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HomeMy WebLinkAboutAEA Board Meeting Jan 25 2007Ke rasAIDEN.LE NDI Alaska Industrial Development and Export Authority AGENDA Alaska Energy Authority Board of Directors January 25,2007 Anchorage,Alaska Following AIDEA Board Meeting 1.CALL TO ORDER 2.BOARD OF DIRECTORS ROLL CALL 3.PUBLIC ROLL CALL 4.PUBLIC COMMENTS 5.PRIOR MINUTES -December 1,2006 6.OLD BUSINESS 7.NEW BUSINESS There is no new business. 8.DIRECTOR COMMENTS A.Director's Status Report of AEA Programs and Projects B.Next meeting date 9.BOARD COMMENTS 10.ADJOURNMENT 813 West Northern Lights Boulevard *Anchorage,Alaska 99503-2495www.aidea.org ¢907/269-3000 *FAX 907/269-3044©Toll Free (Alaska Only)$88/300-8534 ©www.akenergyauthority.org *oc AINE ALASKAAIDEf=co)ENERGY AUTHORITY Alaska Industrial DevelopmentandExportAuthority ALASKA ENERGY AUTHORITY BOARD OF DIRECTORS January 25,2007 @ 12:55pm Anchorage and Juneau,Alaska Teleconference 1.CALL TO ORDER Chairman Barry called the meeting of the Alaska Energy Authority to order on January 25,2007 at 12:55pm.A quorum was established. 2.BOARD OF DIRECTORS ROLL CALL Directors present in Anchorage:Mr.Mike Barry (Chairman/Public Member),Mr.Mark Davis (Designee for Department of Commerce,Community &Economic Development),Mr.Deven Mitchell (Designee for Department of Revenue);and Mr.John Winther (Public Member). (Deputy Commissioner John MacKinnon,Department of Transportation and Public Facilities, absent) 3.PUBLIC ROLL CALL Staff present in Anchorage:Ron Miller (Executive Director),Chris Anderson (Deputy Director - Credit &Business Development),Bruce Chertkow (Loan Officer),Becky Gay (Project Manager), Sara Fisher-Goad (Deputy Director -Operations),Brenda J.M.Fuglestad (Admin Manager),Mike Harper (Deputy Director -Rural Energy),Karl Reiche (Projects Development Manger),Mark Schimsheimer (Project Manager),Jim Strandberg (Project Manager),Valorie Walker (Deputy Director -Finance),and John Wood (Technical Engineer). Telephone:Pat Clancy (Western Financial Group),Tim Oswald (Piper Jaffrey),Bob Shea (Boys & Girls Home Family Services),Michael Huser (Boys &Girls Home Family Services),Bond Stewart (Wells Fargo),and Ken Dole (Resort Associates,Waterfall Resort). Others attending:Brian Bjorkquist (Dept of Law),Betty Gonzales (PenAir Realty),Danny Seybert (PenAir Realty),Orin Seybert (PenAir &PenAir Realty)Jay Page (1°National Bank),Steve Brown (FNBA),Paul Bloom (Merrill Lynch),Judith Hassinger (NWAB),Mayor Siikauraq Whiting (NWAB), Walter G.Sampson (NWAB),Marshall T.White (Dorsey &Whitney),Shelley Ebenall (BHBC),Ken Vassar (BHBC),Craig Smith (Northcrown Properties,Inc.),Dianne Blacksmith (Northcrown Properties,Inc.),Jason Criqut (FNBA),Bernard Zak (Sandia National Labs),and Theresa Obermeyer (Self). 4.PUBLIC COMMENTS Theresa Obermeyer spoke to the group and discussed information available on several websites: The Alaska State Court System;the Alaska Permanent Fund Board Confirmation Committee;and her own personal website -www.tobermeyer.info. 813 West Northern Lights Boulevard *Anchorage,Alaska 99503-2495 www.aidea.org ©907/269-3000 *FAX 907/269-3044 ®Toll Free (Alaska Only)888/300-8534 *www.akenergyauthority.org AEA Board Meeting January 25,2007 Meeting Minutes Page 2 Chairman Barry told Ms.Obermeyer to email the Board with the website she wished for them to visit. 5.PRIOR MINUTES -December 1,2006 The December 1,2006 minutes were approved as presented. 6.OLD BUSINESS There was no old business. 7.NEW BUSINESS There was no new business. 8A.Director's Status Report of AIDEA Programs and Projects Mr.Miller discussed a Memorandum of Understanding between Sandia Corporation and AEA that formalizes a working relationship between Sandia and AEA to pursue development in the energy field and energy technology. Mr.Strandberg provided an overview of four projects.Three are associated with the Alaska Intertie project,an Alaska Energy Authority asset.The Alaska Intertie is a 170 mile long transmission line that stretches from Willow to Healy River and is used to convey energy that is purchased by GVEA from ML&P and Chugach under the Economy Energy Market established by an RCA order. The line,owned by AEA,has no debt associated with it and was constructed in the mid-1980's with State of Alaska appropriations totaling $124 million.AEA is currently operating the line through an Intertie Operating Committee.The current agreement was negotiated with the participating utilities in the 1980's and the Authority collects charges for conveying power and uses that to offset the cost of maintenance and operations.Although we own the facility,the utilities have operational control of the asset.No AEA money flows into operation of the asset. In participation with the Intertie Operating Committee,AEA monitors the operation and maintenance of the line and makes sure the asset is being properly