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HomeMy WebLinkAboutAEA Board Meeting Sep 2021Alaska Energy Authority BOARD MEETING MINUTES Thursday, September 30, 2021 Anchorage, Alaska 1. CALL TO ORDER ALAS KA ENERGY AUTHORITY Chair Pruhs called the meeting of the Alaska Energy Authority to order on September 30, 2021 at 8:34 am. A quorum was established. 2. ROLL CALL BOARD MEMBERS Members present: Chair Dana Pruhs (Public Member); Julie Anderson (Commissioner DCCED); Anna MacKinnon (SOA-DOR); Albert Fogle (Public Member); Bill Kendig (Public Member) (arrived late 9:47 a.m.); and Julie Sande (Public Member). 3. AGENDA APPROVAL MOTION: A motion was made by Mr. Fogle to approve the agenda, as presented. Motion seconded by Commissioner Anderson. The motion to approve the agenda passed without objection. 4. PRIOR MINUTES - August 12, 2021 MOTION: A motion was made by Mr. Fogle to approve the prior minutes of August 12, 2021, as presented. Motion seconded by Ms. Sande. The motion to approve the minutes of the August 12, 2021 minutes passed without objection. 5. PUBLIC COMMENTS (2 minutes per person) Chair Pruhs requested that each person please state their name and affiliation, if any. Dimitri Shein, Executive Director of Alaska Electric Vehicle Association (AKEVA), addressed the prior minutes of August 12, 2021, in which the AEA staff stated that there were no applications in the Wasilla area for DC fast chargers. Mr. Shein informed that there is an application submitted by Three Bears for 1672 Old Trunk Road, commonly known as Four Corners, which is three miles from the highway and could accommodate electric vehicle (EV) commuters in Palmer and Wasilla, and EV drivers coming from Anchorage. He believes this is a very popular and convenient location. REDUCING THE COST OF ENERGY IN ALASKA 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 T 907.771.3000 Toll Free 888.300.8534 F 907.771.3044 Mr. Shein requested again that AEA staff take EV owners' feedback into consideration when selecting the EV charging sites and place the chargers where they will be most used. Mr. Shein noted that AEA Executive Director Curtis Thayer stated on August 12th, that AEA is considering funding a fast charger in Glennallen. Mr. Shein finds this extremely puzzling, as the EV ownership in Glennallen is virtually nonexistent. Additionally, there is no way for an electric vehicle to drive to Glennallen, even after all of the charging stations are installed. Mr. Shein noted that AKEVA asks AEA to fund chargers in places where they are most needed, including Wasilla and Palmer. This is where 90% of the commuting occurs. The concentration of electric vehicles is in Anchorage with the travel destinations primarily to Wasilla, Palmer, and Girdwood. Mr. Shein stated that at the request of the Chair, he submitted his previous written comments and concerns from the August 12th meeting. As of today, Mr. Shein informed that he has not received any response to the issues. Mr. Shein kindly asked AEA staff to provide the response and to address today's comments within the response. Chair Pruhs asked Mr. Thayer regarding the status of the response to Mr. Shein. Mr. Thayer noted that a response was mailed to Mr. Shein on August 30, 2021, and a copy of the response is included in the Board packet. Chair Pruhs noted that the location of Three Bears is not within Wasilla and is not within Palmer. It is located in the Mat -Su Borough. Chair Pruhs asked if there is a distinction in the discussion regarding Wasilla that includes the greater Mat -Su Borough area around Palmer/Wasilla or if the discussion only includes the city of Wasilla. Mr. Thayer explained that there is not a distinction to be within the city limits of Wasilla. The goal is to create a fast charging corridor from Homer to Fairbanks in 50 to 100- mile increments. The focus is not on placing charging locations that are most popular today. Mr. Thayer advised that a ribbon -cutting ceremony for a fast charging station occurred recently in Homer. There is a plan for a charging station in Seward, Cooper Landing, and at the Dimond Center in Anchorage. There were no applications received for locations in Girdwood. Mr. Thayer noted that three different Three Bears locations on the highway submitted applications. Commissioner Anderson asked what charging stations are in the Mat -Su Valley. Mr. Thayer noted that he would have to get the information as to what charging stations are located in the Valley. Mr. Thayer explained that the review focuses on where the EV owners are traveling, and does not look at where the EV owners live. He discussed that the phased intent for Glennallen, Tok, and Delta is to connect EV owners to outside of Alaska through Canada. Mr. Thayer advised that the VW Settlement funds are nearly exhausted and future phases would not begin until new funding becomes available. Ms. MacKinnon asked if the funds for the phased approach have specific program criteria or if AEA adopted criteria for long-term implementation. Mr. Thayer conveyed that AEA adopted a long-term focus. He explained that the VW Settlement was $8.1 million and 15% of that was set aside by the Court Trustee for EV development. The EV