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HomeMy WebLinkAboutIntertie Grant Adminstration Agreement 1995s ALASKA INDUSTRIAL DEVELOPMENT = AND EXPORT AUTHORITY =_ ALASKA @@z ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 561-8050 FAX 907 /561-8998 January 17, 1995 Thomas R. Stahr General Manager and Chairman, IPG Anchorage Municipal Light & Power P.O. Box 196094 Anchorage, Alaska 99519-6094 Subject: Annual Audit Intertie Grant Funds Dear Tom: As a friendly reminder, Section 5 of the Grant Administration Agreement requires an annual audit to comply with the provisions of 2 AAC 45.010. In accordance with the Agreement, the first audit is due April 15, 1995. If AIDEA can be of assistance, please don’t hesitate to call on me. Sincerely, Daniel W. Beardsley en: Michael P. Kelly, GVEA Eugene Bjornstad, CEA William R. Snell, AIDEA \or— LAW OFFICES D a en “ao BIRCH, HORTON, BITTNER AND CHEROT A PROFESSIONAL CORPORATION 1127 WEST SEVENTH AVENUE * ANCHORAGE, ALASKA 99501-3563 * TELEPHONE (907) 276-1550 * TELECOPIER (907) 276-3680 THOMAS LALBERT:I? WILLIAM P. HORN® TIMOTHY J. PETUMENOS oF counset KEY BANK BUILDING THOMAS P-AMODIO. HALA. HORTON ELIZABETH A. PHILLIPS JOHN J. RHODES, 100 CUSHMAN STREET, SUITE 31 J GEOFFREY BENTLEY? STEPHEN. HUTCHINGS GLEN PRICE FAIRBANKS, ALASKA, 99701-4672 RONALD G. BIRCH" ROY 5. JONES, JR” MICHAEL V. REUSING (907) 452-1608 WILLIAM H. BITTNER MARC W. JUNE ELISABETH H. ROSS** TELECOPIER (907) 456-5055 KATHAYN A. BLACK BRAD S. KANE JONATHAN B. RUBIN PHILIP BLUMSTEIN CRISTINA D. LEE E. BUDO SIMPSON coe ler eka. ees CORY A BORGESON STANLEY T. LEWIS STEPHEN F. SORENSEN / tetera depron DOUGLAS S. BURDIN™ LESLIE LONGENBAUGH JONATHAN K. TILLINGHAST D.C. BAR lect ned-cass “D.C. AND ALASKA BAR JOHN J. BURNS RONALD W.LORENSEN JEFFERY D. TROUTT rete eee ona SUZANNE CHEROT L. MERRILL LOWDEN D. KEVIN WILLIAMS 1 MARYLAND BAR JOHN J. CONNORS: ANNE E. MciINERNEY*t JOSEPH E. WRONA # OHIO BAR KIM DUNN GREGORY A. MILLER SUSAN E. WUORINEN# ARIZONA BAR 1155 CONNECTICUT AVE., N.W. RALPH V. ERTZ GAIL R. OBA JOSEPH A. WEBER + VIRGINIA BAR SUITE 1200 JOSEPH W. EVANS MICHAEL J. PARISE {ANNE W. YATES® ALL OTHERS ALASKA BAR WASHINGTON, D.C. 20036-4308 STEPHEN K. GARDNER (202) 659-5800 TELEGOPIER (202) 659-1027 WRITER'S DIRECT DIAL NO. June 27, 1994 (907) 263-7220 ; AX WRITER'S DIRECT "FAX" NO. VIA HAND-DELIVERY (907) 276-3680 Mr. William R. Snell, Executive Director Mr. Dan Beardsley Alaska Industrial Development and Export Authority 480 West Tudor Road Anchorage, AK 99503 Re: Grant Administration Agreement Our File No. 503,357.59 Dear Riley and Dan: I enclose a black-line version as well as triplicate originals of the Grant Administration Agreement. Please note that Section 4.02(b) on Page 10 has been modified to clarify the concerns which we have discussed. The Agreement is now explicitly clear that grand funds may not be applied for so-called Phase II activities, as identified in Schedules A-1 and A-2, until a Phase II budget and binding financing commitments for full costs are approved. The utilities have requested that the Authority execute the Agreement before its circulation among the utilities. ,. TOovgyero ™ If you concur that the new draft/is acceptable for execution, would you please execute the aratt/is, aboey and call Kim Esterling to arrange for transfer of the originals. Sincerely, BIRCH, HORTON, BITTNER and CHEROT GE tioe ), athan B. Rubini JBR: ke Enclosures F:\AIDEA\ENERGY \KAE2377 GRANT ADMINISTRATION AGREEMENT THIS AGREEMENT (the "Agreement") is made and entered into this __—s day - of June, 1994, by and between the ALASKA. INDUSTRIAL DEVELOPMENT & EXPORT AUTHORITY ("AIDEA"), GOLDEN VALLEY ELECTRIC ASSOCIATION, INC. ("GVEA"), FAIRBANKS MUNICIPAL UTILITIES SYSTEM ("FMUS"), 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. and Homer’ Electric Association, Inc.), and the CITY OF SEWARD ("Seward") (ML&P, CEA, AEG&T and Seward hereinafter collectively referred to as the "Southern Participating Utilities"; GVEA and FMUS hereinafter collectively referred to as the "Northern Participating Utilities"; the Southern