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Financial Statements
June 30, 2021
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, 2021
Independent Auditor’s Report ................................................................................................................................... 1
Management’s Discussion and Analysis .................................................................................................................... 4
Basic Financial Statements
Government‐Wide Financial Statements
Statement of Net Position ................................................................................................................................... 18
Statement of Activities ......................................................................................................................................... 20
Fund Financial Statements
Balance Sheet – Governmental Funds ................................................................................................................. 21
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ........................ 22
Statement of Net Position – Enterprise Fund ...................................................................................................... 23
Statement of Revenues, Expenses, and Changes in Net Position – Enterprise Fund .......................................... 25
Statement of Cash Flows – Enterprise Fund ........................................................................................................ 26
Notes to Financial Statements ............................................................................................................................. 28
Supplementary Information
Schedule 1 – Bradley Lake Hydroelectric Project Trust Account Activities (Unaudited) ..................................... 50
Schedule 2 – Special Revenue Fund – Projects and Programs – Balance Sheet (Unaudited) .............................. 51
Schedule 3 – Special Revenue Fund – Projects and Programs – Statement of Revenues, Expenses, and Changes
in Fund Balance (Unaudited) ............................................................................................................................... 52
Schedule 4 – Business‐Type Activities – Enterprise Fund –Projects and Programs – Statement of Net Position
(Unaudited) .......................................................................................................................................................... 53
Schedule 5 – Business‐Type Activities – Enterprise Fund – Projects and Programs – Statement of Revenues,
Expenses, and Changes in Net Position (Unaudited) ........................................................................................... 55
Schedule 6 – Capital Assets Presented under Federal Energy Commission Requirements (Unaudited) ............ 56
Schedule 7 – Bradley Lake Historical Annual Project Cost (Unaudited) .............................................................. 57
Schedule 8 – PCE Endowment Fund Historical Analysis (Unaudited) .................................................................. 58
Schedule 9 – Supplementary Organization and Project Information (Unaudited) .............................................. 59
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1
Independent Auditor’s Report
To the Board of Directors
Alaska Energy Authority
Anchorage, Alaska
Report on the Financial Statements
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) (Authority), as of and for the year ended June 30, 2021, and the related notes to the financial
statements, which collectively comprise the Authority’s basic financial statements as listed in the table
of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
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.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of
the financial statements.
2
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Opinions
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, 2021, 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.
Emphasis of Matter
Emphasis of Matter – Correction of an Error
As discussed in Note 11 to the financial statements, the Authority determined the change in net position
and fund balance included approximately $7.4 million of expenses that was booked incorrectly in the
prior year which resulted in the net position and the fund balance in the governmental activities to be
understated as of July 1, 2020. Accordingly, the amount reported for the net position and fund balance
have been restated as of July 1, 2020. Our opinions are not modified with respect to this matter.
As discussed in Note 11 to the financial statements the Authority determined that prior to July 1, 2020
that operating transfers with the State of Alaska of approximately $2.2 million were incorrectly reported
as a due to funds managed by Treasury instead of an operating transfer. This resulted in the beginning
net position and fund balance in the governmental activities to be understated. Accordingly, the amount
for the net position and fund balance have been restated as of July 1, 2020. Our opinions are not
modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s
Discussion and Analysis on pages 4 through 17 be presented to supplement the basic financial
statements. Such information, 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,
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 supplementary information in
Schedules 1 through 9 is presented for purposes of additional analysis and are not a required part of the
basic financial statements.
3
The supplementary information in Schedules 1 through 5 is the responsibility of management and was
derived and relate directly to the underlying accounting and other records used to prepare the basic
financial statements. Such 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 supplementary information is fairly stated in all material respects in relation to the
basic financial statements as a whole.
The supplementary information in Schedules 6 through 9 has not been subjected to the auditing
procedures applied in the audit of the basic financial statements, and accordingly, we do not express an
opinion or provide any assurance on it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 29,
2021, 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, 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
Alaska Energy Authority’s internal control over financial reporting and compliance.
Boise, Idaho
October 29, 2021
4
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
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, 2021. 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, Emerging Energy Technology Fund, Trans‐Alaska Pipeline Liability
Fund, Rural Energy Projects, and Volkswagen Diesel Settlement 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, the Power Project Fund, the Rural Electrification Revolving Loan Fund, and the Power
Development and Railbelt Energy Projects. 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, 2021
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, 2021
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, 2021
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
$1,569.7 billion at June 30, 2021 and $438.1 million at June 30, 2020. Beginning in FY21, the sweep of the PCE
fund into the Constitutional Budget Reserve was deemed to be ineligible and was removed from the sweep by a
legal ruling. Therefore, liabilities to the State and AEA’s fund balance increased with the retention of the
Endowment funds.
Of the total net position at June 30, 2021, $325.6 million was invested in capital assets, net of related debt, and
$1,244.1 billion was restricted. Of the total net position at June 30, 2020, $323.6 million was invested in capital
assets, net of related debt, and $114.5 million was restricted. In both years, invested in capital assets, net of
related debt, is related to the Bradley Lake Hydroelectric Project, Alaska Intertie Project, and Susitna‐Watana
Hydroelectric Project. The remainder of net position is considered restricted for debt service or restricted due to
agreements with external parties, and legislation.
The following tables are provided to show AEA’s total assets, deferred outflows of resources, liabilities, and net
position at June 30, 2021 and 2020 (stated in thousands):
2021 2020 Variance 2021 2020 Variance
Assets:
Current and other
noncurrent assets 1,194,856$ 1,121,289$ 73,567$ 81,565$ 90,544$ (8,979)$
Capital assets ‐ ‐ ‐ 396,079 388,046 8,033
Total assets 1,194,856 1,121,289 73,567 477,644 478,590 (946)
Deferred outflows
of resources ‐ ‐ ‐ ‐ 3 (3)
Total assets and
deferred outflows 1,194,856 1,121,289 73,567 477,644 478,593 (949)
Liabilities:
Current liabilities 25,866 1,081,398 (1,055,532) 19,912 27,734 (7,822)
Noncurrent liabilities ‐ ‐ ‐ 57,043 52,584 4,459
Total liabilities 25,866 1,081,398 (1,055,532) 76,955 80,318 (3,363)
Net Position:
Net investment in
capital assets ‐ ‐ ‐ 325,614 323,645 1,969
Restricted 1,168,990 39,891 1,129,099 75,075 74,630 445
Total net position 1,168,990 39,891 1,129,099 400,689 398,275 2,414
Total liabilities and
net position 1,194,856$ 1,121,289$ 73,567$ 477,644$ 478,593$ (949)$
Governmental Activities Business‐Type Activities
8
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
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,
2021 and 2020 (stated in thousands):
2021 2020 Variance
Restricted cash and cash equivalents 28,160$ 18,542$ 9,618$
Restricted investments 1,161,100 1,100,867 60,233
Operating receivables 14 14 ‐
Due from Federal Government 3,991 1,304 2,687
Due from State of Alaska 1,268 356 912
Due from component units 7 ‐ 7
Due (to) from other funds/internal balances 316 206 110
Current and other noncurrent assets 1,194,856$ 1,121,289$ 73,567$
Current and other noncurrent assets in total are $73.5 million higher in the current fiscal year. Restricted cash
and cash equivalents held by AEA increased by $9.6 million largely due to the PCE investment fund short term
earnings of $9 million. Restricted investments increased by $60.2 million, relating to investment earnings for the
PCE and Renewable Energy Grant Fund (REF) investment funds managed by Treasury. Amounts due from the
federal government increased by $2.7 million related to timing of reimbursement requests submitted and
received from federal agencies on federal awards. Due from the State of Alaska and component units increased
by $919 thousand largely related to advances from state appropriations, which are drawn based on project
need; therefore, these balances will fluctuate annually. Due (to) from other funds/internal balances will
fluctuate annually depending on program activities and cash needs.
Total current and noncurrent liabilities decreased in this fiscal year by $1,055.5 billion. The decrease is a result
of the legal ruling, which determined that the PCE fund should be removed from the sweep to the CBR. This
determination reduces the Authority’s liability to the State at fiscal year‐end and increases ending fund balance.
Net Position
The following table is provided to show details of AEA’s net position at June 30, 2021 and 2020 (stated in
thousands):
2021 2020 Variance
Restricted by agreements with external parties 1,110$ 1,182$ (72)$
Restricted by legislation 1,167,880 38,709 1,129,171
Net Position 1,168,990$ 39,891$ 1,129,099$
9
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
Net position increased by $1,129.1 billion during the current fiscal year. Net position restricted by agreements
with external parties decreased by $72 thousand compared to the June 30, 2020 balance. Net position restricted
by legislation increased by $1,129.1 substantially due to the PCE fund removal from the sweep to the CBR at
June 30, 2021.