development sought Alaska Energy Authority Page 2 of 15 a fast -charging corridor. Mr. Thayer discussed that he does not think it is the role of AEA or the government to decide where to place EV corridors. The site hosts receive grant funding and install the EV fast chargers. The site hosts own the chargers and conduct the maintenance. Ms. MacKinnon recalled that there was a gap in the Mat -Su area during the corridor bidding process. She asked Mr. Thayer to review that recollection. Ms. MacKinnon suggested that since Round One did not supply a bidder within the most important utilization corridor of the Mat -Su area, that consideration for a Round Two of the Phase One part of the corridor could include a broader applicant spectrum to meet the criteria. Mr. Thayer explained that when funding becomes available, the intent is to create the corridor and fill in the voids in the corridor. The nine successful bidders for the current corridor are in Homer, Soldotna, Seward, Cooper Landing, Anchorage, Chugiak, Trapper Creek, Healy, and Cantwell. The chargers utilized will be fast chargers and Level 2 chargers. Ms. MacKinnon recognized that there is a fairly significant gap in the corridor from Chugiak to Trapper Creek. She clarified that her comments in the previous meeting were not meant to be disparaging to Phase Two and were not meant to be disparaging to staffs' efforts to outline the benefits of Phase Two and the overall state usage of the EV corridor. Ms. MacKinnon explained that her comments were meant to reflect that the primary use corridor should be populated first, so that the EV community can grow. She asked for consideration that any funds remaining from Phase One be used to solicit specifically within the gap between Chugiak and Trapper Creek. Ms. MacKinnon expressed her priority is placing a charging station within the gap location, versus prioritizing a location with limited or no EV ownership in Phase Two. Mr. Thayer discussed that the primary goal of the corridor was to ensure there were charging stations every 50 to 100 miles to lower the range anxiety. He noted that there are multiple charging locations between Anchorage and the Mat -Su within a 25 to 50-mile radius. Ms. MacKinnon asked that it be publically disclosed during public testimony if an individual is representing a group or is receiving remuneration or money for advocating for a group. Chair Pruhs noted that AEA asks for the public to state their affiliation, if any. Ms. MacKinnon noted that disclosing affiliation is important to the EV community. She referenced the concerns raised at the previous meeting regarding the procurement process. Ms. MacKinnon requested additional information on the relationships referenced. Mr. Thayer explained that AEA funds the EV Working Group quarterly with a contracted facilitator. The EV Working Group is comprised of different individuals, utilities, site hosts, and manufacturers. Mr. Thayer noted that feedback and guidance is taken from this public process. Commissioner Anderson expressed support for Ms. MacKinnon's comments regarding an additional review of the central Mat -Su area to be included in the next phase. Alaska Energy Authority Page 3 of 15 Mr. Thayer asked for guidance regarding the remaining funding of $225,000 and the next three planned communities of Tok, Glennallen, and Delta. Chair Pruhs indicated that discussion topic will not occur at this time. There being no other members of the public online or in -person wishing to make a public comment, Chair Pruhs closed the public comment period. 6. NEW BUSINESS A. AK Utility Relief Program Memo Chair Pruhs requested Mr. Thayer provide the overview of the AK Utility Relief Program memo. Mr. Thayer informed that the Department of Commerce, Community & Economic Development (DCCED) asked AEA to administer the grant transactions for the AK Utility Relief Program. The Legislature provided $7 million in available funding to electric utilities that had incurred debt from residential customers during the COVID-19 health emergency. Mr. Thayer discussed the steps of the identification and implementation process. Mr. Thayer noted that an MOU would be developed with DCCED that would follow a similar structure as AK CARES. AEA would be reimbursed for staff time utilized in the implementation. Commissioner Anderson provided additional information and noted that the goal is to administer the funds quickly. She informed that DCCED has a list of grants that they are looking to partner with different State agencies to efficiently distribute the funds. Commissioner Anderson reported that it has been a pleasure to work with Mr. Thayer in the past. She believes AEA is fully capable of administering the grant and that DCCED does not want the format to follow the AK CARES format. The intent of DCCED is to provide the parameters of the program that was designed by the Legislature. Compensation will be provided for managing the program. An MOU will be established. Mr. Fogle asked Mr. Thayer and Commissioner Anderson if the program will be administered on a first-come/first-served basis or on a needs assessment basis. Commissioner Anderson informed that level of detail will be determined by