tended to by the utilities that are actually making use of the line. Since 2003,the AEA Board has worked extensively with the utility in an attempt to change the current operating agreement.A number of defects have been identified in that agreement and we have worked closely with our Assistant AG,Mr.Bjorkquist.Following a Board directive,our Executive Director terminated this agreement on October 16,2006.Under the terms of the Intertie Agreement we have begun a four-year process and at end of that time we should have another agreement in place. Recently Matanuska Electric Association offered to purchase this asset.Staff was asked at the last Board meeting to schedule public hearings which will allow the other utilities and the public a chance to voice their thoughts and opinions about the possibility of selling this asset.It was suggested the public hearing be held in conjunction with the Unified System Operator project. AEA Board Meeting January 25,2007 Meeting Minutes Page 3 The Unified System Operator Project (USO)is a result of an $800,000 legislative appropriation awarded to AEA to study the railbelt energy grid authority.Staff has developed a project to study and consider whether we can economically dispatch power more effectively in the railbelt and ways that the railbelt can collectively plan and acquire new generation and transmission infrastructure. This second part is particularly important for the State because the major generation on the South end of the system is aging and will need to be replaced.There are documented estimates showing we will need to invest as much as one billion dollars over the next ten years to replace this generation.The existing utility structure could be looked at from the standpoint of efficiency over the next ten years.We would like to structure the USO project and plan a technical conference with the public and with the utilities.A conference given by experts could educate us on how to restructure the railbelt over the next ten years and efficiently replace this generation. We should consider the disposition of the AEA owned asset as a part of a technical conference where people are allowed to express their opinions and we should listen carefully about where they think we ought to go.As part of the USO project an experienced consultant could advise us on the best way to restructure our power system.The USO should review the way we are currently operating this Intertie and the renegotiation of the agreement as there may be some synergies between those two projects. With a legislative appropriation of $20.3 million dollars,the third railbelt project is the MEA Bypass Project,designed to upgrade a southern segment of the line connecting with the southern part of the Intertie.We currently convey Intertie energy,by agreement,over an MEA-owned line.This appropriation is designed to install a parallel line which would be dedicated to Intertie energy flow. That contract is set to go before the Municipal Assembly for approval as we have contracted the project with Municipal Light and Power.ML&P provides its spin energy over this line and therefore has interest in the operation of the Intertie. We are peripherally involved in the Eklutna Project Transmission Line Upgrade that was designed -to replace the 50-year old line from the ML&P plant to the Eklutna Power Station.This is a grant that was given to ML&P and AEA is the Grant Administrator.ML&P is constructing this project and it is 80%complete. Mr.Strandberg stated that it is written in the contract with ML&P that AEA is not responsible for cost overruns and this was entered into the minutes at the last Intertie Operating Committee meeting. Mr.Bjorkquist stated that after feasibility studies and design are completed,but before construction begins,ML&P will be obligated to commit to completing the project with the available funds.ML&P has stated they will work with the other utilities for joint funding.It was stated that this should not take place without this Board's approval and Mr.Bjorkquist said there are approval processes with respect to quality and construction. In response to questions from the Board,Mr.Strandberg explained that the $20.3 million was to add a new parallel line to the MEA line which stretches from Teeland Substation to Willow. Mr.Bjorkquist said that when the Alaska Intertie Agreement was put together there was a provision that AEA is to contract with MEA for the use of that line,but MEA has terminated that contractual provision.Certain utilities are using that MEA line under an RCA order which ordered joint use and interconnection.Only certain utilities have the right to use 19 miles of what historically has been AEA Board Meeting January 25,2007 Meeting Minutes Page 4 considered the Alaska Intertie.The bypass will make the Alaska Intertie complete from Willow up to Healy. Mr.Strandberg explained