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HomeMy WebLinkAboutAEA Board Meeting June 8 2010' "ALASKA(E>ENERGY AUTHORITY POWER RE CHUGA<.; POWERING ALASKA'S FUTURE ALASKA ENERGY AUTHORITY VENUE REFUNDING BONDS,SIXTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT) FINANCING SCHEDULE Bankof America <” Merrill Lynch (as of April 11,2010) ISSUER: Alaska Energy Authority/Alaska Industrial Development and Export Authority 813 West Northern Lights Blvd. Anchorage,AK 99503 Valorie Walker,Deputy Director of Finance Alaska Attorney General's Office 1031 West Fourth Avenue,Suite 200 Anchorage,AK 99501-1994 Brian Bjorkquist,Attorney General's Office -Alaska Michael Nave CHUGACH/POWER PURCHASERS: Fax:(907)269-3020 Phone:(907)269-3011 Email:vwalker@aidea.org Fax:(907)258-4978 Phone:(907)269-5150 Email:brian_bjorkquist@alaska.gov Phone:(907)269-5042 Email:mike.nave@alaska.gov Chugach Electric Association,Inc. P.O.Box 196300 Anchorage,AK 99519-6300 Mike Cunningham,Senior Vice President,CFO BOND COUNSEL: Fax:(907)762-4514 Phone:(907)762-4778 Email:mike_cunningham@chugachelectric.com K&L Gates LLP 925 Fourth Avenue,Suite 2900 Seattle,WA 98104 Cynthia Weed,Attorney Stacey Crawshaw-Lewis,Attorney Kerry Salas,Paralegal Fax:(206)623-7022 Phone:(206)623-7580 Email:cynthia.weed@klgates.com Phone:(206)370-7656 Email:stacey.crawshaw-lewis@klgates.com Phone:(206)623-7580 x5766 Email:kerry.salas@klgates.com o °=KA ALASKA ENERGY AUTHORITY :=Bankof America <>”m=ENeRGYAUTHORITY POWER REVENUE REFUNDING BONDS,SIXTH SERIES Merrill Lynch CHUGAAL (BRADLEY LAKE HYDROELECTRIC PROJECT) POWERING ALASKA'S FUTURE FINANCING SCHEDULE (as of April 11,2010) SPECIAL COUNSEL TO CHUGACH/POWER PURCHASERS: McDowell Rackner &Gibson PC 520 SW 6th Avenue,Suite 830 Portland,Oregon 97204 Kirk Gibson,Partner Phone:(503)290-3626 Email:kirk@mcd-law.com FINANCIAL ADVISOR TO AEA: Western Financial Group 333 S.State Street,Suite V172 Lake Oswego,OR 97034 Fax:(503)288-3972 Pat Clancy Phone:(503)288-4152 Email:clancy@westernfinancialgroup.com FINANCIAL ADVISOR TO CHUGACH/POWER PURCHASERS: Walker and Associates Dan Walker Phone:(804)314-6900 Email:dwalker123@comceast.net UNDERWRITER: Bank of America Merrill Lynch 999 Third Avenue,Suite 3610 Seattle,WA 98104 Fax:(206)830-6044 Greg Sundberg,Managing Director Phone:(206)830-6026 Email:greg.sundberg@baml.com Eric Whaley,Director Phone:(206)830-6027 Email:eric.whaley@baml.com 101 California Street,Suite 1225 San Francisco,CA 94111 Ed Burdett,Managing Director Phone:(415)676-3210 Email:ed.burdett@baml.com Chris Rohstedt,Vice President Phone:(415)676-3213 Email:chris.rohstedt@baml.com e °/=KA ALASKA ENERGY AUTHORITY -=Bankof America <>”om ENenGAUTHORITY POWER REVENUE REFUNDING BONDS,SIXTH SERIES _Merrill Lynch CHUGLZE::(BRADLEY LAKE HYDROELECTRIC PROJECT) POE ASS OS FINANCING SCHEDULE (as of April 11,2010) Andrew Hildreth,Analyst Phone:(415)676-3214 Email:andrew.hildreth@baml.com UNDERWRITER'S COUNSEL: TBD FISCAL AGENT: TBD RATING AGENCIES: Standard &Poor's Rating Services 55 Water Street New York,NY 10041 Peter Murphy,Senior Director Phone:(212)438-2065 Email:peter_murphy@standardandpoors.com Moody's Investor Service 7 World Trade Center 250 Greenwich Street,234 Floor New York,NY 10007 Fax:(212)553-4919 Dan Aschenbach,Senior Vice President Phone:(212)553-0880 Email:dan.aschenbach@moodys.com ALASKA ENERGY AUTHORITY"AB Alasha Industrial Developmentxe*and Export Authority AGENDA Alaska Energy Authority Board Meeting Tuesday,June 8,2010 at 10:30 a.m. Anchorage,Alaska 1.CALLTO ORDER 2.BOARD OF DIRECTORS ROLL CALL 3.AGENDA APPROVAL 4.ROLL CALL:STAFF,PUBLIC 5.PUBLIC COMMENTS 6.PRIOR MINUTES -May 4,2010 7.OLD BUSINESS 8.NEW BUSINESS A.AEA Resolution No.2010-02 Supplemental Resolution Authorizing the Issuance, Sale and Delivery of Power