Participating Utilities and the Northern Participating Utilities hereinafter collectively referred to as the "Participating Utilities"). RECITALS WHEREAS, pursuant to Section 1 ch. 19, SLA 1993, the Legislature appropriated $43,200,000 to the Department of Administration ("DOA") for payment as a grant under AS 37.05.316 to GVEA for the purpose of constructing a power transmission intertie between Healy and Fairbanks ("Healy-Fairbanks Intertie") to benefit all utilities participating in the intertie; and ~~ Grant Administration Agreement Page 1 WHEREAS, pursuant to Section 2 of ch. 19, SLA 1993 (Sections 1 and 2 of ch.19, SLA 1993 hereinafter referred to as the "Intertie Appropriation"), the Legislature appropriated $46,800,000 to DOA for payment as a grant under AS 37.05.316 to CEA for the purpose of constructing a power transmission intertie between Anchorage and the Kenai Peninsula ("Anchorage-Kenai Intertie") to benefit all utilities participating in the intertie (the two intertie appropriations are hereinafter collectively referred to as the "Intertie Grants"); and WHEREAS, pursuant to Section 1(b) and (c) and Section 2(b) and (c) of the Intertie Appropriation, DOA, AIDEA, and the Participating Utilities were to enter into a written agreement satisfying certain statutory conditions precedent to DOA’s transfer of the Intertie Grants; and WHEREAS, in order to satisfy such requirement, DOA, AIDEA, and the Participating Utilities have entered into an Intertie Grant Agreement (the "Intertie Grant Agreement"), which among other things, provides that the Intertie Grants are to be transferred to AIDEA for the benefit of the Participating Utilities, and that certain conditions are to be met prior to AIDEA releasing any of the grant funds to the Participating Utilities; and WHEREAS, also as part of the Intertie Grant Agreement, the Participating Utilities have agreed to form an Intertie Participants Group ("IPG") to, among other things, oversee the (f Grant Administration Agreement Page 2 construction of the interties and address grant expenditure matters; and WHEREAS, pursuant to the Intertie Grant ‘Agreement, DOA and AIDEA have entered into a Grant Transfer and Delegation Agreement ("Grant Transfer Agreement") whereby the Intertie Grants were transferred to AIDEA to act as custodian and administrator of the Intertie Grants; and WHEREAS, Section 7 of the Intertie Grant Agreement requires that AIDEA and the Participating Utilities enter into a Grant Administration Agreement which shall set forth the terms and conditions to be satisfied by the Participating Utilities in order for there to be a disbursement of the Intertie Grants, and which shall also provide for AIDEA’s obligations with respect to the Intertie Grants. AGREEMENT NOW, THEREFORE, in consideration of the recitals above (which are hereby incorporated into and shall be deemed part of this Agreement), and of the covenants and agreements hereinafter set forth, it is agreed by and between the parties hereto as follows: Section 1. Custodian and Administrator. The parties acknowledge that pursuant to the Grant Transfer Agreement, DOA has delegated all its powers and duties with respect to the administration of the Intertie Grants to AIDEA and that the Intertie Grants have been transferred from DOA to AIDEA for the ( Grant Administration Agreement Page 3 benefit of the Participating Utilities. The Participating Utilities have requested that AIDEA serve as custodian and administrator of the Intertie Grants. AIDEA hereby accepts such appointment and agrees to act as custodian and administrator of the Intertie Grants for the benefit of the Participating Utilities, subject to the terms and conditions of, and authority and powers granted by, this Agreement and applicable law, including but not limited to those statutes and regulations applicable to the administration of grants to named recipients under AS 37.05.316 by the DOA. Section 2. Custody/Investment of Grant Funds. 