that the Alaska Power Authority built the Eklutna transmission line 50 years ago to bring Eklutna Power to Anchorage.Constructed of wood poles,it is very old and needs to be upgraded.MEA,Chugach and ML&P co-own the 40 megawatt capacity which is Golden Storage Hydro.ML&P was successful in getting a grant which is being administered through AEA. Chairman Barry suggested that the consultant for the USO project work on the various agreements it would take to transmit and dispatch power as efficiently as possible and that public hearings be scheduled quickly to gather public comments in time to respond to any legislative hearings that might take place. Mr.Strandberg provided an overview of the Southeast Intertie Projects.The Alaska Energy Authority received $3.2 million dollars to establish or review the feasibility of a transmission line project in Southeast Alaska Ketchikan area.The first part of the project is completion of the Swan- Tyee Intertie,a 69 mile transmission line from the Swan Lake Power Plant serving Ketchikan,north through the Tongass Forest to the Lake Tyee Power Plant,serving Wrangell and Petersburg. The second part of the project is a 30+mile transmission line from the Lake Tyee Power Plant to the Canadian Border.The concept is to connect potential large-scale hydro storage projects in Thomas Bay with projects in the Ketchikan area,take that energy and sell it to the Canadian grid. The previous administration embarked on an initiative to combine the two projects and through synergy improve the feasibility of completion of the Swan-Tyee Intertie and create an economic development project for Southeast Alaska. A consultant was hired and an advisory body was established.A steering committee comprised of local government elected officials in southern Southeast Alaska was formed.The consultant, Hatch Energy,recently produced an interim report with preliminary indications of feasibility.ThefinalreportisdueonMarch31,2007.There is a lot of effort by various groups to get the funding for the Swan-Tyee Project.Right now we're focused on getting this consultant to give us a straight- shot analysis of the project. Chairman Barry asked if anybody looked at the option of giving the priority to hooking up the Canadian grid and then perhaps later completing the Swan-Tyee Intertie. Mr.Strandberg reported that the consultant was asked to come up with all of the viable development scenarios.As to whether or not we should develop the Thomas Bay Project first,the thing that is coming down is that the 100 megawatts of potential capacity in Thomas Bay,but as a large scale hydro storage in a scenic area,it is likely that it would take battles,a lot of money,and 10-12 years to develop those projects.The Swann-Tyee has alignment cleared and permits and there is no impediment to completing it. A discussion ensued about which project might take priority,the Swan-Tyee Intertie or the BC Transmission and the pros and cons of combining the projects.Mr.Strandberg informed the Board that the interim report by Hatch Energy including an estimate for the transmission line and an abstract outlining the project is posted on their website and invited Board Members to review the information. AEA Board Meeting January 25,2007 Meeting Minutes Page 5 8B.NEXT MEETING DATE The next Board Meeting will be Monday,March 19,2007. There being no objection and no further business of the Board,the meeting was adjourned at 1:45 i Rofi Miller,SecretaryAlaskaEnergyAuthority 2.76.02. ALASKA ENERGY AUTHORITY BOARD OF DIRECTORS December 1,2006 -2:55 p.m. Anchorage and Juneau,Alaska Teleconference 1.CALL TO ORDER Chairman Barry called the meeting of the Alaska Energy Authority to order on December 1,2006,at 2:55 p.m.A quorum was established. 2.BOARD OF DIRECTORS ROLL CALL © Directors presentin Anchorage:Mr.Mike Barry (Chairman/Public Member),Commissioner Bill Noll(Department of Commerce,Community &Economic Development),and Mr.John Winther (PublicMember).= Director present in Juneau:Deputy Commissioner Tom Boutin.(Designee for Department ofRevenue). 3.PUBLIC ROLL CALL Staff present in Anchorage:Ron Miller (Executive Director),Chris Anderson (Deputy Director-Credit &Business Development),Valorie Walker (Deputy Director-Finance),Sara Fisher-Goad (Deputy Director-Operations),Becky Gay (Project Manager),Linda MacMillan (Accountant), Brenda Applegate (GomPtrolien.Brenda J.M.Fuglestad (Admin Manager),and Jim Strandberg(Project Manager).Others attending:Brian Bjorkquist and Mike Mitchell (Department of Law),Doug Hall,Bob Price,and Lou Agi (ML&P),Jennie Trieu and Henry Dale (GVEA),Wayne Carmony,Jim Walker,andDonZoerb(MEA),Kirk Wickersham and Sun Kim (Governor Palin's Transition Team),Theresa Obermeyer (Self),Isac Stein and Jeff Brown (Merrill Lynch),Ken Vassar (Birch Horton Bittner & Cherot),Charlie Kozak and Dave McCambridge (KPMG),Tim Bradner (Alaska Journal of Commerce),Jan Sieberts (Washington Capital Management),Don Edwards (Dorsey &Whitney), and Phil Steyer (Chugach Electric Association). 