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HomeMy WebLinkAboutAEA Board Meeting Jan 15 2009ALASKA ENERGY AUTHORITYax¢x Alaska Industrial DevelopmentandExportAuthority AGENDA Alaska Energy Authority Board of Directors Thursday,January 15,2009 Anchorage,Alaska 1.CALL TO ORDER 2.BOARD OF DIRECTORS ROLL CALL AGENDA APPROVAL PUBLIC ROLL CALL PUBLIC COMMENTS oOafFWPRIOR MINUTES -December 11,2008 7.OLD BUSINESS 8.NEW BUSINESS A.Power Project Fund Loan,Resolution No.2009-01 Alaska Power &Telephone Co. 9.DIRECTOR COMMENTS A.Director's Status Report of AEA Programs and Projects B.Next meeting date February 26,2009 10.BOARD COMMENTS 11.ADJOURNMENT 813 West Northern Lights Boulevard e Anchorage,Alaska 99503-2495 www.aidea.org e 907/771-3000 e FAX 907/771-3044 e Toll Free (Alaska Only)888/300-8534 «www.akenergyauthority.org *oe AIOE ALASKA[DEN {=ENERGY AUTHORITYWeNIEoeattenemer"ReadAlaska Energy Authority BOARD MEETING MINUTES Thursday,January 15,2009 Anchorage,Alaska 1.CALL TO ORDER Chairman Pat Galvin called the meeting of the Alaska Energy Authority to order on January 15,2009 at 1:19 p.m. 2.BOARD OF DIRECTORS ROLL CALL A quorum was established. Members present in Anchorage:Chairman Pat Galvin (Commissioner,Department of Revenue); Vice Chair John Winther (Public Member);John Kelsey (Public Member);Commissioner Emil Notti (Department of Commerce,Community &Economic Development);and Commissioner Leo von Scheben (Department of Transportation &Public Facilities). Chairman Galvin confirmed that public notice requirements had been met. 3.AGENDA APPROVAL MOTION:Commissioner von Scheben moved to approve the agenda as presented.Seconded by Mr.Kelsey.There being no discussion,the question was called.A roll call vote was taken and the motion passed. 4.PUBLIC ROLL CALL Staff present in Anchorage:Steve Haagenson (AEA Executive Director);Chris Anderson (Deputy Director-Credit);Mike Harper (Deputy Director-Rural Energy);James Hemsath (Deputy Director- Development);Valorie Walker (Deputy Director-Finance);Bruce Chertkow (Loan Officer);Karsten Rodvik (Project Manager-External Affairs);Chris Rutz (Procurement Manager);Mark Schimscheimer (Project Manager);Brenda Fuglestad (Administrative Manager);and Sherrie M. Siverson (Administrative Assistant). Others present in Anchorage:Brian Bjorkquist (Department of Law);Charlie Cole (Attorney). Participating via teleconference:Glen Martin,Robert Grimm,and Chad Haggar (Alaska Power and Telephone Company). 5.PUBLIC COMMENTS There were no public comments. 6.PRIOR MINUTES -December 11,2008 The minutes were approved as presented. 813 West Northern Lights Boulevard *Anchorage,Alaska 99503-2495www.aidea.org *907/771-3000 *FAX 907/771-3044 ®Toll Free (Alaska Only)888/300-8534 ®www.akenergyauthority.org AEA Board Meeting January 15,2009 Meeting Minutes Page 2 MOTION:Mr.Kelsey moved to approve the minutes as presented.Seconded by Mr.Winther. There being no discussion,the question was called.A roll call vote was taken and the motion passed. 7.OLD BUSINESS There was no old business. 8.NEW BUSINESS Resolution No.2009-01 Alaska Power and Telephone Company,Power Project Fund Loan Alaska Power &Telephone Company (AP&T)has requested a Power Project Fund loan in the amount of $3,596,768.This 30-year loan is for construction of a transmission line from Coffman Cove to Naukati on Prince of Wales Island.The credit committee reviewed and approved the loan. Per regulations,Resolution 2009-01 requires approval by the Board. In response to a question by Chairman Galvin,Mr.Chertkow said that PPF loans are typically secured by the project itself and confirmed that the net assets of AP&T substantially exceed the amount of loans and liens described in the memo to the board., In response to questions from the board,Mr.Grimm said the northern intertie to Naukati and Coffman Cove would reduce community retail rates by 57%.Diesel heat would not be eliminated, but dramatically reduced.A tariff will apply to all customers on the island and the revenue will beusedforrepaymentofthedebt.Construction is anticipated to begin this spring on Department of Transportation Right-of-Way land and will require a U.S.Forest Service Special Use Permit. MOTION:Commissioner Notti moved to approve Resolution 2009-01.Seconded by Commissioner von Scheben.There being no discussion,the question was called.A roll callvotewastakenandthemotionpassed5-0. AYES:Kelsey,Notti,von Scheben,Winther,Galvin NAYS:None 9.EXECUTIVE DIRECTOR COMMENTS Communication Training A recommendation from Crossroads Leadership Institute was to create an open,trusting and transparent environment;provide training in communication,conflict resolution,team building,and trust building with the purpose of increasing trust and transparency in the work environment.Jim Hemsath will facilitate a book club beginning with Crucial Conversations:Tools for Talking When Stakes are High.Beginning next week staff will meet for approximately 17%hours over a three- week period to discuss the book. Renewable Energy Fund On January 12,2009,AEA staff met with the Renewable Energy Fund Advisory Committee to review the methodology for grant recommendations.AEA is finalizing the Round 1 package for the Governor's office and the Office of Management &Budget (OMB),who will then submit them to the Legislative Budget &Audit Committee (LB&A).The ranked list will be presented at the next Board meeting. AEA Board Meeting January 15,2009 Meeting Minutes Page 3 Because the Round 2 review is only 25%complete,AEA is unable to forward detailed recommendations to the Legislature within 10 days of the start of the Legislative session as required in HB152.Mr.Haagenson will write a letter to Legislative leadership to request a 30-day delay,until March 1,2009,to ensure time for a high quality evaluation.There are 79 projects spread across Alaska totaling $100,000,000. $100 million in funds were appropriated for Round 1 and HB152 requires approval from LB&A before awarding grants to successful applicants.Funding for Round 2 requires appropriation by the full Legislature. Alaska Energy:A First Step Toward Energy Independence The narrative in this report is designed to provide information to engage Alaskans who have a passion to provide energy solutions,stimulate the Alaskan economy,and provide leadership for the benefit of all Alaskans. Mr.Haagenson distributed copies of the report to Board members.Chairman Galvin said the report is not the Governor's energy plan,but is a primary component for areas outside the railbelt. Mr.Haagenson provided a brief explanation of the "meter concept”on page 14.A CD included with the report contains community energy models sorted by Community Name,Alaska Legislative Senate Districts,Alaska Legislative House Districts,and Alaska Native Corporations.A pdf of the report and the community models are available on the web athttp://www.akenerqyauthority.org/alaska_energy.html Railbelt Integrated Resource Plan Project (RIRP) Proposals for development of a 50-year Regional Integrated Resource Plan (RIRP)are being evaluated.The long range plan will identify combinations of generation and transmission (G&T) capital improvement projects in the Railbelt Region of Alaska.The final report is expected late summer 2009. The next board meeting will be February 26,2009. 10.BOARD COMMENTS The Board commended Steve and the staff for doing a great job. 11.ADJOURNMENT There being no objection and no further business of the Board,the meeting was adjourned at 1:53 p.m. AZSteveHaagenson,Executive Director/Secretary Alaska Energy Authority Alaska Energy Authority BOARD MEETING MINUTES Thursday,December 11,2008 Anchorage,Alaska 1.CALL TO ORDER Chairman Pat Galvin called the meeting of the Alaska Energy Authority to order on December 11, 2008 at 10:32 a.m. 2.BOARD OF DIRECTORS ROLL CALL A quorum was established. Members present in Anchorage:Chairman Pat Galvin (Commissioner,Department of Revenue);Vice Chair John Winther (Public Member);John Kelsey (Public Member); Commissioner Emil Notti (Department of Commerce,Community &Economic Development); and Commissioner Leo von Scheben (Department of Transportation &Public Facilities). Chairman Galvin confirmed that public notice requirements had been met. 3.PUBLIC ROLL CALL Staff present in Anchorage:Steve Haagenson (AEA Executive Director);Chris Anderson (Deputy Director-Credit);Sara Fisher-Goad (Deputy Director-Operations);James Hemsath (Deputy Director-Development);Valorie Walker (Deputy Director-Finance);Brenda Applegate (Controller);Brenda Fuglestad (Administrative Manager);and Sherrie M.Siverson (Administrative Assistant). Others present in Anchorage:Brian Bjorkquist (Department of Law);David McCambridge (KPMG);Eric Lidji (Petroleum News);and Clinton White (STG Incorporated). Arrived while meeting in progress:Ted Leonard (AIDEA Executive Director);Bruce Chertkow (Loan Officer);Chris Mello (Project Manager);Linda MacMillan (Accountant);Karl Reiche (Projects Development Manager);Mark Schimscheimer (Project Manager);Jim Strandberg (Project Manager);and Brian Donaldson (Primary Care of Alaska). 