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HomeMy WebLinkAboutRes 1994-10 Settlement Of Litigation Bradley LakeALASKA ENERGY AUTHORITY RESOLUTION NO. 1994-10 RESOLUTION OF THE ALASKA ENERGY AUTHORITY RELATING TO SETTLEMENT OF CERTAIN LITIGATION WHEREAS, the Alaska Energy Authority (the "Authority") is the owner of the Bradley Lake Hydroelectric Project (the "Project"); and WHEREAS, The Authority is party to the BRADLEY LAKE HYDROELECTRIC PROJECT AGREEMENT FOR THE SALE AND PURCHASE OF ELECTRIC POWER ("Power Sales Agreement") dated December 8, 198 7 with Chugach Electric Association, Inc., Golden Valley Electric Association, Inc., Municipality of Anchorage d/b/a Municipal Light & Power, City of Seward Electric System, Alaska Electric Generation & Transmission Cooperative, Inc., Homer Electric Association, Inc., and Matanuska Electric Association, Inc. (the "Purchasing Utilities"). The Power Sales Agreement governs the terms and conditions pertaining to the powers and duties of the Parties concerning the funding, ownership, and operation of the Project; and WHEREAS, The Power Sales Agreement provides, among other things, that the Authority will provide power from the Project to the Purchasing Utilities. Under the Power Sales Agreement, the Purchasing Utilities agreed to pay certain costs, called "Annual Project Costs," associated with the Project; and WHEREAS, Disputes arose between the Authority and the Purchasing Utilities concerning the determination of Annual Project Costs for the 1993 and 1994 fiscal years. The disputes concern the amount properly included in Annual Project Costs with respect to amounts payable to the Authority for services provided by the Authority to the Project; and WHEREAS, On July 15, 1992, the Purchasing Utilities filed a lawsuit in Alaska Superior court for declaratory relief and breach of contract to resolve the fiscal year 1993 budget disputes. The Purchasing Utilities filed a supplemental complaint on February 22, 1994 adding the fiscal year 1994 budget dispute. See Case No. 3AN-92-9447 Civil, Superior Court for the State of Alaska Third Judicial District at Anchorage (the "Lawsuit"); and WHEREAS, the staff of the Authority has negotiated a proposed settlement with the Purchasing Utilities that provides for dismissal of the Lawsuit, payment to the Purchasing Utilities (subject to legislative appropriation) of $250,000.00 in resolution of the fiscal year 1993 and 1994 disputes, and a framework for determination of the amount properly payable by the Purchasing Utilities to the Authority in fiscal year 1995 and subsequent years for services provided by the Authority to the Project; and WHEREAS, the proposed settlement is documented in a proposed Settlement Agreement a copy of which is attached as Exhibit "A" to this resolution (the "Settlement Agreement"); and WHEREAS, the Alaska Attorney General's Office has reviewed and approved the Settlement Agreement; and WHEREAS, the proposed settlement is in the best interests of the Authority and the public it serves. Resolution 1994-10 Page 2 NOW, THEREFORE, BE IT RESOLVED BY THE ALASKA ENERGY AUTHORITY AS FOLLOWS: Section 1. That the proposed settlement, as documented in the Settlement Agreement is hereby approved. Section 2. That, upon execution of the Settlement Agreement by all of the Purchasing Utilities, the Executive Director of the Authority be, and hereby is, authorized and empowered to execute the Settlement Agreement on behalf of the Authority. Section 2. That, upon complete execution of the Settlement Agreement by all parties, the Executive Director be and hereby is authorized and directed to take all actions necessary to fully implement settlement, including, without limitation, taking Resolution 1994-10 Page 3 any actions that may be necessary to seek the legislative appropriation contemplated in the Settlement Agreement. 2nd December, 1994 Dated at Anchorage, Alaska this :>&<XI<lil. day of N~ICJ1::l(,xxlo:fha.4. ALASKA ENERGY AUTHORITY ·a:£&1 Secretary Resolution 1994-10 Page 4 EXHIBIT "A" PROPOSED SETTLEMENT AGREEMENT Resolution 1994-10 Page 5 SETTLEMENT AGREEMENT Between the Alaska Energy Authority and Purchasing Utilities, Bradley Lake Project Annual Project Costs Dispute This settlement agreement ("Agreement"), is by and between the Alaska Energy Authority (the "Authority") and Golden Valley Electric Association, Inc., Chugach Electric Association, Inc., Municipality of Anchorage d/b/a/ Municipal Light & Power, The City of Seward d/b/a Seward Electric System, Alaska Electric Generation & Transmission Cooperative, Inc., Homer Electric Association, Inc., and Matanuska Electric Association, Inc. (collectively the "Purchasing Utilities") (the Authority and each individual Purchasing Utility shall be referred to individually as a "Party" and collectively as the "Parties"). RECITALS This Agreement is made with reference to the following facts: A. The Alaska Energy Authority (formerly the Alaska Power Authority) entered into the BRADLEY LAKE HYDROELECTRIC