2.01. Appropriation Accounts. AIDEA shall establish two appropriation accounts to account for and to disburse the Intertie Grants. One account shall be designated the "Healy- Fairbanks Intertie Account" which shall be comprised of the $43,200,000 appropriation made by Section 1 of the Intertie Appropriation and all interest and other income to be earned thereon. The other account shall be designated the "Anchorage- Kenai Intertie Account" which shall be comprised of the $46,800,000 appropriation made by Section 2 of the Intertie Appropriation and all interest and other income to be earned thereon (the monies collectively comprising the Healy-Fairbanks Intertie Account and the Anchorage-Kenai Intertie Account hereinafter referred to as the "Intertie Funds"). AIDEA shall have the authority to create and om Grant Administration Agreement Page 4 designate subaccounts for these two accounts as it deems necessary from time to time. 2.02. Institutional Custodian. In‘order to carry out its custodial duties under this Agreement, AIDEA may designate and hire one or more institutional trustees to act as custodian for all or any portion of the Intertie Funds and any securities which such funds may be invested in. Such institutional custodian shall hold the Intertie Funds and any securities subject to the terms and conditions of this Agreement and applicable law. AIDEA shall ensure that any institutional custodian provide the appropriate procedures to separately account for the monies, and interest and other income earned thereon, in each of the intertie accounts established pursuant to Section 2.01. 2.03. Investment of Intertie Funds. (a) Generally. AIDEA shall develop and implement an investment strategy (the "Investment Strategy") in cooperation with GVEA and CEA for the investment of the Intertie Funds. In developing the Investment Strategy, AIDEA may also consult with and hire the services of professional investment advisers. AIDEA is hereby authorized, on behalf of the Participating Utilities, to make, execute, acknowledge and deliver any and all documents or instruments that may be necessary or appropriate, to exercise all other rights and powers, and to take all appropriate actions which it deems necessary, to implement the Investment Strategy. ~~ Grant Administration Agreement Page S (b) Limitations. The Investment Strategy shall be consistent with the principles set out in AS 37.10.071. Investment of the Intertie Funds shall be limited to United states Treasury debt obligations, or obligations insured by or guaranteed by the United States or agencies or instrumentalities of the United States. The Investment Strategy shall take into consideration the cash flow needs of the Participating Utilities. The IPG shall submit to AIDEA a schedule for the use of grant funds, and any amendments or changes thereto as necessary from time to time, to assist AIDEA in developing the Investment Strategy. (c) Institutional Investor. In order to implement the Investment Strategy, AIDEA may designate and hire either the institutional custodian hired pursuant to Section 2.02 or another institutional entity to invest the Intertie Funds pursuant to the Investment Strategy, the terms and conditions of this Agreement and applicable law. AIDEA shall provide the necessary direction to provide for the investment of the Intertie Funds. Section 3. Use of Intertie Funds. 3.01. Healy-Fairbanks Intertie Account. Monies in the Healy-Fairbanks Intertie Account and any designated subaccounts of such account shall only be used for the following purposes: (a) all costs reasonably related to the design, permitting, and construction of the Healy-Fairbanks Intertie; =m Grant Administration Agreement Page 6 (b) to pay the costs associated with any institutional custodian and/or investor hired pursuant to Sections 2.02 and 2.03(d); and (c) to pay the costs associated with any professional investment adviser hired pursuant to Section 2.03(a). 3.02. Anchorage-Kenai Intertie Account. Monies in the Anchorage-Kenai Intertie Account and any designated subaccounts of such account shall only be used for the following purposes: (a) all costs reasonably related to the design, permitting, and construction of the Anchorage-Kenai Intertie; (b) to pay the costs associated with any institutional custodian and/or investor hired pursuant to Sections 2.02 and 2.03(c); and (c) to pay the costs associated with any professional investment adviser hired pursuant to Section 2.03(a). 