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Financial Statements
June 30, 2022
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Table of Contents
June 30, 2022
Independent Auditor’s Report ................................................................................................................................... 1
Management’s Discussion and Analysis .................................................................................................................... 4
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position ................................................................................................................................... 17
Statement of Activities ......................................................................................................................................... 19
Fund Financial Statements
Balance Sheet – Governmental Funds ................................................................................................................. 20
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ........................ 21
Statement of Net Position – Enterprise Fund ...................................................................................................... 22
Statement of Revenues, Expenses, and Changes in Net Position – Enterprise Fund .......................................... 24
Statement of Cash Flows – Enterprise Fund ........................................................................................................ 25
Notes to Financial Statements ............................................................................................................................. 27
Supplementary Information
Schedule 1 – Bradley Lake Hydroelectric Project Trust Account Activities ......................................................... 46
Schedule 2 – Special Revenue Fund – Projects and Programs – Balance Sheet .................................................. 47
Schedule 3 – Special Revenue Fund – Projects and Programs – Statement of Revenues, Expenses,
and Changes in Fund Balance .............................................................................................................................. 48
Schedule 4 – Business-Type Activities – Enterprise Fund –Projects and Programs – Statement of
Net Position ......................................................................................................................................................... 49
Schedule 5 – Business-Type Activities – Enterprise Fund – Projects and Programs – Statement of
Revenues, Expenses, and Changes in Net Position ............................................................................................. 51
Schedule 6 – Capital Assets Presented under Federal Energy Commission Requirements (Unaudited) ............ 52
Schedule 7 – Bradley Lake Historical Annual Project Cost (Unaudited) .............................................................. 53
Schedule 8 – PCE Endowment Fund Historical Analysis (Unaudited) .................................................................. 54
Schedule 9 – Supplementary Organization and Project Information (Unaudited) .............................................. 55
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1
Independent Auditor’s Report
To the Board of Directors
Alaska Energy Authority
Anchorage, Alaska
Report on the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-
type activities, and each major fund of Alaska Energy Authority (A Component Unit of the State of
Alaska) (the Authority), as of and for the year ended June 30, 2022, and the related notes to the financial
statements, which collectively comprise the Authority’s basic financial statements as listed in the table
of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, and each major
fund of the Authority, as of June 30, 2022, and the respective changes in financial position and, where
applicable, cash flows thereof for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America (GAAS) and the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States (Government Auditing Standards). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are required to be independent of the
Authority, and to meet our other ethical responsibilities, in accordance with the relevant ethical
requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for the
design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
2
In preparing the financial statements, management is required to evaluate whether there are conditions
or events, considered in the aggregate, that raise substantial doubt about the Authority’s ability to
continue as a going concern for twelve months beyond the financial statement date, including any
currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and
Government Auditing Standards will always detect a material misstatement when it exists. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control. Misstatements are considered material if there is a substantial likelihood that,
individually or in the aggregate, they would influence the judgment made by a reasonable user based on
the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements.
•Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Authority’s internal control. Accordingly, no such opinion is
expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
•Conclude whether, in our judgment, there are conditions or events, considered in the
•aggregate, that raise substantial doubt about the Authority’s ability to continue as a going concern
for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis be presented to supplement the basic financial statements. Such information is
the responsibility of management and, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America,
3
which consisted of inquiries of management about the methods of preparing the information and
comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Authority’s basic financial statements. The Schedules 1 through 5 are
presented for purpose of additional analysis and are not a required part of the basic financial
statements. Such information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements.
The information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements
or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the Schedules 1
through 5 are fairly stated, in all material respects, in relation to the basic financial statements as a
whole.
Other Information
Management is responsible for the other supplemental information included in the annual report. The
other information comprises the Schedules 6-9 but does not include the basic financial statements and
our auditor's report thereon. Our opinions on the basic financial statements do not cover the other
information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and
the basic financial statements, or the other information otherwise appears to be materially misstated. If,
based on the work performed, we conclude that an uncorrected material misstatement of the other
information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December 22,
2022, on our consideration of the Authority’s internal control over financial reporting and on our tests of
its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is solely to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
effectiveness of the Authority’s internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in considering
the Authority’s internal control over financial reporting and compliance.
Boise, Idaho
December 22, 2022
4
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
Overview of the Financial Statements
The Alaska Energy Authority (AEA or Authority) is a public corporation of the State of Alaska (State) within the
Department of Commerce, Community and Economic Development (DCCED), but with a separate and
independent legal existence and a separate and self-balancing set of independently audited financial
statements. AEA’s operations consist of governmental fund activities reported as special revenue funds and
business-type activities reported as enterprise funds. The financial information in this report is later reported as
a component of the State and is discreetly presented in the State’s financial statements.
AEA manages the following projects and programs: owned hydroelectric and intertie projects, rural energy
programs, and energy development programs. AEA’s programs are funded primarily by the State, federal grants,
investment income, and utility companies – for use of AEA owned assets. Further information on AEA’s
programs can be found in Note 1 to the financial statements.
Management’s Discussion and Analysis
This section presents management’s discussion and analysis of the financial position and results of operations
for the year ended June 30, 2022. This information is presented to help the reader focus on significant financial
matters and provide additional information regarding the activities of the Authority. This information should be
read in conjunction with the Independent Auditor’s Report, the audited financial statements, and accompanying
notes.
Government-Wide Financial Statements
The government-wide financial statements report information about the overall finances of the Authority similar
to a business enterprise. These statements combine and consolidate short-term spendable resources with
capital assets and long-term obligations.
The government-wide financial statements are divided into the following categories:
•Governmental activities – These are functions of the Authority that are financed primarily by
intergovernmental revenues. AEA’s governmental activities include Power Cost Equalization (PCE)
Program, Renewable Energy Grant Fund, Trans-Alaska Pipeline Liability Fund, Rural Energy Projects,
Volkswagen Diesel Settlement Fund, and the Electric Utility Relief Fund.
•Business-type activities – These are functions of the Authority in which customer user fees and charges are
used to help cover all or most of the cost of services they provide. AEA’s business-type activities include
the Bradley Lake Hydroelectric Project, the Alaska Intertie Project, the Susitna-Watana Hydroelectric
Project, and the Power Project Fund. Included in Bradley Lake Hydroelectric Project is the addition of
Battle Creek which expands the hydroelectric project and the Sterling Substation to Quartz Creek
Substation (SSQ Line) which transmits power to customers.
The Statement of Net Position presents information on all of AEA’s assets and deferred outflows of resources
less liabilities and deferred inflows of resources, which results in net position. This statement is designed to
display the financial position of AEA.
5
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
The Statement of Activities provides information, which shows how the Authority’s net position changed as a
result of the year’s activities. The statement uses the full accrual basis of accounting and the economic resources
measurement focus, which is similar to the accounting used by private-sector businesses. Revenues are
recognized when earned and expenses are recognized when a liability is incurred.
Fund Financial Statements
A fund is a grouping of related accounts used to maintain control over resources that have been segregated for
specific activities or objectives. The funds of the Authority are divided into two categories: governmental fund
and proprietary fund, both of which are further described below, and which provides more detail than the
government-wide statements. AEA uses fund accounting to ensure and demonstrate compliance with finance
related legal requirements.
Governmental Funds – Special Revenue Funds
The Authority reports one governmental fund as a special revenue fund. The special revenue fund is used to
account for activities that are supported primarily by intergovernmental revenues.
Governmental funds are used to account for essentially the same functions reported as governmental activities
in the government-wide financial statements. However, unlike the government-wide financial statements,
governmental fund financial statements focus on the short-term view of AEA’s operations. Because the focus of
governmental funds is narrower than that of the government-wide financial statements, it is useful to compare
the information presented for the government funds with similar information presented for governmental
activities in the government-wide financial statements. These funds are combined on the Governmental Fund
Balance Sheet/Statement of Net Position – Governmental Activities and Governmental Fund Statement of
Revenues, Expenditures and Changes in Fund Balance/Statement of Activities – Governmental Activities.
Propriety Funds – Enterprise Funds
The Authority reports one enterprise fund. The enterprise fund is used to account for activities for which a fee is
charged to external users for goods and services.
The Statement of Net Position reports the Authority’s assets, deferred outflows of resources, liabilities, deferred
inflows of resources, and resulting net position. The net position is reported as net investment in capital assets,
restricted, and unrestricted. Restricted net position is subject to external limits such as bond resolutions, legal
agreements, or statutes. The Statement of Revenues, Expenses, and Changes in Net Position reports the
Authority’s revenues, expenses, and resulting change in net position during the periods reported. Both
statements report on the full accrual basis of accounting and economic resources measurement focus.
The Statement of Cash Flows reports the Authority’s sources and uses of cash and change in cash balance
resulting from the Authority’s activities during periods reported.
6
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
Notes to Basic Financial Statements
The notes provide additional information that is essential to fully understand the amounts reported in the
government-wide and fund financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain
supplementary information, which provides additional information about AEA’s projects and programs.
Required Components of the Financial Report
Summary Detail
Basic Financial
Statements
(audited)
Required and
Optional*
Supplementary
Information
Government-
wide Financial
Statements
(audited)
Notes to the Financial
Statements (audited)
Fund Financial
Statements
(audited)
Management's
Discussion and
Analysis (audited)
*Optional Supplementary Information:
•Schedule 1: Bradley Lake Hydroelectric Project Trust Account Activities (Unaudited);
•Schedule 2: Special Revenue Fund – Projects and Programs – Balance Sheet (Unaudited);
•Schedule 3: Special Revenue Fund – Projects and Programs – Statement of Revenues, Expenses, and
Changes in Fund Balance (Unaudited);
•Schedule 4: Business-Type Activities – Enterprise Fund – Projects and Programs – Statement of Net
Position (Unaudited);
•Schedule 5: Business-Type Activities – Enterprise Fund – Projects and Programs – Statement of Revenues,
Expenses, and Changes in Net Position (Unaudited);
•Schedule 6: Capital Assets Presented under Federal Energy Regulatory Commission (FERC) Requirements
(Unaudited);
•Schedule 7: Bradley Lake Historical Annual Project Cost (Unaudited);
•Schedule 8: PCE Endowment Fund Historical Analysis (Unaudited); and
•Schedule 9: Supplementary Organization and Project Information (Unaudited).
7
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
Government-Wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In
the case with AEA as a whole, assets and deferred outflows exceeded its liabilities and deferred inflows by $1.4
billion at June 30, 2022 and $1.6 billion at June 30, 2021.
Of the total net position at June 30, 2022, $339.4 million was invested in capital assets, net of related debt, and
$1.0 billion was restricted. Of the total net position at June 30, 2021, $325.6 million was invested in capital
assets, net of related debt, and $1.2 billion was restricted. In both years, invested in capital assets, net of related
debt, is related to the Bradley Lake Hydroelectric Project, Alaska Intertie Project, and Susitna-Watana
Hydroelectric Project. The remainder of net position is considered restricted for debt service or restricted due to
agreements with external parties, and legislation.
The following tables are provided to show AEA’s total assets, deferred outflows of resources, liabilities, and net
position at June 30, 2022 and 2021 (stated in thousands):
2022 2021 Variance 2022 2021 Variance
Assets:
Current and other
noncurrent assets 1,020,376$ 1,194,856$ (174,480)$ 60,821$ 81,565$ (20,744)$
Capital assets - - - 385,307 396,079 (10,772)
Total assets 1,020,376 1,194,856 (174,480) 446,128 477,644 (31,516)
Total assets 1,020,376 1,194,856 (174,480) 446,128 477,644 (31,516)
Liabilities:
Current liabilities 38,110 25,866 12,244 10,141 19,912 (9,771)
Noncurrent liabilities - - - 44,376 57,043 (12,667)
Total liabilities 38,110 25,866 12,244 54,517 76,955 (22,438)
Net Position:
Net investment in
capital assets - - - 339,383 325,614 13,769
Restricted 982,266 1,169,262 (186,996) 52,232 74,804 (22,572)
Unrestricted - - - (4) - (4)
Total net position 982,266 1,169,262 (186,996) 391,611 400,418 (8,807)
Total liabilities and
net position 1,020,376$ 1,195,128$ (174,752)$ 446,128$ 477,373$ (31,245)$
Governmental Activities Business-Type Activities
8
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
Governmental Activities
Current and other noncurrent assets
The following table is provided to show the details of AEA’s current and other noncurrent assets at June 30,
2022 and 2021 (stated in thousands):
2022 2021 Variance
Restricted cash and cash equivalents 35,945$ 28,160$ 7,785$
Restricted investments 978,610 1,161,100 (182,490)
Operating receivables 167 14 153
Due from Federal Government 4,424 3,991 433
Due from State of Alaska 616 1,268 (652)
Due from State of Alaska's component units - 7 (7)
Due (to) from other funds/internal balances 614 316 298
Current and other noncurrent assets 1,020,376$ 1,194,856$ (174,480)$
Current and other noncurrent assets in total are $174.5 million lower in the current fiscal year. Restricted cash
and cash equivalents held by AEA increased by $7.8 million and is associated with unspent advances for State of
Alaska RPSU Capital for $5.8 million and Federal Advances for EURP Grants for $1.9 million. Restricted
investments decreased by $182.5 million, primarily due to unrealized losses in the fiscal year 2022 PCE
Endowment Fund. Amounts due from the federal government increased by $433.0 thousand related to timing of
reimbursement requests submitted and received from federal agencies on federal awards. Due from the State of
Alaska and State of Alaska’s component units decreased by $652.0 thousand. These balances will fluctuate
annually. Due (to) from other funds/internal balances will fluctuate annually depending on program activities
and cash needs. The $298.0 thousand increase is due to timing of fiscal year 2022 related billing and
reimbursement requests.