Revenue Refunding Bonds Sixth Series (Bradley Lake Hydroelectric Project)(additional documents may be viewed at the office of the Executive Director) 9.DIRECTOR COMMENTS A.Director's Status Report B.Next scheduled meeting August 11,2010 10.BOARD COMMENTS 11.ADJOURNMENT 813 West Northern Lights Boulevard e Anchorage,Alaska 99503-2495 www.aidea.org «907/771-3000 e FAX 907/771-3044 e Toll Free (Alaska Only)888/300-8534 e www.akenergyauthority.org Alaska Energy Authority Board Meeting June 8,2010 Page 1 of 1 Home Go Back Edit .:.Public NoticesOnlinePublicNoticeAlaskaEnergyAuthorityBoardMeetingStateofAlaskaJune8,2010 Submitted by:smsiverson/08 Date Submitted:05/28/2010 02:23 PM Date Modified: Ak Admin Journal:[not printed] Attachments:No files attached Alaska Energy Authority Board Meeting June 8,2010 Category:Agency Meetings Department:Commerce Community &Economic Development Publish Date:05/28/2010 Location:Anchorage Archive Date:06/10/2010 Coastal District:N/A Body of Notice: Please note that the Board of Directors of the Alaska Energy Authority (AEA)will hold a board meeting beginning at 10:30 a.m.on Tuesday,June 8,2010.The Board will convene as AEA and continue in session until recess or adjournment. An agenda for the meeting is available by contacting AEA at (907)771-3009 or by visiting our website at www.akenergyauthority.org This meeting will be conducted by electronic media pursuant to AS 44.88.050(a)and AS 44.62.310 at the following location: Alaska Industrial Development and Export Authority Boardroom 813 West Northern Lights Boulevard Anchorage,Alaska The public is invited to attend.The State of Alaska (AIDEA and AEA)complies with Title Il of the Americans with Disabilities Act of 1990.Persons requiring special modifications to participate should contact (907)771-3009 to make arrangements. Revision History: 05/28/2010 02:23:04 PM by smsiverson/08/State/Alaska/US $$WebClient [Submitter][Anon] Home Page Notices by:Department|Category|Publish Date http://notes4.state.ak.us/pn/pubnotic.nsf/pn/0/8c272cb9 1 8d5ed3589257731007af634?Open...5/28/2010 /=ALASKAez)ENERGY AUTHORITYaxezsAlaskaIndustrialDevelopmentandExportAuthority Alaska Energy Authority BOARD MEETING MINUTES June 8,2010 Anchorage,Alaska 1.CALL TO ORDER Chairman Patrick Galvin called the meeting of the Alaska Energy Authority to order on June 8, 2010 at 10:30 a.m. 2.ROLL CALL:BOARD A quorum was established. Members present:Chair Patrick Galvin (Commissioner,Department of Revenue); Commissioner Leo von Scheben (Department of Transportation &Public Facilities);Emil Notti (Commissioner,Department of Commerce,Community &Economic Development);and Mike Felix (Public Member). Members participating via conference call:Vice Chair John Winther (Public Member). 3.AGENDA APPROVAL The agenda was approved as presented. 4.ROLL CALL:STAFF,PUBLIC Staff present in Anchorage:Steve Haagenson (AEA Executive Director);Chris Anderson (Deputy Director-Credit);Sara Fisher-Goad (Deputy Director-Operations);Mike Harper (Deputy Director-Rural Energy);Valorie Walker (Deputy Director-Finance);Chris Mello (Program Manager);Karsten Rodvik (External Affairs Project Manager);Bryan Carey (Project Manager); Linda MacMillan (Accountant);Shauna Howell (Administrative Assistant);and May Clark (Administrative Assistant). Others present in Anchorage:Brian Bjorkquist (Department of Law);Anne Southam and April Brehm (Environmental Resources Management);Mike Cunningham (Chugach Electric Association,Chair Bradley Lake PMC Finance Committee);Eric Whaley and Andrew Hildreth (Bank of America Merrill Lynch). Participating via teleconference:Cynthia Weed (K&L Gates LLP,AEA Bond Counsel). 5.PUBLIC COMMENTS There were no public comments. 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 AEA Board Meeting June 8,2010 Page 2 of 4 6.PRIOR MINUTES The minutes of March 17,2010 were approved as presented. 