Business‐Type Activities
Current and other noncurrent assets
The following table is provided to show the details of the AEA’s current and other noncurrent assets, excluding
capital assets and deferred outflows at June 30, 2021 and 2020 (stated in thousands):
2021 2020 Variance
Restricted cash and cash equivalents 32,351$ 39,974$ (7,623)$
Restricted investments 22,342 21,502 840
Operating receivables 206 267 (61)
Prepaid expense 36 251 (215)
Loans receivable, net of allowance 25,447 27,032 (1,585)
Due from Federal Government 564 562 2
Due from State of Alaska ‐ 1 (1)
Accrued interest receivable 935 1,161 (226)
Due (to) from other funds/internal balances (316) (206) (110)
Current and other noncurrent assets 81,565$ 90,544$ (8,979)$
Current and other noncurrent assets decreased by $9.0 million in the current fiscal year. The decrease in current
and noncurrent assets is primarily due to a decrease in restricted cash and cash equivalents of $7.6 million. The
cash decrease was substantially due to the disbursements from debt proceeds for the construction of the West
Fork Upper Battle Creek Diversion (Battle Creek) Project, which was completed in October 2020. Operating
receivables and prepaid expenses decreased by $276 thousand, which is related to a decrease in monthly billing
rates and amortization of prepaid expenses on the Alaska Intertie Project at the end of FY21. Loans receivable
(net of allowance) decreased $1.6 million related to disbursements on Power Project Fund loans. Due (to) from
other funds/internal balances will fluctuate annually depending on program activities and cash needs.
10
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
Total current and noncurrent liabilities
The following table is provided to show the details of AEA’s total current and noncurrent liabilities at June 30,
2021 and 2020 (stated in thousands):
2021 2020 Variance
Due to State of Alaska 744$ 385$ 359$
Accounts payable 5,049 13,360 (8,311)
Bonds payable 69,109 63,684 5,425
Other bond liabilities 569 1,052 (483)
Accrued interest payable 1,484 1,474 10
Other liabilities ‐ 363 (363)
Current and other noncurrent liabilities 76,955$ 80,318$ (3,363)$
Total current and noncurrent liabilities decreased in the current fiscal year by $3.3 million. Advances from the
State of Alaska increased by $359 thousand related to state appropriations for Railbelt Energy projects, which
are drawn based on project need; therefore, these balances will fluctuate annually. Accounts payable decreased
by $8.3 million due to reduced billings for the construction of the Battle Creek Project, as it was completed in
October 2020. Bonds payable increased by $5.4 million netted between debt service principal payments on the
Bradley Lake Hydroelectric Project bonds and the purchase of the SSQ Line and related bonds or new debt
acquired. Other bond liabilities decreased by $483 thousand related to amortization of bond original issue
premium and increase in estimated arbitrage liability. Accrued interest payable increased by $10 thousand
related to original Bradley Lake debt. Other liabilities decreased $363 thousand related to the estimated
repurchase liability to AIDEA for the portion of the Power Project Fund loan portfolio, which AIDEA purchased
from AEA in 2010.
Net Position
The following table is provided to show the details of AEA’s net position at June 30, 2021 and 2020 (stated in
thousands):
2021 2020 Variance
Net investment in capital assets 325,614$ 323,645$ 1,969$
Restricted for capital projects 1,979 866 1,113
Restricted for debt service 27,636 26,796 840
Restricted by agreements with external parties 3,913 5,703 (1,790)
Restricted by legislation 41,547 41,265 282
Net Position 400,689$ 398,275$ 2,414$
Net position increased in the current fiscal year by $2.4 million. Net investment in capital assets increased $2.0
million due to the net effect of capital asset additions and reduction of debt related to capital projects. Debt
related to capital projects is reduced in FY21 due to the completion of the Battle Creek Hydroelectric Project. In
addition, the Authority purchased the SSQ Line with new bonds (tenth series), which offsets the total increase
from FY20. Restricted net position increased by $445 thousand, substantially due to net income provided by
operating activities.
11
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
The following table is provided to show AEA’s revenues, expenses, and changes in net position at June 30, 2021
and 2020 (stated in thousands):
2021 2020 Variance 2021 2020 Variance
Revenues:
Program revenues:
Fees, fines, and charges
for services ‐$ ‐$ ‐$ 23,209$ 21,889$ 1,320$
Operating grants and
contributions 17,064 13,184 3,880 228 898 (670)
General revenues:
Investment income 150,472 49,406 101,066 1,511 2,005 (494)
State of Alaska appropriations/
transfers 1,017,213 ‐ 1,017,213 ‐ ‐ ‐
Total revenues 1,184,749 62,590 1,122,159 24,948 24,792 156
Expenses:
Grants and projects 20,370 18,714 1,656 ‐ ‐ ‐
Power cost equalization grants 25,557 29,255 (3,698) ‐ ‐ ‐
State of Alaska appropriations/
transfers ‐ 21,288 (21,288) ‐ 66 (66)
General and administrative 19,350 4,079 15,271 1,255 1,663 (408)
Interest expense ‐ ‐ ‐ 1,159 827 332
Plant operations ‐ ‐ ‐ 7,797 5,376 2,421
Depreciation ‐ ‐ ‐ 12,356 10,917 1,439
Provision for loan loss ‐ ‐ ‐ (33) 61 (94)
Total expenses 65,277 73,336 (8,059) 22,534 18,910 3,624
Change in net position 1,119,472 (10,746) 1,130,218 2,414 5,882 (3,468)
Net position, beginning of year,
as previously reported 39,891 50,637 (10,746) 398,275 392,393 5,882
Prior period adjustment 9,627
Net position, beginning of year,
as restated 49,518
Net position, end of year 1,168,990$ 39,891$ 1,129,099$ 400,689$ 398,275$ 2,414$
Governmental Activities Business‐Type Activities
12
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
Governmental Activities:
Total revenues for governmental activities increased by $1,122.2 million, 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. Operating grants and contributions and
State of Alaska appropriations/transfers increased by $1,021.1 billion in the current fiscal year as a result
of increased spending of State of Alaska appropriations for Rural Power System Upgrade (RPSU) and Bulk
Fuel Upgrade (BFU) projects, in accordance with generally accepted accounting principles AEA recognizes
revenue to the extent of expenditures. In addition, with the removal of PCE from the CBR sweep, AEA
recognizes the return of the funds swept in FY20 with no sweep amount in FY21; and
Investment income is primarily from interest earned in the PCE Endowment Fund and the Renewable
Energy Grant Fund, which are managed by the State Department of Revenue, Treasury Division.
Investment income earned in the PCE Endowment fund in FY21 was $150.3 million and $123 thousand
million for REF in FY21.
Expenses for governmental activities decreased by $8.2 million, based on the following:
Grants and project expenses decreased by $1.6 million in the current fiscal year as a result of spending of
State of Alaska appropriations for Rural Power System Upgrade (RPSU) and Bulk Fuel Upgrade (BFU)
projects;
PCE grants decreased by $3.7 million. This decrease is due to the timing between receipt of
documentation from grantees and payment to grantees. The overall encumbrance at fiscal year‐end was
higher than the prior fiscal year due to reduced submissions by the year end close date;
State of Alaska appropriations/transfers decreased by approximately $21.3 million in FY21. This is the
result of the legal ruling, which removed PCE from the sweep to the CBR, which removed the netted
sweep reversal from FY20 and the FY21 sweep amount; and
General and administrative expenses increased by $15.3 million compared to the prior year.
Administrative costs shared between AIDEA and AEA for administrative support and the addition of
administering the Volkswagen Settlement Program contributed to this increase.
13
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
Business‐Type Activities:
Total revenues for business‐type activities increased by $156 thousand, based on the following:
Fees, fines, and charges for services increased by $1.3 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. The current year increase is a reflection of the change in reimbursement for
administrative expenses from Bradley Lake participants;
Operating grants and contributions are from State of Alaska operating and capital appropriations.
Operating grants and contributions decreased by $671 thousand. The current year decrease is a reflection
of reduced operations related projects for FY21; and
Investment income decreased by $494 thousand, due to decreased investment earnings on debt proceeds
issued related to the Battle Creek Project. FY19 was the first full year of investment earnings for the Battle
Creek Project, compared to only half a year when the debt proceeds began earning interest during the
year ended June 30, 2018. FY21 is the last year and only a partial year for earning interest on debt
proceeds, as the capital project was completed in August 2020.