3.03. Unexpended Funds. (a) Project Completion. Any monies remaining in either the Healy-Fairbanks Intertie Account or the Anchorage-Kenai Intertie Account at the completion of the respective intertie project and payment of all outstanding obligations for the applicable project shall be returned to DOA and deposited in the State General Fund. an Grant Administration Agreement Page 7 (b) © tion o - As required by Section 7 of the Intertie Grant Agreement, in the event the IPG notifies AIDEA that one or both of the intertie projects will not be constructed, the monies in the account associated with the respective intertie, after the payment of all outstanding obligations, shall be returned to DOA and deposited in the State General Fund. (c) Unreasonable Delay of Projects. As required by Section 2.4(b) of the Grant Transfer Agreement, in the event that AIDEA determines, in its reasonable discretion, that development of either intertie project is unreasonably delayed by the affected Participating Utilities, the unobligated and unexpended monies in the account associated with the respective intertie shall be returned to DOA and deposited in the State General Fund. AIDEA shall give fifteen (15) days prior notice of such decision to the affected Participating Utilities. Section 4. Disbursement of Intertie Funds. Except for the payments of costs incurred by the Authority under Sections 3.01(b), 3.01(c), 3.02(b), and 3.02(c), any disbursement, release, encumbrance, assignment or pledge (hereinafter collectively referred to as "disbursement" for purposes of this Section 4) of the Intertie Funds from the intertie accounts shall be subject to the procedures, conditions precedent, and limitations/ceilings set forth in this Section 4. é~ Grant Administration Agreement Page 8 4.01. Conditions Precedent. The disbursement of Intertie Funds for the purposes described in Section 3.01(a) and 3.02(a) is not permitted until the following conditioqns precedent have been satisfied by the Participating Utilities: (a) the Participating Utilities have entered into and executed a Participation Agreement, in a form satisfactory to AIDEA, as required by and in accordance with the Intertie Grant Agreement and Section 2.4(c) of the Grant Transfer Agreement, and transmitted a copy of the signed and executed agreement to AIDEA; and (b) the Participating Utilities have determined and agreed upon which contractual obligations related to the Intertie Grants and Intertie Funds must be submitted to the Alaska Public Utilities Commission for its review and approval, and provided written notice to AIDEA of such determination and agreement. 4.02. Disbursement Schedules. Any disbursement of the Intertie Funds shall be subject to the limits and ceilings set forth in this Section 4.02. (a) Project Phases Ceilings. The Schedule A, which is attached to and hereby incorporated into this Agreement, and has been approved by AIDEA and the IPG, sets forth certain dollar ceilings for the initial phase of development for each of the intertie projects. The IPG shall submit to the Authority, for the phases of development. No disbursement of Intertie Funds for each Grant Administration Agreement Page 9 of the respective interties which exceeds the established ceilings set forth in Schedule A shall be permitted. The parties agree that the IPG is authorized to request amendments to Schedule A, subject to AIDEA’s approval, to provide for upward adjustment only of the ceilings set for the project phases. The IPG shall submit any requests for amendments to Schedule A to AIDEA in writing. The submittal shall include appropriate findings and an explanation as to why the existing ceiling is not sufficient. AIDEA agrees to consider any request for amendment within fifteen (15) days of the receipt of such request. No amendment shall be effective until approved by