4.PUBLIC COMMENTS Mr.Clinton White,STG Incorporated,asked several questions regarding the Renewable Energy Fund Grant Application Program.He asked for clarification about the schedule for applications that have been submitted because he felt there was a lack of transparency in the way the applications were being reviewed and discrepancies in the numbers and projects viewed online. He stated the need for greater transparency because as the second largest renewable energy fund in the country,this should be evaluated fairly and openly with good dialog among all partners involved in the process. AEA Board Meeting December 11,2008 Meeting Minutes Page 2 STG has assisted several clients in completing applications that asked for cost benefit ratios, but there was limited information available as to what should be used for the main input.This leaves room for errors in the cost benefit numbers generated,one of the main deciding factors in how the funds will be allocated to specific projects.The job could have been done better in the area of communicating cost categories and how costs should be allocated to a project in the budget worksheet prepared for the grants. Mr.Haagenson stated that ISER was hired to determine the price for fuel and will be conforming the numbers to a common index.A draft process is in place and the Statute is clear about evaluating projects on benefit-to-cost;the most weight is given to high-cost areas first and then to matching.All components of the Statute have been incorporated into a fairly comprehensive process and AEA is currently doing an internal review.A Regional Advisory Committee has been involved in the structure of the evaluation and the overall process.Information will be submitted to the committee at a meeting on December 18,2008 and they will assist with regional spreading to ensure projects are not concentrated in any one area of the state.When the committee review is complete,all applications including the |Taw data,evaluations andcommentswillbepostedonline. LB&A is in the process of selecting a new committee and it is anticipated that FY 2009 information will be submitted in January 2009.By Statute,the second $50 million dollars,FY 2010,will be submitted to the Legislature on January '30,2009,ten days after the session begins.The process is new and taking longer because.each application received is being evaluated internally.Outside economists are also evaluating the benefit-to-cost ratios not only for the project,but also for the public benefit-to-cost ratio.In response to the Board,Mr.Haagenson stated that the meeting on December 18,2008 is apublicadvisorycommitteeandopentointerestedparties.5 'ay Wag insChairmanGalvinreiteratedthattheapplications'are currently in an internal evaluation phasewheretheworkisbeingdonesothetransparencyisnotevident.During the next phase,beforeadecision|is§actually made by the Legislature,everything will be made public.diy,rey hee he .In response to the Board.Mr.White stated that the Alaska Renewable Energy program is second nationally only to California based on information from Chris Rose.Mr.Haagensonstatedthatthefundisfor$250 million dollars,$50 million for five years and an additional $50millionwasaddedinaspecialsession.- 5.PRIOR MINUTES -October 7,2008 and November 10,2008 The minutes of both meetings were approved as presented. MOTION:Mr.Winther moved to approve both sets of minutes as presented.Seconded by Mr.Kelsey.There being no discussion,the question was called.A roll call vote was taken and the motion passed. 6.OLD BUSINESS There was no old business. AEA Board Meeting December 11,2008 Meeting Minutes Page 3 7.EXECUTIVE DIRECTOR COMMENTS Status Report of the August 3,2008 Recommendations from Crossroads Leadership Institute A._Creation of an Open,Trusting and Transparent Environment Create an open culture which encourages candor at all levels. Implement the "I will...”agreement throughout the building. Provide training in communication,conflict resolution,team building,and trust building with the purpose of increasing trust and transparency in the work environment. Promoting fairness in the treatment of all employees. Develop and redefine communication practices throughout the building. Conduct "Open Forum Meetings”to discuss current topics. Develop multiple media to provide access to information Encourage employee input to changes which affect them. Implement a continuous improvement program.Process improvement will involve employees,and will identify process bottlenecks,waste,and promote a quality culture with AIDEA/AEA. .Human Resource Development Hire a full time senior level HR Manager to be shared between AEA and AIDEA. The HR Manager will be responsible for all HR activities and functions including but not limited to:staff development,organizational development,performance management programs,linking training to the strategic plans,staffing,design a conflict resolution process for employees,comprehensive compensation program (changes to compensation and benefits)and succession planning. Develop HR policies and procedures to be applied consistently throughout the organization. Provide management and supervisor training. Managers need to explore ways to let people know they are appreciated in a genuine and supportive fashion.Employees need to hear "good job”much more often from their managers. Strategic Planning All employees will be involved in the newly revised strategic plans for both AEA and AIDEA through a process so each employee can see the big picture and understand how the job they do fits into driving the mission for their organization Develop and implement strategic plans for both AEA and AIDEA. Review the organizational structure of AEA and AIDEA to more effectively meet the missions of each organization. Provide each organization with their own administrative services. Physical Work Environment The building needs repairs,painting and general maintenance. Noise is an issue with the cubicle office spaces. Alaskan Energy Report: AEA Board Meeting December 11,2008 Meeting Minutes Page 4 Continue to present to the public on the concept.The narrative is being finalized and includes stand-alone technology sections.We have recently modified the output to clearly show the local opportunities for fuel sources.The meter format identifies three zones:green,yellow and red that show crude oil costs.The alternative fuels are shown how they compare to various fuel prices. Renewable Energy Fund: Total applications received in both rounds |and Il totaled 234;requesting over $755 Million. Attached are the draft review criteria being used in each stage of the review process for applications. Summaryof the applications received and the status of the review process AEA iscompletingfortheRenewableEnergyFund: Round |grant applications received (due 10/8)=114 (one those received was accidently counted twice is the reason it appears there may have been 115 received);requesting $444 Million. http:/Awww.akenergyauthority.org/RenewableEnergyFund/RFA ProjectLocations 3Nov08.xls Of the 114 received,99 of the applications were determined to be eligible projects worthy of additional review. hitp:/Awww.akenergyauthority.orq/RenewableEnergyFund/RFA RoundlApplicantstoStagellReview_7Nov08.x!s Of these 99 applications,the AEA still needs to complete the review of approximately 30 more Round |applications.These reviews involve outside economists,project managers and program managers.Their review is to determine the technical and economic feasibility of the proposed projects,recommend whether to actually fund the project and at what level of funding. Currently,it is planned to have a meeting with the Renewable Energy Fund Advisory Committee on December 18,2008 to review AEA's recommendations and determine regional priorities (per