HomeMy WebLinkAboutMahoney Lake Hydroelectric Project Indemnification Agreement 1998480 WEST TUDOR ANCHORAGE, ALASKA
S: As Ar ALASKA INDUSTRIAL DEVELOPME , ss
* AND EXPORT AUTHORITY f= ALASKA
June 8, 1998
ka ustrial Development
apron Authority
Mr. Robert Grimm
Alaska Power and Telephone Company
P.O. Box 222
191 Otto Street
Port Townsend, Washington 98368
Subject: Mahoney Lake Hydroelectric Project
Indemnification Agreement
Dear Bob:
Enclosed are two originals of the Indemnification Agreement between Ketchikan Electric
Company and the Alaska Energy Authority. Please sign both originals, retain one for
your files and return the other to the Authority.
If you have any questions, please do not hesitate to call.
Sincerely, ey D. Randy Simmons
Executive Director
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INDEMNIFICATION AGREEMENT
This Indemnification Agreement (“Agreement”) is entered into between Ketchikan
Electric Company (“KEC”) and the Alaska Energy Authority (“AEA”) as of the day and year last
written below.
RECITALS
WHEREAS, the KEC is a joint venture between Cape Fox Native Corporation and Alaska
Power and Telephone that has requested and desires to obtain federal matching funds for the
Mahoney Lake Hydroelectric project ("Mahoney Lake"); and
WHEREAS, the financial feasibility of Mahoney Lake involves obtaining federal matching
funds to offset capital costs and that KEC enter into a power sales agreement with Ketchikan Public
Utilities (““KPU”) that may require KPU to purchase from KEC, on a priority basis, electric power
generated by Mahoney Lake; and
WHEREAS, KPU is contractually obligated pursuant to the Long-Term Power Sales
Agreement, Four Dam Pool-Initial Project of the Alaska Power Authority ("Long-Term Power Sales
Agreement") to purchase power generated by the Swan Lake Hydroelectric facility ("Swan Lake")
on a priority basis; and
WHEREAS, KPU's contractual obligation under the Long-Term Power Sales Agreement may
conflict with the proposed power sales agreement between KPU and KEC to provide for priority
purchase of Mahoney Lake Power; and
WHEREAS, the AEA is the successor state agency to the Alaska Power Authority under the
Long-Term Power Sales Agreement; and
WHEREAS, the AEA has considered opposing KEC’s request for federal matching funds for
Mahoney Lake on the grounds that the proposed funding and power sales agreement may adversely
impact the financial interests of AEA and the Four Dam Pool Purchasing Utilities (the “Purchasing
Utilities”) in the Long-Term Power Sales Agreement; and
WHEREAS, AEA's and the Purchasing Utilities financial interests in the Long-Term Power
Sales Agreement can be adequately protected without the AEA opposing federal matching funds for
Mahoney Lake if KEC indemnifies the AEA and the Purchasing Utilities for any lost revenues that
might result from Mahoney Lake power replacing Swan Lake power, and if KEC further agrees to
defend, indemnify, and hold harmless the AEA from any claim or liability arising out of, or related
to, the AEA entering this agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth, the parties hereto
agree as follows:
1. The AEA agrees that it will not oppose KEC's request for federal matching funds for
Mahoney Lake.
2. KEC agrees to indemnify the AEA and the Purchasing Utilities for any lost revenues that
might result on an annual basis from Mahoney Lake power replacing Swan Lake power that would
otherwise be purchased by Ketchikan Public Utilities or by any other Swan Lake energy purchaser.
3. KEC further agrees to defend, indemnify, and hold harmless the AEA from any claim or
liability arising out of, or related to, the AEA entering this agreement.
4. The Purchasing Utilities are an intended third party beneficiary of this Agreement.
5. This Agreement sets forth the entire understanding of the parties with respect to the
subject-matter hereof and supersedes all prior oral or written agreements and understandings with
respect to the subject matter hereof.
6. This Agreement shall not be altered, modified or otherwise amended except by an
instrument in writing signed by both parties.
7. Should an action be brought to enforce or interpret the provisions of this Agreement, the
prevailing party in such action shall be entitled to recover reasonable attorney fees and other costs
of litigation in addition to any other relief awarded by the court.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed the day and
year last written below.
ALASKA ENERGY AUTHORITY » LL
D. Randy Simmgns
Executive Director
General Manager
C-~22-9¢
Date
Indemnification Agreement Page 2