AEA. Mr. Thayer explained that staff will conduct a survey in which the utilities will provide a list of outstanding customer amounts. This amount will be compared to the available funding and a formula will be established to distribute the funds. The application process will have a filing deadline. Mr. Fogle requested additional information regarding the needs assessment parameters. Mr. Thayer clarified that the funding distribution calculation for the bad debt is based on the number of applicants received. He reviewed that some of the utilities' bad debt has already been paid by regional corporations, communities, and in some cases, the utility itself has provided relief. No funding will be given to bad debt that has already been relieved. Alaska Energy Authority Page 4 of 15 Mr. Fogle asked that the Board review the funding disbursement process and who it will be released to in order to understand possible public sensitivities. Chair Pruhs commented that he understands the disbursement process is linked to the distribution process, which he likens to a black hole. Chair Pruhs asked if AEA received any guidance from the Legislature or the Commissioner's Office on how to make the determination. Commissioner Anderson informed that the utility has to show the delinquent debt. Chair Pruhs requested additional explanation as to the decision making process regarding a scenario that includes more debt than available funding. Commissioner Anderson explained that the process will first identify the amount of need and if the need exceeds the available funding, then the distribution will be based evenly with a flat percentage. Chair Pruhs asked to be apprised of the final calculation method. Mr. Fogle also requested that the Board is provided with the final calculation method before it becomes public in order to review any possible sensitive issues. He noted that sensitivities arose regarding the AK CARES funding and he wants to fully understand the process. Ms. MacKinnon commented that she understands the method will utilize a pro rata share based on the bad debt survey. She noted that her past experience with pro rata disbursements is that utilities within larger communities may see more funding because there are more ratepayers. Ms. MacKinnon requested that in working to create a fair process, there might be a consideration of two different kinds of criteria, including one that creates a funding cap so that the big players do not take a substantial amount of the funding. Mr. Thayer explained that AEA has to be cautious not to appear discriminatory because that language is not in the legislation. He explained that the Legislature gave a lump sum to be dispersed to the electric utilities. Mr. Thayer discussed that the bad debt that is held by the utilities will ultimately be absorbed by the ratepayers through rates. These funds will relieve $7 million of that recovery on the ratepayers. Chair Pruhs expressed his understanding of the process; AEA will conduct a survey, the disbursement determination will be made with lead guidance from the Administration and DCCED, and AEA will facilitate the disbursement. Commissioner Anderson agreed to work together with AEA. Ms. MacKinnon expressed her support for being fair and following the guidelines within the legislative appropriation. She asked staff to consider the comments, specifically so that there is not only one winner, but multiple winners. Ms. MacKinnon referenced the past experience with the Renewable Energy Fund (REF) grant funding and highlighted her confidence that staff knows how to place criteria to make the process fair and equitable for the different utilities and their different challenges. Chair Pruhs requested that Commissioner Anderson make a motion for the record to accept the funding. Alaska Energy Authority Page 5 of 15 MOTION: A motion was made by Commissioner Anderson that AEA accept the $7 million for the Electric Utility Relief Program and to work together to develop the program guidelines. Motion seconded by Mr. Fogle. A roll call was taken, and the motion to accept the $7 million for the Electric Utility Relief Program passed unanimously. 7. OLD BUSINESS A. REF - Round 13 Mr. Thayer indicated that the memorandum notifies the Board that during a special session, the Legislature approved REF Round 13 funding in the amount of $4.7 million for 11 projects. The project description sheets are included in the Board packet. The requested project amount is listed on each sheet in the upper right-hand corner. Staff is in the process of disseminating grant agreements to those communities. Mr. Thayer informed that due to the excess earnings of the PCE Endowment, there appears to be approximately $15 million available for Round 14. Staff is beginning the operations to identify possible projects and communities for Round 14. Chair Pruhs requested that in the future, the project list includes the project funding amount next to the project's name. Mr. Thayer apologized and noted that the project funding amount was included on each project's detail page. Ms. MacKinnon expressed appreciation to Mr. Thayer for his advocacy with the Legislature. She noted that AEA is one of the few enterprise agencies that were funded with additional dollars. Ms. MacKinnon commented that Mr. Thayer has been successful in a bipartisan way in both rounds to gain legislative support advocating for communities. She highlighted these successful funding endeavors, which are helping both the EV corridor and the Renewable Energy projects. Ms. MacKinnon publically thanked Mr. Thayer. She believes that the communities will also be appreciative since the projects have been on hold for five years. The projects will help the utilities become better providers of energy throughout Alaska. 