Expenses for business‐type activities increased by $3.6 million, based on the following:
State of Alaska appropriation of funds and transfers for business‐type activities decreased by
approximately $66 thousand in FY21. In FY20, the Rural Electrification Revolving Loan Fund received final
payments, which closed the remaining loans and, per Statute, the program was closed;
General and administrative expenses decreased by $408 thousand. The current year decrease is a result
of decreased general and administrative support incurred during the construction of the Battle Creek
Project;
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 $332 thousand. Interest
expense on the Battle Creek Diversion bonds qualified for two federal interest subsidy programs. In
addition, consistent with generally accepted accounting principles. AEA capitalizes a portion of interest
related to the construction of the Battle Creek Project, which was only capitalized in comparison to FY20
where interest was capitalized for a full year;
Plant operations for the Bradley Lake Hydroelectric Project and the Alaska Intertie Project increased in the
current fiscal year by $2.4 million. Plant operations consist of various activities required to maintain
operations of each project;
Depreciation expense increased in the current fiscal year by $1.4 million. In FY21, AEA had $5.5 million in
deletions and $44.8 million that was removed from CIP and placed into service for the Battle Creek
Project. The addition of Battle Creek to completed assets increases the amount of depreciation for the
fiscal year; and
Provision for loan loss (recovery) decreased by $94 thousand from the prior fiscal year. During FY20, AEA
received final payments on the remaining loans related to the Rural Electrification Revolving Loan Fund,
which results in a reduced amount in the loan loss calculation, as this calculation now only includes loans
from the Power Project Fund.
14
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
Fund Financial Analysis
Fund Balances
Governmental Fund:
The focus of AEA’s governmental fund is to provide information on near‐term inflows, outflows, and balances of
spendable resources. Such information is useful in assessing AEA’s financing requirements.
The following table is provided to show AEA’s total fund balances for the governmental funds at June 30, 2021
and 2020 (stated in thousands):
2021 2020 Variance
Power Cost Equalization Program 1,145,062$ 13,005$ 1,132,057$
Renewable Energy Grant Fund 21,802 24,583 (2,781)
Emerging Energy Technology Fund 1,004 1,109 (105)
Trans‐Alaska Pipeline Liability Fund 1,110 1,182 (72)
Rural Energy Projects 12 12 ‐
Total Fund Balances 1,168,990$ 39,891$ 1,129,099$
At the end of the current fiscal year, AEA’s governmental funds reported combined ending fund balances of
$1,169.90 billion, which is an increase of $1,129.1 million in comparison with the prior fiscal year. The Power
Cost Equalization Program increased by $1,132.1 million due to the legal ruling, which removed PCE from the
sweep to the CBR. The increase to PCE was offset by a decrease in the Renewable Energy Fund by $2.8 million as
a result of AEA disbursements for the Renewable Energy Fund, with no new capitalizations in FY21. The
Emerging Energy Technology Fund reduced by $105 thousand, and the Trans‐Alaska Pipeline Liability Fund
reduced by $72 thousand, both as a result of reduced project activity in FY21.
The combined ending fund balance is categorized as restricted to indicate that there is an externally enforceable
limitation to its use. Specifically, the fund balance is entirely restricted by agreements with external parties or by
legislation.
15
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
Proprietary Fund:
AEA’s proprietary fund financial statements consist of enterprise funds, which provide detailed information of
the same type found in the business‐type activities section of the government‐wide financial statements.
The following table is provided to show AEA’s total net position for the proprietary fund at June 30, 2021 and
2020 (stated in thousands):
2021 2020 Variance
Bradley Lake Hydroelectric Project 160,429$ 154,772$ 5,657$
Alaska Intertie Project 15,031 18,556 (3,525)
Susitna‐Watana Hydroelectric Project 183,682 183,682 ‐
Power Project Fund 39,553 39,271 282
Power Development and Railbelt Energy Projects 1,994 1,994 ‐
Total Net Position 400,689$ 398,275$ 2,414$
At the end of the current fiscal year, AEA’s proprietary fund reported combined ending net position of $400.7
million, which is an increase of $2.4 million in comparison with the prior fiscal year. The increase of $5.7 million
for the Bradley Lake Hydroelectric Project was due to operating revenues greater than operating expenses by
$2.4 million related to revenue collected for debt service payments. The decrease of $3.5 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 by $282 thousand, due to the addition of new loans. The Rural Electrification
Revolving Loan Fund had no activity in FY21, due to the final payments and subsequent closure of the remaining
loans in this fund in FY20.
The following table is provided to show the proprietary fund net position by category at June 30, 2021 and 2020
(stated in thousands):
2021 2020 Variance
Net investment in capital assets 325,614$ 323,645$ 1,969$
Restricted for capital projects 1,979 866 1,113
Restricted for debt service 27,636 26,796 840
Restricted by agreements with external parties 3,913 5,703 (1,790)
Restricted by legislation 41,547 41,265 282
Total Net Position 400,689$ 398,275$ 2,414$
Net investment in capital assets increased by $2.0 million, which is the net effect of capital asset additions and
retirements and reduction of debt related to capital projects. Restricted net position increased by $445
thousand, substantially due to the PCE fund removal from the CBR sweep.
16
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
Capital Assets and Debt Administration
Capital Assets:
AEA’s investment in capital assets for its business‐type activities as of June 30, 2021 amounts to $396.1 million
(net of accumulated depreciation), which is an increase of $8.0 million from the prior fiscal year. The investment
in capital assets only occurs in the enterprise funds and includes land and rights of way, infrastructure,
equipment, and construction in progress.
2021 2020 Variance
Land and Rights of Way 11,212$ 11,212$ ‐$
Equipment 1,228 140,575 (139,347)
Infrastructure 198,741 1,092 197,649
Construction in Progress 184,898 235,167 (50,269)
Total 396,079$ 388,046$ 8,033$
Business‐Type Activities
Capital assets, net of accumulated depreciation increased by $8.0 million. The increase is a net result of the
completion of construction on the Battle Creek Project, which moved approximately $48 million from
construction in progress to an active in use asset. This project was completed in October 2020. The Authority
also purchased the SSQ Line in FY21 for $17.0 million. The sale was completed in December 2020. The remaining
additions to capital assets are for both Bradley Lake and Alaska Intertie as normal maintenance and upgrades to
the existing assets.
17
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Management’s Discussion and Analysis
June 30, 2021
Long‐Term Debt:
At the end of the current fiscal year, AEA had total long‐term debt outstanding of $69.1 million. AEA’s total long‐
term debt increased by $5.4 million during the current fiscal year as a result of the purchase of the SSQ Line,
which secured bonds in the amount of $17.0 million.
The following table is provided to show the outstanding debt at June 30, 2021 and 2020 (stated in thousands):
2021 2020 Variance
Power Revenue and Refunding Bonds
Bradley Lake 10,870$ 22,445$ (11,575)$
Bradley Lake‐Battle Creek private placement 41,239 41,239 ‐
Soldotna to Quartz Creek (SSQ) private placement 17,000 ‐ 17,000
Total 69,109$ 63,684$ 5,425$
Business‐Type Activities
Outlook
The Authority received funding from the VW Settlement Trust to spearhead multiple projects in Alaska. FY22
and FY23 will focus on the Electric Vehicle corridor and increasing the number of charging stations for electric
vehicle users. In addition, AEA is also working with various communities to obtain school buses.
Various RPSU and BFU projects are anticipated to continue through FY22 with continued federal and state
funding. AEA and the Denali Commission are leveraging the use of available funding by shifting project focus to
more 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 13 to begin in FY22. AEA will next solicit applications for the Renewable Energy Fund grant
program in spring 2022 to deliver a recommended priority for awarding grants to the Legislature for FY23
funding.
Operations and maintenance of AEA’s Bradley Lake Hydroelectric Project and Alaska Intertie Project will
continue as approved by the Bradley Lake Project Management Committee and Alaska Intertie Committee,
respectively. The construction on the West Fork Upper Battle Creek Diversion Project was completed in October
2021; however, additional expansion opportunities are being explored to build upon Battle Creek’s success. The
SSQ Line was purchased in FY21 and remediation and other upgrade projects are planned for FY22. The
Authority is actively seeking authorization for projects related to the SSQ Line purchased in December 2020. Part
of the purchase included plans for remediation efforts for a large portion of the transmission line. In addition,
with the final payment on the original Bradley Lake bonds in early FY22, an excess earnings estimate has been
calculated and plans are on‐going for use of these funds on required capital projects.
