HomeMy WebLinkAboutIntertie CEA and AEA 1994® ALASKA INDUSTRIAL DEVELOPMENT
AND EXPORT AUTHORITY
480 WEST TUDOR + ANCHORAGE, ALASKA 99503-6690 + (907) 561-8050 + FAX (907) 561-8998
January 24, 1994
Mr. David L. Highers
General Manager
Chugach Electric Association, Inc.
P.O. Box 196300
Anchorage, Alaska 99519-6300
Subject: Existing Intertie
Dear Dave:
Thank you for your inquiry regarding the Alaska Energy Authority's (AEA)
possible interest in transferring its ownership of the existing intertie
transmission line between Anchorage and Healy. I intend to raise this issue
with AEA's Board of Directors at our January 28, 1994 meeting.
With regard to a schedule and-resource allocation, AEA will need to conclude
its dealings on the transfer of Maintenance and Operation responsibilities
for Bradley Lake prior to proceeding with the review of issues associated
with the transfer of the existing Intertie.
I will be prepared to meet with you and others after the January 28 meeting
to discuss the potential transfer and the process by which it may occur. In
the meantime, please feel free to contact me should you have additional
information or ideas regarding how the utilities see such a transfer could
benefit the state.
Sincerely,
Wil ENERGY AUT! TTY.
on iam R. Snell
Executive Director
WRS:bjf
DOCBJF 163
cc: Pat Ryan, Chief of Staff
Herb Lang, AEA Board of Directors
James Baldwin, Esq. (w/enclosure)
bec: Valorie F. Walker, Deputy Director (Finance)
Dennis V. McCrohan, Deputy Director (Energy)
Keith Laufer, Esq. (w/enclosure)
Jon Rubini, Esq.
CHUGACH ELECTRIC
ASSOCIATION, INC.
Juugach
kctric G DE 16! 8-944 1 DAVID L. HIGHERS
General Manager
December 27, 1993
William R. Snell Executive Director 33
Alaska Industrial Development & Export Authority ta] Dodeiobeahis
480 West Tudor Road im Auialtty
Anchorage, AK 99503-6690
Re: Existing Intertie
Dear Riley:
As you are aware, the Alaska Energy Authority is the owner of the existing intertie transmission
line between Anchorage and Healy and is a party to the Alaska Intertie Agreement.
The utility participants have asked me to propose to you that AEA consider transferring the
ownership of this line to the utilities. We believe this makes sense for the State and would
simplify a number of issues.
First, the State's interest in this line is very limited, and is all risk. Unlike Bradley Lake (with
outstanding bonds) or the Four Dam Pool (where the State collects debt service which can be
reappropriated for other purposes), the existing intertie does not involve the payment of any funds
to the State for bond or other State purposes. The utilities pay all of the operating costs and their
responsibility for insurance, repairs, etc.
The State's involvement does result in some risks and uncertainty for the State. As has been
discussed at numerous meetings with the AEA, the correct reading of the contract actually results
in the requirement to treat AEA as a “utility participant" which would owe a share of the utility
expenses. This has been true since the date the AEA signed the Bradley Lake Power Sales
Agreement and leaves the State with a financial exposure for the last three years, as well as one
for future years. This result is possibly unintended, but is nonetheless the inescapable conclusion
from application of contract provisions. AEA has not addressed how it intends to fulfill this
obligation. In addition, because the State is the owner, it is almost certainly true that anyone
asserting liability claims against the line would include the State as a defendant, thereby exposing
the State to such risks.
5601 Minnesota Drive * P.O. Box 196300 « Anchorage, Alaska 99519-6300
Phone 907-563-7494 * FAX 907-562-0027
William R. Snell
December 27, 1993
‘Page Two
After significant reflection on these issues, we believe they are most easily resolved by a transfer
of the ownership of the line to the utilities and a release of the State from any of its obligations
under the Alaska Intertie Agreement.
We would like to discuss these issues with you at your earliest convenience. Please feel free to
contact Ron Saxton for any explanation you may wish about the workings of the Alaska Intertie
Agreement and the mechanics of how such a transfer might occur.
Thank you for your cooperation.
Sincerely,
ACH,ELEGTRIC ASSOCIATION, INC.
David L. Higher.
General Manager