8. DIRECTOR COMMENTS A. Response to Board Questions • Chugach Electric U-21-59 (Investigate Projected Margin Shortfall) Chair Pruhs noted that the responses to Board questions are included in the packet. He requested Mr. Thayer discuss the Chugach Electric Docket U-21-059. Mr. Thayer advised that the Chugach Electric Association Acquisition Premium memo and the Docket U-21-059 are included in the packet. He asked TW Patch, Director of Planning, to join the discussion and answer questions. Mr. Thayer noted that Mr. Patch is a former Chair of the Regulatory Alaska Energy Authority Page 6 of 15 Commission of Alaska (RCA). Mr. Thayer informed that background information on best practices for electric cooperatives is also included in the packet. Mr. Patch discussed that there are two pending matters of concern that the Board has requested investigation and follow-up reporting. The first is a petition by Chugach Electric Association (Chugach) to be absolved from certain responsibilities pertaining to a stipulation which was entered into at the time when the Commission made its decision to allow the acquisition of Municipal Light and Power (ML&P) by Chugach. Mr. Patch informed that because of economic conditions which have befallen the nation and the state of Alaska, Chugach is on the cusp of failing to meet certain covenants in its debt structure. Chugach has asked for relief from the burdens of the stipulations. The nature of the request is that Chugach be allowed to create a regulatory asset that could be reversed if they do meet their covenant targets and do not suffer an adverse credit impact. The issue is somewhat technical. Mr. Patch explained the issue in simplified terms. If money is borrowed with a promise to repay the money, there is a cost to the money if certain earning targets are not met. That is the nexus of the present case before the RCA. The case is difficult. Chugach has suffered issues from the COVID-19 pandemic. Chugach has seen a collapse of its earning capability as people leave the state, are unemployed, and suffer through the present economic times. Mr. Patch discussed an example scenario without quoting actual numbers. If Chugach promised a lender that it would earn 1.1% on the debt, but then earned only .9% on the debt, the cost of money would increase. Chugach is asking for relief so that it can pledge to its lenders that Chugach will meet its targets. Chugach can do that by making a regulatory asset, carrying forward the shortfall, and then in the following year, if Chugach earns more than the 1.1%, Chugach will reverse the accounting entry. Chugach needs the permission of RCA in order to garner that complex accounting treatment. Mr. Patch indicated that it does appear at the moment, based upon the arguments and the matters presented at the RCA special hearing regarding this petition by Chugach, that the RCA may grant Chugach the requested relief. Mr. Patch noted that he has read most of the arguments, has discussed these issues with Regulatory counsel, and feels that Chugach is attempting to protect the ratepayers in the best way possible. A better solution has not been offered and many of the participating litigants support Chugach's petition. The matter is before the RCA and he expects that the RCA will provide an answer by the end of October. Chair Pruhs asked if the ratepayers are going to pay more money. Mr. Patch noted that Chugach has pledged that the ratepayers will not pay more money. Chair Pruhs asked Mr. Patch to give his opinion on whether or not the existing economic conditions justify Chugach's request or if Chugach retained more debt than their equity could support to run their business in Alaska's economy. Mr. Patch commented that he does not have a response. Chair Pruhs asked if there is another utility in the state that has a similar debt to equity ratio Alaska Energy Authority Page 7 of 15 to Chugach. Mr. Patch noted he cannot respond because he does not have the information. Mr. Thayer informed that Chugach is currently at an 86% debt to equity ratio. Chair Pruhs discussed his understanding that if a company with an 86% debt to equity ratio suffers any challenges, the company will be in trouble. He asked for the next steps if the proposed solution does not work. Mr. Patch commented that the spectrum of options Chugach could enact include requesting an adjustment on their rate from their lenders or going to bankruptcy court. Chair Pruhs asked if the Blue Sky given to the Municipality would be clawed back. Mr. Patch believes that would be a steep uphill struggle. Chair Pruhs asked Mr. Thayer regarding AEA's position on these issues. Mr. Thayer