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, 2021
Governmental Business‐Type
Activities Activities Total
Assets
Current Assets
Restricted cash and cash equivalents 28,160$ 32,351$ 60,511$
Operating receivables 14 206 220
Prepaid expenses ‐ 36 36
Due from federal government 3,991 ‐ 3,991
Loans receivable, net of allowance ‐ 564 564
Due from State of Alaska 1,268 ‐ 1,268
Due from component units 7 ‐ 7
Accrued interest receivable ‐ 935 935
Due (to) from other funds/internal balances 316 (316) ‐
Total current assets 33,756 33,776 67,532
Noncurrent Assets
Restricted investments 1,161,100 22,342 1,183,442
Loans receivable, net of allowance ‐ 25,447 25,447
Capital assets, net of accumulated depreciation ‐ 396,079 396,079
Total noncurrent assets 1,161,100 443,868 1,604,968
Total Assets 1,194,856$ 477,644$ 1,672,500$
See Notes to Financial Statements 19
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Net Position
(in thousands)
June 30, 2021
Governmental Business‐Type
Activities Activities Total
Liabilities
Current Liabilities
Due to State of Alaska 1,164$ 744$ 1,908$
Accounts payable 24,673 5,049 29,722
Bonds payable ‐ current portion ‐ 12,245 12,245
Other bond liabilities ‐ current portion ‐ 390 390
Accrued interest payable ‐ 1,484 1,484
Other liabilities 29 ‐ 29
Total current liabilities 25,866 19,912 45,778
Noncurrent Liabilities
Bonds payable ‐ noncurrent portion ‐ 56,864 56,864
Other bond liabilities ‐ 179 179
Total noncurrent liabilities ‐ 57,043 57,043
Total liabilities 25,866 76,955 102,821
Net Position
Net investment in capital assets ‐ 325,614 325,614
Restricted for
Capital projects ‐ 1,979 1,979
Debt service ‐ 27,636 27,636
Agreements with external parties 1,110 3,913 5,023
Legislation 1,167,880 41,547 1,209,427
Total net position 1,168,990 400,689 1,569,679
Total Liabilities and Net Position 1,194,856$ 477,644$ 1,672,500$
See Notes to Financial Statements 20 Alaska Energy Authority (A Component Unit of the State of Alaska) Statement of Activities (in thousands) Year Ended June 30, 2021 Fees, Fines, Operatingand Charges Grants and Governmental Business‐TypeFunctions/Programs Expenses for Services Contributions Activities Activities TotalGovernmental ActivitiesPower Cost Equalization Program 42,712$ ‐$ ‐$ (42,712)$ ‐$ (42,712)$ Renewable Energy Grant Fund 2,492 ‐ ‐ (2,492) ‐ (2,492) Emerging Energy Technology Fund 228 ‐ 123 (105) ‐ (105) Trans Alaska Pipeline Liability Fund 72 ‐ ‐ (72) ‐ (72) Rural Energy projects 15,890 ‐ 13,058 (2,832) ‐ (2,832) Volkswagen Diesel Settlement Fund 3,883 ‐ 3,883 ‐ ‐ ‐ Total governmental activities 65,277 ‐ 17,064 (48,213) ‐ (48,213) Business‐Type ActivitiesBradley Lake Hydroelectric Project 15,703 19,852 ‐ ‐ 4,149 4,149 Alaska Intertie Project 6,558 2,805 228 ‐ (3,525) (3,525) Power Project Fund 273 552 ‐ ‐ 279 279 Total business‐type activities 22,534 23,209 228 ‐ 903 903 Total Activities 87,811$ 23,209$ 17,292$ (48,213) 903 (47,310) General RevenuesInterest and investment income 150,472 1,511 151,983 State of Alaska transfers 1,017,213 ‐ 1,017,213 Change in Net Position 1,119,472 2,414 1,121,886 Net Position, Beginning of Year, as Previously Report 39,891 398,275 438,166 Prior Period Adjustment 9,627 ‐ 9,627 Net Position, Beginning of Year, as Restated 49,518 398,275 447,793 Net Position, End of Year 1,168,990$ 400,689$ 1,569,679$ Net (Expense) Revenue and Changes in Net PositionProgram Revenues
See Notes to Financial Statements 21
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Balance Sheet – Governmental Funds
(in thousands)
June 30, 2021
Major Special Statement of
Revenue Fund Net Position
Assets
Current Assets
Restricted cash and cash equivalents 28,160$ 28,160$
Operating receivable 14 14
Due from federal government 3,991 3,991
Due from State of Alaska 1,268 1,268
Due from component units 7 7
Due (to) from other funds/internal balances 316 316
Total current assets 33,756 33,756
Noncurrent Assets
Restricted investments 1,161,100 1,161,100
Total assets 1,194,856$ 1,194,856$
Liabilities
Current Liabilities
Due to State of Alaska 1,164$ 1,164$
Accounts payable 24,673 24,673
Other liabilities 29 29
Total liabilities 25,866 25,866
Fund Balance
Restricted for
Agreements with external parties 1,110
Legislation 1,167,880
Total fund balance 1,168,990
Total Liabilities and Fund Balance 1,194,856$
Net Position
Restricted for
Agreements with external parties 1,110
Legislation 1,167,880
Total net position 1,168,990
Total Liabilities and Net Position 1,194,856$
See Notes to Financial Statements 22
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, 2021
Major Special Statement of
Revenue Fund Activities
Operating Revenues
State of Alaska appropriations 3,695$ 3,695$
Federal grants 8,575 8,575
Other revenues 4,794 4,794
Total operating revenues 17,064 17,064
Operating Expenditures
Grants and projects 20,265 20,370
Power cost equalization grants 25,557 25,557
General and administrative 19,350 19,350
Total operating expenses 65,172 65,277
Nonoperating Revenues (Expenses)
Investment income, net 150,472 150,472
State of Alaska appropriations and transfers 1,017,108 1,017,213
Total nonoperating revenue 1,167,580 1,167,685
Change in Fund Balance 1,119,472
Change in Net Position 1,119,472
Fund Balance/Net Position, Beginning of Year, as Previously Reported 39,891 39,891
Prior Period Adjustment 9,627 9,627
Fund Balance/Net Position, Beginning of Year, as Restated 49,518 49,518
Fund Balance/Net Position, End of Year 1,168,990$ 1,168,990$
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, 2021
Assets
Current Assets
Restricted cash and cash equivalents 32,351$
Operating receivable 206
Prepaid expenses 36
Loans receivable, net of allowance 564
Accrued interest receivable 935
Due (to) from other funds/internal balances (316)
Total current assets 33,776
Noncurrent Assets
Restricted investments 22,342
Loans receivable, net of allowance 25,447
Capital assets, net of accumulated depreciation 396,079
Total noncurrent assets 443,868
Total Assets 477,644$
See Notes to Financial Statements 24
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Net Position – Enterprise Fund
(in thousands)
June 30, 2021
Liabilities
Current Liabilities
Due to State of Alaska 744$
Accounts payable 5,049
Bonds payable ‐ current portion 12,245
Other bond liabilities ‐ current portion 390
Accrued interest payable 1,484
Total current liabilities 19,912
Noncurrent Liabilities
Bonds payable ‐ noncurrent portion 56,864
Other liabilities 179
Total noncurrent liabilities 57,043
Total liabilities 76,955
Net Position
Net investment in capital assets 325,614
Restricted for
Capital projects 1,979
Debt service 27,636
Agreements with external parties 3,913
Legislation 41,547
Total net position 400,689
Total Liabilities and Net Position 477,644$
See Notes to Financial Statements 25
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, 2021
Operating Revenues
State of Alaska appropriations 227$
Revenue from operating plants 22,657
Interest on loans 339
Other revenues 214
Total operating revenues 23,437
Operating Expenses
Depreciation 12,356
General and administrative 1,255
Interest expense 1,159
Plant operations 7,797
Provision for loan loss (recovery) (33)
Total operating expenses 22,534
Operating Income 903
Nonoperating Revenues (Expenses)
Investment income, net expenses 1,511
Change in Net Position 2,414
Net Position, Beginning of Year 398,275
Net Position, End of Year 400,689$
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, 2021
Operating Activities
Receipts from customers and users 24,059$
Payments from State of Alaska 227
Payments to suppliers (11,564)
Net Cash from Operating Activities 12,722
Noncapital and Related Financing Activities
Net Increase in short‐term borrowings from AIDEA for working capital 1,751
Capital and Related Financing Activities
Principal paid on bonds (11,575)
Amounts received on bonds 17,000
Payments for other bond liabilities (836)
Interest paid on bonds (1,159)
Investment in capital assets (27,219)
Net Cash used for Capital and Related Financing Activities (23,789)
Investing Activities
Purchase of investments (12,002)
Proceeds from sales and maturities of investments 11,162
Interest received from investments 1,511
Net change in loans 1,022
Net Cash used for Investing Activities 1,693
Net Change in Restricted Cash and Cash Equivalents (7,623)
Restricted Cash and Cash Equivalents, Beginning of Year 39,974
Cash and Cash Equivalents, End of Year 32,351$
See Notes to Financial Statements 27
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Statement of Cash Flows – Enterprise Fund
(in thousands)
Year Ended June 30, 2021
Reconciliation of operating income to net cash
from operating activities
Operating income 904$
Adjustments to reconcile operating income to net cash
used for operating activities
Depreciation 12,356
Amortization of bond deferred charges 3
Bond interest expense 1,159
Loss on disposal 330
Changes in assets and liabilities
Operating receivables 61
Due to/from other funds 110
Accrued interest receivable 226
Prepaid assets 215
Due to/from State of Alaska 143
Due to/from Federal Government 563
Operating accounts payable (3,347)
Net Cash from Operating Activities 12,723$
Noncash capital and related financing and investing activities
Change in ending balance of capital assets accounts payable 6,500$
28
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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 will increase the Bradley
Lake projects annual energy by approximately 37,000 megawatt hours (MWh). Construction began in 2018 and
was completed in October 2020.