Total current and noncurrent liabilities increased in this fiscal year by $12.2. The increase is in current liabilities
is primarily due to higher accounts payable at year end.
Net Position
The following table is provided to show details of AEA’s net position at June 30, 2022 and 2021 (stated in
thousands):
2022 2021 Variance
Restricted by agreements with external parties 922$ 1,110$ (188)$
Restricted by legislation 981,344 1,168,152 (186,808)
Net Position 982,266$ 1,169,262$ (186,996)$
9
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
The Governmental Activities Net position decreased by $186.7 million during the current fiscal year. Net position
restricted by agreements with external parties decreased by $188.0 thousand compared to the June 30, 2021
balance due to current year expenditures from the Trans-Alaska Pipeline Liability Fund. Net position restricted
by legislation decreased by $186.8 million primarily due to unrealized investment losses in the PCE Endowment
Fund.
Business-Type Activities
Business-type activities are functions of the Authority in which customer user fees and charges are used to help
cover all or most of the cost of services they provide. AEA’s business-type activities include the Bradley Lake
Hydroelectric Project, the Alaska Intertie Project, the Susitna-Watana Hydroelectric Project, the Power Project
Fund, and the Power Development and Railbelt Energy Projects.
Current and other noncurrent assets
The following table is provided to show the details of the AEA’s current and other noncurrent assets, excluding
capital assets and deferred outflows at June 30, 2022 and 2021 (stated in thousands):
2022 2021 Variance
Restricted cash and cash equivalents 33,950$ 32,351$ 1,599$
Restricted investments - 22,342 (22,342)
Operating receivables 267 206 61
Prepaid expense - 36 (36)
Loans receivable, net of allowance 26,576 25,447 1,129
Due from Federal Government 482 564 (82)
Due from State of Alaska's component units 113 - 113
Accrued interest receivable 47 935 (888)
Due (to) from other funds/internal balances (614) (316) (298)
Current and other noncurrent assets 60,821$ 81,565$ (20,744)$
Overall Current and other noncurrent assets decreased by $20.7 million in the current fiscal year. The decrease
in current and noncurrent assets is primarily due to a decrease in restricted investment of $22.3 million. This
decrease was primarily due to liquidation of investment agreements with JP Morgan Chase Bank upon pay off of
the original Bradley Lake Project bonds on July 1, 2021. Increase in Restricted cash and cash equivalents of $1.6
million is primarily due to funds received for utility buy-in for participation in the Battle Creek Project to be
disbursed to the original project participants in fiscal year 2023. Operating receivables and prepaid expenses
increased by $25.0 thousand, associated with timing of monthly billing. Loans receivable (net of allowance)
increased by $1.1 million due to new loans. Accrued interest receivable decreased by $888.0 thousand
associated with interest rates on loans. Due (to) from other funds/internal balances will fluctuate annually
depending on program activities and cash needs.
10
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
Total current and noncurrent liabilities
The following table is provided to show the details of AEA’s total current and noncurrent liabilities at June 30,
2022 and 2021 (stated in thousands):
2022 2021 Variance
Due to State of Alaska 691$ 744$ (53)$
Due to component units 99 - 99
Accounts payable 6,794 5,049 1,745
Bonds payable 45,925 69,109 (23,184)
Other liabilities 56 569 (513)
Accrued interest payable 952 1,484 (532)
Current and other noncurrent liabilities 54,517$ 76,955$ (22,438)$
Overall total current and noncurrent liabilities decreased in the current fiscal year by $22.4 million primarily due
to the reduction in bonds payable associated with the payoff of Bradley Lake bonds (First, Fourth and Sixth
Series), and an early prepayment of SSQ line debt service (Tenth Series). Due to the State of Alaska decreased by
$53 thousand and is related to state appropriations drawn based on project need; therefore, these balances will
fluctuate annually. Accounts payable increased by $1.7 million due to invoicing accruals at year end. Other
Bonds payable decreased by $513 thousand netted between debt service principal payments on the Bradley
Lake Hydroelectric Project bonds. Accrued interest payable decreased by $532 thousand related to lower
Bradley Lake debt compared to prior year.
Net Position
The following table is provided to show the details of AEA’s net position at June 30, 2022 and 2021 (stated in
thousands):
2022 2021 Variance
Net investment in capital assets 339,383$ 325,614$ 13,769$
Restricted for capital projects 1,969 1,979 (10)
Restricted for debt service 5,771 27,636 (21,865)
Restricted by agreements with external parties 3,168 3,913 (745)
Restricted by legislation 41,324 41,276 48
Unrestricted (4) - (4)
Net Position 391,611$ 400,418$ (8,807)$
Overall Net position decreased in the current fiscal year by $8.8 million primarily to reduction in bond debt
being greater than investments in capital additions. Net investment in capital assets increased $13.8 million due
to the net effect of capital asset additions and reduction of debt related to capital projects. Debt service is
reduced in fiscal year 2022 due to the payoff of original Bradley Lake Bond debt (Series First, Fourth and Sixth).
In addition, an early prepayment was made towards the SSQ Line bonds (Series Tenth).
11
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
The following table is provided to show AEA’s revenues, expenses, and changes in net position at June 30, 2022
and 2021 (stated in thousands):
2022 2021 Variance 2022 2021 Variance
Revenues:
Program revenues:
Fees, fines, and charges
for services -$ -$ -$ 14,005$ 23,209$ (9,204)$
Operating grants and
contributions 16,993 17,064 (71) 172 228 (56)
General revenues:
Investment income (144,144) 150,472 (294,616) 35 1,511 (1,476)
State of Alaska appropriations/
transfers (12,395) 1,017,213 (1,029,608) - - -
Total revenues (139,546) 1,184,749 (1,324,295) 14,212 24,948 (10,736)
Expenses:
Grants and projects 18,238 20,370 (2,132) - - -
Power cost equalization grants 24,222 25,557 (1,335) - - -
General and administrative 4,990 19,078 (14,088) 1,329 1,526 (197)
Interest expense - - - 1,568 1,159 409
Plant operations - - - 7,834 7,797 37
Depreciation - - - 12,305 12,356 (51)
Provision for loan loss - - - (17) (33) 16
Total expenses 47,450 65,005 (17,555) 23,019 22,805 214
Change in net position (186,996) 1,119,744 (1,306,740) (8,807) 2,143 (10,950)
Net position, beginning of year 1,169,262 49,518 1,119,744 400,418 398,275 2,143
Net position, end of year 982,266 1,169,262 (186,996)$ 391,611$ 400,418$ (8,807)$
Governmental Activities Business-Type Activities
12
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
Governmental Activities:
These are functions of the Authority that are financed primarily by intergovernmental revenues. AEA’s
governmental activities include Power Cost Equalization (PCE) Program, Renewable Energy Grant Fund, Trans-
Alaska Pipeline Liability Fund, Rural Energy Projects, Volkswagen Diesel Settlement Fund, and the Electric Utility
Relief Fund.
Total revenues for governmental activities decreased by $1.3 billion, based on the following:
•Operating grants and contributions and State of Alaska appropriations/transfers are from State of Alaska
operating and capital appropriations and Federal grant awards. AEA recognizes revenue to the extent of
expenditures. The State of Alaska appropriations/transfers reflects a variance decrease by $1.0 billion as a
result of removal of the PCE sweep in fiscal year 2021.
•Investment income is primarily from interest earned in the PCE Endowment Fund and the Renewable
Energy Grant Fund (REF), which are managed by the State Department of Revenue, Treasury Division.
Geopolitical and market conditions affected FY22 Investment income losses totaling $144.1 million
compared to investment income of $150.5 million in fiscal year 2021. Investment income losses in the PCE
Endowment Fund are $143.9 million and $309.0 thousand for REF.
Expenses for governmental activities decreased by $17.5 million, based on the following:
•Grants and project expenses decreased by $2.1 million in the current fiscal year. The decrease was a
combination of less State funds appropriated for the projects and deferral of projects due to supply chain
and logistical issues.
•PCE grants decreased by $1.3 million due to the timing between receipt of documentation from grantees
and payment to grantees and related year end liability accrual estimates of the timing differences.
•State of Alaska appropriations/transfers incurred no activity in fiscal year 2022. This is the result of the
legal ruling, which removed PCE from the sweep to the CBR, which removed the netted sweep reversal
from fiscal year 2020 and the fiscal year 2021 sweep amount.
•General and administrative expenses decreased by $14.1 million compared to the prior year and is
primarily due to a fiscal year 2021 State charge to the PCE Endowment for $16 million that did not reoccur
in fiscal year 2022.
13
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
Business-Type Activities:
Total revenues for business-type activities decreased by $10.7 million, based on the following:
• Fees, fines, and charges for services decreased by $9.2 million. Charges for services include the amounts
received from the utilities for plant operations and debt service obligations. These services are provided
under various agreements and are based on project expenditures, operating cash requirements, and will
fluctuate annually. This decrease was primarily due to pay off of the original Bradley Lake Project bonds on
July 1, 2021. The revenue for funds to make the final payment was received in the prior year and no need
for revenue for the debt service in fiscal year 2022.
• Operating grants and contributions are from State of Alaska operating and capital appropriations.
Operating grants and contributions decreased slightly by $56.0 thousand due to project expenditures
related to the capital appropriations.
• Investment income decreased by $1.5 million, due to decreased investment earnings. This decrease was
primarily due to liquidation of investment agreements with JP Morgan Chase Bank upon pay off of the
original Bradley Lake Project bonds on July 1, 2021.
Expenses for business-type activities increased by $214.0 thousand, primarily based on the following:
• Interest expense represents the cost of interest on AEA’s Power Revenue Bonds for the Bradley Lake
Hydroelectric Project. Interest expense increased in the current fiscal year by $409.0 thousand. The
increase in interest expense is primarily due to increase in debt for the Bradley Lake Project purchase of a
transmission line from a participating utility in fiscal year 2022.
• Plant operations for the Bradley Lake Hydroelectric Project and the Alaska Intertie Project increased in
the current fiscal year by $37.0 thousand. Plant operations consist of various activities required to
maintain operations of each project. The decrease from the prior year is primarily due to reduced
transmission line expense for the Alaska Intertie Project.
Fund Financial Analysis
Governmental Fund:
The focus of AEA’s governmental fund is to provide information on near-term inflows, outflows, and balances of
spendable resources. Such information is useful in assessing AEA’s financing requirements.
14
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
The following table is provided to show AEA’s total fund balances for the governmental funds at June 30, 2022
and 2021 (stated in thousands):
2022 2021 Variance
Power Cost Equalization Program 960,388$ 1,145,062$ (184,674)$
Renewable Energy Grant Fund 19,693 21,802 (2,109)
Emerging Energy Technology Fund 979 1,004 (25)
Trans-Alaska Pipeline Liability Fund 922 1,110 (188)
Rural Energy Projects 12 12 -
Power Development Fund 272 272 -
Total Fund Balances 982,266$ 1,169,262$ (186,996)$
At the end of the current fiscal year, AEA’s governmental funds reported combined ending fund balances of
$982.3 million, which is a decrease in comparison with the prior fiscal year. The Power Cost Equalization
Program decreases are due to unrealized losses on investments in the PCE Endowment Fund during the year.
The decrease in the Renewable Energy Fund by $2.1 million is a result of AEA disbursements for the Renewable
Energy Fund. The Trans-Alaska Pipeline Liability Fund reduced by $188.0 thousand, both as a result of project
activity in fiscal year 2022.
The combined ending fund balance is categorized as restricted to indicate that there is an externally enforceable
limitation to its use. Specifically, the fund balance is entirely restricted by agreements with external parties or by
legislation.
Proprietary Fund:
AEA’s proprietary fund financial statements consist of enterprise funds, which provide detailed information of
the same type found in the business-type activities section of the government-wide financial statements.