noted that AEA is watching what is occurring and has taken the position against any increases to ratepayers. The other participants in the hearing are not objecting to Chugach's proposal before the RCA. Chair Pruhs asked if this agreement is the original agreement presented by Chugach. Mr. Thayer explained that this agreement has concurrence as a result of the RCA hearing process, which included the Attorney General's Public Advocacy Division. Chair Pruhs asked if this proposed solution does not work, then the lenders will be affected first and the ratepayers will be affected second. Mr. Patch agreed. Mr. Thayer commented that Chugach has the ability to sell assets to provide debt relief. He noted that he is not advocating for this option, nor is it being considered. Chair Pruhs noted that the option to sell assets just moves assets and debt from one ledger to another utility's ledger, which then affects other ratepayers in perhaps a different service area. Chair Pruhs remarked that he does not understand how the RCA and the financial institutions made the decision to agree to a merger that gave the surviving entity an 86% debt to equity ratio. He noted that he was not privy to all of the information, and is not keenly sympathetic to the financial institutions that approved the structure of the merger. Chair Pruhs asked for Mr. Patch's opinion, as a former RCA Commissioner, how RCA moved forward with the merger knowing Chugach would have an 8S% debt to equity ratio. Chair Pruhs commented that there was no way the citizens knew that they would finance a Blue Sky amount of $300 million and that this issue would arise. Mr. Patch believes that the RCA has a very difficult job. Having read much of the documentation and the RCA order on the acquisition proceeding, Mr. Patch noted his understanding of the reasons RCA used for their conclusion. He reiterated that he is not on the panel and did not listen to all of the evidence and did not read all of the testimony, nor did he have any of his questions asked or answered. Mr. Patch believes the RCA made a reasoned decision with the majority of the Commissioners voting in favor. Chair Pruhs requested feedback from Mr. Thayer regarding how AEA relates to this scenario while advocating its mission of low-cost power to the entire state of Alaska. Chair Pruhs asked what will happen if Chugach returns to the ratepayers with increases in order to reduce the debt. He asked what steps AEA will take to inform the public and to continue AEA's mission. Chair Pruhs inquired as to AEA's assets, such as the SSQ Line, and how they will be used to reduce costs to the ratepayers. Mr. Thayer discussed that AEA has no Alaska Energy Authority Page 8 of 15 statutory or regulatory authority over the utilities. The statutory and regulatory authority rests with RCA and the Regulatory Affairs & Public Advocacy (RAPA) section of the Attorney General's office. The utilities are independent co-ops that have a Board of Directors elected by their members. Chair Pruhs noted that he understands the structure and is questioning the possible effects on AEA's economic decisions regarding future upgrades with Chugach. Mr. Thayer discussed that all the utilities pay into the excess payments on AEA's Bradley Lake asset, now that the bonds have been defeased. Required project work is part of that funding stream and is not attached to Chugach's debt issue. There is no indication that Chugach would decrease their share of Bradley power, especially since it is the lowest cost of energy on the Railbelt. Mr. Thayer noted that Chugach is not a party to the Intertie asset. Chair Pruhs discussed his concern from a different perspective, from AIDEA's perspective, regarding possible events that could occur if AIDEA financed an upgrade with Chugach and Chugach was unable to pay or went into bankruptcy or reorganization or had to increase the rates to the 300,000 consumers. Mr. Thayer informed that there is currently no discussion of bankruptcy or any issue as such with Chugach. Mr. Thayer commented that he believes the RCA will not let it get to that point. He noted that AEA does not have the ability to influence individual utilities that are governed by their Board. Chair Pruhs expressed his concern regarding the appropriateness to continue to invest in opportunities with a financially challenged utility that obliges their ratepayers to pay for investments. Mr. Thayer indicated the scenarios should be reviewed on a case -by -case basis going forward. Chair Pruhs discussed his understanding that if a bankruptcy or reorganization scenario occurred, the contracts would be stayed and the cash flow would cease, but the power would remain. Mr. Thayer discussed that the current proposal will fix an issue that Chugach ascribes to the COVID-19 pandemic and its effects on their economic margins. He explained that because people are working from home and are not working in office buildings, the lights are turned off in those large office buildings in the service area of downtown Anchorage. Chair Pruhs asked if Chugach received any federal funding to address this issue. Mr. Thayer does not know if they received any federal funding and he does not know the