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.
29
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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.
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‐
initiate the licensing process.
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). Subject to
appropriations and the adoption of the reverse sweep, 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.
30
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
Energy Development Programs
The energy development programs include the Renewable Energy Grant Fund and Recommendation Program,
Alternative Energy and Energy Efficiency (AEEE) programs, and the Emerging Energy Technology Fund (EETF)
grant program.
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. The purpose of the EETF grant program is to promote and provide financial assistance to applicants to
test, conserve, and improve emerging energy technologies.
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.
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.
31
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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.
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 nonoperating.
32
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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.
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.
33
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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 $500 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 nonspendable fund balance
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.
34
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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.
Recently Issued Accounting Pronouncements
GASB Statement No. 87, Leases, was issued by GASB in June 2017. The objective of Statement No. 87 is to better
meet the information needs of financial statement users by improving accounting and financial reporting for
leases by governments. This Statement increases the usefulness of governments’ financial statements by
requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating
leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the
35
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
contract. It establishes a single model for lease accounting based on the foundational principle that leases are
financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease
liability and an intangible right‐to‐use lease asset, and a lessor is required to recognize a lease receivable and a
deferred inflow of resources, thereby enhancing the relevance and consistency of information about
governments’ leasing activities. The provisions of this Statement are required to be implemented for the
reporting periods beginning after June 15, 2021. The Authority has not implemented Statement No. 87 and are
currently evaluating the impact on future financial statements.
GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, was
released in June of 2018. The objectives of this Statement are (1) to enhance the relevance and comparability of
information about capital assets and the cost of borrowing for a reporting period and (2) to simplify accounting
for interest cost incurred before the end of a construction period. This Statement establishes accounting
requirements for interest cost incurred before the end of a construction period. Such interest cost includes all
interest that previously was accounted for in accordance with the requirements of paragraphs 5‐22 of
Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre‐November 30,
1989 FASB and AICPA Pronouncements which are superseded by this Statement. This Statement requires that
interest cost incurred before the end of a construction period be recognized as an expense in the period in
which the cost is incurred for financial statements prepared using the economic resources measurement focus.
As a result, interest cost incurred before the end of a construction period will not be included in the historical
cost of a capital asset reported in a business‐type activity or enterprise fund. This Statement also reiterates in
the financial statements prepared using the current financial resources measurement focus that interest cost
incurred before the end of a construction period should be recognized as an expenditure on a basis consistent
with governmental fund accounting principles. The requirements of this Statement are effective for reporting
periods beginning after December 15, 2020. The Authority has not implemented Statement No. 89 and will
evaluate the impact on future financial statements.
GASB Statement No. 91, Conduit Debt Obligations, was issued May 2019. The primary objectives of this
Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate
diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with
conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying
the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of
the issuer; establishing standards for accounting and financial reporting of additional commitments and
voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and
improving required note disclosures. This Statement requires issuers to disclose general information about their
conduit debt obligations, organized by type of commitment, including the aggregate outstanding principal
amount of the issuers’ conduit debt obligations and a description of each type of commitment. Issuers that
recognize liabilities related to supporting the debt service of conduit debt obligations also should disclose
information about the amount recognized and how the liabilities changed during the reporting period. The
requirements of this Statement are effective for reporting periods beginning after December 15, 2021. The
Authority has not implemented Statement No. 91 and will evaluate the impact on future financial statements.
GASB Statement No. 92, Omnibus 2020 (Statement No. 92) was issued by GASB in January 2020. This statement
addresses a variety of topics with an objective to enhance comparability in accounting and financial reporting
36
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
and to improve the consistency of authoritative literature by addressing practice issues that have been
identified during implementation and application of certain GASB Statements. The requirements of this
Statement are effective for reporting periods beginning after June 15, 2021. We have not implemented
Statement No. 92 and are currently evaluating impact on the financial statements.
GASB Statement No. 93, Replacement of Interbank Offered Rates (Statement No. 93) was issued by GASB in
March 2020. This statement addresses a scheduled replacement of interbank offered rate (IBOR) with a new
reference rate and an impact of the replacement on derivative instruments and lease contracts in which variable
payments made or received depend on IBOR. The requirements of this Statement are effective for reporting
periods beginning after June 15, 2021. We have not implemented Statement No. 93 and are currently evaluating
impact on the financial statements.
GASB Statement No. 94, Public‐Private and Public‐Public Partnerships and Availability Payment Arrangements,
(Statement No. 94) was issued by GASB in March 2020. The primary objective of this Statement is to improve
financial reporting by addressing issues related to public‐private and public‐public partnership arrangements
(PPPs). The requirements of this Statement are effective for reporting periods beginning after June 15, 2022. We
have not implemented Statement No. 94 and are currently evaluating impact on the financial statements.
In light of the COVID‐19 pandemic, on May 8, 2020, the GASB issued Statement No. 95, Postponement of the
Effect Dates of Certain Authoritative Guidance, to Provide Relief to Governments, (Statement No. 95). This
Statement, which was effective upon issuance, postpones the effective dates of certain provisions in the above
noted pronouncements for one year, except for Statement No. 87 and provisions related to leases in Statement
92 are excluded from Statement No. 95. Additionally, Statement No. 95 excludes provisions in Statement No. 93
related to lease modifications and excludes Statement No. 94 since GASB considered the pandemic in
determining effective dates. Earlier application of the standards is encouraged and is permitted to the extent
specified in each pronouncement as originally issued.
GASB Statement No. 96, Subscription‐Based Information Technology Arrangements, (Statement No. 96) is
effective for year‐end June 30, 2023. This statement provides guidance on the accounting and financial reporting
for subscription‐based information technology arrangements (SBITAs) for government end users. This
statement, among other things, defines a SBITA, establishes that a SBITA results in a right‐to‐use subscription
asset (an intangible asset) and a corresponding subscription liability, provides capitalization criteria for outlays
other than subscription payments, and requires note disclosures regarding a SBITA. The Authority has not
implemented Statement No. 96 and will evaluate the impact on future financial statements.
GASB Statement No. 97, Certain Components Unit Criteria, and Accounting and Financial Reporting for Internal
Revenue Code Section 457 Deferred Compensation Plans, (Statements No. 97) is effective for year‐end June 30,
2022, except the portion of the pronouncement related to component unit criteria, which is effective for year ‐
end June 30, 2020. This statement modifies certain guidance contained in Statement No. 84 and enhances the
relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code
(IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan
and for benefits provided through those plans. We determined that the portion of Statement No. 97 that is
related to component unit criteria has no impact on the presentation of the financial statements for the year
ended June 30, 2021. We have not implemented the remaining pronouncements of Statement No. 97 and will
evaluate the impact on future financial statements.
37
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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, 2021, the Authority’s bank and carrying amount of cash and cash equivalents (all of which were
restricted or designated for specific purposes) was $60,511,000.
