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HomeMy WebLinkAboutCopper Valley Electric Association-Outgoing Correspondence 1996i ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY {= ALASKA m= ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 March 1, 1996 Mr. Clayton Hurless General Manager Copper Valley Electric Association P.O. Box 45 Glennallen, Alaska 99588 SUBJECT: | Working Papers Sutton Glennallen Intertie Dear Clayton: Attached are the working papers which we prepared to address major issues raised in the December 1995 public meetings. These were sent to Commissioner Irwin on February 23, 1996. | believe these are the working papers which you requested in your February 26, 1996 letter. These papers include: 1. Review of Environmental Impacts, Copper Valley Intertie and Alternatives. 2. Cost Estimates and Risk Analysis for Copper Valley Intertie and Alternatives. 3 Projected CVEA Cost of Power Assuming State Loan Is Available for Any New Power Supply Alternative. 4. Copper Valley Intertie Power Flow. 5 Petro Star Agreement. We would be pleased to meet if you have any questions or feel free to contact Mr. Dave Gray of CH2M Hill or Riley Snell or me if you wish to discuss any details. Sincerely, Meat Dennis V. McCrohan, P.E. Deputy Director - Energy Attachments cc: Randy Simmons Riley Snell Dave Gray/CH2M Hill Mike Irwin/DCRA (Catches = e a ey i ALASKA INDUSTRIAL DEVELOPMENT =~ ; * AND EXPORT AUTHORITY = ALASKA @@E™ ENERGY AUTHORITY ——_————— 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 561-8050 FAX 907 /561-8998 September 15, 1995 Mr. Clayton Hurless, General Manager Copper Valley Electric Assoc. Inc. P.O. Box 45 Glennallen, AK 99588 Dear Clayton, This is in regards to your letter of August 31, requesting that the Alaska Industrial Development & Export Authority (AIDEA) conduct a due diligence examination of Arctic Slope Regional Corporation. The purpose of the examination would be to determine the financial condition of Arctic Slope as it relates to their possible issuance of a Letter of Credit to Copper Valley Electric Assoc. Inc. (CVEA). The Authority would be happy to assist CVEA in conducting the due diligence, subject to a reimbursement agreement for all of the Authority’s out-of-pocket costs. Since the Letter of Credit is predicated on the Sutton-Glennallen Intertie being constructed, we would propose to delay the start of the due diligence until after the decision is made by the Department of Community and Regional Affairs to proceed with the project. The Authority will move to draft the scope of services if CVEA has other reasons to proceed with the review of Arctic Slopes’ financial condition for purposes of issuance of a Letter of Credit. Please let me know if you wish the Authority to proceed. Shel Executive Director CC: Percy Frisby, Division of Energy, DCRA * bec: Dennis McCrohan Randy Simmons COPPER VALLEY ELECTRIC ASSOCIATION, INC. P.O. BOX 45, GLENNALLEN, ALASKA 99588 (907) 822-3211 FAX 822-5586 VALDEZ (907) 835-4301 FAX 835-4328 August 31, 1995 nye Riel Wie | n \ }O) Eble te Mr. William R. Snell, Executive Director ka inuus Alaska Industrial Development & Export Authority and Export Authority 480 West Tudor Avenue to. Ove Anchorage, Alaska 99503 Dawe © Carn Dear Riley: on As you are aware, Copper Valley Electric Association (CVEA) is continuing to work with Petro Star to find a way to keep them on the system during construction or, in the alternative, to have them return to the system when the Sutton to Glennallen transmission line is completed. One of the items Petro Star has proposed for negotiation is for CVEA to agree to exchange the present Letter of Credit issued by the National Bank of Alaska (NBA) for a similar Letter of Credit that would be issued by their parent company, Arctic Slope Regional Corporation. Petro Star made this same request in early 1995, but CVEA's Board of Directors would.not agree to the proposal because of the lack of firm information about Arctic Slope’s financial condition. In our conversation of August 30 you mentioned that you would consider Arctic Slope's Letter of Credit to be adequate security to support a long-term power sales agreement with Petro Star, and if requested, you could conduct a due diligence search through a company you do business. You would then provide CVEA with a recommendation as to the quality