or CEA elect not to act as the contractors of the interties, the Participating Utilities may contract for construction with one or more of the other Participating Utilities or Additional Parties. 6. Intertie Participants Group. As common owners of the interties, the Participating Utilities agree to form the Intertie Participants Group (IPG) for the purpose of exercising their rights and responsibilities as owners. Each Participating Utility shall be represented on the IPG, and the IPG shall form a technical advisory subcommittee on which each Participating Utility shall be represented, except that MEA and HEA shall be represented on the IPG and any subcommittees, each of which shall be a voting member, and AEG&T shall not be additionally represented. The Participation Agreement shall resolve and adopt voting rights and procedural rules for the operation of the IPG. Total project cost and financing shall be addressed in the Participation Agreement. Intertie design, construction, construction management, and operation and maintenance, among other issues, shall be resolved by the IPG in accordance with its rules and procedures. Relative to design and construction issues, the IPG and its technical advisory subcommittee shall be responsible for oversight of GVEA and CEA construction efforts. Such INTERTIE GRANT AGREEMENT Page 2 oversight shall include approval of at least project scope (including routing and points of interconnection), cost estimates and budget, approval of construction agreements, significant change orders, receipt and review of at least monthly reports, and auditing of design and construction funds. Neither the IPG nor any individual Participating Utility shall attempt to make claims against GVEA and CEA for any decisions made by the IPG. Upon completion and commercial operation of the interties, the IPG shall be responsible for all decisions relating to the ongoing operations, maintenance, repair, and improvement of the interties. ile Transfer of Grant Funds. DOA hereby transfers the grant funds of $43,200,000 to GVEA and $46,800,000 to CEA to be held by Alaska Industrial Development & Export Authority (AIDEA). GVEA and CEA agree that such funds shall be held by AIDEA for the benefit of all Participating Utilities, with instructions to AIDEA that no funds are to be released, encumbered, assigned, or pledged until a Participation Agreement and a Grant Administration Agreement, each in a form satisfactory to AIDEA, have been executed by all of the Participating Utilities and, as applicable, the Authority. Pursuant to AS 44.88.190(b), grant funds held by AIDEA and all interest earned thereon shall not be or constitute monies of the State. The Participating Utilities agree to negotiate in good faith with the intent of executing a Participation Agreement by November 30, 1993. The Participating Utilities and the Authority agree to negotiate in good faith with the intent of executing a Grant Administration Agreement by November 30, 1993. In the event that the Healy-Fairbanks intertie is not, for any reason, constructed, GVEA agrees that AIDEA shall return any unexpended funds and any interest earned thereon to DOA. In the event that the Anchorage-Kenai Peninsula intertie is not, for any reason, constructed, CEA agrees that AIDEA shall return any unexpended funds and any interest earned thereon to DOA. No Participating Utility shall unreasonably delay progress toward completion of the interties. 8. Use of Funds. The parties agree to use funds described in paragraph 7 solely for the purposes of design and construction of the Healy-Fairbanks and Anchorage-Kenai Peninsula interties, including all acts necessary for completion of these projects. The parties further agree to return to the State any unexpended grant funds and any interest earned thereon not needed for this purpose. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first above written. STATE PARTIES: STATE OF ALASKA, DEPARTMENT OF AD STRATION By: Mhp1ew ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY ADMINISTRATION __ / INTERTIE GRANT AGREEMENT Page 3 INTERTIE GRANT AGREEMENT Page 4 ADDITIONAL PARTIES: MATANUSKA ELE C ASSOCIATION, INC. By: HOMER ELECTRIC ASSOCIATION, INC. By: PARTICIPATING UTILITIES: GOLDEN VALLEY ELECTRIC ASSOCIATION, INC. ww MA. + FAIRBANKS MUNICIPAL UTILITIES SYSTE By: = CHUG ELECTRIC ASSOCIATION, INC. By: Attachment 1 INTERTIE GRANT AGREEMENT Page 5 ALASKA ELECTRIC GENERATION & TRANSMISSION COOPERATIVE, INC. er (iebee 5 Kufnor FS MUNICIPALITY OF ANCHORAGE d/b/a ANCHORAGE MUNICIPAL LIGHT & POWER INTERTIE OWNERSHIP INTERESTS Golden Valley Electric Association, Inc. 15.41% Fairbanks Municipal Utilities System 4.70% Anchorage Municipal Light and Power 22.43% Chugach Electric Association, Inc. 30.23% Alaska Electric Generation & Transmission Cooperative, Inc. 25.79% Matanuska Electric Association, Inc. 14.19% Attachment | Homer Electric Association, Inc. 11.60% City of Seward 1.44% TOTAL 100.00% NOTE: The above percentage ownership interests are subject to recomputation in the Participation Agreement utilizing consistent system peak data and methodology unless the Participating Utilities agree to a different allocation of specific project capacity (Section 3 of this Agreement). INTERTIE GRANT AGREEMENT Page 6