The restricted cash and cash equivalents and investments were held in trust and restricted accounts for the
following activities as of June 30, 2021 (in thousands):
Governmental Business‐Type
Activities Activities Totals
Restricted Cash and Cash Equivalents
Bradley Lake Hydroelectric Project ‐$ 16,273$ 16,273$
Alaska Intertie Project ‐ 703 703
Power Project Fund ‐ 13,768 13,768
Power Development and Railbelt Energy
Projects ‐ 1,607 1,607
Rural Energy Projects 2,011 ‐ 2,011
Power Cost Equalization Program 18,349 ‐ 18,349
Renewable Energy Grant Fund 1,001 ‐ 1,001
Emerging Energy Technology Fund 1,083 ‐ 1,083
Trans‐Alaska Pipeline Liability Fund 1,134 ‐ 1,134
VW Settlement 4,582 ‐ 4,582
28,160$ 32,351$ 60,511$
Governmental Business‐Type
Activities Activities Totals
Restricted Investments
Bradley Lake Hydroelectric Project ‐$ 22,342$ 22,342$
Power Cost Equalization Program 1,139,313 ‐ 1,139,313
Renewable Energy Grant Fund 21,787 ‐ 21,787
1,161,100$ 22,342$ 1,183,442$
38
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
Investment Holdings
The Power Cost Equalization Endowment Fund (PCE Fund), created under Alaska Statute (AS) 42.45.070, the
Renewable Energy Grant Fund (RE Fund), created under AS 42.45.045, and the Emerging Energy Technology
Fund (EET Fund), created under AS 42.45.375, are under the fiduciary authority of the State Department of
Revenue, Treasury Division (Treasury). AEA requests draws from these funds as needed for program cashflow
needs.
Other AEA Cash and Investments – a portion of Bradley Lake Hydroelectric Project investments are invested
pursuant to investment agreements with JP Morgan Chase Bank that guarantees annual interest earnings of
7.38% or 7.41% per annum that ends the earlier of July 1, 2021 or the date of repayment of the Bradley Lake
Power Revenue Bonds, First Series. These investments are in nonparticipating contracts and are 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.
39
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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, 2021 (in thousands):
Governmental Business‐Type
Activities Activities Totals
Money market funds 28,160$ 32,351$ 60,511$
Investment agreements ‐ 22,342 22,342
Investments managed by Treasury 1,161,100 ‐ 1,161,100
1,189,260$ 54,693$ 1,243,953$
Cash and cash equivalents, including investment agreements, are reported 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.
40
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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, 2021,
AEA’s deposits managed by Treasury were uncollateralized and uninsured.
With respect to AEA managed investments, amounts totaling approximately $60,511,000 at June 30, 2021 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 in the amount of $22,342,000 are held with the
custodian institution and are collateralized.
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, 2021, the GeFONSI total for the Renewable Energy Grant Fund was $21,787,000. For additional
information on interest rate risk, credit risk, foreign exchange, derivatives, fair value, and counterparty credit
risk see the separately issued report on the Invested Assets of the Commissioner of Revenue at:
http://treasury.dor.alaska.gov/Investments/Annual‐Investment‐Reports.aspx.
41
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
Power Cost Equalization Endowment Fund Investment Holdings
Treasury has created a pooled environment by which it manages the investments for which the Commissioner
has fiduciary responsibility. Actual investing is performed by investment officers in Treasury or by contracted
external investment managers. The Fund invests in the State’s internally managed Short‐term Fixed Income
Pool, the Broad Market Fixed Income Pool, as well as the State’s internally managed Domestic Equity and
International Equity Pools. The complete financial activity of the Fund is shown in the ACFR available from the
State ‐ Department of Administration, Division of Finance.
Assets in the pools are reported at fair value. Investment purchases and sales are recorded on a trade‐date
basis. Fixed income and equity securities are valued each business day. Securities expressed in terms of foreign
currencies are translated into U.S. dollars at the prevailing exchange rates.
The full accrual basis of accounting is used for investment income. Income in the Short‐term and Broad Market
Fixed Income Pools is allocated to pool participants daily on a pro‐rata basis.
At June 30, 2021, the Fund’s share of pool investments was as follows (in thousands):
Cash and cash equivalents
Short‐term fixed income pool 9,852$
Fixed income – broad market pool 689,141
Equity
Domestic equity pool 280,130
International equity pools 170,042
1,149,165
Less cash and cash equivalents (9,852)
1,139,313$
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.
42
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
Note 3 ‐ Capital Assets
Capital asset activity for the year ended June 30, 2021 was as follows (in thousands):
Balance at Balance at
Business‐Type Activities July 1, 2020 Additions Deletions June 30, 2021
Capital assets not being depreciated
Land and rights of way 11,212$ ‐$ ‐$ 11,212$
Construction in progress
Intangibles 189,151 ‐ (5,469) 183,682
Other 46,015 ‐ (44,799) 1,216
Total capital assets not
being depreciated 246,378 ‐ (50,268) 196,110
Capital assets being depreciated
Equipment 6,633 231 ‐ 6,864
Infrastructure 443,142 70,426 ‐ 513,568
Total capital assets
being depreciated 449,775 70,657 ‐ 520,432
Less accumulated depreciation
Equipment (5,541) (95) ‐ (5,636)
Infrastructure (302,566) (12,261) ‐ (314,827)
Total accumulated depreciation (308,107) (12,356) ‐ (320,463)
Total capital assets, being
depreciated, net 141,668 58,301 ‐ 199,969
Capital assets, net 388,046$ 58,301$ (50,268)$ 396,079$
For the year ended June 30, 2021 total interest costs on long‐term borrowings for construction projects was
$1,729,000, of that amount $569,000 was capitalized as a part of construction in progress‐other.
Depreciation expense was charged to the functions as follows for the year ended June 30, 2021 (in thousands):
Business‐Type Activities
Bradley Lake Hydroelectric Project 8,973$
Alaska Intertie Project 3,383
12,356$
43
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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, 2021 follows (in
thousands):
Due from other funds
Due to Special Revenue Fund from Enterprise Fund 316$
Note 5 ‐ Long‐Term Debt
Long‐term debt activity for the year ended June 30, 2021 was as follows (in thousands):
Due
Balance at Balance at within
Business‐Type Activities July 1, 2020 Additions Deletions June 30, 2021 one year
Power Revenue Bonds
Bradley Lake
First Series 50$ ‐$ (25)$ 25$ 25$
Refunding, Fourth Series 8,540 ‐ (4,145) 4,395 4,395
Refunding, Sixth Series 13,855 ‐ (7,405) 6,450 6,450
Transmission Line
Tenth Series ‐ 17,000 ‐ 17,000 ‐
Bradley Lake ‐ Battle Creek Diversion ‐
Private Placement
Seventh Series 40,000 ‐ ‐ 40,000 1,333
Eighth Series 1,239 ‐ ‐ 1,239 42
Total bonds payable 63,684 17,000 (11,575) 69,109 12,245
Arbitrage interest payable (c) 1,007 ‐ (617) 390 390
Bond original issue premium 45 ‐ (45) ‐ ‐
Total other bond liabilities 1,052 ‐ (662) 390 390
64,736$ 17,000$ (12,237)$ 69,499$ 12,635$
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.
44
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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%.
AEA issued the following Bonds in support of the Bradley Lake Project. The Bradley Lake Bond below was issued
on 12/17/2020 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 and Eighth Series have amounts outstanding as of June 30, 2021. 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 have been made as of June 30, 2021. 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
45
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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
46
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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, 2021, are as follows:
Years Ending June 30, Principal Interest Total
2022 12,245$ 2,630$ 14,875$
2023 2,020 2,245 4,265
2024 2,042 2,161 4,203
2025 2,066 2,082 4,148
2026 2,089 1,998 4,087
2027‐2031 10,842 8,719 19,561
2032‐2036 11,587 6,503 18,090
2037‐2041 12,472 4,146 16,618
2042‐2046 6,873 2,186 9,059
2047‐2051 6,873 729 7,602
69,109$ 33,399$ 102,508$
Note 6 ‐ Loans Receivable
The Authority administers the Power Project Fund Loan Program and the Rural Electrification Revolving Loan
Program. Loans outstanding at June 30, 2021 are classified as follows (in thousands):
Number of
Loans Amount
Power Project Fund Loan Programs 15 26,505$
Less allowance for loan loss (494)
26,011$
Loans more than 90 days past due are not included in the accrual of interest. At June 30, 2021, there were no
loans more than 90 days past due.
47
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
An analysis of changes in the allowance for loan losses for the years ended June 30, 2021 follows (in thousands):
Balance at beginning of year 527$
Provision for loan loss (recovery)(33)
Balance at end of year 494$
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, 2021, the outstanding principal balance of the loans sold was $8,933,000 for which AEA has recognized an
estimated liability for potential repurchase of $179,000.
Note 7 ‐ Fund Balance
Fund balances reported in the aggregate on the governmental fund balance sheet are subject to the following
constraints (in thousands):
Restricted by Restricted by
External Parties Legislation
Power Cost Equalization Program ‐$ 1,145,062$
Renewable Energy Grant Fund ‐ 21,802
Emerging Energy Technology Fund ‐ 1,004
Trans‐Alaska Pipeline Liability Fund 1,110 ‐
Rural Energy Projects ‐ 12
1,110$ 1,167,880$
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.