The following table is provided to show AEA’s total net position for the proprietary fund at June 30, 2022 and
2021 (stated in thousands):
2022 2021 Variance
Bradley Lake Hydroelectric Project 153,281$ 160,429$ (7,148)$
Alaska Intertie Project 13,324 15,031 (1,707)
Susitna-Watana Hydroelectric Project 183,682 183,682 -
Power Project Fund 39,602 39,554 48
Power Development and Railbelt Energy Projects 1,722 1,722 -
Total Net Position 391,611$ 400,418$ (8,807)$
At the end of the current fiscal year, AEA’s proprietary fund reported combined ending net position of $391.6
million, which is a decrease of $8.8 million in comparison with the prior fiscal year. The decrease of $7.1 million
for the Bradley Lake Hydroelectric Project was due to lower operating revenues net of higher operating
expenses. The operating revenue decrease is related to pay-off of the original Bradley Lake Project Bonds at the
15
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
beginning of the year. The SSQ Line Bond (Tenth Series) payment was funded by the capital reserve balance
from the Bradley Lake Project bonds that was released upon payoff of the bonds. The decrease of $1.7 million
for the Alaska Intertie Project was due to operating revenues less than operating expenses as a result of
depreciation expense. The Power Project Fund increased slightly by $48.0 thousand.
The following table is provided to show the proprietary fund net position by category at June 30, 2022 and 2021
(stated in thousands):
2022 2021 Variance
Net investment in capital assets 339,383$ 325,614$ 13,769$
Restricted for capital projects 1,969 1,979 (10)
Restricted for debt service 5,771 27,636 (21,865)
Restricted by agreements with external parties 3,168 3,913 (745)
Restricted by legislation 41,324 41,276 48
Unrestricted (4) - (4)
Total Net Position 391,611$ 400,418$ (8,807)$
Total Net Position decreased by $8.8 million primarily by capital asset and debt service activity. The Net
investment in capital assets increased by $13.8 million, which is the net effect of capital asset additions and
retirements. In fiscal year 2022 the Bradley Project purchased a transmission line which is the primary reason for
the increase. The reduction of debt related to capital projects in fiscal year 2022 is reflected in the $21.9 million
decrease in the Restricted for debt service. The decrease is primarily due to pay off of the original Bradley Lake
Bonds.
Capital Assets and Debt Administration
Capital Assets:
AEA’s investment in capital assets for its business-type activities as of June 30, 2022 amounts to $385.3 million
(net of accumulated depreciation), which is a decrease of $10.8 million from the prior fiscal year. The
investment in capital assets only occurs in the enterprise funds and includes land and rights of way,
infrastructure, equipment, and construction in progress.
2022 2021 Variance
Land and Rights of Way 11,212$ 11,212$ -$
Equipment 1,394 1,228 166
Infrastructure 187,803 198,741 (10,938)
Construction in Progress 184,898 184,898 -
Total 385,307$ 396,079$ (10,772)$
.
Business-Type Activities
Capital assets, net of accumulated depreciation decreased by $10.8 million as a net result of additions and
depreciation of capital assets for both Bradley Lake and Alaska Intertie as normal maintenance and upgrades to
the existing assets. Further information on AEA’s capital assets can be found in Note 3.
16
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2022
Long-Term Debt:
At the end of the current fiscal year, AEA had total long-term debt outstanding of $45.9 million. AEA’s total long-
term debt decreased by $23.2 million during the current fiscal year as a result of the final payments made on the
Bradley Lake First, Fourth and Sixth Series debt service and an early pay down of $10.9 million towards the SSQ
Line debt service (Series Tenth), which secured bonds in the amount of $17.0 million.
The following table is provided to show the outstanding debt at June 30, 2022 and 2021 (stated in thousands):
2022 2021 Variance
Power Revenue and Refunding Bonds
Bradley Lake -$ 10,870$ (10,870)$
Bradley Lake-Battle Creek private placement 39,864 41,239 (1,375)
Soldotna to Quartz Creek (SSQ) private placement 6,060 17,000 (10,940)
Total 45,924$ 69,109$ (23,185)$
Business-Type Activities
Further information on AEA’s long-term debt can be found in Note 5.
Outlook
AEA anticipates a substantial increase in federal funding, from the Infrastructure Investment and Jobs Act and
others, over the next several years. This increase will require substantial new receipt authority as well as
matching funds from the Legislature and other sources. In addition, it is anticipated that additional personnel
will be required to fulfill the Authority’s mission with the new funding.
Various Rural Power System Upgrades and Bulk Fuel Upgrades projects are anticipated to continue through
fiscal year 2023 with ongoing federal and state funding. AEA and the Denali Commission are leveraging the use
of available funding by shifting project focus to maintenance and improvement projects. AEA will continue Bulk
Fuel and Power Plant Operator training, Circuit Rider, Technical Assistance, and Electrical Emergency efforts
across Alaska.
AEA continues to manage the Renewable Energy Grant Fund (REF) active projects. The legislature approved
funding for Round 14 to begin in fiscal year 2023. AEA will next solicit applications for the Renewable Energy
Fund grant program in late 2022 to deliver a recommended priority for awarding grants to the Legislature for
fiscal year 2024 funding.
Operations and maintenance of AEA’s Bradley Lake Hydroelectric Project, and the Alaska Intertie Project will
continue as approved by the Bradley Lake Project Management Committee, AEA, and the Alaska Intertie
Committee, respectively. With the final payment on the original Bradley Lake bonds in early fiscal year 2022, an
excess earnings estimate has been calculated and will used to pay for a bond issuance of $166 million. These
funds will be used for required project work associated with the Bradley Lake Hydroelectric Project.
See Notes to Financial Statements 17
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Net Position
(in thousands)
June 30, 2022
Governmental Business-Type
Activities Activities Total
Assets
Current Assets
Restricted cash and cash equivalents 35,945$ 33,950$ 69,895$
Operating receivables 167 267 434
Due from federal government 4,424 - 4,424
Loans receivable, net of allowance - 482 482
Due from State of Alaska 616 - 616
Due from State of Alaska's component units - 113 113
Accrued interest receivable - 47 47
Due (to) from other funds/internal balances 614 (614) -
Total current assets 41,766 34,245 76,011
Noncurrent Assets
Restricted investments 978,610 - 978,610
Loans receivable, net of allowance - 26,576 26,576
Capital assets, net of accumulated depreciation - 385,307 385,307
Total noncurrent assets 978,610 411,883 1,390,493
Total Assets 1,020,376$ 446,128$ 1,466,504$
See Notes to Financial Statements 18
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Net Position
(in thousands)
June 30, 2022
Governmental Business-Type
Activities Activities Total
Liabilities
Current Liabilities
Due to State of Alaska 16,547$ 691$ 17,238$
Due to State of Alaska's component units 4,257 99 4,356
Accounts payable 17,306 6,794 24,100
Bonds payable - current portion - 1,605 1,605
Accrued interest payable - 952 952
Total current liabilities 38,110 10,141 48,251
Noncurrent Liabilities
Bonds payable - noncurrent portion - 44,320 44,320
Other bond liabilities - 56 56
Total noncurrent liabilities - 44,376 44,376
Total liabilities 38,110 54,517 92,627
Net Position
Net investment in capital assets - 339,383 339,383
Restricted for
Capital projects - 1,969 1,969
Debt service - 5,771 5,771
Agreements with external parties 922 3,168 4,090
Legislation 981,344 41,324 1,022,668
Unrestricted - (4) (4)
Total net position 982,266 391,611 1,373,877
Total Liabilities and Net Position 1,020,376$ 446,128$ 1,466,504$
See Notes to Financial Statements 19
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Activities
(in thousands)
Year Ended June 30, 2022
Fees, Fines,Operating
and Charges Grants and Governmental Business-Type
Functions/Programs Expenses for Services Contributions Activities Activities Total
Governmental Activities
Power Cost Equalization Program 25,944$ -$ -$ (25,944)$ -$ (25,944)$
Renewable Energy Grant Fund 1,787 - - (1,787) - (1,787)
Emerging Energy Technology Fund 37 - 12 (25) - (25)
Trans Alaska Pipeline Liability Fund 190 - - (190) - (190)
Rural Energy projects 17,877 - 15,366 (2,511) - (2,511)
Volkswagen Diesel Settlement Fund 1,615 - 1,615 - - -
Total governmental activities 47,450 - 16,993 (30,457) - (30,457)
Business-Type Activities
Bradley Lake Hydroelectric Project 18,960 11,798 - - (7,162) (7,162)
Alaska Intertie Project 3,590 1,709 172 - (1,709) (1,709)
Power Project Fund 469 498 - - 29 29
Total business-type activities 23,019 14,005 172 - (8,842) (8,842)
Total Activities 70,469$ 14,005$ 17,165$ (30,457) (8,842) (39,299)
General Revenues
Interest and investment
income (loss)(144,144)35 (144,109)
Transfer to State of Alaska (12,395) - (12,395)
Change in Net Position (186,996) (8,807) (195,803)
Net Position, Beginning of Year 1,169,262 400,418 1,569,680
Net Position, End of Year 982,266$ 391,611$ 1,373,877$
Net (Expense) Revenue and Changes in Net PositionProgram Revenues
See Notes to Financial Statements 20
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Balance Sheet – Governmental Funds
(in thousands)
June 30, 2022
Major Special Statement of
Revenue Fund Net Position
Assets
Current Assets
Restricted cash and cash equivalents 35,945$ 35,945$
Operating receivable 167 167
Due from federal government 4,424 4,424
Due from State of Alaska 616 616
Due (to) from other funds/internal balances 614 614
Total current assets 41,766 41,766
Noncurrent Assets
Restricted investments 978,610 978,610
Total assets 1,020,376$ 1,020,376$
Liabilities
Current Liabilities
Due to State of Alaska 16,547$ 16,547$
Due to State of Alaska's component units 4,257 4,257
Accounts payable 17,306 17,306
Total liabilities 38,110 38,110
Fund Balance
Restricted for
Agreements with external parties 922
Legislation 981,344
Total fund balance 982,266
Total Liabilities and Fund Balance 1,020,376$
Net Position
Restricted for
Agreements with external parties 922
Legislation 981,344
Total net position 982,266
Total Liabilities and Net Position 1,020,376$
See Notes to Financial Statements 21
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds
(in thousands)
Year Ended June 30, 2022
Major Special Statement of
Revenue Fund Activities
Operating Revenues
State of Alaska appropriations 4,290$ 4,290$
Federal grants 10,211 10,211
Other revenues 2,492 2,492
Total operating revenues 16,993 16,993
Operating Expenses
Grants and projects 18,238 18,238
Power cost equalization grants 24,222 24,222
General and administrative 4,990 4,990
Total operating expenses 47,450 47,450
Nonoperating Revenues (Expenses)
Investment loss, net (144,144) (144,144)
State of Alaska appropriations and transfers (12,395) (12,395)
Total nonoperating revenue (expenses)(156,539) (156,539)
Change in Fund Balance (186,996)
Change in Net Position (186,996)
Fund Balance/Net Position, Beginning of Year 1,169,262 1,169,262
Fund Balance/Net Position, End of Year 982,266$ 982,266$
See Notes to Financial Statements 22
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Net Position – Enterprise Fund
(in thousands)
June 30, 2022
Assets
Current Assets
Restricted cash and cash equivalents 33,950$
Operating receivable 267
Loans receivable, net of allowance 482
Due from State of Alaska's component units 113
Accrued interest receivable 47
Due (to) from other funds/internal balances (614)
Total current assets 34,245
Noncurrent Assets
Loans receivable, net of allowance 26,576
Capital assets, net of accumulated depreciation 385,307
Total noncurrent assets 411,883
Total Assets 446,128$
See Notes to Financial Statements 23
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Net Position – Enterprise Fund
(in thousands)
June 30, 2022
Liabilities
Current Liabilities
Due to State of Alaska 691$
Due to local government 99
Accounts payable 6,794
Bonds payable - current portion 1,605
Accrued interest payable 952
Total current liabilities 10,141
Noncurrent Liabilities
Bonds payable - noncurrent portion 44,320
Other liabilities 56
Total noncurrent liabilities 44,376
Total liabilities 54,517
Net Position
Net investment in capital assets 339,383
Restricted for
Capital projects 1,969
Debt service 5,771
Agreements with external parties 3,168
Legislation 41,324
Unrestricted (4)
Total net position 391,611
Total Liabilities and Net Position 446,128$
See Notes to Financial Statements 24
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Revenues, Expenses, and Changes in Net Position – Enterprise Fund
(in thousands)
Year Ended June 30, 2022
Operating Revenues
State of Alaska appropriations 171$
Revenue from operating plants 13,507
Interest on loans 346
Other revenues 153
Total operating revenues 14,177
Operating Expenses
Depreciation 12,305
General and administrative 1,329
Plant operations 7,834
Provision for loan recovery (17)
Total operating expenses 21,451
Operating Income (Loss)(7,274)
Nonoperating Revenues (Expenses)
Investment income, net expenses 35
Interest expense (1,568)
Total nonoperating revenue (1,533)
Change in Net Position (8,807)
Net Position, Beginning of Year 400,418
Net Position, End of Year 391,611$
See Notes to Financial Statements 25
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Cash Flows – Enterprise Fund
(in thousands)
Year Ended June 30, 2022
Operating Activities
Receipts from customers and users 14,836$
Payments from State of Alaska 171
Payments to suppliers (6,091)
Net Cash from Operating Activities 8,916
Noncapital and Related Financing Activities
Net Increase in short-term borrowings from AIDEA for working capital (1,043)
Capital and Related Financing Activities
Principal paid on bonds (23,185)
Payments for other bond liabilities (1,977)
Interest paid on bonds (1,532)
Capital asset acquisitions (927)
Net Cash used for Capital and Related Financing Activities (27,621)
Investing Activities
Purchase of investments (5,280)
Proceeds from sales and maturities of investments 27,622
Interest received from investments 35
Net change in loans (1,030)
Net Cash from Investing Activities 21,347
Net Change in Restricted Cash and Cash Equivalents 1,599
Restricted Cash and Cash Equivalents, Beginning of Year 32,351
Restricted Cash and Cash Equivalents, End of Year 33,950$
See Notes to Financial Statements 26
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Cash Flows – Enterprise Fund
(in thousands)
Year Ended June 30, 2022
Reconciliation of operating income (loss) to net cash from operating activities
Operating income (loss)(7,274)$
Adjustments to reconcile operating income (loss) to net cash
used from operating activities
Depreciation 12,305
Changes in assets and liabilities
Operating receivables (61)
Due to/from other funds 298
Due to/from local government (14)
Accrued interest receivable 889
Prepaid assets 36
Due to/from State of Alaska (52)
Operating accounts payable 2,789
Net Cash from Operating Activities 8,916$
27
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Note 1 - Summary of Significant Accounting Policies
Reporting Entity
The Alaska Energy Authority (AEA or Authority) was created by the Alaska State Legislature in 1976. AEA is a
public corporation of the State of Alaska (State) within the Department of Commerce, Community, and
Economic Development with separate and independent legal existence. AEA has its own self-balancing set of
financial statements independently audited separate from the State. For financial reporting, AEA is a component
unit of the State. AEA finances various energy infrastructure projects and energy programs to reduce the cost of
energy throughout the State. AEA receives funding from the State, federal grants, and utility companies for use
of AEA owned assets.