amount of Chugach's bad debt. Mr. Thayer believes Chugach has gotten utility relief through programs through Alaska Housing. Chair Pruhs asked if any of the COVID-19 federal money provided to the Municipality was given to Chugach. Commissioner Anderson noted that the City of Anchorage has received funding, but she does not know how it was spent. Mr. Thayer gave the example that Seward owns their utility and they made sure that their utility was made whole with any bad debt. Mr. Thayer is unaware if Anchorage provided any utility relief. Alaska Energy Authority Page 9 of 15 Chair Pruhs commented that half of the ratepayers in the Railbelt are being challenged and AEA cannot control the decisions that will be made by RCA or the utilities, but AEA and its mission will be affected by those decisions. He reiterated that AEA's future decisions regarding upgrading utilities need to be sensitive to the fact that Chugach is currently challenged and has a high debt load, which may challenge their ability to make repayments and AEA has no control over that scenario. Commissioner Anderson commented that the solution to these issues is to increase economic activity in the Anchorage area. She encouraged everyone to help achieve the goals. Mr. Fogle agreed with Commissioner Anderson's comments and hopes to see economic activity in Anchorage. He asked Mr. Patch for the anticipated cost of the accounting tactic that Chugach is requesting. Mr. Patch noted that the accounting tactic would be time to earn out from under the debt load. This is the methodology that is explicit in the filing. Mr. Fogle asked for the worst case scenario. Mr. Patch explained that the worst case scenario in any economic proposition is failure. In this case, if Chugach does not reach their revenue targets for this year, their cost of capital will increase, which will increase their debt load. Mr. Thayer commented that the State of Alaska and the citizens are complacent in the process because the State of Alaska spent hundreds of millions of dollars for energy efficiency, which resulted, to a certain degree, to a decrease usage for the utilities. The public policy of the State was a good goal to have, even though it produced lower revenues for the Railbelt utilities based on those energy efficiencies and contributed to some of the challenges the utilities are now facing with respect to their margins. Chair Pruhs commented that the utilities did not plan for the challenges. He noted that an 86% debt ratio is unheard of. Commissioner Anderson commented that the utility economic model has changed. Mr. Thayer agreed. Chair Pruhs asked if utility representatives will attend the next Board meeting. Mr. Thayer noted that discussion needs to occur because the CEOs from MEA and Chugach have offered to come in, but they do not want to defend the merger. Chair Pruhs informed that he would like to discuss their process of borrowing money and adding 5% to pay their bills. Mr. Thayer noted that he will confirm that the CEOs will attend the next month's meeting, as scheduled. He stated there is no indication at this time that they do not want to attend. Chair Pruhs expressed his understanding there was already an agreement that the CEOs would come before AEA. Mr. Thayer agreed, and believes today's public meeting discussions will be taken into consideration. Mr. Thayer suggested that the Board review the included background information, Parts 1 through 5 of Setting Rates: Best Practices for Electric Cooperatives, because it is the foundation of their methodology. Mr. Thayer informed that the RCA and RAFA declined the invitation to come before AEA. Chair Pruhs asked for the reason they declined. Mr. Thayer believes that part of the reason RCA declined is due to the open docket involving Chugach. Chair Pruhs inquired if the RCA Alaska Energy Authority Page 10 of 15 holds more than one docket a year on Alaskan utilities. Mr. Patch agreed, and noted that a historic low number is approximately 80 dockets a year. Ms. Sande informed that it was reported during a previous discussion that RCA stated that they had little interest in pursuing the conversation with AEA. Ms. Sande expressed that she believes AEA has an obligation to better understand the process while pursuing its mission to reduce the cost of energy to the ratepayer. She feels that additional conversation or a presentation is needed. Chair Pruhs agreed that better decisions are made with more information. Mr. Thayer concurred. He informed that he reached out to the legal community to have an attorney come before AEA and walk through the rate making process, but no one accepted because they all have cases before the RCA and do not want to answer questions that might put them in an awkward position in a future hearing. Ms. Sande commented that the issues are very complex and she appreciates the information provided by Mr. Thayer and Mr. Patch. She believes it is the Board's responsibility to better understand the issues and she requested additional information. Chair Pruhs commented that the details will not be understood until the debt ratio becomes more palatable and that the RCA should expect to see more cases regarding this issue. Chair