48
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
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.
At June 30, 2021, AEA recognized expenses for services from AIDEA in the amount of $5,300,000. In addition,
AEA had $5,070,000 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, CEA, and ML&P) 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 $210,000 during fiscal year 2021 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, ML&P,
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, a Project Management Committee
(PMC) was formed to manage the project. The PMC 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 PMC to
provide administrative services to the Bradley Lake Project and received $330,000 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, 2021, AEA had Power Project Fund loan commitments of $5,154,000.
At June 30, 2021, AEA had cumulative prior year commitments from grant awards that are funded by State
appropriations and federal awards; the amounts committed were $21,945,000.
49
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Notes to Financial Statements
June 30, 2021
Note 11 ‐ Correction of an Error
Beginning net position/fund balance was restated for an increase of $7,388,000, to record revised amounts
related to the sweep activity in the due to the State of Alaska.
Beginning net position/fund balance was restated for an increase of $2,239,000, to record revised amounts
related to the general activity in the due to funds managed by Treasury.
The following table shows the changes to the beginning net position/fund balance as of July 1, 2020, for the
following:
Major Special Statement of
Revenue Fund Activities
Fund balance/net position at June 30, 2020, as previously reported 39,891$ 39,891$
Correction of the due to State of Alaska ‐ sweep activity 7,388 7,388
Correction of the due to funds managed by Treasury 2,239 2,239
Fund balance/net position at July 1, 2020, as restated 49,518$ 49,518$
eidebailly.com
Supplementary Information
June 30, 2021
Alaska Energy Authority
(A Component Unit of the State of Alaska)
See Independent Auditor’s Report 50 Alaska Energy Authority (A Component Unit of the State of Alaska) Schedule 1 – Bradley Lake Hydroelectric Project Trust Account Activities (Unaudited) (in thousands) Year Ended June 30, 2021 ExcessCapital Renewal and Investment OperatingConstruction Debt Service Reserve Contingency Earnings Revenue Operating ReserveFund Fund Fund Reserve Fund Fund Fund Fund Account TotalBalance at July 1, 2020 8,550$ 13,049$ 15,575$ 3,922$ 653$ 2,210$ 1,878$ 1,149$ 46,986$ Interest received‐ 271 913 270 34 330 79 81 1,978 Bond principal paid‐ (11,575) ‐ ‐ ‐ ‐ ‐ ‐ (11,575) Bond interest paid‐ (2,647) ‐ ‐ ‐ ‐ ‐ ‐ (2,647) Construction proceeds received‐ ‐ ‐ ‐ ‐ 50 ‐ ‐ 50 Acquisition proceeds received 15,760 ‐ 1,240 ‐ ‐ ‐ ‐ ‐ 17,000 Capital expenditures (22,331) ‐ ‐ (6,081) ‐ (770) ‐ (48) (29,230) Operating revenue received‐ ‐ ‐ 750 ‐ 23,997 ‐ ‐ 24,747 Operating expenses paid‐ ‐ ‐ ‐ (895) (994) (6,571) (233) (8,693) Transfers between funds‐ 14,313 (2,131) 2,209 320 (21,299) 6,268 320 ‐ Balance at June 30, 2021 1,979$ 13,411$ 15,597$ 1,070$ 112$ 3,524$ 1,654$ 1,269$ 38,616$
See Independent Auditor’s Report 51 Alaska Energy Authority (A Component Unit of the State of Alaska) Schedule 2 – Special Revenue Fund – Projects and Programs – Balance Sheet (Unaudited) (in thousands) June 30, 2021 Renewable Emerging Trans Alaska VolkswagenPower Cost Energy Energy Pipeline Rural DieselEqualization Grant Technology Liability Energy SettlementProgram Fund Fund Fund Projects Fund Eliminations TotalsAssetsCurrent assetsRestricted cash and cash equivalents 18,349$ 1,001$ 1,083$ 1,134$ 2,011$ 4,582$ ‐$ 28,160$ Operating receivable‐ 10 ‐ ‐ ‐ 4 ‐ 14 Due from Federal Government‐ ‐ 113 ‐ 3,878 ‐ ‐ 3,991 Due from State of Alaska‐ ‐ ‐ ‐ 1,268 ‐ ‐ 1,268 Due from component units‐ ‐ ‐ ‐ 7 ‐ ‐ 7 Due (to) from other funds/internal balances‐ ‐ ‐ ‐ 2,536 ‐ (2,220) 316 Total current assets 18,349 1,011 1,196 1,134 9,700 4,586 (2,220) 33,756 Noncurrent assetsRestricted investments 1,139,313 21,787 ‐ ‐ ‐ ‐ ‐ 1,161,100 Total assets 1,157,662$ 22,798$ 1,196$ 1,134$ 9,700$ 4,586$ (2,220)$ 1,194,856$ Liabilities and Fund BalanceCurrent liabilitiesDue to the State of Alaska 19$ ‐$ ‐$ ‐$ 1,145$ ‐$ ‐$ 1,164$ Accounts payable 12,111 183 192 ‐ 7,643 4,544 ‐ 24,673 Other liabilities‐ ‐ ‐ ‐ 29 ‐ ‐ 29 Due to (from) other funds/internal balances 470 813 ‐ 24 871 42 (2,220) ‐ Total liabilities 12,600 996 192 24 9,688 4,586 (2,220) 25,866 Fund BalanceRestricted by agreements with external parties‐ ‐ ‐ 1,110 ‐ ‐ ‐ 1,110 Restricted by legislation 1,145,062 21,802 1,004 ‐ 12 ‐ ‐ 1,167,880 Total fund balance 1,145,062 21,802 1,004 1,110 12 ‐ ‐ 1,168,990 Total Liabilities and Fund Balance 1,157,662$ 22,798$ 1,196$ 1,134$ 9,700$ 4,586$ (2,220)$ 1,194,856$
See Independent Auditor’s Report 52 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 (Unaudited) (in thousands) Year Ended June 30, 2021 Renewable Emerging Trans Alaska VolkswagenPower Cost Energy Energy Pipeline Rural DieselEqualization Grant Technology Liability Energy SettlementProgram Fund Fund Fund Projects Fund TotalsOperating revenuesState of Alaska appropriations‐$ ‐$ ‐$ ‐$ 3,695$ ‐$ 3,695$ Federal grants‐ ‐ 123 ‐ 8,452 ‐ 8,575 Other revenues‐ ‐ ‐ ‐ 911 3,883 4,794 Total operating revenues‐ ‐ 123 ‐ 13,058 3,883 17,064 Operating expendituresGrants and projects‐ 2,387 228 52 13,801 3,797 20,265 Power cost equalization grants 25,557 ‐ ‐ ‐ ‐ ‐ 25,557 General and administrative 17,155 ‐ ‐ 20 2,089 86 19,350 Total operating expenditures 42,712 2,387 228 72 15,890 3,883 65,172 Nonoperating revenues (expenses) and otherInvestment income, net 150,349 123 ‐ ‐ ‐ ‐ 150,472 Interfund capital grants and contributions (2,420) (412) ‐ ‐ 2,832 ‐ ‐ State of Alaska appropriations and transfers 1,017,213 (105) ‐ ‐ ‐ ‐ 1,017,108 Total nonoperating revenues (expenses) and other 1,165,142 (394) ‐ ‐ 2,832 ‐ 1,167,580 Change in Fund Balance 1,122,430 (2,781) (105) (72) ‐ ‐ 1,119,472 Fund Balance, Beginning of Year, as Previously Report 13,005 24,583 1,109 1,182 12 ‐ 39,891 Prior Period Adjustment 9,627 ‐ ‐ ‐ ‐ ‐ 9,627 Fund Balance, Beginning of Year, as Restated 22,632 24,583 1,109 1,182 12 ‐ 49,518 Fund Balance, End of Year 1,145,062$ 21,802$ 1,004$ 1,110$ 12$ ‐$ 1,168,990$
See Independent Auditor’s Report 53 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 (Unaudited) (in thousands) June 30, 2021 Susitna‐PowerBradley Lake Alaska Watana Power Development andHydroelectric Intertie Hydroelectric Project Railbelt EnergyProject Project Project Fund Projects Eliminations TotalsAssetsCurrent assetsRestricted cash and cash equivalents 16,273$ 703$ ‐$ 13,768$ 1,607$ ‐$ 32,351$ Operating receivable‐ 138‐ 48 20 ‐ 206 Prepaid expense‐ 36‐ ‐ ‐ ‐ 36 Loans receivable‐ ‐ ‐ 564‐ ‐ 564 Accrued interest receivable 908‐ ‐ 27‐ ‐ 935 Due (to) from other funds/internal balances‐ ‐ ‐ ‐ 1,109 (1,425) (316) Total current assets 17,181 877 ‐ 14,407 2,736 (1,425) 33,776 Noncurrent assetsRestricted investments 22,342‐ ‐ ‐ ‐ ‐ 22,342 Loans receivable, net of allowance‐ ‐ ‐ 25,447‐ ‐ 25,447 Capital assets, net of accumulated depreciation 197,570 14,827 183,682 ‐ ‐ ‐ 396,079 Total noncurrent assets 219,912 14,827 183,682 25,447 ‐ ‐ 443,868 Total Assets 237,093$ 15,704$ 183,682$ 39,854$ 2,736$ (1,425)$ 477,644$