PROJECT AGREEMENT FOR THE SALE AND PURCHASE OF ELECTRIC POWER ("Power Sales Agreement" or "PSA") dated December 8, 1987 with the Purchasing Utilities. The Power Sales Agreement governs the terms and conditions pertaining to the powers and duties of the Parties concerning the funding, ownership, and operation of the Bradley Lake Hydroelectric Project ("Project"). B. The Power Sales Agreement provides that the Authority will provide power from the Project to the Purchasing Utilities. The Purchasing Utilities agreed to pay certain costs, called "Annual Project Costs," associated with the Project. C. Disputes arose between the Authority and the Purchasing Utilities concerning the determination of Annual Project Costs for the 1993 and 1994 fiscal years. The Authority included in its estimated Annual Project Costs for the 1993 and 1994 fiscal years costs which the Purchasing Utilities contend are not properly chargeable as Annual Project Costs. D. On July 15, 1992, the Purchasing Utilities filed a lawsuit in Alaska Superior court for declaratory relief and breach 1 -Settlement Agreement of contract to resolve the fiscal year 1993 budget disputes. The Purchasing Utilities filed a supplemental complaint on February 22, 1994 adding the 1994 budget dispute. See Case No. 3AN-92-9447 Civil, Superior Court for the State of Alaska Third Judicial District at Anchorage (the "Lawsuit"). E. In entering into this Agreement, the Parties intend to settle all claims, rights and causes of action that they now have against one another with regard to the Lawsuit referenced above. Furthermore, the Parties intend to establish a binding framework for the determination of Annual Project Costs for the 1995 fiscal year and all subsequent years under the Power Sales Agreement. AGREEMENT Section 1 Definitions. All initial capitalized terms in this Agreement shall have the same definition here as was given in the Power Sales Agreement, unless otherwise defined herein. Section 2 Payment to Purchasing Utilities. In settlement of the Lawsuit and the matters, claims and allegations raised therein, the Authority shall pay a total of $250,000 to the Purchasing Utilities by depositing such sum in the Bradley Lake Revenue Fund. Such payment is subject to appropriation by the Alaska State Legislature. The payment shall be made as soon as possible following the Alaska State Legislature's appropriation for the payments, but in no event later than August 31, 1995. Section 3 Agreement Contingent. This Agreement is contingent upon receipt by the Purchasing Utilities of the payment described in Section 2 above. In the event the Authority fails to make the payment described above by August 31, 1995, the Purchasing Utilities may, at their option, declare this Agreement null and void except for Section 6 which will remain in full force and effect. Section 4 Release. Except as provided in Sections 3 and 6 of this Agreement in the event the payment required under Section 2 of this Agreement is not made, each individual Purchasing Utility hereby releases and discharges the Authority from all rights, claims, causes of action, damages, liabilities, losses, and costs, whether known or unknown, that the Purchasing Utilities have against the Authority pertaining or related to those matters, claims and allegations raised in the Lawsuit. Each Purchasing Utility fully understands that it may have additional economic loss, loss of earnings or other losses in the future arising out of the matters claims and allegations raised in the Lawsuit. Each Purchasing Utility nonetheless desires to settle 2 -Settlement Agreement this mater in accordance with the terms of this Agreement with the full understanding that this settlement is final and complete no matter what losses or other problems or damages the Purchasing Utility may incur including unforeseen problems arising out of the matters, claims and allegations raised in the Lawsuit. Section 5 Dismissal. After execution of this Agreement, the Purchasing Utilities shall take all actions necessary to dismiss the Lawsuit without prejudice. Section 6 Reinstitution of Lawsuit/Tolling Period. In the event the Authority fails to make the payment referenced in Section 2 above by August 31, 1995 and the Purchasing Utilities elect to declare this Agreement null and void, the Purchasing Utilities may, on or before October 31, 1995, refile the Lawsuit with the Alaska Superior Court. In the event the Purchasing Utilities refile the Lawsuit pursuant to this Section on or before October 31, 1995, the claims in the Lawsuit shall relate back to the date the Lawsuit was initially filed --July 15, 1992--for purposes of the tolling of any equitable or legal periods of limitation including statutes of limitation. In such event, the Authority shall not raise as a defense to any claim in the Lawsuit any equitable or legal periods of limitation that could be asserted solely due to the lapse of time between dismissal and reinstitution of the Lawsuit pursuant to this Section. The