the statute)for all Round |applications received. Round Il grant applications received (due 11/10)=120 (one those received was accidently counted twice is the reason it appears there may have been 121 received);requesting $311 Million. http:/Awww.akenergyauthority.org/RenewableEnerqyFund/RFA RoundllApplications alphabyApplicantName_19Nov08xis AEA has not yet begun the review of Round II applications received. Google Earth map of the Round |applications moved to the Stage II review:http://www.akenergyauthority.org/RE Fund map.html Railbelt Electric Grid Authority: Continue to work with Railbelt utilities to identify common ground. Financial Statements: Introduce David McCambridge with KPMG to walk the Board through the AEA Financial Statements and answer any questions. Commissioner von Scheben asked that the group interface with DOT&PF regarding transportation needs that may arise. AEA Board Meeting December 11,2008 Meeting Minutes Page 5 As a follow-up on earlier comments Commissioner Galvin inquired if public expectations were being met regarding the schedule.Mr.Haagenson stated that there was no set schedule for Round |.After the December 18,2008 Advisory Committee meeting and LB&A forms a new committee,the recommendations and applications will be submitted for their approval. Commissioner Galvin stated that AEA Programs and Projects updates and a proposed 2009 meeting schedule are included in board member packets.The next meeting is scheduled for January 15,2008. 8.NEW BUSINESS David McCambridge,audit partner with KPMG,Provided an overview of the 2008 AEA FinancialStatementsandlettertotheBoard. The purpose of the audit is for KPMG to gain reasonable assurance that the financialstatementsarefreeofmaterialmisstatement.KPMG conducted appropriate audit proceduresandhasconcludedthatthefinancialstatementsarefairlystatedinallmaterialrespectsin accordance with generally accepted accounting principles,resulting in an unqualified or a clean opinion.KPMG obtained reasonable assurance during the audit that the financial statement isfreeofmaterialmisstatements.' There were no significant transactions out of the ordinary,No adjustments were proposed or recorded.Management did a great job of preparing for the audit and providing KPMGinformation.During that (process there were nounadjusted ¢differences,or adjustmentsrequestedbyKPMG.: Mr.McCambridge added that KPMG also performed a federal single audit compliance audit. Those reports were issued with unqualified opinions on AEA's management of those programs.9.BOARD COMMENTSCommissionerNotticommended Steve for doing :a great jobin assimilating all of the information in a short period of time.Commission Galvin stated the Board was pleased to have him on staffandveryexcitedaboutwhereAEAisgoing. 40.ADJOURNMENTTherebeingnoobjection and rno further business of the Board,the meeting was adjourned at11:17 a.m.po Steve Haagenson,Executive Director/Secretary Alaska Energy Authority KA laska Industrial DevelopmentindExportAuthority [=ALASKACa)ENERGY AUTHORITY YtEXHIBIT "A” MEMORANDUM TO:Board of Directors Alaska Energy Authority FROM:Steve HaagensonExecutiveDirector aWt DATE:January 15,2009 SUBJECT:Power Project Fund Loan Summary Alaska Power and Telephone Company Resolution No.2009-01 Borrower Alaska Power and Telephone Company Guarantors None Loan Request AP&T requests a $3,596,768 30-year loan Use of Proceeds Construct a new transmission line connecting the communities of Coffman Cove and Naukati Bay to the existing electrical grid on Prince of Wales Island (POW),Alaska. Collateral and Value This loan will be secured by a general assignment of all of the assets of AP&T.This lien, however,is subject to a prior lien by Co-Bank in the approximate amount of $51 million dollars and is also subject to liens taken by the AEA to secure other Power Project Fund loans. Therefore this loan should be considered unsecured from a collateral standpoint. Both Alaska statute and AEA regulation allows the loan to be unsecured if an applicant is regulated by the RCA and "if the applicant has a history of repaying long-term loans and demonstrates to the authority that it has the capacity to repay the loan obtained from the authority.”AP&T meets these requirements. Related Debt AP&T has a 10-year credit history with AEA.Eight loans totaling $3,597,400 are outstanding of which $2,746,515 is associated with various projects on POW.All loans are paid as agreed. Additionally,AP&T is a guarantor on $150,000 loan to Alaska Wind Power,LLC. Background Alaska Power &Telephone Co.(AP&T)was formed in Skagway,Alaska in 1957.Today AP&T serves over 12,000 households and business customers in 24 communities stretching from the Arctic Circle to the southernmost tip of southeast Alaska offering an array of services from energy to cutting-edge voice,video and data communications built on a foundation of fiber-optic, landline and wireless technologies. 813 West Northern Lights Boulevard *Anchorage,Alaska 99503-2495 www.aidea.org *907/771-3000 ®FAX 907/771-3044 ®Toll Free (Alaska Only)888/300-8534 ©www.akenergyauthority.org Board of Directors Page 2 January 15,2009 AP&T serves power to businesses and residents on POW.The purpose of this loan is to construct new transmission lines to connect the communities of Coffman Cove,population 199',and Naukati Bay,population 135',to the existing electrical grid on POW. Coffman Cove and Naukati Bay are unable to reduce the high cost of electricity because of their isolated location;they are not interconnected to either a state or nationwide grid that could provide less expensive rates.They also do not have access to alternative sources of energy such as hydro,unless they are connected to the POW grid,owned and operated by AP&T. Once connected,Coffman Cove's and Naukati Bay's rates would decrease approximately 51% and 60%respectively.The average monthly bill for residents in Coffman Cove would go from approximately $100/Mo.to $49/Mo.;the average monthly bill for residents in Naukati Bay will be reduced from approximately $132/Mo.to $53/Mo.They would also benefit from 'green'energy via AP&T's Black Bear Lake and South Fork Hydro Projects that presently provide power to the POW grid. Management Greg Mickelson,POW Operations Manager for AP&T,is the senior manager of the project and will supervise the construction crews.Mr.Mickelson has over 29 years in the power industry and has held the position of AP&T operations manager since 1983.Mr.Mickelson was involved in the construction of both the Black Bear Lake and South Fork hydroelectric projects and now oversees the operation and maintenance of both projects. AP&T generates electricity with hydroelectric and diesel power plants throughout Alaska, presently serving 24 communities.AP&T's experience in Alaska dates back to 1957.AP&T has staff certified as electrical,civil,and mechanical engineers.AP&T's engineers are responsible for the design,ordering materials,and construction of impoundment structures,power plants, turbines,generators,switchgear,SCADA networks,transmission lines,etc.AP&T also has proven administrators that are responsible for multi-million dollar budgets,which include managing over 60 employees,equipment,and management of all generation and distribution resources.These budgets also include several 50%grant funded projects for installation of transmission lines on Prince of Wales Island,and three Rural Utility Service 100%grants for the installation of transmission lines to Tetlin,Lutak,and along 5-10 mile of the Haines Highway. Financial Information Confidential financial information is provided under separate cover. Portfolio Diversification Approval of this credit will increase AP&T's liability to AEA from 13.87%to 24.36%of AEA's total PPF loan portfolio (outstanding plus unfunded commitments),and from 9.45%to 18.90%of AEA's total Power Project Fund (total fund dollars). Loan Covenants None Recommendation Staff recommends approval of this loan. Source:State of Alaska,Commerce,Community and Economic Development website -2000 U.S.Census Board of Directors Page 3 January 15,2009 -)POINT BAKER 'PORT PROTECTION *EDNA BAY |"NAUKATI®- Existing BBL &South Fork Hydro were."KASAANNye Proposed Reynolds Creek ALASKA ENERGY AUTHORITY RESOLUTION NO.2009-01 A RESOLUTION OF THE ALASKA ENERGY AUTHORITY REGARDING A LOAN BY THE AUTHORITY TO ALASKA POWER AND TELEPHONE COMPANY FOR CONSTRUCTION OF A POWER TRANSMISSION LINE ON PRINCE OF WALES