AIDEA. (b) Limitation on Phase II Expenditures. Except as m oved b e Authorit a 4.03. Disbursement Procedures. Subject to the conditions, limitations, and ceilings set forth in Sections 4.01 and 4.02, and the terms and conditions of this Agreement, on Grant Administration Agreement Page 10 disbursement of the Intertie Funds shall be subject to the following procedures: (a) All invoices shall be initially submitted to the IPG for its review and approval. (b) After IPG review and approval, the IPG shall submit, on a monthly basis all approved invoices to AIDEA for payment. Each invoice shall be referenced to a particular intertie project and a specific phase for that project to allow AIDEA to properly charge the invoice against the appropriate project and to determine if payment is authorized pursuant to the Intertie Appropriation or the disbursement schedules set forth in Section 4.02. AIDEA may request further documentation or explanation with respect to any invoice and is authorized to withhold payment until documentation, acceptable to AIDEA, is submitted. (c) If payment of an invoice is authorized in accordance with (b), AIDEA shall pay such invoice within fifteen (15) days of receipt of the invoice. Section 5. Audit Requirements. 5.01. General. The parties acknowledge that the audit requirements of 2 AAC 45.010 apply to the Intertie Grants, Intertie Funds, and the use of such monies for the purposes set forth in this Agreement. The Participating Utilities, through the IPG, agree to have performed annual audits as required by 2 AAC 45.010, and to submit to the state coordinating agency, as such term is defined in 2 AAC 45.010(0) (4), separate audit reports, as / f Grant Administration Agreement Page 11 required by and in accordance with 2 AAC 45.010, on an annual basis, for both the Healy-Fairbanks Intertie project and the Anchorage-Kenai Intertie project. Each audit and, the resulting audit report shall cover the preceding calendar year, and the audit report shall be submitted no later than April 15 of each year, beginning on April 15, 1995. A copy of each audit report shall be transmitted to AIDEA at the same time each audit report is transmitted to the state coordinating agency. The Participating Utilities shall also submit copies to the state coordinating agency to the extent required by 2 AAC 45.010(h). 5.02. Audit Standards and Report Contents. The audits required by Section 5.01 shall be conducted by an independent auditor in accordance with the audit standards set forth in 2 AAC 45.010(c). The audit reports shall address at a minimum the items set forth in 2 AAC 45.010(d) through (g). 5.03. Additional Requirements. The audits and audit reports required by this Section 5 shall comply fully with all requirements imposed by 2 AAC 45.010, and any amendments or modifications thereto, regardless of whether such requirements are specifically set forth in this Agreement. In addition, the Participating Utilities shall ensure that the requirements of 2 AAC 45.010(j) are satisfied by any applicable third party recipients. 5.04. Books and Records. In addition to complying with the audit requirements of Sections 5.01-5.03, the Participating Utilities and the IPG shall permit AIDEA to have ( Grant Administration Agreement Page 12 reasonable access upon request to all books and records related to the (a) design, permitting and construction of the interties; (b) Intertie Grants; and (c) Intertie Funds. Section 6. Vv t e . 6.01. Waiver of Liability/Indemnification on Custodial/Investment Duties. The Participating Utilities, and all their successors and assigns, hereby waive and release AIDEA, and all its officers, directors and employees, from any and all claims and liabilities of any nature and kind whatsoever which are related to or may arise out of AIDEA’s obligations and duties as custodian and investor under this Agreement, except those which may arise from the gross negligence or willful misconduct of AIDEA. The Participating Utilities agree to and shall indemnify, defend and hold harmless AIDEA, and all its officers, directors and employees, from and against, any and all demands, claims, causes of action, losses, fines, penalties, judgments, damages (including punitive and consequential damages), or liabilities of any nature and kind whatsoever (including attorney’s fees, and other legal fees and expenses) incurred in connection with or resulting from or arising out of or in any way related to AIDEA’s obligations and duties as custodian and investor under this Agreement, except those which may arise from the gross negligence or willful misconduct of AIDEA. 