Pursuant to legislation enacted in 1993, the Members of the Board of the Alaska Industrial Development and
Export Authority (AIDEA) also serve as the Board of Directors of AEA. AIDEA provides personnel services for AEA
(per statute, AEA has no employees) and has a Board approved borrowing agreement to provide short-term
working capital funds to AEA. AIDEA and AEA have separate executive directors, both are employees of AIDEA.
There is no commingling of funds, assets, or liabilities between AIDEA and AEA and there is no responsibility of
one for the debts or the obligations of the other. Neither AIDEA’s accounts nor activities are included in the
accompanying financial statements.
The following is a description of AEA’s existing owned projects and programs:
Bradley Lake Hydroelectric Project
The project has 120 megawatts of installed capacity and transmits its power to the State’s main power grid via
two parallel 20–mile transmission lines. The project, which cost in excess of $300 million, went into commercial
operation in 1991. The Bradley Lake Project Management Committee (BPMC) oversees the activities of the
Bradley Lake Hydroelectric Project. The BPMC consists of representatives from the following utilities and AEA:
Golden Valley Electric Association (GVEA), Chugach Electric Association (CEA), Matanuska Electric Association
(MEA), Homer Electric Association (HEA), and the City of Seward. The project is now operated by Homer Electric
Association under contract with AEA. Bradley Lake serves Alaska’s Railbelt (the power-sharing area between
Interior Alaska and South Central Alaska, connected by roads, generating facilities, and transmission lines) from
the Kenai Peninsula to Fairbanks, as well as the Delta Junction area. The BPMC utilities pay AEA for the costs of
operations and maintenance of the Bradley Lake Hydroelectric Project.
In September 2016, the Authority received an amendment to the Federal Energy Regulatory Commission (FERC)
license for a diversion of West Fork Upper Battle Creek into Bradley Lake. The diversion increases the Bradley
Lake projects annual energy by approximately 37,000 megawatt hours (MWh). Construction began in 2018 and
was completed in October 2020.
All the Purchasers of the Bradley Lake Project Management Committee (BPMC) have supported the
development and completion of the Battle Creek Diversion (BCD) Project. In April 2022, Golden Valley Electric
Association (GVEA), an initial Non-Purchaser, issued it Callback Notice and payment to participate in the Battle
Creek Diversion Project. The BPMC accepted a GVEA Buy-In, re-allocated the shares and GVEA became a full
participant in the Battle Creek Diversion Project effective May 1, 2022.
28
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
In December 2020 the Authority purchased the Sterling to Quartz section of the 115kV transmission line from
Homer Electric Association. This transmission line connects the Bradley Lake Hydroelectric Project to the
customers that are located north of the Kenai Peninsula. The section is approximately 39 miles long.
In December 2020, the Authority closed on the purchase of the Sterling Substation to Quartz Creek Substation
(SSQ Line), which issued bonds in the amount of $17,000,000. Purchase of the SSQ Line is in support of the
Bradley Lake Hydroelectric Project. In June 2022, the Railbelt utilities opted to make an early prepayment of
$10.9 million on the SSQ Line debt using capital reserve funds that were released upon final payment on the
original Bradley Lake project bonds.
In December of 2021, The Authority in partnership with the Railbelt utilities, began coordination to pursue bond
financing for required project work to improve the efficiency and deliverable capacity of power from the Bradley
Lake Hydroelectric Project. The planned financing will pay for transmission line upgrades and battery energy
storage systems that will reduce existing constraints on the Railbelt grid by increasing transmission capacity to
export Bradley Lake hydropower, while also allowing for the integration of future renewable energy generation.
Bradley Lake financing completed on November 30, 2022.
Alaska Intertie Project
The Alaska Intertie is a 170–mile transmission line designed for 345 kilovolts (kV) and operated at 138kV. It runs
between Willow and Healy and interconnects the electric utilities in the Southcentral region with Fairbanks area
electric utilities. The Intertie Management Committee (IMC) and AEA manage the Alaska Intertie according to
the terms and conditions of the Alaska Intertie Agreement. AEA contracts with the following utilities for
operations and maintenance: GVEA in Fairbanks, and Southcentral Alaska utilities, CEA, and MEA (Participating
Utilities). The Intertie reduces the number of black/brownouts throughout the system by enabling power to
move either north or south when major system disturbances occur. The Intertie enables GVEA to purchase low-
cost power from Southcentral utilities and allows Southcentral Alaska utilities to purchase power from Fairbanks
during power shortages. It also enables GVEA to receive power generated by the Bradley Lake Project, which is
some of the lowest priced power in the Railbelt region.
Susitna-Watana Hydroelectric Project
The Alaska Legislature appropriated $192 million in funding to AEA towards the development of a large
hydroelectric project to be built in the Railbelt Region. The proposed project would be located approximately
half-way between Anchorage and Fairbanks on the upper Susitna River and would include a single dam that
would produce 2,800,000 MWh annually, equivalent to approximately 50% of the Railbelt’s annual electrical
use.
AEA pursued a FERC license. Pursuant to Administrative Order No. 271, AEA advanced the licensing process
through FERC’s issuance of an updated Study Plan Determination on the environmental studies completed
between 2013 and 2015. The engineering feasibility study and economic analysis have been completed; FERC’s
updated Determination on the environmental work completed thus far was favorable to the State. The licensing
effort is currently in abeyance. On February 21, 2019, Governor Michael Dunleavy issued Administrative Order
(AO) No. 309 which rescinded several AOs, including AO No. 271. However, AEA has not been directed to re-
29
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
initiate the licensing process. The licensing project remains in abeyance, as State level discussions integrating
this project into Alaska’s Statewide Energy Plan.
Rural Energy Programs
The rural energy programs include Bulk Fuel Storage Upgrades, Rural Power System Upgrades, the Power Cost
Equalization (PCE) Grant Program, Utility Training, Technical Assistance, one active loan program (the Power
Project Fund), and one inactive loan program (Rural Electrification Revolving Loan Fund). During fiscal year 2022,
the Authority established the Electric Utility Relief Fund and disbursed funds to Grantee’s for verified eligible
residential electric utility costs that arose due to COVID -19. The Program provided Grantee’s with funding to
retire delinquent residential electric utility costs stemming from the pandemic. Subject to appropriations, the
PCE Endowment Fund provides the PCE grant program a long-term stable financing source in order to reduce
electricity costs for residential and community facility customers in otherwise high-cost service areas.
Energy Development Programs
The energy development programs include the Renewable Energy Grant Fund and Recommendation Program
and the Alternative Energy and Energy Efficiency (AEEE) programs.
The purpose of the Renewable Energy Grant Fund and Recommendation program is to finance renewable
energy projects in Alaska. The AEEE programs support the development of alternative energy resources specific
to Alaska.
Basis of Accounting
As a component unit of the State, and for the purpose of preparing financial statements in accordance with
U.S. Generally Accepted Accounting Principles (GAAP), the Authority, as a public corporation of the State with
separate and independent legal existence, is subject to the accounting requirements as set forth by the
Governmental Accounting Standards Board (GASB).
The funds of the Authority are organized as Governmental Fund and Proprietary Fund. The financial activities of
the Authority are recorded in various funds as necessitated by sound fiscal management. The funds are
combined for financial statement purposes.
Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities)
report information on all of the activities of the Authority. In general, the effect of inter-fund activity has been
removed from these statements to minimize the double-counting of internal activities. Governmental activities,
which normally are supported by intergovernmental revenues, are reported separately from business-type
activities, which rely primarily on fees and charges to external parties.
30
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
The statement of activities demonstrates the degree to which the direct expenses of a given function or
segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific
function or segment. Program revenues include 1) fees, fines and charges to customers or applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and
2)grants and contributions that are restricted to meeting the operational or capital requirements of a particular
function or segment. Other items not properly included among program revenues are reported instead as
general revenues. Investment earnings are general revenues.
Separate financial statements are provided for the special revenue fund and enterprise fund.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide and proprietary fund financial statements are reported using the economic resources
measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses
are recorded when a liability is incurred, regardless of the timing of the related cash flows. Grants and similar
items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus
and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the Authority considers all revenues,
except reimbursement grants, to be available if they are collected within 60 days after year end. Reimbursement
grants are considered available if they are collected within one year of the end of the current fiscal period.
Expenditures generally are recorded when a liability is incurred, as under full accrual accounting. However, debt
service expenditures are recorded only to the extent they have matured.
The Authority reports the following major funds:
•Major governmental funds – AEA uses a special revenue fund to account for its governmental activities.
This fund does not have a legally adopted budget, and hence the budget to actual is not presented in the
financial statements.
•Major proprietary funds – The enterprise fund accounts for all financial activities primarily related to fees
and charges to external parties.
Revenue Recognition
AEA does not have a General Fund since all funds are legally restricted with specific purposes by external
agreements, legislation, or statute. As a general rule, the effect of inter-fund activity has been eliminated from
the government-wide financial statements.
Amounts reported as program revenues include 1) fees, fines, and charges to customers or applicants for goods,
services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions.
Internally dedicated resources are reported as general revenues rather than as program revenues.
31
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
For purposes of proprietary fund presentation, the Authority considers its revenues and expenses, except
investment income, the sale of program loans, certain fund transfers and appropriations with the State, and
conveyance of capital assets, to be part of its principal ongoing operations and, therefore, classifies these
revenues and expenses as operating in the statement of revenues, expenses, and changes in net position.
All other revenues and expenses are considered non-operating.
Fair Value Measurement and Application
Securities or other assets are reported and measured at fair value if (a) we hold it primarily for the purpose of
income or profit and (b) it has a present service capacity based solely on its ability to generate cash or be sold to
generate cash.
Cash and Cash Equivalents
All of AEA’s cash and cash equivalents are restricted or designated as to use. AEA has trust accounts defined by
bond resolutions, agreements with external parties, and state legislation restricting the use of cash and
investments.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash, short-term
commercial paper, and money market funds.
Investments
Marketable securities are reported at fair value in the financial statements. Unrealized gains and losses are
reported as components of the change in net position. Fair values are obtained from independent sources.
Investments are segregated between current and noncurrent based on stated maturity and intended use.