parties agree that in the event the Lawsuit is refiled pursuant to this Section, that this Agreement and the recitals and provisions contained herein shall not be admitted as evidence. This Agreement and the recitals and provisions contained herein are made for the purpose of settlement only. In the event the Purchasing Utilities declare this Agreement null and void pursuant to the provisions of Section 3 of this Agreement, this Agreement and the recitals and provisions contained herein may not be used for any other purpose. Section 7 Determination of Annual Project Costs. Section 7 of the Power Sales Agreement obligates the Purchasing Utilities to pay Annual Project Costs for each Fiscal Year {FY) during the term of the Power Sales Agreement. Pursuant to PSA Section 8{a), "Annual Project Costs means all of the costs resulting from the ownership, operation, maintenance of and renewals and replacements to the Project, properly incurred or paid during each Fiscal Year. " Pursuant to PSA Subsections 8{a) {i) -{vi) Annual Project Costs include debt service on Project construction cost financing bonds and funding of related reserve funds. There is currently no dispute between the Parties as to these items. Pursuant to PSA Subsection 8{a) {vii) {C) Annual Project Costs include "non-delegable" costs associated with the Authority's ownership of the Project, specifically: "Project-specific administrative and general expenses of the Authority, such as costs 3 -Settlement Agreement of safety inspections and investigations." These costs include expenses related to accounting and trustee costs associated with any outstanding bonds, and compliance with statutory or regulatory duties of the Authority which cannot be delegated to the Bradley Project Management Committee ("BPMC"). Pursuant to PSA Subsections 8(a) (vii) (D) and (E), Annual Project Costs include costs of the BPMC and "other" BPMC-approved costs, respectively. These costs include administration of Project operating agreements, budget coordination and BPMC meeting recording and recordkeeping. (a) Fiscal Year 1995. For FY 1995, full payment to the Authority for all costs of the Authority associated with PSA Subsections 8 (a) (vii) (C), (D) and (E) shall be determined as follows. The Authority's obligations in FY 1995 shall include all services provided immediately prior to the effective date of this Agreement. {i) July 1 to December 31, 1994. For the period from July 1, 1994 through December 31, 1994, the Authority shall receive payment in accordance with the budget adopted by the Authority for fiscal year 1995 pursuant to Section 13 (e) of the Power Sales Agreement. (ii) January 1 to June 30, 1995. For the period from January 1, 1995 through June 30, 1995, the Authority shall receive $150,000 plus the Authority's actual cost for third party contract services for Federal Energy Regulatory Commission (FERC) compliance work, not to exceed $13,500 unless such excess amount is included in a budget adopted pursuant to Section 13 of the Power Sales Agreement. {b) Fiscal Years Starting with 1996. (1) For FY 1996, full payment to the Authority for all costs associated with PSA Subsections 8 (a) (vii) (C), (D) and (E) shall be $275,000 plus the Authority's actual cost for third party contract services for FERC compliance work. The Authority's obligations in FY 1996 shall include all services provided immediately prior to the effective date of this Agreement. The cost of contract services for third party contract services for FERC compliance work shall be included in a budget adopted pursuant to Section 13 of the Power Sales Agreement. (2) For any fiscal year after FY 1996 during which the BPMC elects to have the Authority continue providing all services performed by the Authority immediately prior to the effective date of this Agreement, full payment to the Authority shall be $275,000 adjusted by a percentage equal to the annual percentage change in the Handy-Whitman Index of Public Utility Construction Costs, Pacific Region, Total Hydraulic Production Plant, January 1, for 4 -Settlement Agreement all years following FY 1996 ("Index") plus the Authority's actual cost for third party contract services for FERC compliance work. The cost of contract services for FERC compliance work shall be included in a budget adopted pursuant to Section 13 of the Power Sales Agreement. (c) Reduced Services After Fiscal Year 1996. Upon prior notice of at least 12 months, for any fiscal year after FY 1996 either the BPMC or the Authority may reduce the Authority's PSA Subsection 8(a) (vii) (D) and (E) duties. For any fiscal year after FY 1996 for which the Authority's PSA Subsection 8(a) (vii) (D) and (E) duties are reduced, the BPMC and the Authority shall agree to an appropriate reduction in the payment set forth in Subsection 7 (b) above. If the BPMC and the Authority cannot agree on an appropriate reduction of services and payments, payment and services shall be pursuant to paragraph 7(b) (2) above, unless the