See Independent Auditor’s Report 54 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 (Unaudited) (in thousands) June 30, 2021 Susitna‐PowerBradley Lake Alaska Watana Power Development andHydroelectric Intertie Hydroelectric Project Railbelt EnergyProject Project Project Fund Projects Eliminations TotalsLiabilities and Net PositionLiabilitiesCurrent liabilitiesDue to the State of Alaska 2$ ‐$ ‐$ ‐$ 742$ ‐$ 744$ Accounts payable 4,435 614 ‐ ‐ ‐ ‐ 5,049 Bonds payable – current portion 12,245 ‐ ‐ ‐ ‐ ‐ 12,245 Other bond liabilities – current portion 390 ‐ ‐ ‐ ‐ ‐ 390 Accrued interest payable 1,484 ‐ ‐ ‐ ‐ ‐ 1,484 Due to (from) other funds/internal balances 1,244 59 ‐ 122 ‐ (1,425) ‐ Total current liabilities 19,800 673 ‐ 122 742 (1,425) 19,912 Noncurrent liabilitiesBonds payable – noncurrent portion, net 56,864 ‐ ‐ ‐ ‐ ‐ 56,864 Other liabilities‐ ‐ ‐ 179 ‐ ‐ 179 Total noncurrent liabilities 56,864 ‐ ‐ 179 ‐ ‐ 57,043 Total liabilities 76,664 673 ‐ 301 742 (1,425) 76,955 Net PositionNet investment in capital assets 127,105 14,827 183,682 ‐ ‐ ‐ 325,614 Restricted for capital projects 1,979 ‐ ‐ ‐ ‐ ‐ 1,979 Restricted for debt service 27,636 ‐ ‐ ‐ ‐ ‐ 27,636 Restricted by agreements with external parties 3,709 204 ‐ ‐ ‐ ‐ 3,913 Restricted by legislation‐ ‐ ‐ 39,553 1,994 ‐ 41,547 Total net position 160,429 15,031 183,682 39,553 1,994 ‐ 400,689 Total Liabilities and Net Position 237,093$ 15,704$ 183,682$ 39,854$ 2,736$ (1,425)$ 477,644$
See Independent Auditor’s Report 55 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 (Unaudited) (in thousands) Year Ended June 30, 2021 PowerBradley Lake Alaska Susitna‐Watana Power Development andHydroelectric Intertie Hydroelectric Project Railbelt EnergyProject Project Project Fund Projects TotalsOperating revenuesState of Alaska appropriations‐$ 227$ ‐$ ‐$ ‐$ 227$ Revenue from operating plants 19,852 2,805 ‐ ‐ ‐ 22,657 Interest on loans‐ ‐ ‐ 339 ‐ 339 Other revenues‐ 1 ‐ 213 ‐ 214 Total operating revenues 19,852 3,033 ‐ 552 ‐ 23,437 Operating expensesDepreciation 8,973 3,383 ‐ ‐ ‐ 12,356 General and administrative 666 283 ‐ 306 ‐ 1,255 Interest expense 1,159 ‐ ‐ ‐ ‐ 1,159 Plant operating 4,905 2,892 ‐ ‐ ‐ 7,797 Provision for loan loss (recovery)‐ ‐ ‐ (33) ‐ (33) Total operating expenses 15,703 6,558 ‐ 273 ‐ 22,534 Operating Income (Loss) 4,149 (3,525) ‐ 279 ‐ 903 Nonoperating revenues (expenses) and otherinvestment income, net 1,508 ‐ ‐ 3 ‐ 1,511 Change in Net Position 5,657 (3,525) ‐ 282 ‐ 2,414 Fund Balance, Beginning of Year 154,772 18,556 183,682 39,271 1,994 398,275 Fund Balance, End of Year 160,429$ 15,031$ 183,682$ 39,553$ 1,994$ 400,689$
See Independent Auditor’s Report 56
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, 2021
Balance at Balance at
July 1, 2020 Additions Deletions June 30, 2021
Capital assets
Intangible 183,696$ ‐$ ‐$ 183,696$
Production 314,439 6,736 ‐ 321,175
Transmission 192,213 13,834 ‐ 206,047
General 5,805 149 (330) 5,624
Total capital assets 696,153 20,719 (330) 716,542
Less accumulated depreciation
Intangible (6) ‐ ‐ (6)
Production (149,532) (6,971) ‐ (156,503)
Transmission (153,165) (5,353) ‐ (158,518)
General (5,404) (32) ‐ (5,436)
Total accumulated
depreciation (308,107) (12,356) ‐ (320,463)
Capital assets, net 388,046$ 8,363$ (330)$ 396,079$
See Independent Auditor’s Report 57
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, 2021
Operating Data
Project costs
Operations and maintenance 3,767$
Repairs 280
General and administrative 922
Insurance 708
Capital purchases 268
Contributions to capital reserve fund 107
Contributions to renewal and contingency fund and operating reserve account 2,590
8,642
Debt service 14,584
Less Federal interest subsidy (1,132)
Less investment income (1,622)
Total cost of power 20,472$
Energy delivered (MWh) 400,761
Total unit cost of power (cents per kWh) 5.11
This schedule is provided as part of the municipal secondary market disclosure requirements relating to the
Bradley Lake Hydroelectric Power Revenue and Refunding Bonds.
See Independent Auditor’s Report 58 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 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021Beginning cash and investment balance 364,529$ 751,780$ 840,215$ 977,867$ 969,389$ 946,939$ 1,023,566$ 1,073,378$ 1,072,825$ 1,078,157$ InflowsAnnual investment earnings 10,948 111,488 171,112 33,192 8,912 112,331 76,602 74,142 48,303 150,299 Capital fund transfers in 400,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Total inflows 410,948 111,488 171,112 33,192 8,912 112,331 76,602 74,142 48,303 150,299 OutflowsTransfers to AEA for PCE payments (1) (23,154) (22,527) (32,773) (41,002) (30,622) (34,956) (25,595) (29,719) (27,000) (28,237) Transfers to Other Funds‐ ‐ ‐ ‐ ‐ ‐ ‐ (44,000) (14,867) (49,164) Program administration ‐ AEA (211) (198) (241) (248) (255) (243) (624) (444) (575) (737) Administrative fee ‐ Regulatory Commission (129) (90) (110) (107) (100) (112) (113) (102) (108) (123) Management fee ‐ Department of Revenue (203) (238) (336) (313) (385) (393) (458) (430) (421) (1,030) Total outflows (23,697) (23,053) (33,460) (41,670) (31,362) (35,704) (26,790) (74,695) (42,971) (79,291) Ending 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$ (1) Final PCE program expenditures reported may vary depending on outstanding PCE payables at June 30, not included in this presentation.
59
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 9 – Supplementary Organization and Project Information (Unaudited)
June 30, 2021
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.
60
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 9 – Supplementary Organization and Project Information (Unaudited)
June 30, 2021
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.
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.
Summarized below are the State’s appropriations to upgrade and extend a portion of the Alaska Intertie (in
thousands):
Appropriation Description Year Amount
Upgrade and extension of the Intertie, net of FY08 and
FY12 reappropriations)FY02 9,300$
Repair of Static VAR compensators (SVC) and a
tower foundation repair FY08 10,000
Substation upgrades and tower repairs FY12 5,000
Railbelt transmission plan FY12 1,000
61
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 9 – Supplementary Organization and Project Information (Unaudited)
June 30, 2021
ML&P was contracted to perform the repairs and upgrades. The tower repairs are now complete. Design and
construction of the new static VAR compensators (SVC’s) is complete. AEA will continue to work with the
Railbelt utilities to extend the intertie to Lake Lorraine.
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.
62
Alaska Energy Authority
(A Component Unit of the State of Alaska)
Schedule 9 – Supplementary Organization and Project Information (Unaudited)
June 30, 2021
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 FY17 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 FY19.
As of June 30, 2021, 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.