Investments maturing within a year are classified as current if they are considered to be potentially needed for
current operations. This classification recognizes that a portion of our investment portfolio may be needed for
current operations. A noncurrent investment may be sold for operational cash flow needs, if needed, and is
beneficial under current market conditions.
Loans and Related Interest Income
Loans are generally carried at amounts advanced less principal payments collected. Interest income is accrued as
earned. Accrual of interest is discontinued whenever the payment of interest or principal is more than ninety
days past due or when the loan terms are restructured. The Authority considers lending activities to be part of
its principal operations and classifies it as operating in the statement of revenues, expenses, and changes in net
position. For purposes of the statement of cash flows, the loan program activities are treated as investing
activities.
32
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Allowance for Loan Losses
The allowance for loan losses represents management’s judgment as to the amount required to absorb probable
losses in the loan portfolio. The factors used by management to determine the allowance required include
payment history, individual loan size, collateral values, and other factors. Management’s opinion is that the
allowance is currently adequate to absorb known losses and inherent risks in the portfolio.
Capital Assets
Capital assets are stated at cost and depreciation is charged to operations by use of the straight-line method
over their estimated useful lives. The Authority capitalizes all assets with a cost of at least $5,000 and a useful
life greater than one year.
The estimated economic lives of the assets are as follows:
Life in Years
Intangible 30-50
Production 30-50
Transmission 20-40
General 5-30
Utility Plant
AEA recognizes intangible assets per the guidance of GASB Statement No. 51, Accounting and Financial
Reporting for Intangible Assets. Intangible assets are assets which are nonfinancial in nature, lack physical
substance, are identifiable and have a useful life extending beyond a single reporting period. Costs associated
with the generation of internally generated intangible assets are capitalized when incurred after the following
milestones have been met:
•Determination of the specific objective of the project and the nature of the service capacity that is
expected to be provided by the intangible asset upon the completion of the project.
•Demonstration of the technical or technological feasibility for completing the project so that the intangible
asset will provide its expected service capacity.
•Demonstration of the current intention, ability, and presence of effort to complete or, in the case of a
multiyear project, continue development of the intangible asset.
The Authority recognizes impairment losses for long-lived assets whenever there is a significant unexpected
decline in service utility.
Interest on short-term and long-term borrowing for construction projects are capitalized during the construction
phase of the projects.
Fund Balance
In the fund financial statements, the Special Revenue Fund reports aggregate amounts for five classifications of
fund balances based on the constraints imposed on the use of these resources. The non-spendable fund balance
33
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
classification includes amounts that cannot be spent because they are either (a) not in spendable form—prepaid
items or inventories; or (b) legally or contractually required to be maintained intact. The spendable portion of
the fund balance comprises the remaining four classifications: restricted, committed, assigned, and unassigned.
Restricted fund balance – this classification reflects the constraints imposed on resources either (a) externally by
creditors, grantors, contributors, laws, or regulations of other governments; or (b) imposed by law through
constitutional provisions or enabling legislation.
All of the Authority’s fund balance is restricted.
Net Position
Net position is displayed in three components, as follows:
Net investment in capital assets – This consists of capital assets, net of accumulated depreciation, less the
outstanding balances of any bonds, mortgages, notes, and accounts payable or other borrowings that are
attributable to the acquisition, construction, or improvement of those assets.
Restricted – This consists of net assets that are legally restricted by outside parties. Those restrictions come in
the form of legislation or State statute that cannot be modified by AEA’s board of directors.
Unrestricted – This consists of net assets that do not meet the definition of “restricted” or “net investment in
capital assets.”
The Authority’s spending policy is to evaluate, on a case-by-case basis, whether restricted or unrestricted net
position should be spent. This evaluation is performed by management as part of the overall spending plan.
Environmental Issues
The Authority’s policy relating to environmental issues, including pollution and contamination remediation
obligations to address the current or potential detrimental effects of existing pollution by participating in
pollution remediation activities such as site assessments and cleanups, is to record a liability when the likelihood
of Authority responsibility for clean-up is probable and the costs are reasonably estimable.
Appropriations and Grants
The Authority recognizes appropriations and grant revenue when all applicable eligibility requirements,
including time requirements, are met.
Estimates
In preparing the financial statements, management of the Authority is required to make estimates and
assumptions that affect the reported amounts of asset, deferred outflows of resources, liabilities, deferred
inflows of resources and disclosures of contingencies as of the date of the statements of net position. These
estimates impact revenue and expenses for the period. Actual results could differ from those estimates.
34
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Rounding
The preparation of the financial statements represents accurate numerical values by using rounding which may
cause differences in the statements due to rounding. Rounding a numerical value means replacing it by another
value that is approximately equal but shorter, simpler, or more explicit.
Note 2 - Cash and Investments
Pursuant to various agreements, appropriations, and statutory requirements relating to its operations, AEA has
established accounts for assets restricted to construction, operation, and financing activities. As used
throughout this note, “Fund” means a separate account established by the State legislature and does not refer
to a separate group of self-balancing accounts as contemplated by GAAP.
At June 30, 2022, the Authority’s bank and carrying amount of cash and cash equivalents (all of which were
restricted or designated for specific purposes) was $69,895,000.
The restricted cash and cash equivalents and investments were held in trust and restricted accounts for the
following activities as of June 30, 2022 (in thousands):
Governmental Business-Type
Activities Activities TotalsRestricted Cash and Cash Equivalents
Bradley Lake Hydroelectric Project -$ 17,561$ 17,561$ Alaska Intertie Project - 1,335 1,335 Power Project Fund - 12,544 12,544 Power Development and Railbelt Energy Projects 13,933 2,510 16,443 Rural Energy Projects 218 -218 Power Cost Equalization Program 14,877 - 14,877 Renewable Energy Grant Fund 3,893 - 3,893 Emerging Energy Technology Fund 984 - 984 Trans-Alaska Pipeline Liability Fund 964 - 964 VW Settlement 1,076 - 1,076
35,945$ 33,950$ 69,895$
Governmental Business-Type
Activities Activities TotalsRestricted Investments
Power Cost Equalization Program 957,488$ -$ 957,488$ Renewable Energy Grant Fund 21,122 - 21,122
978,610$ -$ 978,610$
35
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Investment Holdings
The Power Cost Equalization Endowment Fund (PCE Fund), created under Alaska Statute (AS) 42.45.070, and the
Renewable Energy Grant Fund (RE Fund), created under AS 42.45.045, are under the fiduciary authority of the
State Department of Revenue, Treasury Division (Treasury). AEA requests draws from these funds as needed for
program cash flow needs.
Other AEA Cash and Investments – a portion of Bradley Lake Hydroelectric Project investments were invested
pursuant to investment agreements with JP Morgan Chase Bank that guarantees annual interest earnings of
7.38% or 7.41% per annum. The investment agreement closed as a result of the Bradley Lake Power Revenue
Bonds, First Series debt service repayment completed on July 1, 2021. These investments were in
nonparticipating contracts and were measured at cost in accordance with GASB 31. Additional funds are held by
a trustee bank and invested in accordance with the requirements of the trust agreement.
Under the Internal Revenue Code of 1986, as amended, certain earnings in excess of arbitrage yield on the
Bradley Lake bonds must be rebated to the U.S. Treasury. Bradley Lake investments, associated with the Power
Revenue Bonds and Refunding Bonds, are subject to rebate computation.
Internal staff manage AEA’s internally managed portfolio for liquidity and safety. There is no AEA Board
approved investment policy; however, staff follows AIDEA’s Board approved investment policy for internally
managed investments (the Resolution). The AEA managed portfolio consists of the following eligible securities:
• Debt instruments issued or guaranteed by the U.S. government, its agencies and instrumentalities, and
Government Sponsored Enterprises (GSEs);
• Money market funds collateralized by U.S. Treasury, agency securities, and repurchase agreements;
• Units in the investment pool or any series of investment pool of the Alaska Municipal League Investment
Pool, Inc., or any successor to that entity, or any other investment pool for public entities of the State of
Alaska that is established under the Alaska Investment Pool Act (AS 37.23.010-37.23.900); and
• Other investments specifically approved by the board.
36
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Fair Value Measurement
AEA categorizes fair value measurements within the fair value hierarchy established by generally accepted
accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of an asset.
Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other
observable inputs; and Level 3 inputs are significant unobservable inputs. Following is a summary of the AEA’s
cash and investments at the recurring fair value measurement at June 30, 2022 (in thousands):
Governmental Business-Type
Activities Activities Totals
Money market funds 35,945$ 33,950$ 69,895$ Investments managed by Treasury 978,610 - 978,610
1,014,555$ 33,950$ 1,048,505$
Money market funds which are not held primarily for the purpose of income or profit and have remaining
maturities at time of purchase of one year or less. Therefore, the money market funds are recorded at
amortized cost. Investments managed by Treasury are invested in a pooled environment and the remaining
investments have a fair value Level of 2.
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will negatively affect the fair value of an investment.
The resolution addresses interest rate risk. Duration is an indicator of a portfolio’s market sensitivity to changes
in interest rates. In general, major factors affecting duration are (in order of importance):
1.Maturity
2.Prepayment frequency
3.Level of market interest rates
4.Size of coupon
5.Coupon payments
Rising interest rates generally translate into the fair market value of fixed income investments declining, while
falling interest rates are generally associated with increasing market values. Effective duration attempts to
account for the price sensitivity of a bond to changes in prevailing interest rates, including the effect of
embedded options. For example, for a bond portfolio with a duration of 5.0, a one percentage point parallel
decline in interest rates would result in an approximate price increase on that bond portfolio of 5.0%.
AEA Internally Managed Investments – AEA has no written policy for interest rate risk for internally managed
investments; however, staff follows and believes to be in compliance with AIDEA’s written policy for interest
rate risk. The duration for investments is 2 years or less. The maximum maturity of any issue is 3 years from the
date of purchase.
37
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Credit Risk
AEA has no written policy with regard to credit risk; however, staff follows and believe to be in compliance with
AIDEA’s written policy for credit risk with regards to its internally managed portfolio. Since AEA only invests its
internally managed portfolio in highly rated money markets and U.S. government and agency securities and
GSEs, credit risk is minimal.
The Bradley Lake Hydroelectric Project investments contain a portion that are invested in guaranteed
investment contracts collateralized by federal obligations, which minimize credit risk.
Custodial Credit Risk
Custodial credit risk is the risk that deposits may not be returned in the event of a bank failure. Treasury’s policy
with regard to custodial credit risk is to collateralize State deposits to the extent possible. At June 30, 2022,
AEA’s deposits managed by Treasury were uncollateralized and uninsured.
With respect to AEA managed investments, amounts totaling approximately $69,895,000 at June 30, 2022 are
held in money market funds with the custodian, the trust department of a commercial bank; therefore, no
custodial risk exists for these securities. Investment agreements for Bradley Lake ended July 1, 2021 with the
payoff of the bonds.
Renewable Energy Grant Fund
The State Department of Revenue – Treasury Division has created a pooled environment by which it manages
the investments for which its Commissioner has fiduciary responsibility. Actual investing is performed by
investment officers within Treasury or by contracted external investment managers. The Fund invests in the
State’s internally managed General Fund and Other Non-Segregated Investments Pool (GeFONSI). The GeFONSI
consists of investments in the State’s internally managed Short-term Fixed Income Pool, Short-term Liquidity
Fixed Income Pool, and the Intermediate-term Fixed Income Pool. The complete financial activity of the Fund is
shown in the Annual Comprehensive Financial Report (ACFR) available from the Department of Administration,
Division of Finance.
Assets in the pools are reported at fair value. Investment purchases and sales are recorded on a trade-date
basis. Securities are valued each business day using prices obtained from a pricing service.
The full accrual basis of accounting is used for the investment income and GeFONSI investment income is
distributed to pool participants monthly if prescribed by statute or if appropriated by the State legislature.
Income in the Short-term, Short-term Liquidity, and Intermediate-term Fixed Income Pools is allocated to the
pool participants daily on a pro-rata basis.
At June 30, 2022, the GeFONSI total for the Renewable Energy Grant Fund was $21,122,000. For additional
information on interest rate risk, credit risk, foreign exchange, derivatives, fair value, and counterparty credit
risk see the separately issued report on the Invested Assets of the Commissioner of Revenue at:
http://treasury.dor.alaska.gov/Investments/Annual-Investment-Reports.aspx.
38
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Power Cost Equalization Endowment Fund Investment Holdings
Treasury has created a pooled environment by which it manages the investments for which the Commissioner
has fiduciary responsibility. Actual investing is performed by investment officers in Treasury or by contracted
external investment managers. The Fund invests in the State’s internally managed Short-term Fixed Income
Pool, the Broad Market Fixed Income Pool, as well as the State’s internally managed Domestic Equity and
International Equity Pools. The complete financial activity of the Fund is shown in the ACFR available from the
State - Department of Administration, Division of Finance.