Pruhs discussed that no one has asked the primary question of why people are physically leaving the city of Anchorage. He noted that there are probably multiple reasons including the community, the divide between the Mayor and the Assembly, the tax structure, and the school district, which have caused people to vote with their feet and move. He discussed that AEA can only react to the economic development of the community, but AEA cannot control it. Chair Pruhs does not believe Anchorage is the place that it was 20 years ago. He noted that the Valley is experiencing increased traffic congestion. Chair Pruhs expressed frustration that community leaders have not discussed the foundation of why folks are leaving the city and what can be done to stop people from leaving. He recognized that this is not a pleasant subject, but believes it needs to be discussed to understand the future. Chair Pruhs thanked Mr. Thayer and Mr. Patch for the presentation. B. Railbelt Owned Assets Mr. Thayer reviewed the Railbelt Owned Assets Update included in the packet. He discussed that the update focuses primarily on the Alaska Intertie and the preventative maintenance. Mr. Thayer noted that a schedule is being developed in preparation for winter and spring work to remove the 69kV line, as previously agreed with the Refuge. C. Rural Update Mr. Thayer discussed that staff has completed the powerhouse assessments and is now undertaking an inventory and assessment of the bulk fuel facilities in communities that have a population of more than 20, but less than 2,000. Staff is working with the Coast Guard on Alaska Energy Authority Page 11 of 15 this assessment. The expected completion date for the 800 locations is December 2023. Mr. Thayer commented on the supply chain impacts affecting inventory. Large purchases have been made in advance of project requirements in order to have the equipment available. The storage warehouse on Commercial Drive is being utilized. Chair Pruhs inquired as to the security of the building. Mr. Thayer noted that no issues have occurred. There is fencing all around the fortified building and cameras are located on the property. There is no longer a homeless camp nearby. Chair Pruhs inquired if there was a previous thought process regarding the disposal of the warehouse asset. Mr. Thayer indicated that staff reviewed the possibility of buying or leasing a different facility in Anchorage, but there was very little in the market that met the industrial needs. He noted that the current warehouse building and land is owned by DNR and costs AEA approximately $100,000 a year to occupy, including utilities and maintenance. Chair Pruhs commented that he believes if the warehouse was privately owned that it would contain a legal grow operation. Chair Pruhs noted for the record that Mr. Kendig joined the meeting. Mr. Thayer noted that the Legislature successfully funded $5.5 million for bulk fuel and AEA was able to obtain a federal funding match, increasing the total amount to over $11 million. This is the first time in three years that the program has had funding. Chair Pruhs asked if the federal dollars are always available as a match. Mr. Thayer noted that the funds are not always available, but are usually available if the State provides their portion of the matched funding. Mr. Thayer explained that much of the federal money that is available for the EV corridor requires a State match to obtain the funding. Chair Pruhs noted the obvious benefits of the State partnering with Federal funds and asked if there is a selection process in the Legislature that precluded the program during the last three years from obtaining funding and receiving the federal match. Mr. Thayer explained that in the first year of non -funding, the Dunleavy Administration did not put through any capital projects that included a federal match. The following year, AEA was successful in obtaining funding for powerhouses, but not with bulk fuel. This last year, AEA advocated heavily in order to receive the full request for bulk fuel and for powerhouses, which was included over $15 million in a federal match. Chair Pruhs asked what AEA's goals are for next year regarding these programs. Mr. Thayer indicated that AEA is again requesting funds for bulk fuel and powerhouses. The recommendation has been made to the Governor and the amount is proprietary information. A federal funding match is available on the State funds requested. Mr. Thayer discussed that the Administration is supportive. AEA identifies the specific communities that will receive upgrades and presents the scoring system directly to the Legislature. Mr. Thayer informed that there are 41 listed communities in need for powerhouse funds. The funding that has been received will provide for seven communities. Alaska Energy Authority Page 12of15 D. Denali Commission Awards Mr. Thayer noted that the Denali Commission awards are listed in the packet. There are a few extensions due to the COVID-19 pandemic. The total funding of active awards is $35 million. The Denali Commission continues to be good partners with AEA, and is looking at bringing additional funding to AEA. E. Power Project Fund Dashboard and Loan Report