4.PUBLIC COMMENTS There were no public comments. 5.PRIOR MINUTES -October 16,2006 The October 16,2006 minutes were approved as presented. 6.OLD BUSINESS AEA Board Meeting ;December 1,2006 Meeting Minutes Page 2 There was no old business. 7.NEW BUSINESS 7A.Financial Statements Presentation Mr.McCambridge said KPMG LLP has an internal policy similar to what is required in public companies in that partners on engagements rotate off the engagements after they have served for a period of time so that there is a fresh look from the Partner level.This is the reason that he is here this year instead of Kathy Porterfield.: Summarizing the letter to the Board,he said KPMG has issued ann unqualifiied opinion on AEA'sfinancialstatements.There were no changesin accounting policies or significant transactions thatneededtobereportedseparately.Includedin the accounting estimatesis $1.5 millionin allowance for bad debt.Under significant audit adjustments,there.was one past adjustment where a debtserviceaccountintheprioryearclassificationsofnetassetswasshownandrestrictedthatshould have been reduced by the amount of outstanding accrued interest payable of $3.2 million.Those2005financialstatementshavenotberestatedtoaffectthatasstheadjustmenthad1noimpacton conducted separate audits on AEA's federal fi nancial assistance award grants as required underOMBCircularA133.KPMG conducted those audits and.has.issued unqualified opinions on theconductofAEA's operation of the federal funds.There were no disagreements with managementoveraccountingquestionsorissuesconcerningtheA133audit.Een HEE7B.Matanuska Electric Offer to Purchase Alaska IntertieANovember14,2006 letter -ion he Jordan,"President,Matanuska Electric Association, requested a place on the Authority's December agenda to present a proposal to purchase theAlaskaIntertie.chek Mr.Jim Walker,Senior Counsel "tor Matanuska Electric Association read into the record his December 1,2006 presentation (appended to this written record as Attachment A). Commissioner Noll asked that staff pursue the issue and bring back their thoughts and recommendations to the Board on how to move forward. Mr.Winther said before this takes place,we first need to decide if we want to sell,then we need to decide how we want to sell it.He had no objection to the proposal but there have not been a lot of discussions about the sale of the asset. Commissioner Boutin reiterated Mr.Winther's comments and also said that due diligence would require an analysis to see what is best for the Alaska Energy Authority and State of Alaska. Chairman Barry said that the Energy Task Force spent much time reviewing present practices and hoped for future practices within the railbelt utility system.A key of any potential sale of this asset would be how it fits into an overall railbelt energy grid and the management of that grid,as there is no question that the Alaska Intertie is a vital link between the southern and northern part of the railbelt.The question is whether our duty under the statute that MEA presented is one of AEA Board Meeting December 1,2006 Meeting Minutes ,Page 3 maximizing the value to the corporation or whether it is a much greater burden of doing our best to make the railbelt energy grid serve the people of Alaska as best it can. Chairman Barry indicated that the Board understood that MEA has proprietary reasons for keeping the details of their proposal confidential;however,it is important that the Alaska Energy Authority look at the actual details of how this would affect the grid.It was grievous that AEA had to go so far as to terminate the intertie agreement in order to focus attention on reparations on the intertie and forestall any potential disservice or lack of service to Alaskans.The Alaska Intertie is a public asset and therefore deserves public scrutiny as to how it is to be dealt with;repaired,maintained,or sold.Mr.Winther supported the Chairman's recommendation of cenit forward to see where theprocessleads.Trying to bring the whole thing together in four years has not worked;maybethiswillbeawaytogettheissuetakencareof. Commissioner Noll and Deputy Commissioner Boutin were also in1 agreement with therecommendation.s ; Chairman Barry instructed staff to meet with 'MEA and,obtain an understanding of theirproposal.After this has been accomplished staff is 'to hold public hearings to allow the otherrailbeltutilitiesandthepublictocomeforthwithanythoughtsoropinions.It was noted that staff would need torreview whether MEA's proposal could be kept confidentialonceithasbeenpresentedtotheBoardforaction.Mr.Jim Walker said MEA understands thatatthetimeofactiontherewillhavetobepublicdisclosureae Mr.Lou Agi,Municipal Light &Power,askedthat the Board front end this process