Assets in the pools are reported at fair value. Investment purchases and sales are recorded on a trade-date
basis. Fixed income and equity securities are valued each business day. Securities expressed in terms of foreign
currencies are translated into U.S. dollars at the prevailing exchange rates.
The full accrual basis of accounting is used for investment income. Income in the Short-term and Broad Market
Fixed Income Pools is allocated to pool participants daily on a pro-rata basis.
At June 30, 2022, the Authority’s share of pool investments was as follows (in thousands):
Cash and cash equivalents
Short-term fixed income pool 9,928$
Fixed income – broad market pool 440,684
Equity
Domestic equity pool 289,317
International equity pools 189,935
Real estate investment trust pool 37,552
967,416
Less cash and cash equivalents (9,928)
957,488$
For additional information on interest rate risk, credit risk, foreign exchange, derivatives, fair value, and
counterparty credit risk see the separately issued report on the Invested Assets of the Commissioner of Revenue
at: http://treasury.dor.alaska.gov/Investments/Annual-Investment-Reports.aspx.
39
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Note 3 - Capital Assets
Capital asset activity for the year ended June 30, 2022 was as follows (in thousands):
Balance at Balance atBusiness-Type Activities July 1, 2021 Additions Deletions June 30, 2022Capital assets not being depreciated
Land and rights of way 11,212$ -$ -$ 11,212$ Construction in progress
Intangibles 183,682 - - 183,682 Other 1,216 - - 1,216
Total capital assets not
being depreciated 196,110 - - 196,110
Capital assets being depreciated
Equipment 6,864 394 - 7,258 Infrastructure 513,568 1,139 - 514,707
Total capital assets
being depreciated 520,432 1,533 - 521,965
Less accumulated depreciation
Equipment (5,636) (163) - (5,799) Infrastructure (314,827) (12,142) - (326,969)
Total accumulated depreciation (320,463) (12,305) - (332,768)
Total capital assets, being
depreciated, net 199,969 (10,772) - 189,197
Capital assets, net 396,079$ (10,772)$ -$ 385,307$
Depreciation expense was charged to the functions as follows for the year ended June 30, 2022 (in thousands):
Business-Type Activities
Bradley Lake Hydroelectric Project 10,806$
Alaska Intertie Project 1,499
12,305$
40
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Note 4 - Interfund Receivables, Payables, and Transfers
Interfund balances typically result from short-term operating or capital advances. Transfers typically result from
operating activities. A schedule of interfund balances as of and for the year ended June 30, 2022 follows (in
thousands):
Due from other funds
Due to Special Revenue Fund from Enterprise Fund 614$
Note 5 - Long-Term Debt
Long-term debt activity for the year ended June 30, 2022 was as follows (in thousands):
Due
Balance at Balance at within
Business-Type Activities July 1, 2021 Additions Deletions June 30, 2022 one year
Power Revenue Bonds
Bradley Lake
First Series 25$ -$ (25)$ -$ -$
Refunding, Fourth Series 4,395 - (4,395) - -
Refunding, Sixth Series 6,450 - (6,450) - -
Transmission Line
Tenth Series 17,000 - (10,940) 6,060 230
Bradley Lake - Battle Creek Diversion -
Private Placement
Seventh Series 40,000 - (1,333) 38,667 1,333
Eighth Series 1,239 - (42) 1,197 42
Total bonds payable 69,109 - (23,185) 45,924 1,605
Arbitrage interest payable (c)390 - (390) - -
Total other bond liabilities 390 - (390) - -
69,499$ -$ (23,575)$ 45,924$ 1,605$
AEA issued the following Bonds in support of the Bradley Lake Project (Bradley Lake Bonds):
•First and Second Series in September 1989 and August 1990, respectively, for the long-term financing of
the construction costs of the Bradley Lake Hydroelectric Project and refunded AEA’s Variable Rate
Demand Bonds which were issued in November 1985 to provide interim financing for the Project.
•Third and Fifth Series Power Revenue Refunding Bonds in April 1999 to refund a portion of the First
Series Bonds and pay costs of issuance. The First Series refunded bonds were called on July 1, 1999.
41
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
• Fourth Series Power Revenue Refunding Bonds in April 2000 to refund a portion of the Second
Series Bonds and to provide costs of issuance. The Second Series refunded bonds were called on July 1,
2000.
• Sixth Series Power Revenue Refunding Bonds in July 2010 in the amount of $28,800,000 to refund and
defease $30,640,000 aggregate outstanding principal amount of the Authority’s Power Revenue Refunding
Bonds, Fifth Series, and to pay costs of issuing the bonds. The refunded bonds were called on August 2,
2010.
The outstanding Bradley Lake bonds above mature annually each July 1 through the year 2021 with interest
rates ranging from 4.0% to 6.25% and were paid off during fiscal year 2022.
AEA issued the following Bonds in support of the Bradley Lake Project. The Bradley Lake Bond below was issued
on December 17, 2020 as a private placement for the purchase of the SQQ Line project, as required project work
for the Bradley Lake Project:
• $17,000,000 Tenth Series Taxable Draw-Down Bonds
The Bradley Lake Bonds below were issued as a private placement in support of the Battle Creek Diversion
project, an improvement to the Bradley Lake Project:
• $40,000,000 Seventh Series New Clean Renewable Energy Bonds.
• $1,239,000 Eighth Series Qualified Energy Conservation Bonds.
• $5,761,000 Ninth Series Taxable Draw-Down Bonds.
Only the Seventh, Eighth, and Tenth Series have amounts outstanding as of June 30, 2022. During the period of
construction, interest only payments are due on the outstanding bonds at a fixed interest rate of 4.24%. The
outstanding bonds mature annually each July 1 starting in 2021 through the year 2050. The draw period for the
Ninth Series ended in December 2020; no draws were made as of June 30, 2022. The Seventh and Eighth Series
Bonds qualify for federal tax credits under the New Clean Renewable Energy Bond and Qualified Energy
Conservation Bond Programs, respectively. These programs provide for a partial federal subsidy of interest due
on such bonds, subject to federal funding availability.
The bonds are direct and general obligations of AEA and the full faith and credit of AEA are pledged to pay
principal and interest on the bonds. Payment of the bonds is secured by a pledge of revenues of the project,
including all payments to be made by power purchasers under the Agreement for the Sale and Purchase of
Electric Power by and among named powers purchasers and AEA. Under the Power Sales Agreement (PSA), the
power purchasers are obligated to make payments to AEA in an aggregate amount sufficient to pay annual
project costs, including debt service on all outstanding bonds.
Under the terms of the Bond Resolution, as additional security for repayment of the bonds, a capital reserve
fund has been established in an amount equal to the capital reserve fund requirement. The capital reserve fund
is supported by the moral obligation of the State of Alaska. In the event amounts are drawn from the capital
reserve fund to pay debt service on the bonds the Authority is to certify in writing to the Governor and the State
42
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Legislature the sum required to restore the capital reserve fund to the capital reserve requirement. The State
Legislature may, but is not obligated to, appropriate to the Authority the sum certified by the Chair of the board
of the Authority necessary to restore the capital reserve fund to the capital reserve fund requirement.
The Fourth Series Bonds are further secured by bond insurance.
All Bradley Lake bonds above were issued under the Alaska Energy Authority Power Revenue Bond Resolution
(Bond Resolution). Events of Default under the Bond Resolution include:
•Late payment or non-payment of principal or Redemption Price (as defined in the Bond Resolution)
whether at maturity or upon call for redemption.
•Late payment or non-payment of interest or on the unsatisfied balance of any sinking fund installment.
•Non-performance or non-observance of any of the other covenants, agreements, or conditions in the
Bond Resolution or in the Bonds, and such default continues for 60 days after written notice to the
Authority by the Trustee or to the Authority and the Trustee by the Holders of not less than 25% in the
principal amount of the outstanding bonds.
•Dissolution or liquidation of the Authority or filing by the Authority of a voluntary petition in bankruptcy,
or the commission by the Authority of any act of bankruptcy, or adjudication of the Authority as bankrupt,
or assignment by the Authority for the benefit of its creditors, or the entry by the creditors, or the
approval by a court of competent jurisdiction of a petition applicable to the Authority in any proceedings
for its reorganization instituted under the provisions of the federal bankruptcy act, as amended, or under
any similar act in any jurisdiction effective now or in the future.
•If an order or decree is entered with the consent or acquiescence of the Authority, appointing a receiver(s)
of the Bradley Lake Project, in whole or part, or of the Bradley Lake Project rents, fees, charges or other
Revenues therefrom (as defined in the Bond Resolution). If the order or decree is entered without the
consent or acquiescence of the Authority and is not vacated or discharged or stayed within 90 days after
the entry.
•If a judgment for the payment of money shall be rendered against the Authority resulting from the
construction, improvement, ownership, control or operation of the Bradley Lake Project, and the
judgment is not discharged within 90 days, or an appeal or decree to set aside or stay the execution or
levy of the judgment is not filed in such manner as to set aside or stay the execution of or levy under such
judgment, or order, decree or process or the enforcement thereof.
In the Event of Default, the Authority shall pay over or cause to be paid over to the Trustee (i) all moneys,
securities and funds then held by the Authority in any Fund or Account under the Bond Resolution, and (ii) all
Revenues (as defined in the Bond Resolution) as promptly as practicable after receipt. During the continuance of
an Event of Default, per the Bond Resolution the Trustee shall apply funds in the following order:
•Expenses of fiduciaries
•Operating expenses
•Principal, redemption, and interest payments
43
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Additionally, AEA has covenanted to notify the State Legislature of any failure to maintain the capital reserve
fund at its required level. If the capital reserve fund is less than the required level the State Legislature may
appropriate funds (but not legally bound) to bring the capital reserve to the required level. Under the Alaska
Constitution, appropriations passed by the State Legislature are subject to line item veto by the Governor.
The arbitrage interest payable is due to the U.S. Treasury for the excess of investment income on the proceeds
of each series of AEA’s tax exempt and tax advantaged Bradley Lake bonds over the related interest expense
computed in accordance with Section 148 of the Internal Revenue Code of 1986, as amended. The accumulated
arbitrage interest payable amount is computed each year, and the amount for each series is first due after the
end of the fifth bond year and every five years thereafter. AEA maintains a separate account for each series with
the trustee and each year sets aside a sufficient amount to satisfy the liability.
The minimum payments related to all bonds, for the years subsequent to June 30, 2022, are as follows:
Years Ending June 30,Principal Interest Total
2023 1,604$ 1,869$ 3,473$ 2024 1,613 1,803 3,416 2025 1,621 1,736 3,357 2026 1,630 1,669 3,299 2027 1,638 1,601 3,239 2028-2032 8,337 6,986 15,323 2033-2037 8,612 5,249 13,861 2038-2042 8,497 3,467 11,964 2043-2047 6,873 1,894 8,767 2048-2051 5,499 475 5,974
45,924$ 26,749$ 72,673$
Note 6 - Loans Receivable
The Authority administers the Power Project Fund Loan Program. Loans outstanding at June 30, 2022 are
classified as follows (in thousands):
Number of
Loans Amount
Power Project Fund Loan Programs 15 27,535$
Less allowance for loan loss (477)
27,058$
Loans more than 90 days past due are not included in the accrual of interest. At June 30, 2022, there were no
loans more than 90 days past due.
44
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
An analysis of changes in the allowance for loan losses for the years ended June 30, 2022 follows (in thousands):
Balance at beginning of year 494$
Provision for loan loss (recovery)(17)
Balance at end of year 477$
On September 30, 2010, the Authority sold a portion of its Power Project Fund loan portfolio to AIDEA. Under
the agreement, upon AIDEA’s request, AEA is required to repurchase any loan upon a payment default. On
June 30, 2022, the outstanding principal balance of the loans sold was $2,795,000 for which AEA has recognized
an estimated liability for potential repurchase of $56,000.
Note 7 - Fund Balance
Fund balances reported in the aggregate on the governmental fund balance sheet are subject to the following
constraints (in thousands):
Restricted by Restricted by
External Parties Legislation
Power Cost Equalization Program -$ 960,388$ Renewable Energy Grant Fund - 19,693 Emerging Energy Technology Fund - 979 Trans-Alaska Pipeline Liability Fund 922 - Power Development Fund - 272 Rural Energy Projects - 12
922$ 981,344$
Note 8 - Risk Management
AEA is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and
omissions; and natural disasters. AEA covers that risk through the purchase of commercial insurance and
participation in the State’s Risk Management Pool. The Risk Management Pool administers a self-insurance
program for each State agency, which covers all sudden and accidental property and casualty claims. Annual
assessments allocated by Risk Management are the maximum each agency is called upon to pay, forestalling the
need for supplemental appropriation or disruption of vital state services after a major property loss, adverse civil
jury award, or significant workers compensation claim.