6.02. Indemnification on Contractor Claims. The Participating Utilities agree to and shall indemnify, defend and hold harmless AIDEA, and all its officers, directors and employees, ¢ Grant Administration Agreement Page 13 from and against, any and all demands, claims, causes of action, losses, fines, penalties, judgments, damages (including punitive and consequential damages), or liabilities of any nature and kind whatsoever (including attorney’s fees, and other legal fees and expenses) incurred in connection with or resulting from or arising out of or in any way related to the design and construction of the interties, which may be asserted against AIDEA, or its officers, directors or employees, by any contractor, subcontractor, consultant, or third party or entity. Section 7. ene le e 7.01. No Third- ty Bene ries. Nothing in this Agreement shall be interpreted or construed as creating any rights or privileges of any kind whatsoever in persons or entities who are not parties to this Agreement. 7.02. wand Vi - This Agreement shall be construed under the laws of the State of Alaska and any dispute shall be resolved in the Superior Court for the State of Alaska, Third Judicial District, at Anchorage, Alaska. 7.03. No Strict Construction. This Agreement was drafted in accordance with the wishes of all parties and after negotiation and discussion between all parties, and all parties have been represented by counsel in such negotiations. The rule of construction that a contract shall be construed against the party who drafted it shall not apply to construction of this Agreement. ~ Grant Administration Agreement Page 14 7.04. Counterparts. This Agreement may be executed in counterparts, in which case all such counterparts. shall constitute one and the same Agreement. 7.05. Successors and Assigns. This Agreement shall be binding upon the parties and their successors and assigns. 7.06. Modifications/Amendments. This Agreement may not be modified or amended except by a writing signed by all the parties. 7.07. Captions/Headings. All captions and headings used in this Agreement are for the convenience of reference only and shall not be construed as part of the Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first above written. ALASKA IN & EXPORT AUTHORITY By: Its: GOLDEN VALLEY ELECTRIC ASSOCIATION, INC. By: Its: FAIRBANKS MUNICIPAL UTILITIES SYSTEM By: Its: ANCHORAGE MUNICIPAL LIGHT AND POWER ~~ Grant Administration Agreement Page 15 F: \AIDEA\ ENERGY \KAE2363 CHUGACH ELECTRIC ASSOCIATION, INC. By: Its: ‘ ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE, INC. on behalf of its members (Matanuska Electric Association, Inc. and Homer Electric Association, Inc.) By: Its: CITY OF SEWARD By: Les: ~ Grant Administration Agreement Page 16 QQ > JUN.27 794 11:24AM FMUS POWERPLANT 987 451 4410 Poe. Municipal Utilities System MEMORANDUM Mark Boyer, City Manager Vince Mottola, Electric Utilities essai act | Contender in Purchase of Electric Utility June 27, 1994 I am speaking on behalf of myself and current employees. 