7.OLD BUSINESS There was no old business. 8.NEW BUSINESS 8A.AEA Resolution No.2010-02 Supplemental Resolution Authorizing the Issuance, Sale and Delivery of Power Revenue Refunding Bonds Sixth Series (Bradley Lake Hydroelectric Project) This action was requested by the Bradley Lake Project Management Committee (Bradley PMC), who directed the Budget Subcommittee of the PMC to analyze a potential refunding transaction for cost savings benefits.The Budget Subcommittee determined refunding the Refunded Bonds results in a projected 7%present value savings (at the time of the analysis)and recommended PMC authorization of the transaction.On June 3,2010,the Bradley PMC approved a resolution authorizing the refunding.On July 1,2010,the call premium on the Refunded Bonds drops by .5%,a savings of $153,200.Therefore,staff anticipates issuing the bonds on July 1,2010. This resolution authorizes the Authority to issue up to $34,000,000 principal amount of the Authority's Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) (the "Sixth Series Bonds').The Sixth Series Bonds will be revenue obligations of the Authority and supported by revenues from the Bradley Lake Hydroelectric Project.The $34 million was requested to provide cushion for market changes which require original issue discount and authorization for the sales costs is necessary.We are going to refund not only the bonds,but also going to pay for closing costs.We used the same number for the state bond committee for the volume cap allocation request,and the unused amount will be returned to the state for reallocation. The purpose of the Sixth Series Bonds is to redeem and refund the Authority's $30,640,000 outstanding Power Revenue Refunding Bonds,Fifth Series (Bradley Lake Hydroelectric Project) (the "Refunded Bonds”).The Authority issued the Refunded Bonds in 1999 for the purpose of refunding bonds issued in 1989 which financed a portion of the Bradley Lake Hydroelectric Project.The Refunded Bonds are fixed rate bonds.The reason for the refunding is to provide lower interest rates and,therefore,debt service savings. Resolution No.2010-02 establishes the parameters of the Sixth Series Bonds.It delegates authority to a Designated Representative to finalize the terms of the Sixth Series Bonds at the time of marketing pursuant to a Bond Purchase Agreement.It is currently anticipated that the Sixth Series Bonds will be issued in the approximate principal amount of $29,000,000.(The final interest rates,principal maturities and redemption features will be determined on the date of marketing (currently expected to occur on June 16,2010). AEA Board Meeting June 8,2010 Page 3 of4 The Power Purchasers are expected to receive the benefits of the lower interest rates as soon as August 2,2010,when the old bonds are paid off.A final addition to this resolution was added,a ratification and approval of the outstanding power sales agreement.The underwriter was expecting an opinion regarding the enforceability of that power sales contract.Its been enforced and in place and all of the power purchasers have conformed to that agreement since the late 1980s.Administratively,rather than go back and find all the original signatures on the documents it is administratively easier if we ratify and reconfirm on the part of the Authority Power Sales Agreements so that it needs to be an enforceable agreement of the Authority.The Power Purchasers have separate counsel and they will be providing opinions to the underwriter about the enforceability of the Power Sales Agreements on the part of the Power Purchasers. These obligations are not a direct obligation of the Alaska Energy Authority.They are payable solely from the payments made by the Power Purchasers.This refunding is expected to be undertaken strictly for the benefit of lowering the cost to those Power Purchasers.Staff recommends approval of Resolution No.2010-02. MOTION:Commissioner von Scheben moved to approve Resolution No.2010-02. Seconded by Commissioner Notti.A roll call vote was taken and the motion passed unanimously. 