with their owndeliberationswithoutconsideringordiscussinganyofthemattersthathavebeensubmittedinconfidentialitybyMEA.There is no.need to get involved with handling confidential material inanyrespect,even if there is some sense that it would be later divulged,as once you have readthematerialthoseideaswillremainwithyou.»:He recommended not reviewing any confidential proposal from MEA at this time.Obviously,there are other utilities that are interested in theintertie.: MEA is part of a joint action agency that it created either with Homer Electric through AEG&T or otherwise.This intertie,together with railbelt energy matters,has been in front of the legislature continually as well as in front of the Board of AEA.Under the joint action agency statute there is a process where the legislature will direct AEA to negotiate the sale,transfer,or acquisition with a JAA and then presumably name the agency or instruct that it be done on a competitive basis. This is a public asset and it cannot be better managed than through AEA's hands if it is to be managed at all. He suggested there may be a greater path of prudence in thinking these matters over.AEA has a specific statute which speaks to the sale of AEA assets -there are rival competitors in the railbelt scenario -maybe the process to sell or transfer the intertie asset should be led by the legislature and the Governor's office with input from AEA.Mr.Agi said that he is sensing that the Board of AEA is giving up entirely on managing the intertie.He indicated that in the course of the meetings that he attended,which led to the termination document,he recalled one time that the Chairman said that a principal source of the problem and failing to achieve unanimity was MEA's positions on a lot of the restructuring. AEA Board Meeting December 1,2006 Meeting Minutes Page 4 When the termination notice was issued,AEA indicated that they thought the problems could be solved fairly easily and,at a point,the Board directed AEA's engineer to work with the utilities. Nobody has ever said anything.In fact,you have had no negative comments in front of you by any of the utilities,at least none formally.You can infer that there was an effort to see where that would lead,but now the same agency,less than 30+days later,is saying insoluble,can't be handled,best thing is to get rid of it and bring $50 million into the treasury.He suggested that is not the path of wisdom or consistency and that there is also a sense of hubris to have heard senior council to MEA come forward,cite the event that precipitated the termination ,and say obviously it has to be managed bya utility and let us be your utility. Chairman Barry stated he did not hear the Board say they thought the Authority should accepttheoffer.The consensus of the Board is this is a genuine offer so they should haveconsideration.Thereis no predilection of accepting or rejecting the offer.We appreciate your comments about the confiidentiality |issue.This \was.;not an offer that wassolicitedbytheAuthorityandwearenotgoingtotrytopushthisquicklythroughtheprocess.Our focus is on how we can make the intertie work better for all Alaskans.Itis encouraging thatthereseemstobeawillingnessiteratedtoAEAfromtheutilitiesthattheyarewillingtositdownandlookathowtheagreementscanbeadjustedto'make them work better.No decisions arebeingmadeheretodayatthisboardmeeting.Weappreciate your comments and will makeampleopportunityforeveryoneelsetovoicetheiropinionChairmanBarryaskedforclarification'on'1 Mee Agi's comment that other utilities would beinterested.He inquired as to whether ML&P would have an interest in either acquiring theintertiejointlywithothersorseparatelyifthe.asset were made available.Mr.Agi stated this ispartoftheareagroupandoneofitsstatedpurposesinitsagreementofestablishingitselfwasthatwewouldstandready,to accept.and administer the intertie as best we could.Chairman Barry directed staff to leam more about MEA's offer and then hold public hearings toascertainaprocessinwhichtomoveforward.He said staff should not abandon the path that we are currently on in working with the utilities to make changes to the existing agreements that would be amenable to everyone that would solve the intertie issues.Consider this another option that has presented itself. Mr.Winther asked if this meant that staff is going to work toward laying out the process to start negotiations with MEA or is this to decided if we want to sell it and,if so,then open up the process and ask for offers. Chairman Barry said the Board is not asking staff to commence negotiations with MEA.We are requesting that staff learn more about MEA's proposal and then hold public hearings to get input from anyone who is affected by this potentiality. We all understand that this has many nuances and probably needs to be addressed within the overall administration of the railbeit grid.That does