ISLAND WHEREAS,Alaska Power &Telephone Company (AP&T)has applied to the Alaska Energy Authority (the "Authority”)for a loan in the amount of $3,596,768 with a term of 30 years under the Authority's power project fund program (AS 42.45.010)at the interest rate established under AS 42.45.010(f)(2)(A)(the "Loan'); WHEREAS,the nature,purpose and terms of the Loan are described in the memorandum from Authority staff attached as Exhibit "A”hereto (the "Memorandum'); WHEREAS,staff of the Authority has recommended that the Authority make the Loan,subject to certain conditions,as described in the Memorandum; . WHEREAS,the Loan is consistent with all requirements in AS 42.45.010 and the applicable regulations of the Authority related to such loans (3 AAC 106.100 -.140); 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;and WHEREAS,it is in the best interest of the Authority that the Authority make the Loan,subject to conditions recommended by staff as described in the Memorandum. NOW,THEREFORE,BE IT RESOLVED BY THE ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY AS FOLLOWS: Section 1.The Authority's Loan to AP&T as described in the Memorandum is approved,subject to the conditions recommended by staff as set forth in the Memorandum. Section 2.The Executive Director of the Authority and the Deputy Director-Credit of the Authority are authorized to take such actions as may be necessary or convenient to consummate the 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 Loan as the Executive Director,in his discretion,determines appropriate. DATED at Anchorage,Alaska on this 15th day of January,2009. Chair (SEAL) ATTEST Secretary AEA Resolution No.2009-01 Page 2 of 2 ALASKA ENERGY AUTHORITY Loan Programs Power Project Fund (PPF) Number of loans:44 Outstanding portfolio balance:$24,597,881 Committed &un-disbursed funds:S 1,456,181 Uncommitted funds:$11,830,560 As of 11/30/08,there was 1 loan past due 90 days or more in the amount of $215,000;which was .87%of the outstanding portfolio balance. Program Background:The PPF program provides loans to local utilities,local governments or independent power producers for the development or upgrade of electric power facilities, including conservation,bulk fuel storage,and waste energy conservation.The loan term is related to the productive life of the project,but cannot exceed 50 years.Interest rates vary between tax-exempt rates at the high end and zero on the low end.This rate is equal to the percentage that is the average weekly yield of municipal bonds for the 12 months preceding the date of the loan commitment. Bulk Fuel Revolving Loan Fund (BFRLF) Number of loans:48 Outstanding portfolio balance:$7,456,631 Committed &un-disbursed funds:$1,694,434 Uncommitted funds:$6,052,999 As of 11/30/08 there was one loan that was past due 90 days or more in the amount of $109,235;which was 1.46%of the outstanding portfolio balance. Program Background:The purpose of the BFRLF program is to assist communities,utilities or fuel retailers in small rural communities in purchasing emergency,semi-annual or annual bulk fuel supplies..Loans are for the purchase of new fuel.Loans are not provided for fuel already purchased,in the process of being used or already consumed.The Alaska State Legislature appropriated an additional $5.5 million to this revolving loan fund in August 2008. Revised 12/31/2008 ALASKA ENERGY AUTHORITY Alternative Energy and Energy Efficiency Program Overview Currently Alaska Energy Authority's (AEA's)Alternative Energy and Energy Efficiency (AEEE)program manages and funds 33 projects and initiatives totaling $31.5 million in state and federal funding.Program activity has substantially increased after AEA launched the Renewable Energy Fund.An AEEE update is available on AEA's website at www.akenergyauthority.org Program Description The AEEE program promotes the use of renewable resources as alternatives to fossil fuel-based power and heat,and measures to improve energy production and end use efficiency.In rural areas the program may support developing local sources of coal and natural gas as diesel alternatives.The AEEE program is divided into seven separate program areas: Biomass Energy Program develops projects using wood,sawmill residue,and municipal wastes for energy;tests air emissions and performance of fish oil and diesel blends as fuel;and assesses the viability of recovering fish oil from fish processing wastes. Diesel Generation Efficiency Program provides assistance in developing projects that use high efficiency generators and recover "waste heat”from diesel generators. End Use Efficiency (Conservation)Program has completed 40%of a project upgrading lighting and heating efficiency in over 150 schools and other facilities in 50 villages,is conducting energy audits,and working with Alaska Housing Finance Corporation to develop statewide efficiency policy recommendations and demonstrate impact of aggressive,village-wide measures in Nightmute. Geothermal Program supports projects such as the Chena Hot Springs power plant,organizes workshops and training sessions,and coordinates state assistance in developing other potential projects such as Mt.Spurr on the Railbelt and Makushin in Unalaska via a statewide development plan. Hydroelectric Program provides technical assistance through staff and contractors for hydro feasibility assessment and manages public funding for project construction. Ocean and River Energy Program evaluates technology and feasibility of converting wave motion and tidal and river flow into power in partnership with Alaskan utilities and Electric Power Research Institute. Wind Program assists utilities and communities in resource evaluation,training,environmental assessment, regional development,conceptual!design and economic feasibility of rural wind-diesel systems,and Railbelt wind integration studies. Funding AEA's alternative energy program has received funding since the early 1980s from the US Department of Energy (USDOE)and more recently from the Denali Commission and the EPA.In June AEA and the Denali Commission offered $7.5 million in grants for 37 alternative energy and efficiency projects.The new Renewable Energy Fund offers up to $100 million in fyO9 and potentially $200 million over the following four years.AEA is currently reviewing 231 proposals requesting $760 million received in the current solicitation. The Energy Cost Reduction RFP,an earlier program,has provided $8.4 million in grant funds to match $12.4 million in local funds for projects that are displacing or will displace 1.4 million gallons per year of diesel and equivalent natural gas.For more detail,see the AEA's Biennial AEEE Assistance Plan on the AEA website. Reviewed 11/2008 ALASKA ENERGY AUTHORITY Bulk Fuel Program Current Status In 2008,bulk fuel upgrades were completed in the communities of Tyonek,Ruby,and Pilot Point.The pipeline project in Newtok was started and will be completed in spring 2009.Nine communities are in the design process. Program Description The goal of Alaska Energy Authority's (AEA)Bulk Fuel program is to upgrade non-compliant bulk fuel facilities in communities that meet program criteria.Upgrading bulk fuel facilities reduces the cost of energy by reducing or eliminating fuel loss from leaks and spills.In addition,by providing enough capacity for current and planned needs,communities may purchase fuel in larger quantities at a lower cost per gallon. Alaskan remote communities rely on diesel fuel storage for heating and power generation.Many of the bulk fuel storage facilities were constructed in the 1970's or earlier.Many of these facilities are at the end of their design life and do not meet fire code.Some have tanks,pipes and other equipment that leak fuel.Regulatory agencies may prohibit fuel!deliveries these facilities.Communities often do not have funds for replacing these storage facilities. Since 2000,the Denali Commission has provided funding to replace community bulk fuel facilities.Due diligence is performed on possible participants to ensure that if they are in debt that they are paying on their loans.Participants sign a Business Operating Plan.The Business Operating Plan lays out the existing fuel facility organizational structure,the qualifications of responsible people,AEA required training,estimated operation and maintenance costs,and the establishment of a repair and replacement fund,so that when equipment fails the community