9.DIRECTOR COMMENTS 9A.Director's Status Report of AEA Programs and Projects e Alaska Energy Plan The draft Energy Pathway was released on April 27 at the Rural Energy Conference for comment,which we will be accepting until the end of June. We are currently providing outreach to native entities,utilities and municipalities;utilizing database to determine loan and grant amounts for equal treatment.Continue meeting with different regions to engage them and gain ownership in the final community and regional plans. °Renewable Energy Fund There is a meeting this afternoon of the Renewable Energy Fund Advisory Committee to discuss project status,program improvements and solicit user feedback. °Legislative Wrap-up AEA had a very active Legislative session with several energy bills (HB306 SB220),GRETC bill and the Railbelt IRP,capital budget energy projects and procurement code authorization.Some bills passed and some did not.Sara Fisher-Goad provided an update of the bills,capital and operating budgets: e SB 301:Authorizes the sale of power projects loan portfolio from AEA to AIDEA.It also authorizes the loan for the Reynolds Creek hydro project and authorizes AEA to adopt regulations that would allow AEA to establish a fee schedule to the power project fund. e HB 363:Restructures the board membership,changing it from three commissioners and two public members to two commissioners and five public members. e $B 220:Omnibus Energy Bill establishes a new emerging energy technology fund that will be managed by AEA with a beginning fund of $2.4 million.It also changes AEA's AEA Board Meeting June 8,2010 Page 4 of 4 powers to include the promotion of energy conservation,energy efficiency and alternative energy through training and public education.There will also be an energy report that the Governor's office will be required to submit to the Legislature no later than January 31,2011 "providing recommendations on how to best structure state energy programs and offices to increase the coordination and efficiency of the state's effort and describing state energy services and programs in their entirety.The report must also include an examination of the existing powers and duties and the structure of the AEA and its Board of Directors,specifically its relationship between AEA and AIDEA.” 9B.Next meeting Wednesday,August 11,2010. 10.BOARD COMMENTS Commissioner von Scheben stated discussion should be kept up regarding the Kake- Petersburg intertie project.A short discussion followed regarding routing and possible environmental impact statements. 11.ADJOURNMENT There being no further business of the Board,the meeting was adjourned at 11:10 a.m. LEZSteveHaagengerrExecutive Director/Secretary Alaska Energy Authority Alaska Energy Authority BOARD MEETING MINUTES March 17,2010 Anchorage,Alaska 1.CALL TO ORDER Vice Chairman John Winther called the meeting of the Alaska Energy Authority to order on March 17,2010 at 11:40 p.m. 2.ROLL CALL:BOARD ¢iyiH A quorum was established.alll ly,,iMembersparticipating:Vice-Chair John Winther,lone Member);Mike Felix (Public Member),Emil Notti (Commissioner,Department of Commerce,Community &'Economic Development);and Jerry Burnett (Deputy Commissioner,Designs,",marital of aii|atl i IMemberparticipatingviaphone'igo eon Scheben \(Bepartment ofTransportation&Public Facilities).