not mean that we are going to brush aside a genuine offer that has come forward from one of the prominent utilities on the railbelt.We need to give it due consideration and we will. Mr.Henri Dale,Golden Valley Electric Association,said AEA needs to evaluate what the best thing is for the State of Alaska.This intertie is very important for a large part of the economy of the state,it links the north and the south,the two biggest residential areas of the state and | would hope that you do your due diligence.Before you go into negotiations AEA needs to AEA Board Meeting |December 1,2006 Meeting Minutes Page 5 decide what the best purpose is for everybody.You are going to need to evaluate the intertie in the terms of what your study sees as the future for the State of Alaska. 8A._Director's Status Report of AIDEA Programs and Projects Mr.Miller thanked the board for their work during the last four years. 8B.NEXT MEETING DATE The board will be polled for the next meeting date. 9.BOARD COMMENTS sts. The Board thanked each other and staff for all of their hard work during their tenure. 10.ADJOURNMENT There being no objection and no further business of the Board,the meeting was adjourned at 3:35 Ron Miller,Secretary Alaska Energy Authority Attachment A December 1,2006 Presentation of Matanuska Electric Association to the Alaska Energy Authority Board of Directors Regarding Purchase of the Alaska Intertie by James L.Walker,Senior Counsel Directors,Mr.Miller,I want to thank you for scheduling MEA into your meeting agenda.For those of you who do not know me,I am Jim Walker,Senior Counsel for Matanuska Electric Association. Pursuant to Alaska Statute 44.83.080(7),and the Regulations at 3 AAC 105,this Authority has the power to sell any real or personal property that it owns or in which it otherwise has a legal interest.Any such sale must be found by this Board to further the corporate purposes of the Authority.Those purposes,are set out in Alaska Statute 44.83.070 as being to promote,develop, and advance the general prosperity and economic welfare of the people of this state by providing a means of financing and operating power projects.The Alaska Intertie is one of the power projects owned and operated by the Authority. The Alaska Intertie has been primarily utilized to make excess generation capacity in the southern Railbelt area available for consumers in the northern Railbelt area served by Golden Valley Electric Association.It has also facilitated contractual transfer of comparatively low cost energy from the Authority's Bradley Lake Hydroelectric Project to consumers in the GVEA service territory and provided comparatively high cost transmission service to MEA's Stevens Substation. The Alaska Intertie Agreement dated December 23,1985,was intended to be the vehicle facilitating achievement of the Authority's purposes with the Alaska Intertie.The Authority has recently given notice terminating the Alaska Intertie Agreement,effective October 16,2010. This notice was given after years of negotiations involving the participating utilities and Authority staff failed to produce a means for financing the long-term repair,rehabilitation,and improvements required for safe operation of the Alaska Intertie. The State owned portion of the Alaska Intertie mostly runs through MEA's service territory,and energy transfers over the Alaska Intertie are dependent upon use of more than 20 miles of MEA facilities.The Alaska Intertie needs the continuous attention to maintenance,repair, rehabilitation,and improvements that a regulated public utility can provide. MEA hereby offers to purchase the Alaska Intertie from the Authority pursuant to 3 AAC 105.400,for approximately $50 million,under terms and conditions mutually agreeable to the Authority and MEA that provide for Commission approved rates and the long-term viability of the Alaska Intertie for all connected entities providing electric utility services in Alaska.MEA has developed terms upon which negotiations leading to its purchase of the Alaska Intertie could be based.However,for competitive business reasons MEA desires to keep these terms confidential while negotiations are in progress. MEA is here today to specifically ask the Board to authorize its Executive Director to enter into confidential discussions regarding sale of the Alaska Intertie to MEA.The existing MEA proposal to AEA Board December I,2006 Page |of 2 unsatisfactory contractual arrangement under which the Alaska Intertie is operated will expire in roughly 46 months.The sale ofthis asset to MEA would best fulfill the public policy requirements of the Authority with respect to the Alaska Intertie. If there are any general questions that you want to ask,we would be happy to answer them at this time.Thank you for your time and attention to this important issue. MEA proposal to AEA Board December 1,2006 Page 2 of 2