will have the knowledge and savings to repair or replace it. Program Progress The bulk fuel program receives most of its funding through the Denali Commission.A total of 21 communities were completed in years previous to 2000.In 2000,funding increased substantially when the Denali Commission started to fund bulk fuel projects.As of December 2008,an additional 65 communities have been completed for a total of 86.Approximately 32 communities have not received upgrades.Depending on funding,three to six communities are receiving upgrades per year. Revised 1-4-2009 ALASKA ENERGY AUTHORITY Circuit Rider Program Current Status The Circuit Rider Program provides technical assistance to help rural utilities with the operation and maintenance of their electrical generation and distribution system.In 2007,21 utilities participated. Program Description The Circuit Rider Program is administered by the Alaska Energy Authority (AEA)and is available to all eligible electric utilities.Electric utilities participating in this program will receive support services available from AEA. The purpose of the circuit rider maintenance program under 3 AAC 108.200 -3 AAC 108.220 is to assist eligible utilities to improve the efficiency,safety,and reliability of power systems and reduce the risk and severity of emergency conditions or emergency disruptions in the operation of community power systems,by providing training,consultation,on-site assistance with maintenance and minor repairs,and other related technical assistance. e The CRM program runs ona fiscal year from July 1 to June 30. e All applications will be evaluated and placed on priority list. e AEA will make one or more visits to eligible electric utilities over the course of the fiscal year to provide training and provide recommendations concerning operations and routine maintenance activities.There will be no charge to the utility for these services. e Participating utilities are responsible for the purchase of all supplies,parts and equipment used for routine maintenance and minor repairs that are made during Circuit Rider visits.These items must be available at the utility's workplace prior to the arrival of AEA staff. e The Circuit Rider program does not provide funding for major repairs or reconstruction of electrical systems. e The participating utility's power plant operator and/or other utility staff must be available for training and consultation during the time of the Circuit Rider staff visit.Power plant operators will be required to maintain written performance logs in between Circuit Rider visits. e Utilities participating in the Circuit Rider program will be required to sign a letter acknowledging their understanding of the terms and conditions of the services provided by the program,prior to the first visit., Program Progress Services under the Circuit Rider program are limited to village electric utilities with a demonstrated need for assistance with preventative operations and maintenance activities,utility training and emergency prevention.The program is not intended to serve electric utilities that have sufficient financial and technical resources to perform routine operations and maintenance activities. Reviewed 11/2008 ALASKA ENERGY AUTHORITY Emergency Response Program Current Status In 2007/2008,20 communities where assisted.Major responses included Beaver when their powerhouse burned to the ground,Diomede with unexpected major equipment failures and Tuluksak engine failures. Program Description The Emergency Response program provides on-call,as-needed emergency action response to mitigate extended power outages and electrical hazards that present eminent threat to life or property. This program is designed to respond to an emergency or potential emergency situation before disaster or major loss occurs.It provides funding for continuance of government activities.It allows for procurement of manpower,materials and equipment for emergency response to electrical generation and distribution system emergencies and disasters in Alaska. Program Progress Emergency response is provided on an as-needed basis only.Well-managed utilities with adequate technical and financial resources are not candidates for these services.Besides helping rural communities,AEA works with State and Federal agencies on an as-needed case by case basis to resolve electrical generation and distribution system emergencies throughout Alaska. Revised 11/2008 ALASKA ENERGY AUTHORITY Power Cost Equalization Program Current Status The original FYO8 PCE appropriation was $26,760,000.00 which was further capitalized by a $1.2 million dollar supplemental appropriation,increasing the total funding to $27,960,000.00.FYO8 budget funding levels remained at the 100%level for the entire fiscal year.This caused the program to go over budget by what is currently $486,484.21.The legislature approved a $600,000 supplemental appropriation for PCE's FY08 expenditures. Effective October 1,2008,the power cost for which PCE is paid (the "ceiling”)will be raised from $.525 to $1.00 for the remainder of the FY 2009.The PCE Program has been provided an open ended General Fund Appropriation estimated to be $23 million. Program Description The goal of Alaska Energy Authority's (AEA)Power Cost Equalization program is to provide economic assistance to customers in rural areas of Alaska where the kilowatt-hour charge for electricity can be three to five times higher than the charge in more urban areas of the state.PCE only pays a portion of approximately 30%of all kWh's sold by the participating utilities. PCE fundamentally improves Alaska's standard of living by helping small rural areas maintain the availability of communications and the operation of basic infrastructure and systems,including water and sewer,incinerators,heat and light.PCE is a core element underlying the financial viability of centralized power generation in rural communities. The Legislature established different functions for AEA and the Regulatory Commission of Alaska (RCA) under Alaska Statutes 42.45.100-170,which govern PCE program responsibilities. AEA determines eligibility of community facilities and residential customers and authorizes payment to the electric utility.Commercial customers are not eligible to receive PCE credit.Participating utilities are required to reduce each eligible customer's bill by the amount that the State pays for PCE. RCA determines if a utility is eligible to participate in the program and calculates the amount of PCE per kWh payable to the utility.More information about the RCA may be found at www.state.ak.us/rca PCE Endowment Fund The PCE Endowment Fund was created and capitalized in FY 2001 with Funds from the Constitutional Budget Reserve and the Four Dam Pool Project sale proceeds.The PCE Endowment Fund is an Alaska Energy Authority Fund managed by the Department of Revenue;it is invested to earn at least 7%over time.$182.7 million was appropriated to the fund in FY 2007.The deposit occurred in October 2006. AS 42.45.085 provides that 7%of the PCE Endowment Fund's 3 year monthly average market value may be appropriated to the PCE Rural Electric Capitalization Fund for annual PCE program costs.After the FY 2007 capitalization,7%of the market value equals the estimated full funding amount for the program. Revised 12/2008 ALASKA ENERGY AUTHORITY Rural Power Systems Upgrade Program Current Status Between the calendar years 2000 through 2008,38 communities have benefited from powerhouse and distribution upgrades.11 additional communities are currently undergoing or are scheduled for construction upgrades in 2009.12 more communities are in conceptual design or final design stage. Program Description The Rural Power System Upgrade (RPSU)program concentrates on powerhouse and electrical distribution upgrades.Typical project include powerhouse upgrades or replacements,distribution line assessments and upgrades,line extensions to new customers,demand-side improvements and repairs to generation and distribution systems.Energy efficiency,reliability,safety and sustainability are primary drivers during the conceptual design,final design and construction process.Identification of available alternative energy and interoperability with any existing alternative energy sources is high priority with the rising cost of fuel and carbon emissions concerns. Examples of programmatic efforts include: °Rebuilding or replacement of