|tnill "hyNy"lh ly,ly u Uy,The agenda was approvedwit Han soa item add ed;by Commissioner von Scheben,whichwasdiscussionoffeisorouaiatpoweringndroadstatus.hy {i)aHi4.ROLL CALL:STA Porat iinHTnttiStaffpr<ilAieroace Henson ia Executive Director);James Hemsath(Deputy(Business)pevelormert fenaoeiKarsten Roavik (Project non Offer Affairs);Bruce hy,3.|AGENDA APPROVAL|ul atl NewRoniecncemnedyth "MeOtherspresentailoeBrian ajorkauist (Department of Law);Anne Southam,ERM;andSteveKlein(First ar eat|i5.PUBLIC COMMENTS)HlTherewerenopubliccomments. 6.PRIOR MINUTES The minutes of February 17,2010 were approved as presented. AEA Board Meeting March 17,2010 Meeting Minutes Page 2 7.OLD BUSINESS 7A.Regional Integrated Resource Plan (RIRP)Final Report The Regional Integrated Resource Plan Final Report was presented to the board for approval. MOTION:Deputy Commissioner Burnett moved to accept the RIRP Final Report. Seconded by Mr.Felix.A roll call vote was taken and the motion passed unanimously. nflCommissionervonSchebenrequestedameetingwithy|Staff,to discuss the Kake-Petersburgroadandpowerlineprojectthathasacostestimate'OF $38),illion.Items to be discussedincluderoutingofthepowerlineversustheroad;;road quality construction,and routing withrespecttoKupreanofIsland.a }Hi j 8.NEW BUSINESS 9.DIRECTOR COMMENTS qlftq9A._Director's Status Report 'i ajeareonmia ects 'wyifne Pratl atieg 4pstreetandnextyearonly$21 nd Uy We Lire eps 'Blnew to get all of the projectscompleted.We will have,hay million in tecorneted within the next two years and saveeaters tty. anil a ,"Hal HT "iThedro-rata Noe fhWekeneen? aM ey reorganization lof the board,energy Sicilnay building efficiency,and policy and 'planning.TheGRETCbillshould{hove by end.of day.The operating budget was approved and they will moveonthecapitalbudgetitoday.Both Sara Fisher-Goad and James Strandberg are currently inJuneautestifying."Uy(hy (iHNiWMr.Haagenson was asked his$opinion about the separating the two boards. Mr.Haagenson said,"I'll give you my opinion on AIDEA.It seems interesting that they want to move it into Revenue because the mission of AIDEA has been working on for months is economic development,in Commerce.AIDEA is much more than a banker.Since we share boards neither one will affect the other, there's another bill in there where they want to separate boards and reconstitute boards and are we on the same mission.AIDEA makes money and AEA spends money,this board is very good at balancing those two things and we have a AEA Board Meeting March 17,2010 Meeting Minutes Page 3 good partnership,we share employees.If you were going to separate us and say you wanted to move us apart,it will increase costs.Right now we're getting the best synergy between the two organizations.If you're going to reorganize,you need to reorganize for a reason,and I'm not sure what that reason is.” The idea to split the boards arose originally in the House Omnibus Energy bill.They want to create a Department of Energy. We are also working on,in coordination with AEA,is the purchase and sale of the PPF portfolio.One hearing was held and it was received favorably.mi(|I'u 4TheRegionalIntegratedResourcePlanFinalReportwill!rw poststed on AEA's website on March 18,2010.ary,9B.Next meeting Wednesday,May 26,20 a lh, 10.BOARD COMMENTS il |vyi There were no board comments.in Ny f (i ih,(il tal 11.ADJOURNMENT \|vy iWhAhy,,ih Nsjourned at 12:0573,ad)a p.m.|-."lphhSteveHaagenson,Executive,Directo SecretaryAlaskaEnergyAuthority'lj shinyLessity {=ALASKA-.=qa)ENERGY AUTHORITYFeFemepowainPm EXHIBIT "A” MEMORANDUM TO:Board of Directors Alaska Energy Authority FROM:Steve Haagenson 3 Executive Director DATE:June 8,2010 SUBJECT:Loan Summary Haida Energy,Inc. Loan Request Haida Energy,Inc.requests a $9,000,000 33-year loan from the Power Project Fund to finance in part a new 5 megawatt (MW)hydroelectric project located at Reynolds Creek on Prince of Wales Island in southeast Alaska. Borrower Haida Energy,Inc. Guarantors Haida Corporation and Alaska Power and Telephone Company,Inc. Management Haida Energy,Inc.is managed by its stockholders,Haida Corporation and Alaska Power and Telephone Company,Inc.