45
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2022
Note 9 - Related Parties
Alaska Industrial Development and Export Authority
Pursuant to understandings and agreements between AIDEA and AEA, AIDEA provides administrative,
personnel, data processing, communications, and other services to AEA. AEA has a Board approved borrowing
agreement with AIDEA to provide short-term working capital funds up to a maximum of $7,500,000.
As of June 30, 2022, AEA recognized expenses for services from AIDEA in the amount of $5,473,000. In addition,
AEA had $4,032,000 payable to AIDEA for services and borrowings, which are included in accounts payable.
As a result of implementing GASB Statement No. 68, Accounting and Financial Reporting for Pensions, AIDEA
recorded a net pension liability. Additionally, as a result of implementing GASB Statement No. 75, Accounting
and Financial Reporting for Postemployment Benefit Plans Other than Pensions, AIDEA recorded a net liability for
other postemployment benefits. AEA’s annual payments to AIDEA for personnel services supporting AEA
activities includes a Public Employees’ Retirement System contribution component. Payments to AIDEA for
personnel services supporting AEA activities comprise over half of AIDEA’s personnel costs.
Alaska Intertie Management Committee
AEA is party to agreement with utilities (GVEA, MEA, and CEA) using the Alaska Intertie for wheeling of electrical
power. Pursuant to the Intertie Agreement, the IMC was established to manage the system. The IMC is
comprised of a representative from AEA and each of the utilities. AEA is reimbursed for operation and
maintenance costs on a monthly basis with an annual settlement to adjust the payments to actual costs. AEA
received $222,000 during fiscal year 2022 for administrative services.
Bradley Lake Project Management Committee
On December 7, 1987, AEA entered into a Power Sales Agreement (PSA) with utilities (GVEA, MEA, CEA, HEA,
and City of Seward) purchasing electric power produced by the Bradley Lake Hydroelectric Project. In 1988,
legislation was passed which made the PSA effective. Pursuant to the PSA, the Bradley Lake Hydroelectric
Project Management Committee (BPMC) was formed to manage the project. The BPMC is comprised of a
representative from AEA and each of the utilities. The participating utilities make monthly payments directly to
the bond trustee based on their respective percentage share of the estimated annual project costs. AEA has an
agreement with the BPMC to provide administrative services to the Bradley Lake Project, Battle Creek, and the
SSQ Line and received $464,000 for these services.
Note 10 - Commitments and Contingencies
In the normal course of business, AEA also has various commitments, such as commitments for the extension of
credit and award of grants. At June 30, 2022, AEA had Power Project Fund loan commitments of $7,788,000.
At June 30, 2022, AEA had cumulative prior year commitments from grant awards that are funded by State
appropriations and federal awards; the amounts committed were $35,958,000.
eidebailly.com
Supplementary Information
June 30, 2022
Alaska Energy Authority
(A Component Unit of the State of Alaska)
See Independent Auditor’s Report 46
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 1 – Bradley Lake Hydroelectric Project Trust Account Activities
(in thousands)
Year Ended June 30, 2022
Excess Renewal and
Capital Renewal and Investment Operating Revenue and Contingency Operating
Construction Debt Service Reserve Contingency Earnings Revenue Operating Reserve Operating Reserve Reserve
Fund Fund Fund Reserve Fund Fund Fund Fund Account Fund Fund Account Total
Balance at July 1, 2021 1,979$ 13,411$ 15,597$ 1,070$ 112$ 3,524$ 1,654$ 1,269$ -$ -$ -$ 38,616$
Interest received - 217 420 41 4 150 38 42 7 2 2 923
Bond principal paid - (23,451) - - - - - - - - - (23,451)
Bond interest paid - (2,924) - - - - - - - - - (2,924)
Arbitrage paid - -- - (390) - - - - - - (390)
due to utilities - -- - - 1,587 - - - - - 1,587
Operating budget surplus paid - -- - - 1,089 - - (727) (290) - 72
Operating budget surplus paid - -- - - (2,140) - - - - - (2,140)
Capital expenditures (11) - - - - (1,254) (49) - 209 (895) - (2,000)
Operating revenue received - -- - - 5,815 - -8,109 - -13,924
Operating expenses paid - -- - - -(850) - (5,669) - -(6,519)
Transfers between funds - 15,324 (11,871) (1,111) 274 (6,982) 490 (1,142) 1,538 2,215 1,265 -
Balance at June 30, 2022 1,968$ 2,577$ 4,146$ -$ -$ 1,789$ 1,283$ 169$ 3,467$ 1,032$ 1,267$ 17,698$
See Independent Auditor’s Report 47
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 2 – Special Revenue Fund – Projects and Programs – Balance Sheet
(in thousands)
June 30, 2022
Renewable Emerging Trans Alaska Volkswagen
Power Cost Energy Energy Pipeline Rural Diesel Power
Equalization Grant Technology Liability Energy Settlement Development
Program Fund Fund Fund Projects Fund Fund Totals
Assets
Current assets
Restricted cash and cash equivalents 14,877$ 3,893$ 984$ 964$ 218$ 1,076$ 13,933$ 35,945$
Operating receivable - 8 - - 117 - 42 167
Due from Federal Government - -- - 4,424 - -4,424
Due from State of Alaska - -- - 110 - 506 616
Due (to) from other funds/internal balances - -- - 413 - 201 614
Total current assets 14,877 3,901 984 964 5,282 1,076 14,682 41,766
Noncurrent assets
Restricted investments 957,488 21,122 - - - - - 978,610
Total assets 972,365$ 25,023$ 984$ 964$ 5,282$ 1,076$ 14,682$ 1,020,376$
Liabilities and Fund Balance
Current liabilities
Due to the State of Alaska 252$ 4,751$ 4$ -$ (951)$ -$ 12,491$ 16,547$
Due to State of Alaska's component units - - - - 4,257 - - 4,257
Accounts payable 11,502 406 - - 2,509 970 1,919 17,306
Due to (from) other funds/internal balances 223 173 1 42 (545) 106 - -
Total liabilities 11,977 5,330 5 42 5,270 1,076 14,410 38,110
Fund Balance
Restricted by agreements with external parties - - - 922 - - - 922
Restricted by legislation 960,388 19,693 979 - 12 - 272 981,344
Total fund balance 960,388 19,693 979 922 12 - 272 982,266
Total Liabilities and Fund Balance 972,365$ 25,023$ 984$ 964$ 5,282$ 1,076$ 14,682$ 1,020,376$
See Independent Auditor’s Report 48
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 3 – Special Revenue Fund – Projects and Programs – Statement of Revenues, Expenses, and Changes in Fund Balance
(in thousands)
Year Ended June 30, 2022
Renewable Emerging Trans Alaska Volkswagen
Power Cost Energy Energy Pipeline Rural Diesel Power
Equalization Grant Technology Liability Energy Settlement Development
Program Fund Fund Fund Projects Fund Fund Totals
Operating revenues
State of Alaska appropriations -$ -$ -$ -$ 4,290$ -$ -$ 4,290$
Federal grants - - 12 - 10,199 - - 10,211
Other revenues - - - - 877 1,615 - 2,492
Total operating revenues - - 12 - 15,366 1,615 - 16,993
Operating expenditures
Grants and projects - 1,226 33 171 15,421 1,387 - 18,238
Power cost equalization grants 24,222 - - - - - - 24,222
General and administrative 1,722 561 4 19 2,456 228 - 4,990
Total operating expenditures 25,944 1,787 37 190 17,877 1,615 - 47,450
Nonoperating revenues (expenses) and other
Investment income, net (143,837) (309) - 2 - - - (144,144)
Interfund capital grants and contributions (2,498) (13) - - 2,511 - - -
State of Alaska appropriations and transfers (12,395) - - - - - - (12,395)
Total nonoperating revenues (expenses) and other (158,730) (322) - 2 2,511 - - (156,539)
Change in Fund Balance (184,674) (2,109) (25) (188) - - - (186,996)
Fund Balance, Beginning of Year 1,145,062 21,802 1,004 1,110 12 - 272 1,169,262
Fund Balance, End of Year 960,388$ 19,693$ 979$ 922$ 12$ -$ 272$ 982,266$
See Independent Auditor’s Report 49
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 4 – Business-Type Activities – Enterprise Fund –Projects and Programs – Statement of Net Position
(in thousands)
June 30, 2022
Susitna-Power
Bradley Lake Alaska Watana Power Development and
Hydroelectric Intertie Hydroelectric Project Railbelt Energy
Project Project Project Fund Projects Totals
Assets
Current assets
Restricted cash and cash equivalents 17,561$ 1,335$ -$ 12,544$ 2,510$ 33,950$
Operating receivable - 267 - - - 267
Loans receivable - -- 482 - 482
Accrued interest receivable - -- 47 - 47
Due from State of Alaska's component units - -- 113 - 113
Due (to) from other funds/internal balances (357) (153) - (104) - (614)
Total current assets 17,204 1,449 - 13,082 2,510 34,245
Noncurrent assets
Loans receivable, net of allowance - - - 26,576 - 26,576
Capital assets, net of accumulated depreciation 188,297 13,328 183,682 - - 385,307
Total noncurrent assets 188,297 13,328 183,682 26,576 - 411,883
Total Assets 205,501$ 14,777$ 183,682$ 39,658$ 2,510$ 446,128$
See Independent Auditor’s Report 50
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 4 – Business-Type Activities – Enterprise Fund – Projects and Programs – Statement of Net Position
(in thousands)
June 30, 2022
Susitna-Power
Bradley Lake Alaska Watana Power Development and
Hydroelectric Intertie Hydroelectric Project Railbelt Energy
Project Project Project Fund Projects Totals
Liabilities and Net Position
Liabilities
Current liabilities
Due to the State of Alaska 78$ (4)$ -$ -$ 617$ 691$
Due to local governments 109 1 - - (11) 99
Accounts payable 5,156 1,456 - - 182 6,794
Bonds payable – current portion 1,605 - - - - 1,605
Accrued interest payable 952 - - - - 952
Total current liabilities 7,900 1,453 - - 788 10,141
Noncurrent liabilities
Bonds payable – noncurrent portion, net 44,320 - - - - 44,320
Other liabilities - - - 56 - 56
Total noncurrent liabilities 44,320 - - 56 - 44,376
Total liabilities 52,220 1,453 - 56 788 54,517
Net Position
Net investment in capital assets 142,373 13,328 183,682 - - 339,383
Restricted for capital projects 1,969 - - - - 1,969
Restricted for debt service 5,771 - - - - 5,771
Restricted by agreements with external parties 3,168 - - - - 3,168
Restricted by legislation - - - 39,602 1,722 41,324
Unrestricted - (4) - - - (4)
Total net position 153,281 13,324 183,682 39,602 1,722 391,611
Total Liabilities and Net Position 205,501$ 14,777$ 183,682$ 39,658$ 2,510$ 446,128$
See Independent Auditor’s Report 51
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 5 – Business-Type Activities – Enterprise Fund – Projects and Programs – Statement of Revenues, Expenses, and Changes in Net Position
(in thousands)
Year Ended June 30, 2022
Power
Bradley Lake Alaska Susitna-Watana Power Development and
Hydroelectric Intertie Hydroelectric Project Railbelt Energy
Project Project Project Fund Projects Totals
Operating revenues
State of Alaska appropriations -$ 171$ -$ -$ -$ 171$
Revenue from operating plants 11,798 1,709 - - - 13,507
Interest on loans - - - 346 - 346
Other revenues - 1 - 152 - 153
Total operating revenues 11,798 1,881 - 498 - 14,177
Operating expenses
Depreciation 10,806 1,499 - - - 12,305
General and administrative 767 76 - 486 - 1,329
Plant operating 5,819 2,015 - -- 7,834
Provision for loan loss (recovery)- - - (17) - (17)
Total operating expenses 17,392 3,590 - 469 - 21,451
Operating Income (Loss)(5,594) (1,709) - 29 - (7,274)
Nonoperating revenues (expenses) and other
Investment income, net 14 2 - 19 - 35
Interest expense (1,568) - - - - (1,568)
Total nonoperating revenues (expenses)
and other (1,554) 2 - 19 - (1,533)
Change in Net Position (7,148) (1,707) - 48 - (8,807)
Fund Balance, Beginning of Year 160,429 15,031 183,682 39,554 1,722 400,418
Fund Balance, End of Year 153,281$ 13,324$ 183,682$ 39,602$ 1,722$ 391,611$
See Independent Auditor’s Report 52
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 6 – Capital Assets Presented under Federal Energy Commission Requirements (Unaudited)
(in thousands)
June 30, 2022
Balance at Balance at
July 1, 2021 Additions Deletions June 30, 2022
Capital assets
Intangible 183,696$ -$ -$ 183,696$
Production 321,175 1,205 - 322,380
Transmission 206,047 251 - 206,298
General 5,624 77 - 5,701
Total capital assets 716,542 1,533 - 718,075
Less accumulated depreciation
Intangible (6) (1) - (7)
Production (156,503) (8,426) - (164,929)
Transmission (158,518) (3,832) - (162,350)
General (5,436) (46) - (5,482)
Total accumulated
depreciation (320,463) (12,305) - (332,768)
Capital assets, net 396,079$ (10,772)$ -$ 385,307$
See Independent Auditor’s Report 53
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 7 – Bradley Lake Historical Annual Project Cost (Unaudited)
(in thousands)
Year Ended June 30, 2022 and 2021
As of As of
Operating Data June 30, 2021 June 30, 2022
Project costs
Operations and maintenance 3,767$ 4,166$
Repairs 280 229
General and administrative 922 1,204
Insurance 708 1,216
Capital purchases 268 315
Contributions to capital reserve fund 107 1
Contributions to renewal and contingency fund
and operating reserve account 2,590 2,265
8,642 9,396
Debt service 14,584 15,540
Less Federal interest subsidy (1,132) (1,089)
Less investment income 1,622 (597)
Total cost of power 23,716$ 23,250$
See Independent Auditor’s Report 54
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 8 – PCE Endowment Fund Historical Analysis (Unaudited)
(in thousands)
Last Ten Fiscal Years
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022
Beginning cash and investment balance 751,780$ 840,215$ 977,867$ 969,389$ 946,939$ 1,023,566$ 1,073,378$ 1,072,825$ 1,078,157$ 1,149,165$
Inflows
Annual investment earnings 111,488 171,112 33,192 8,912 112,331 76,602 74,142 48,303 150,299 (143,842)
Total inflows 111,488 171,112 33,192 8,912 112,331 76,602 74,142 48,303 150,299 (143,842)
Outflows
Transfers to AEA for PCE payments (1)(22,527) (32,773) (41,002) (30,622) (34,956) (25,595) (29,719) (27,000) (28,237) (24,000)
Transfers to Other Funds - - - - - - (44,000) (14,867) (49,164) (12,140)
Program administration - AEA (198) (241) (248) (255) (243) (624) (444) (575) (737) (602)
Administrative fee - Regulatory
Commission (90) (110) (107) (100) (112) (113) (102) (108) (123) (135)
Management fee - Department of
Revenue (238) (336) (313) (385) (393) (458) (430) (421) (1,030) (1,030)
Total outflows (23,053) (33,460) (41,670) (31,362) (35,704) (26,790) (74,695) (42,971) (79,291) (37,907)
Ending cash and investment balance 840,215$ 977,867$ 969,389$ 946,939$ 1,023,566$ 1,073,378$ 1,072,825$ 1,078,157$ 1,149,165$ 967,416$
(1) Final PCE program expenditures reported may vary depending on outstanding PCE payables at June 30, not included in this presentation.