worn-out,inefficient diesel generator units. e Rebuilding or replacement of old,hazardous and non-code compliant distribution systems. °Construction of new power generation systems that meet State and Federal codes.Communities StateofAlaska °Inclusion of waste heat recovery systems in new powerhouses. °Force account labor and technical assistance to rural communities through AEA personnel and/or contractors with experience in rural construction. System upgrades to be funded may be identified through a variety of ways,including via technical assistance,advanced by the local community or directed by the Legislature.The Majority of funds are via the Denali Commission.Other sources include Community Development Block Grant (CDBG),Indian Community Development Block Grant (ICDBG)and Rural Utility Service (RUS)._RPSU Funding 1999 -2007 Program Progress Annual Fuel Savings from New Powerhouses Electricity provides for lighting,communications, M000 rT tajeaee "38 heat and power necessary to operate infrastructuregatosconesneethatsupportsallotherelementsneededinany community to permit safe and healthy living conditions.In rural communities throughout Alaska, electricity is generated by a small local "system” (generation and distribution)using diesel fuel at a cost that is three to five times higher than that in 200,000 urban parts of the state.Of the 200 rural300.000 4 1 ||1]communities,approximately half are served by 9 y cooperatives or another form of utility that performsSSKPKKKHLLLPSPKYUnderawell-established organization.Others areservedonverysmallentities,many which experience technical and administrative problems due to lack of economies of scale and/or lack of specialized skills in the community. Reviewed 12/2008 ALASKA ENERGY AUTHORITY Training Program Current Status The Alaska Energy Authority (AEA),along with the Denali Commission Training Fund,provides training Opportunities to local residents for their energy projects and infrastructure.In FYO7,the AEA Training Program provided training to 131 rural Alaskans.For FYO8,the program was funded at $416,435 and at least 118 rural Alaskans are expected to be trained. Program Description The intent of this training is to ensure that community personnel have the best skills with which to sustain their energy infrastructure in a business-like manner.With proper training,utilities can keep their facilities code-compliant and sustainable. The training program currently offers the following courses: e Bulk Fuel Operator Training e =Itinerant Bulk Fuel Operator Training e Bulk Fuel Business Training e Power Plant Operator Training e Advanced Power Plant Operator Training e =Electric Utility Business Training e ==PCE Utility Clerk Training e Hydro Power Plant Training Reviewed 1/9/2009 2008 Alaska Energy Authority Initiatives [=ALASKA_ea ENERGY AUTHORITYxwWAlaskaIndustrialDevelopmentandExportAuthority Revised August 5,2008 Project Fact Sheet:ALASKA-BC INTERTIE STUDY CURRENT STATUS:A portion of the AKBC funds have been re-appropriated for the design and permitting of the Petersburg to Kake Intertie project.Some funds have been retained to monitor the situation in British Columbia,where the government is re-evaluating whether to build the backbone intertie from southern BC to 60 miles from the Alaska-BC border.Further action on the export project depends in part on the evaluation by private mining companies of the economics of major mines near the Alaska BC border.The final feasibility report has been published.It is available online at http:/Awww.akenergyauthority.org/AKBCProjectPage.html After July 1,2008 AEA will begin the final route selection,design and permitting process for the Petersburg to Kake Intertie.AEA is presently discussing an integrated corridor development concept with DOT-PF,to build a joint road/intertie project.AEA attended a public meeting in Petersburg in late June.Considerable community input was received,useful to AEA and DOT- PF and Southeast Conference to determine the best course of action for the project.Another meeting is scheduled in Kake on August 5,2008 to further discuss the project. PROJECT COST:$3.2 million. DESCRIPTION:To analyze and confirm the feasibility of a transmission line that would connect two parts of the Four Dam Pool service area and the two major Southeast hydroelectric power plants in the Ketchikan-Wrangell-Petersburg region through construction of a 67-mile electrical transmission intertie;and connect the Four Dam Pool transmission system into the Canadian grid,and thus gain access to power markets either in Canada or US Pacific Northwest.As a part of the study,examine the construction of a transmission backbone that that would entice private or local government entities to develop hydro power projects that could produce as much as 100 MW of power for use in southern SE Alaska or be exported. PURPOSE:Provide a transmission system to allow for exportation of power to the British Columbia grid.Additional intertie will allow delivery of excess power for Lake Tyee to Ketchikan. SOURCE OF FUNDS:Legislative appropriation of $3.2 million.Of the $3.2M funding,AEA has expended approximately $511,000 as of September 30,2007. PARTICIPANTS:Hatch Energy (Contractor)and an Advisory Work Group made up of representatives from Southeast Alaska communities including:Auke Bay,Craig,Juneau, Ketchikan,Metlakatla,Petersburg,and Wrangell. BENEFITS:The draft final report supports the Swan-Tyee Intertie and the Kake Petersburg Interties as being economically feasible,and indicates the export intertie link shows economic promise,but cannot be definitively determined at this time. ADDITIONAL BACKGROUND:This study has an advisory committee and steering committee to assist AEA in proper administration of funds.The committees have participated actively in 813 West Northern Lights Boulevard e Anchorage,Alaska 99503-2495 www.aidea.org e 907/771-3000 e FAX 907/771-3044 e Toll Free (Alaska Only)888/300-8534 e www.akenergyauthority.org 'Alaska-BC Intertie Study Page 2 of 2 Project Fact Sheet the formulation of the consultant scope of work,selection of the consultant.The feasibility study has been reviewed and approved by the work group. "A LN /=ALASKA:aoe ENERGY AUTHORITYakeXxAlaskaIndustrialDevelopmentandExportAuthority Reviewed August 8,2008 Project Fact Sheet:ALASKA INTERTIE CURRENT STATUS:The Intertie is currently in operation.Several Repair and Renovation projects have been authorized by the Intertie Operating Committee and AEA has started to pursue the projects.The projects are the STATIC VAR COMPENSATOR replacement project and the TOWER 195 RELOCATION project.There is $10M available to accomplish this work. PROJECT COST:Initial capitals costs of $124 million.Warranty and repair and replacement fund is paid into by utilities to cover costs. DESCRIPTION:The Alaska Intertie transmission line is a 170-mile long,345kV transmission line between Willow and Healy that is owned by AEA.It is presently operated at 138 KV. PURPOSE:The purpose of the Alaska Intertie is to interconnect Golden Valley Electric Association, the regulated utility that serves areas north of the Alaska Range with south central Alaska Utilities. The intertie also allows resources north and south of the range to be shared to improve reliability. Notably,the GVEA storage battery,as well as GVEA generation resources,can and have been used to send emergency power southward to minimize catastrophic network wide outages.The operation of this intertie materially improves overall system reliability. SOURCE OF FUNDS:The Intertie was built in the mid-1980s with State of Alaska appropriations totaling $124 million.Currently,there is no debt associated with this asset. PARTICIPANTS:The operation of the Intertie is governed by the Alaska Intertie Agreement entered into in 1985 and amended in 1991.The parties to this agreement are AEA (formerly Alaska Power Authority),Anchorage Municipal Light &Power,Chugach Electric Association Inc.,Alaska Municipal Utilities System,Golden Valley Electric Association,Inc.,and the Alaska Electric Generation and Transmission Cooperative (AEG&T is comprised of Matanuska Electric Association and Homer Electric Association). BENEFITS:In 1981,a study demonstrated a positive feasibility of the line and recommended construction of an intertie to allow exchange of economy energy and the sharing of reserve generation capacity between the Anchorage and Fairbanks load centers.It was