BPMC or the Authority elects to reduce services and payment as set forth in Subsection 7(d) below. (d) Authority Provides only Section 8(a) (vii) (C) Services. (1) For any fiscal year starting with FY 1997, upon at least 12 months prior notice, either the Authority or the BPMC can elect to limit the services provided by the Authority to those specified in the PSA Subsection 8(a) (vii) (C). For any such year, the full annual payment to the Authority for such services shall be $175,000, adjusted by the Index, as provided in Subsection 7(b) above. The BPMC shall be responsible for making arrangements for all services other than those specified in PSA Subsection 8 (a) (vii) (C) . (2) The Authority shall make a good faith effort to minimize the costs of meeting its PSA Subsection 8 (a) (vii) (C) obligations to a level of $150,000 or less (FY 1997 dollars) and shall the Subsection 7(d) (1) payment shall be reduced accordingly. (e) Complete Payment for AEA services. The parties intend that the payments to be made to the Authority pursuant to this Section 7 shall constitute full payment to the Authority for all services provided by the Authority with respect to the Project and with respect to the cost of third party contract services for FERC compliance work. Section 8. No Admission. The Parties acknowledge that entering into this Agreement shall not constitute any admission of fault, wrongdoing, liability, or responsibility by a Party hereto. Section 9. Costs and Fees. Each Party hereto shall pay its own costs and attorneys' fees in connection with the Lawsuit and the preparation and execution of this Agreement. 5 -Settlement Agreement Section 10. Costs Upon Breach. In any dispute arising under or to enforce this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and other costs incurred, in addition to any other remedies. Section 11 Nonwaiver. None of the provisions of this Agreement, including this Section, shall be considered to be waived by a Party unless such waiver is given in a writing signed by that Party. The failure of a Party to insist in any one or more instances upon strict performance of any of the provisions of this Agreement or to take advantage of any of its rights hereunder shall not be construed as a waiver of any such provisions or the relinquishment of any such rights for the future, but the same shall continue and remain in full force and effect. Section 12 Effect of Subject Headings. this Agreement are inserted for conven1ence construed as interpretations of text. Subject headings in only and shall not be Section 13 Amendments in Writing. This Agreement shall not be amended, changed, modified, abrogated or superseded by a subsequent agreement unless such subsequent agreement shall be in the form of a written instrument signed by the Parties that specifically refers to this Agreement. Section 14 Entire Agreement. In entering into this Agreement, the Parties intend to settle all claims, rights and causes of action which they have against one another with regard to the matters, claims and allegations raised in the Lawsuit. This Agreement constitutes the entire agreement of the Parties concerning the settlement of the Lawsuit and supersedes any and all prior negotiations, correspondence, understandings, and agreements between the Parties concerning the subject matter of this Agreement. Section 15 Successors and Assigns. This Agreement shall be binding upon the Parties hereto and their respective successors and assigns by operation of law or otherwise. Section 16 Relationship to the Power Sales Agreement. Except as expressly modified herein, the terms of the Power Sales Agreement remain in full force and effect. Section 17 Governing Law. This Agreement shall be interpreted, governed, and construed under the laws of the State of Alaska. Section 18 in two or original. Multiple Originals. This Agreement may be executed more counterparts, each of which shall be deemed an Section 19 Signature Authorization. Each person who signs below on behalf of a Party represents that he or she has authority 6 -Settlement Agreement to execute this Agreement on behalf of that Party; and that all requisite approvals and consents to enter into and bind each Party to the terms of this Agreement have been obtained. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives. ALASKA ENERGY AUTHORITY By Title ________________________ ___ Date CHUGACH ELECTRIC ASSOCIATION, INC. By Title ________________________ ___ Date MUNICIPALITY OF ANCHORAGE D/B/A MUNICIPAL LIGHT & POWER By Title, ________________________ ___ Date --------------------------- ALASKA ELECTRIC GENERATION & TRANSMISSION COOPERATIVE, INC. By Title, ________________________ ___ Date --------------------------- 7 -Settlement Agreement GOLDEN VALLEY ELECTRIC ASSOCIATION, INC. By Title Date CITY OF SEWARD D/B/A SEWARD ELECTRIC SYSTEM By Title Date MATANUSKA ELECTRIC ASSOCIATION, INC. By Title -------------------------- Date HOMER ELECTRIC ASSOCIATION, INC. By Title -------------------------- Date