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HomeMy WebLinkAboutRes 2014-04_Haida Energy-ReynoldsCreekLoan-Revised MEMORANDUM TO: Board of Directors Alaska Energy Authority FROM: Sara Fisher-Goad Executive Director DATE: June 26, 2014 SUBJECT: Resolution No. 2014-04 Haida Energy Inc. - Reynolds Creek Hydroelectric Project, PPF Loan Resolution No. 2014-04 would approve the Power Project Fund (PPF) loan application from Haida Energy, Inc. (HE) for the proposed Reynolds Creek run of river hydro project located on Prince of Wales Island approximately 10 miles east of Hydaburg. Pursuant to board direction in Resolution No. 2014-02, AEA staff continued negotiations of PPF loan terms with HE regarding the Reynolds Creek Hydroelectric Project. Based on discussions with the Regulation Commission of Alaska (RCA) staff and HE, AEA Loan Committee offered new terms to HE on May 19th 2014. HE accepted these terms on June 4th 2014. These loan terms are outlined in Exhibit B. The PPF Loan Committee’s recommendation is attached as Exhibit A. Substantive changes from those loan terms presented to the board at the April 24th 2014 board meeting focused on eliminating years in which Reynolds Creek $/kWh exceed projected diesel $/kWh, and on protecting the value of the fund as much as possible. In summary, the substantive changes include: 1. No interest charged through operational year seven (five additional years) 2. Reduction of interest rate from 4.6% to 3.78% 3. Requirement that RCA approve a Power Sales Agreement before construction funds are released 4. 100% performance and payment bond The AEA Loan Committee and staff recommend the AEA Board of Directors adopt Resolution No. 2014-04 approving the loan terms recommended by the Loan Committee and accepted by Haida Energy, Inc. ALASKA ENERGY AUTHORITY RESOLUTION NO. 2014-04 A RESOLUTION OF THE ALASKA ENERGY AUTHORITY REGARDING A LOAN BY THE AUTHORITY TO HAIDA ENERGY, INC. RESPECTING THE REYNOLDS CREEK HYDROELECTRIC PROJECT WHEREAS, Haida Energy, Inc. has applied to the Alaska Energy Authority (“Authority”) for a Power Project Fund (PPF) loan in the amount up to $20,000,000 with a term of 50 years under the Authority’s power project fund program (AS 42.45.010); WHEREAS, AEA Resolution No. 2014-02 directed AEA staff to continue negotiations with Haida Energy Inc. respecting PPF loan terms for the Reynolds Creek Hydroelectric Project; WHEREAS, Haida Energy Inc. and AEA staff cooperatively continued negotiations, with AEA staff proposing loan terms on May 19, 2014, which Haida Energy Inc. accepted on June 4, 2014; WHEREAS, the nature, purpose and terms of the recommended PPF Loan are described in the PPF Loan Committee Recommendation, attached as Exhibit “A,” and the Term Sheet, attached as Exhibit B; WHEREAS, the PPF Loan Committee has recommended that the Authority approve the Loan, as described in the PPF Loan Committee Recommendation and in the Term Sheet; WHEREAS, 3 AAC 106.110(d) requires that a loan from the power project fund be approved by the Authority’s Board if the subject loan will exceed $2,000,000; WHEREAS, 3 AAC 106.110(d) requires that the approval or disapproval of a power project fund loan be in the form of a written determination that contains the findings required by 3 AAC 106.110; WHEREAS, the PPF Loan Committee has recommended findings required by 3 AAC 106.110(d) in the PPF Loan Committee Recommendation, a copy of which is attached as Exhibit A; and WHEREAS, it is in the best interest of the Authority and the State of Alaska to approve the Haida Energy Inc. loan application respecting the Reynolds Creek Hydroelectric Project. NOW, THEREFORE, BE IT RESOLVED BY THE ALASKA ENERGY AUTHORITY AS FOLLOWS: Section 1. The written findings recommended by the PPF Loan Committee, required by 3 AAC 106.110(d), and contained in the PPF Loan Committee Recommendation, attached as Exhibit A, are adopted and incorporated by reference as part of this Resolution. Section 2. The Term Sheet attached as Exhibit B, as amended to incorporate the condition that AEA must approve the sale of the project or the transfer of ownership of Haida Energy, Inc., is adopted and incorporated by reference as part of this Resolution. Section 3. The PPF Loan Committee's recommendation to approve the PPF Loan as described in the Term Sheet, is accepted, adopted and approved. Section 4 . This Resolution is the final decision of the Authority regarding the PPF Loan Application for the Reynolds Creek hydroelectric project. Section 5 . The Executive Director of the Authority is authorized to take such actions as may be necessary or convenient to consummate the PPF Loan including, without limitation, issuing a commitment with respect to the Loan . The Executive Director is authorized to approve non-material changes in the terms and conditions of the PPF Loan as the Executive Director, in her discretion, determines appropriate . DATED at Anchorage, Alaska on this 26th day of June, 2014. ,,,, ... ,,,, ,,, r::AG ,,, ,, <..~t;. y ,, ''. ~"' . . . . .. . . ..<tv ,, ..• :•' ~ . . . . . . . . ~ ';, "0 ' '-:}.' 2 ~ _: c,ORPO~ \ O ~ --.J : -·-~ • --<{ •. ~J:i '\'' . :D-~E ~~AL /~¥ A~ TE.5T$-,s / ~ ', ·· ........ ·· ,, ... ,,, * ,,, ,,, ,,, ~········· /1 RfJ~-G:'TIN1 Secretary AEA Resolution No . 2014 -04 Haida Energy Vice Chair Page 2 of 2