55
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 9 – Supplementary Organization and Project Information (Unaudited)
June 30, 2022
Organization and Operations
Throughout the 1980’s, Alaska Energy Authority (AEA or Authority) worked to develop the State’s energy
resources as a key element in diversifying Alaska’s economy. A number of large-scale projects were constructed;
four of those projects were sold in 2002 and one was transferred to the City of Larsen Bay in the fall of 2010. The
Bradley Lake Hydroelectric project provides some of the least expensive electric energy to the Railbelt. The
Alaska Intertie provides for connection and movement of power north or south to increase reliability and allow
Interior Alaska to obtain less expensive electric energy available from the Southcentral portion of the state.
Pursuant to statute, on August 12, 1993, the Board of the Alaska Industrial Development and Export Authority
(AIDEA), a public corporation and a political subdivision of the State, became the Board of Directors of AEA. AEA
continues to exist as a separate legal entity. The corporate structure and operating assets of AEA were retained,
but the ability to have employees and construct or acquire energy projects was eliminated. Among other things,
AIDEA provides personnel services to AEA. The AEA executive director is an employee of AIDEA, but is separate
and independent and is not subject to supervision by AIDEA’s executive director. There is no commingling of
funds, assets, or liabilities between AIDEA and AEA, and there is no responsibility of one for the debts or the
obligations of the other. Consequently, the accounts of AIDEA are not included in the accompanying financial
statements. The Legislature, in 1993, required AEA, to the maximum extent feasible, to enter into contracts with
public utilities and other entities to carry out AEA duties with respect to the ongoing operation and maintenance
of the AEA owned operating assets; this has occurred with oversight responsibility retained by AEA.
Rural energy programs previously administered by the former Department of Community and Regional Affairs,
Division of Energy, were transferred to AEA for administration, as part of a larger reorganization of State
agencies. These rural energy programs were originally part of AEA prior to the 1993 reorganization. During fiscal
year 2009, legislation added energy development programs to AEA.
The Alaska Legislature empowered AEA to acquire a Susitna River power project under AS 44.83.080 (18),
effective July 1, 1999. Effective July 14, 2011, the legislature empowered AEA to acquire, construct, own, and
operate a hydroelectric project located on the Susitna River. Under this legislative authorization, AEA worked on
planning, designing, and Federal Energy Regulatory Commission (FERC) licensing of the Susitna-Watana
Hydroelectric Project. Pursuant to Administrative Order No. 271, AEA advanced the licensing process through
FERC’s issuance of an updated Study Plan Determination on the environmental studies completed through 2015
and the licensing effort is currently in abeyance.
Bradley Lake Hydroelectric Project
The project has 120 Megawatts (MW) of installed capacity and transmits its power to the State’s main power
grid via two parallel 20–mile transmission lines. The project, which cost in excess of $300 million, went into
commercial operation in 1991. Homer Electric Association now operates the project under contract with AEA.
Bradley Lake serves Alaska’s Railbelt from the Kenai Peninsula to Fairbanks, as well as the Delta Junction area.
56
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 9 – Supplementary Organization and Project Information (Unaudited)
June 30, 2022
In September 2016, the Authority received an amendment to the FERC license for a diversion of West Fork
Upper Battle Creek into Bradley Lake. The diversion will increase the Bradley Lake Hydroelectric Project annual
energy output by approximately 37,000 Megawatt hours (MWh). The Battle Creek project addition includes
construction of three miles of road, a concrete diversion dam, and a pipe and canal to convey the water to
Bradley Lake. The estimated cost of construction is approximately $47.2 million. Construction began in 2018 and
was completed in October 2020.
In December 2020, the Authority closed on the purchase of the SSQ Line, which issued bonds in the amount of
$17,000,000. Purchase of the SSQ Line is in support of the Bradley Lake Hydroelectric Project. In June 2022, the
Authority applied $10.9 million as an early prepayment to pay down the debt service.
In April 2022, the Authority filed an Initial Consultation Document with FERC for a diversion of the Dixon Glacier
outlet stream to Bradley Lake. AEA is performing studies and investigating the feasibility of this project to
significantly increase Bradley Lake Project annual energy.
Alaska Intertie Project
The Alaska Intertie is a 170–mile transmission line designed for 345kV and operated at 138kV. It runs between
Willow and Healy and interconnects the electric utilities in the Southcentral region with Fairbanks area electric
utilities. The Intertie Management Committee (IMC) and AEA manage the Alaska Intertie according to the terms
and conditions of the Alaska Intertie Agreement. AEA contracts with the following utilities for operations and
maintenance: Golden Valley Electric Association (GVEA) in Fairbanks, and Southcentral Alaska utilities, Chugach
Electric Association (CEA) and Matanuska Electric Association (MEA) (Participating Utilities). The Intertie reduces
the number of black/brownouts throughout the system by enabling power to move either north or south when
major system disturbances occur. The Intertie enables GVEA to purchase low cost power from Southcentral
utilities and allows Southcentral Alaska utilities to purchase power from Fairbanks during power shortages. It
also enables GVEA to receive power generated by the Bradley Lake Project, which is some of the lowest priced
power in the Railbelt region.
The Intertie Management Committee (IMC) and AEA manage the activities of the Alaska Intertie project under
the terms and conditions of the Second Amended and Restated Intertie Agreement (Agreement) executed on
March 11, 2014. AEA contracts with certain Participating Utilities for operations and maintenance. The
Agreement improves the reliability of the interconnected electrical systems, outlines how the transfer over the
Intertie of electrical capacity and energy among the participants will occur, and establishes the IMC. The IMC’s
primary responsibility is to provide governance, control, operation, maintenance, repair, and improvement to
the Intertie, subject to AEA’s oversight. The IMC is comprised of a representative from AEA and each of the
Participating Utilities.
57
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 9 – Supplementary Organization and Project Information (Unaudited)
June 30, 2022
Susitna-Watana Hydroelectric Project
Starting in 2010, AEA conducted preliminary planning and conceptual design for a large hydroelectric project to
be built in the Railbelt Region. A number of hydroelectric generation alternatives were studied and AEA issued a
Preliminary Decision Document selecting what is now known as the Susitna-Watana Hydroelectric Project as the
primary large hydroelectric project for the State to pursue.
The proposed Susitna-Watana Hydroelectric Project would be located approximately half-way between
Anchorage and Fairbanks on the upper Susitna River. The Susitna-Watana dam would be located within a steep-
sided valley of the Susitna River below Watana Creek at River Mile 184, approximately 22 miles upstream of the
Devil's Canyon rapids.
The project would include a single roller compacted concrete dam with a height providing nominal crest
elevation at 2,050 feet mean sea level with a 23,546 acre, 42.5-mile long reservoir with an average width of one
to two miles. The height of the dam was determined to be 705 feet tall during the engineering feasibility studies.
The powerhouse, dam, and related facilities would be linked by transmission lines connecting the project to the
Alaska Intertie. The project would produce about 50% of the Railbelt's electrical demand or an annual average of
2,800,000 MWh.
AEA filed a Notice of Intent and Pre-Application Document with the FERC to begin the licensing process for the
project in December 2011. The FERC approved 58 environmental study plans in early 2013. In implementing the
study plans, AEA worked closely with the Alaska Department of Fish and Game in conducting the fishery and
wildlife studies. On June 3, 2014, AEA filed the Initial Study Report (ISR) for the project. The approximately 7,000
page ISR presents information collected from the first year of field studies.
The Alaska Legislature has appropriated a total of $192 million for AEA to plan, design, and obtain a FERC permit
for the project. On December 26, 2014, Governor Bill Walker of Alaska (Governor Walker) issued Administrative
Order 271 suspending discretionary spending on the project. On January 8, 2015, the FERC granted AEA’s
request to hold the licensing process in abeyance. On July 6, 2015, Governor Walker’s office authorized AEA to
proceed with the Integrated Licensing Process (ILP) using previously appropriated funds. AEA, in August 2015,
requested the FERC’s permission to resume the licensing efforts. On August 4, 2016, Governor Walker issued a
letter to FERC requesting to proceed with the ILP to the point of issuing an updated Study Plan Determination
(SPD) to preserve the State of Alaska’s investment in the project. On August 26, 2016, FERC responded to the
Governor’s letter stating that FERC will proceed with the ILP to complete the SPD. After issuing the SPD, the
project will be put into abeyance as requested by the Governor.
58
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 9 – Supplementary Organization and Project Information (Unaudited)
June 30, 2022
On June 22, 2017, FERC issued its Determination on the ISR for Susitna. Overall, it was very favorable to the
State. However, since it was issued more than 100 days beyond the ILP schedule of March 10, 2017, there was
insufficient time within fiscal year 2017 to complete previously authorized scopes of work to complete a
comprehensive analysis of the Determination and revise study reports as needed. AEA requested that a portion
of the Susitna appropriation be extended for 90 days to complete this work and preserve the value of the State’s
investment to the maximum extent possible.
On July 18, 2017, the OMB issued a memo to AEA authorizing the continued spending on the project 90 days
from June 30, 2017. AEA was granted concurrence and authorization to spend necessary funds in order to
proceed to the point where the State’s investment, to date, is preserved and the project was put in abeyance.
The work was completed, and all remaining contracts were terminated September 30, 2017. The remaining
funds, approximately $1,893,000, were returned to the State in fiscal year 2019.
As of June 30, 2022, the annual evaluation concluded there was no impairment of the costs capitalized relating
to the Susitna-Watana Hydroelectric Project. An indicator of impairment cited under GASB 51 paragraph 18 is
“development stoppage”, which did not occur. Work on the project was completed and the licensing project is
in abeyance. Looking ahead, and to the extent the project proposal does not change and the data gathered
remains representative of current conditions, FERC ruled that AEA would not need to repeat the already
completed Integrated Licensing Process (ILP) steps.