estimated that the benefits from the project would be approximately $17 million per year. ADDITIONAL BACKGROUND:Agreements have been developed over a span of 30 years to govern the cooperative management,operation of the connected network at large.AEA has agreements with participating utilities that assure the Alaska Intertie operates with prudent maintenance and operation by utilities.ML&P is the intertie operator,while MEA and GVEA provide maintenance and operations services. AEA serves as financial administrator,providing basic accounting services to establish a cost-based wheeling rate that is trued up each year.AEA collects payments from Intertie users and pays expenses,including reimbursement of costs incurred by the two operators of the line,ML&P and GVEA,and the three maintenance contractors,MEA,CEA,and GVEA. 813 West Northern Lights Boulevard e Anchorage,Alaska 99503-2495 www.aidea.org «907/771-3000 «FAX 907/771-3044 e Toll Free (Alaska Only)888/300-8534 «www.akenergyauthority.org /=ALASKAacieClENERGYAUTHORITYaxeKe?Alaska Industrial DevelopmentindExportAuthority Reviewed:December 31,2008 Project Fact Sheet:BRADLEY LAKE HYDROELECTRIC PROJECT CURRENT STATUS:Inspections indicate Bradley is in good condition.In August maintenance was performed at the Nuka River to deepen the channel.On September 25,2008 a helicopter under contract for maintenance transmission line work contacted the line and cut it.The helicopter was destroyed and the pilot was injured.Bradley continues to perform well and maintenance activities are proceeding as planned. PROJECT COST:$317 million (original cost plus major capital improvements through June 30, 2007) DESCRIPTION:The project has 126 MW of installed capacity hydroelectric project located 27 air miles southeast of Homer on the Kenai Peninsula.The project consists of Bradley Lake,a 125 foot high concrete faced,rock filled dam structure,three diversion structures,a 19,063 ft. long power tunnel and vertical shaft,generating plant,interior substation,20 miles of transmission line,and substation.Due to its remote location,the project has its own airstrip, boat dock,residential quarters,and utility system.The project is normally automatically operated by remote dispatch by Chugach Electric Association from Anchorage. PURPOSE:The Bradley project provides 5-10%of the annual railbelt electric power needs at the lowest generation cost.Bradley is most important to the railbelt electric system during the cold winter months.Demand for both electric power and gas for heat is at its highest.Utilities limited by available gas are able to use Bradley power to meet the high electric demand. SOURCE OF FUNDS:Legislative appropriations and AEA revenue bonds repaid by participating utilities. PARTICIPANTS:Under the Power Sales Agreement,100%of the project's capacity has been sold to the power purchasers:Chugach Electric Association,Inc.(30.4%);Municipality of Anchorage (25.9%);Alaska Electric Generation &Transmission Cooperative,Inc.(25.8%); acting on behalf of Homer Electric Association,Inc.(12.0%)and Matanuska Electric Association, Inc.(13.8%);Golden Valley Electric Association,Inc.(16.9%);and City of Seward (1.0%) BENEFITS:Authority ownership now assures the railbelt area of a long-term source of power at a stable cost and promotes economic development in the region. ADDITIONAL BACKGROUND:The power generation potential of Bradley Lake was first studied by the U.S.Corps of Engineers and presented in a report dated March 1955.The project was authorized by Congress in 1962,but,despite its feasibility,federal funds were not available for its construction.The Alaska Energy Authority (then Alaska Power Authority)assumed responsibility for the project in 1982.Preliminary plans and field investigations started in 1982. In April 1984,the Authority submitted an application for license to the Federal Energy Regulatory Commission (FERC).The license to construct the project was issued on December 31,1985.In 813 West Northern Lights Boulevard «Anchorage,Alaska 99503-2495 www.aidea.org *907/771-3000 e FAX 907/771-3044 e Toil Free (Alaska Only)888/300-8534 e www.akenergyauthority.org Bradley Hydroelectric Project . Page 2 of 2 Project Fact Sheet December 1987,the Authority and the railbelt utilities entered into a Power Sales Agreement to delineate responsibilities.Project was declared in commercial operation September 1,1991. Bradley has been producing power for 16 years.In 2007,Bradley produced 392,000 MWh of power at a cost of approximately $.039 per kWh. A Bradley Project Management Committee (BPMC)was formed in 1993 with representatives from each of the power purchasers and Alaska Energy Authority.The BPMC is responsible for the management,operation,maintenance,and improvement of the project,subject to the non- delegable duties of the Alaska Energy Authority. %LovetAlaska Industrial Developmentand£xport Authority xe =ENERGY AUTHORITY Reviewed June 3,2008 Project Fact Sheet:EKLUTNA TRANSMISSION LINE UPGRADE CURRENT STATUS:Project construction is complete.The line presently awaits connection into the Railbelt network.As the available funds through the AEA grant are nearly exhausted, the Eklutna Operating Committee (ML&P,Chugach and MEA)has elected to complete the project using funds they will secure.The Operating Committee has designated ML&P as the project manager for completing terminations,commissioning and energizing the line.ML&P is securing professional services to accomplish this commissioning process.They will be reporting the proposed schedule to AEA for commissioning in the spring of 2008. PROJECT COST:$19.3 million DESCRIPTION:The project consists of rebuilding the existing 115kV wood-pole electric transmission line from the Eklutna Hydroelectric Plant to the point where the Beluga 230kV electric transmission line intersects the line (near Briggs Tap/Fossil Creek),spanning a distance of 22.5 miles. PURPOSE:To upgrade the existing single circuit line to a double circuit line providing an overall capacity and reliability ta the intertie.To improve system reliability and resolve fault issues,the generating utilities approached the legislature for funding to construct a dedicated transmission link between the two generation centers and to provide a second line to serve the four existing MEA taps.The new transmission line will be constructed and insulated for 230KV, but will initially operated at 138KV. SOURCE OF FUNDS:Grant to the Municipality of Anchorage Municipal Light and Power through the Alaska Energy Authority for an Eklutna project transmission line upgrade.AEA is the grant administrator. PARTICIPANTS:Anchorage Municipal Light and Power,Chugach Electric Association,Inc., and Matanuska Electric Association. BENEFITS:This intertie project will resolve concerns over the 50-year age of a wood structured primary intertie link between the hydroelectric power plant at Eklutna,and the ML&P plant no.2,which is one of the main generation centers for South Central Alaska.Completion of the intertie will increase operating and dispatch flexibility for South Central Alaska,and increase reliability of power supply. ADDITIONAL BACKGROUND:Concerns for system reliability and safety led South Central Utilities to approach the legislature for a $19.3 Million appropriation to replace a 50-year-old key transmission link between two South Central Generation facilities.The Eklutna hydropower generation facility,recently repowered to produce 40MW of storage hydropower,was connected to the rest of the Railbelt system through the wood structured link. 3 West Northern Lights Boulevard «Anchorage,Alaska 99503-2495 www.aidea.org e 907/771-3000 «FAX 907/771-3044 @ Toll Free (Alaska Only)888/300-8534 e www.akenergyauthority.org 81 /=ALASKAeaENERGYAUTHORITYi ke *%Alaska industrial DevelopmentandExportAuthority Revised:December 2,2008 Project Fact Sheet:LARSEN BAY HYDROELECTRIC PROJECT CURRENT STATUS:Upgrades to the Larsen Bay Hydro Facility are in progress.Replacement of the switchgear,related controls and repairs to the intake structure are scheduled for completion in January of 2009.The utility is now supplying a portion of the cannery's energy needs.The new replacement hydro switchgear and related material is on the barge waiting for weather to clear. PROJECT COST:$320,000 DESCRIPTION:The Larsen Bay hydro facility has experienced many operating problems over the last few years.The problems are mainly related to the aging