of a Letter of Credit from Arctic Slope. If the due diligence report and your recommendation are positive, I believe CVEA's Board of Directors would reconsider their March 1995 decision and accept such a Letter of Credit in lieu of the one from NBA. CVEA's positive response to Petro Star on this issue CVEA, therefore, respectively requests AIDEA to conduct a due diligence examination of Arctic Slope Regional Corporation for the purpose of determining whether or not Arctic Slope’s financial condition is adequate to support a Letter of Credit in the amount of $300.000. CVEA will bear any cost associated with the report. We appreciate AIDEA's cooperation on this matter. Yours truly, - Clayts Hurless General Manager w:\word\cdh\95-139jw.doc ‘Serving the Copper River Basin and Valdez (e —aaxts e T. Stody ALASKA INDUSTRIAL DEVELOPMENT > AND EXPORT AUTHORITY /= ALASKA @@m— ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 561-8050 FAX 907 /561-8998 October 5, 1994 Mr. Clayton Hurless General Manager Copper Valley Electric Association, Inc. P.O. Box 45 Glennallen, Alaska 99588-0045 Subject: | Sutton to Glennallen Intertie Supplemental Financing Dear Clayton: The Authority staff has completed its initial review of the information provided regarding the Sutton to Glennallen Intertie. Prior to involving our investment bankers, legal counsel, and others | would like to schedule a small working group meeting to discuss general issues and concepts which need to be clarified. Resolving or at least understanding these topics and issues will assist the Authority in providing explicit instructions to our financing team members and in arriving at the optimum financing structure for the project participants. In particular we require discussions on the following topics: Ae We assume that Copper Valley Electric Association (CVEA) is anticipating a project revenue debt financing structure that uses a moral obligation pledge from the State of Alaska or the Authority to improve marketability. While such a structure appears to meet the general intent of the adopted legislation (SLA 1993, CH 18, § 32, line 20-24, pg 36) there remain many unresolved financial variables which preclude us from determining the feasibility of such an approach. Does CVEA intend to adopt the J.C. Bradford May 3, 1994, report as its plan of finance or is a new plan of finance in development? Based on current engineer’s estimates, what is the amount of debt financing required above and beyond the state’s loan amount? AIDEA 73 Mr. Clayton Hurless October 5, 1994 Page Two What other assumptions have been made in your analysis regarding debt service parameters? Does your financing analysis demonstrate a marketable debt offering prior to a pledge of the state’s or Authority’s “moral obligation?” 2. Based on the information provided and our discussions you have indicated both the integrated and non-integrated approaches are being evaluated What is the timeline for CVEA’s decision regarding these two approaches? Obviously there are numerous economic and financial differences regarding the option that would influence any project financing debt structure. If the integrated approach is adopted, who will be the Owner and Operator and what is the form of ownership if the railbelt utilities are involved? 3. What is your current development schedule regarding: ° Completion of environmental permits, acquisition of property and rights of ways, release of state monies to fund development activities? ° Completed evaluations of proposals responding to power supply RFP, selection of suppliers and fabrication schedule of long lead time items; finalization of power sales agreement. . Conclusion to the Alyeska issues. . Project cash flow projections. . Scope, actions required, and schedule for the APUC or other agencies requiring reviews and approvals. Additional information would include an overall implementation plan showing the relationship between major activities and a description of your project management organization. Please contact me at your earliest convenience so the necessary scheduling arrangements can be made. If you have any questions, please do not hesitate to call me. Sincerely, ilfiam R. Snell Executive director WRS:bif h:all\bjfisutgleni AIDEA 74 bec: Dennis V. McCrohan, Deputy Director (Energy) Daniel W. Beardsley, Contracts Manager AIDEA 75