Mr. Thayer noted that the three delinquencies listed have since been updated and there is now only one delinquency of two months for a total of approximately $1,100. Chair Pruhs asked if this community will be eligible for relief funding. Mr. Thayer noted this community has a history of catching up when their PPF loan becomes delinquent and he will inquire regarding the possibility of eligibility for relief funding. F. 3rd Quarter Org Chart Mr. Thayer indicated that there have been no changes on the AEA side of the organization chart. He noted that active recruitment is ongoing for the open positions, including an Assistant Project Manager. Mr. Thayer informed that there were no capital projects three years ago and this year, the Legislature and federal match has reached $60 million in projects. Staff positions are increasing to identify and assist with the additional workload. Ms. Sande believes that is important for the public to hear of the remarkable accomplishments of staff regarding excess earnings, additional grant funding, capital projects, and federal match funding. She thanked Mr. Thayer and staff for their efforts. Ms. Sande noted that some of the public comments shared today regarded concerns of unintended project consequences. She asked if there is any opportunity in the current or future budget to consider sources of funding to help fill a portion of those gaps. Mr. Thayer agreed. He explained that PCE earnings disbursement is formula -driven depending on the earning levels. The first portion of funding is directed to PCE. The second portion of funding is directed to community assistance for rural Alaska and is administered by DCCED. The next portion of up to $25 million can be used, depending upon the earnings level, for benefits to powerhouses, REF, or capitalization for rural bulk loans. Mr. Thayer discussed that the Rural Bulk Loans Fund is fully funded. The $25 million is available for a split between powerhouses and REF. Discussions are ongoing with the Administration and with federal partners regarding how to maximize those dollars, including upgrading the power and transmission lines, as well as looking for additional opportunities for EV funding qualifications and partnerships. Ms. Sande asked for clarification regarding AEA's operating budget of approximately $40 million and how reliant that is on UGF. Mr. Thayer advised that AEA's UGF is $847,000 of the $40 million budget. He explained that a de minimis 10% is taken for federal funding. Staff is reviewing the possibility of undergoing a federal two-year audit process to raise the 10% amount to a 15% amount, which would eliminate the UGF amount. Ms. Sande reiterated that Alaska Energy Authority Page 13 of 15 staff is trying to reduce reliance on UGF. She noted that there is often criticism of State government and State agencies and she believes it is important to highlight these efforts. Mr. Thayer noted he will include additional information in the Board packet at the next meeting regarding AEA's decrease of approximately 95% in UGF during the course of the last eight years. G. Community Outreach Mr. Thayer provided a review of the community outreach events. He informed that AEA participated in a two-day workshop with the EPA to discuss the programs and issues in Alaska. There are no pending projects with the EPA. Mr. Thayer discussed that Mr. Patch and Betsy McGregor participated in the EV fast -charger ribbon cutting in Homer. Tim Sandstrom participated in the Southeast Conference in Haines. Staff held an exhibit booth at the State Fair. Mr. Thayer reviewed that he participated with the Governor in the Old Harbor Road ribbon cutting event in Old Harbor. Mr. Thayer noted that staff presented at the National Hydropower Association Regional Meeting and he was invited to the meeting with Senator Murkowski and the Secretary of Energy during which he expressed strong support for hydropower. Mr. Thayer noted hydropower is not an issue that the Department of Energy sees as renewable, even though it is the most economic and most widely used source in Alaska that could reduce the use of fossil fuels. Mr. Thayer indicated that some of the scheduled meetings have changed to a virtual option. He and Alan Weitzner are presenting at the Fairbanks Chamber of Commerce in November. H. Articles of Interest - Included in packet. I. Next Regularly Scheduled AEA Board Meeting Wednesday, October 27, 2021 Mr. Thayer advised that the next scheduled AEA Board meeting is Wednesday, October 27, 2021. 9. BOARD COMMENTS Commissioner Anderson expressed appreciation for the support and assistance of working with AEA to deploy the grant funds throughout the state. Chair Pruhs thanked Mr. Thayer and staff for their efforts. He welcomed Lindsey Causer to the team. He thanked Mr. Patch and group for compiling the information on the Chugach proposal to RCA. He looks forward to reviewing the information before the next Board meeting. Alaska Energy Authority Page 14 of 15 10. ADJOURNMENT There being no further business of the Board, the AEA meeting adjourned at 10:05 am. NN....i9f, jt�p 0.# 'goo Xx Curtis W. Thayer, Executive Director% EAL -< /,,,f�r�t1ll�ttttt`�t,�t Alaska Energy Authority Page 15 of 15