of the control switchgear,much of which was installed twenty years ago.Improvements that will be made to the hydroelectric facilitiestoimproveoperationalreliabilitywillincludethereplacementofthehydroswitchgearandcontrols with new data acquisition and remote monitoring capabilities.Ice damage to the water intake structure will be repaired.A portion of the cannery domestic load will be isolated and separately metered in order to facilitate increased use of hydro power during the summer without impacting the power to the city. PURPOSE:The project intent is to increase the reliability,power quality and efficiency of the hydro and turn over ownership of the system to the City of Larsen Bay. SOURCE OF FUNDS:In 2004,the City of Larsen Bay applied for and received a CDBG Grant to upgrade the hydro facility.In 2005,AEA negotiated a Grant Agreement with the City of Larsen Bay and CDBG to manage the hydro upgrade project.Subsequently,the project was awarded $320,000 from CDBG. PARTICIPANTS:Alaska Energy Authority and the City of Larsen Bay BENEFITS:When operating reliably and efficiently the hydro can displace 90%of the communities diesel fuel used for electrical generation.The utility can now provide a portion of the cannery's energy needs.This has resulted in increased revenue to the utility.Sales to the cannery during the summer of 2007 allowed the City of Larsen Bay to pay its loan obligations for FY 2007 and 2008. The intent is to turn the hydro facility over to the City after the improvements have been made and the facility has proven its reliability ADDITIONAL BACKGROUND:This 475-kilowatt project went into commercial operation in mid- 1991 with construction costs of approximately $1.6 million.In addition to producing electricity for this isolated Kodiak Island community,the project replaced the City of Larsen Bay's old water supply system and provides a better source of water with reduced maintenance and improved water quality.The original intent of the hydro project was to turn the facility over to the City of Larsen Bay once it had been demonstrated to be operationally viable over a few years.The hydro operated only intermittently and unreliably for many years;therefore the community would not agree to accept the facility until these problems were worked out.In 2004,the City of Larsen Bay agreed to seek CDBG funding to make improvements to the hydro facility. 813 West Northern Lights Boulevard *Anchorage,Alaska 99503-2495www.aidea.org ¢907/269-3000 *FAX 907/269-3044 ®Toll Free (Alaska Only)888/300-8534 ©www.akenergyauthority.org x "Alaska Industrial Development _ENERGY AUTHORITY and ort AuthorityExp Revised August 4,2008 Project Fact Sheet:RAILBELT ELECTRICAL GRID AUTHORITY STUDY CURRENT STATUS:The Consultant,Black and Veatch (B&V),has completed analysis work,and has delivered a draft report.A second technical conference was held to explain the results of the study,and the draft report is now posted on the AEA web page.AEA is accepting public comment for a 20 day period after July 23,2008.Current project completion is expected to be September 2008. PROJECT COST:$800,000 DESCRIPTION:Black and Veatch (B&V)was hired as consultant to AEA to perform the analysis of the potential of a Railbelt Electrical Grid Authority in increasing cost effectiveness and reliability in the operation of the Railbelt transmission grid.B&V will analyze operation costs,look at current and future generation sources,look at current and future electrical demands and develop a series of future scenarios with recommendations for a grid authority. This work will be done in conjunction with the Railbelt utilities,through extensive interviews with affected stakeholders and subject matter experts and with the guidance and feedback of an advisory work group. PURPOSE:This Railbelt Electrical Grid Authority (REGA)study will identify a range of grid authority business structures to own,operate,control,maintain and operate the future Railbelt Electrical generation and transmission Grid This business structure alternatives could range from a voluntary organization to dispatch power and manage the grid assets,or it could be more encompassing to include responsibility for planning and acquiring new generation and assuming ownership of existing Railbelt assets. SOURCE OF FUNDS:Legislative appropriation. PARTICIPANTS:Black and Veatch;Alaska Energy Authority;Homer Electric Association; Chugach Electric Association;Anchorage Municipal Light and Power;Matanuska Electric Association;Golden Valley Electric Association;and a variety of stakeholders as represented on the advisory group and through interviews. BENEFITS:The project will provide the range of effective business structures that the Railbelt can employ to manage the future generation and transmission assets,with comparative economic assessments,analysis of barriers to implementation,and an implementation plan. This will provide a basis for any decisions relating to the enhancement and growth of Railbelt Electric Infrastructure under a variety of possible future energy supplies. ADDITIONAL BACKGROUND:A recent petition by MEA to the Regulatory Commission of Alaska called for the creation of a regional Generation and Transmission Cooperative as a means to implement a collective process to secure new generation sources for the Railbelt. This matter is currently being considered by the RCA. 813 West Northern Lights Boulevard e Anchorage,Alaska 99503-2495 www.aidea.org e 907/771-3000 #FAX 907/771-3044 e Toll Free (Alaska Only)888/300-8534 e www.akenergyauthority.org [=ALASKA)ENERGY AUTHORITY". *ake Alaska Industrial DevelopmentandExportAuthority Revised August 4,2008 Project Fact Sheet:SWAN-TYEE INTERTIE CONSTRUCTION COMPLETION CURRENT STATUS:The project has been mobilized and line clearing is underway. Remaining portions of the intertie towers are under order.Foundation construction is underway.AEA project manager Strandberg made a site visit in late July.At that time,the foundation contractor's barges were on-site and there were 5 separate foundation crews in operation with 5 helicopters supporting.The prime transformer has been bid,and towers bids have been taken,and a low bidder selected.Four Dam Pool Power Agency has an office in Ketchikan,and has environmental monitors,geotechnical consultants,on site inspectors in place as the construction is pursued.Construction photos are available from AEA on request. Four Dam Pool will issue tax exempt bond offerings to finance the remainder of completion funds required beyond the $46.2M grant. PROJECT COST:$46.2 million DESCRIPTION:This project will complete the construction of the 57-mile Swan-Tyee Intertie between the Swan Lake hydro-electric power plant and the Tyee Lake hydro-electric power plant,and when energized will allow the communities of Petersburg,Wrangell,and Ketchikan to be electrically interconnected.The work will be completed in the 2008 and 2009 construction seasons.The intertie will be owned and operated by The Four Dam Pool Power Agency. PURPOSE:This project will allow power that is produced in the Four Dam Pool transmission network to be scheduled and economically dispatched.Initially,it is expected that excess water energy available at Lake Tyee generation capacity and energy will be used to offset an energy shortage in the Ketchikan area.In a longer range capacity,the intertie can be used to convey power for export through an export intertie that is being considered into British Columbia. SOURCE OF FUNDS:Grant to the Four Dam Pool Power Agency PARTICIPANTS:The Four Dam Poo!Power Agency consisting of three purchasing utilities (municipal utilities of the Cities of Ketchikan,Wrangell and Petersburg)and two electric cooperatives (Copper Valley Electric Association and Kodiak Electric Association). BENEFITS:Generation,avoiding a looming shortage in Ketchikan that could have required Ketchikan Public Utilities to operate expensive and polluting diesel generation. ADDITIONAL BACKGROUND:This project was partially funded in 2005.The Four Dam Pool Power Agency cleared the Right-of-Way and purchased and installed tower foundations, construction was stopped when these funds were expended.The region was able to secure an appropriation of $46.2 million for completion of the project. 813 West Northern Lights Boulevard e Anchorage,Alaska 99503-2495 www.aidea.org e 907/771-3000 #FAX 907/771-3044 @ Toll Free (Alaska Only)888/300-8534 «www.akenergyauthority.org