7 ‘iis I am formally advising you of the intention of becoming a serious contender in the purchase of the Fairbanks Electric Utilities System as a whole. This includes the Power Plant and (1204 First Avenue Building), the entire Electric Distribution System and (building with land from State Street to Cleary Street), the Electric Interties ownership share, District Heating Distribution System including the entire Utilidors System. There are significant benefits to the City to strongly consider to sell the entire electric system to current employees instead of other possible buyers such as a local co-op or private entities. Therefore, the viability of an employee owned and operated utility should be evaluated equally along with other alternatives. We are scrious buyers and we wish to be included in all studies and/or future negotiations. We are eager to pring our ideas to the negotiating table on how to achieve betterment for rate payers and Fairbanks eitizens. vM/cdm J. Hayes, Mayor city Council Public Utilities Board V. Gillespie Task Force Power Plant Employees City Attorncy . Fairbanks Daily News Miner 9a7 451 4410 P.2 JUN.27 794 11:24AM_FMUS POWERPLANT ELECTRIC PRODUCTION DEPARTMENT FAX TRANSMITTAL Fairbanks Municipal Utilities System 1204 ist Avenue Fairbanks, Alaska 99701 FROM: Vince Mottola Electric Utilities Superintendent -Division Manager- 907-451-4410 = 907-456-7981 <<If any questions call FAX = PHONE > # of pages including cover sheet. Fax # Called __|~51-«x9298 TO: Re, SaogQQ - AOA DATE: G~ aT-44 SUBJECT: Comments: Dien Oe - Wlctawcs) on ke we ow cna Reet —? e..% ometrrD Wns an vce Oi tities el ae > ay ‘ Ve tae eae caste Te LT TN te eet te eet as VRE , ALASKA INDUSTRIAL DEVELOPMENT f BX AND EXPORT AUTHORITY 480 WEST TUDOR * ANCHORAGE, ALASKA 99503-6690 + (907) 561-8050 * FAX (907) 561-8998 March 4, 1994 Mr. Jonathan B. Rubini, Esquire Birch, Horton, Bittner and Cherot 1127 West Seventh Avenue Anchorage, Alaska 99501-3563 Re: Grant Administration Agreement Your File No. 503,357.59 Dear Jon: AIDEA has reviewed your letter of February 28, 1994, the comments dated January 19, 1994, provided by Ron Saxton and Julie Simon, and the revised draft. Our comments are as follows: (a) After additional review of the agreement and the applicable provisions of the grant and AS Title 37 as well as a conversation with staff at the Department of Administration, AIDEA is of the opinion that we cannot require the participants to reimburse AIDEA for its staff costs. Consistent with these comments, 2.01(d) and 2.02(d) should be dropped from the Agreements with your comments (a), (b) and (e). We concur that the custodial and investment services costs should not be subject to IPG "approval." The intent of the February 4, 1994, comments to you pertaining to Sections 4.01 and 4.03 was to exclude the custodial, investor and investment advisor expenses specified in 2.01(b) & (c) and 2.02 (b) & (c) from the provisions of 4.01 and 4.03. We meant to identify that the IPG did not have approval authority over those costs. (b) | Weconcur. The language of the appropriation indicates the funds are for the "design and construction of a power transmission intertie...," Section 1, Line 11, and Section 2, Line 26. Furthermore, Sections 1(b)(2) and 2(b)(2) specifically make the appropriation contingent on the agreement of the participating utilities to pay the operation and maintenance costs. (c) AIDEA believes that the utilities should prepare a draft of Schedule A subject to AIDEA's review and approval. Mr. Jonathan Rubini March 4, 1994 Page Two (d) (e) As indicated in (a) above, our concerns with the provisions of Section 4 were not fully addressed by the draft or your comment (d). As AIDEA reads that section, the IPG would have the authority to approve AIDEA's expenditures for: custodial and investor expenses (Sections 3.01(b) and 3.02(b)), investment advisor (Sections 3.01(c) and 3.02 (c)). If the previous language we proposed is not sufficient, then we think 4.01 and 4.03 should be modified by inserting "except for those expenses incurred by AIDEA under 2.01(b) & (c) and 2.02(b) & (c)" after the disbursement language in Section 4. As long as the expenditures approved by the IPG are within the scope of the grant, and do not exceed the ceilings established under Schedule A, we perceive our role to be a "billpayer." Should the expenditures fall outside of those limits then we should have the authority to disapprove payment. We concur. Should you have any questions regarding our comments, please call me or Dan Beardsley. Sincerely, / oR ak lam FR. Executive Director DWB:bif h:all:beardsle:ipgaa