(AP&T). Use of Proceeds Construction and long-term financing for a new 5MW hydroelectric power plant. Project A new 5MW hydroelectric project located at Reynolds Creek on Prince of Wales Island in southeast Alaska Collateral and Value Deed of Trust,UCC-1,Security Agreement and assignment of easements,permits,and power sales agreement;first lien position on the SMW hydroelectric power plant constructed with the loan proceeds.The project cost-value is $17,245,000.Grants of $5,340,000 have been approved and Haida Corporation has invested $4,000,000 in equity.Haida is seeking to reduce its equity to $2,905,000 through use of the PPF loan,resulting in a capital structure for non- grant funded capital of 24%equity and 76%debt: Finance structure Federal Grants $1,340,000 State Grants 4,000,000 PPF loan 9,000,000 Haida Energy,Inc.2,905,000 Project cost $17,245,000 813 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 Board of Directors June 8,2010 Page 2 Related debt AP&T,either directly,or through its subsidiary Alaska Power Company,has a 22-year credit history with AEA through utilization of the Power Project Fund loan program.Eight loans and one commitment are outstanding totaling $7,004,291.Additionally,AP&T is a guarantor on a loan to Alaska Wind Power,LLC of which it is a member.The outstanding balance on this latter loan is $143,503.All loans pay as scheduled. Financial Information Confidential financial information will be provided to board members under separate cover. Background Haida Corporation and AP&T have joined together and formed Haida Energy,Inc.to construct and own a 5MW hydroelectric power plant at Reynolds Creek on Prince of Wales Island in southeast Alaska.Haida Energy is a newly formed corporation.It has no operating history nor any financial wherewithal beyond that of its stockholders,Haida Corporation (75%)and AP&T (25%). On October 24,2000,the Federal Energy Regulatory Commission (FERC)issued Haida Corporation a license to construct,own,and operate Reynolds Creek.Under the terms of the FERC license,construction must commence no later than October 24,2010,and be complete by October 24,2012.Through a 40-year Power Sales Agreement,100%of the power Reynolds Creek generates will be sold to Alaska Power Company,a wholly owned subsidiary of AP&T. Haida Corporation is the village corporation of Hydaburg,Alaska,and was created pursuant to the Alaska Native Claims Settlement Act (ANSCA).The company is located in the geographic region encompassed by Sealaska Corporation,a regional corporation,which was also formed under ANCSCA. AP&T is a 50+year old Washington based utility that was formed in Skagway,Alaska,and now serves over 30 Alaskan communities stretching from the Arctic Circle to the southernmost tip of southeast Alaska.Through a combination of low-impact hydro,wind,and experimental underwater river turbine projects,AP&T's 134 employee-owners work to further minimize its environmental footprint while ensuring the availability of energy resources necessary in future years.Serving over 12,000 households and business customers,AP&T offers an array of services to Alaskans,from energy to cutting-edge voice,video and data communications built on a foundation of fiber-optic,landline and wireless technologies.AP&T serves Prince of Wales Island. Loan Covenants None Board of Directors June 8,2010 Page 3 Recommendation Staff recommends approval of this loan subject to the following terms and conditions: 1.Recapitalization of the Power Project Loan Fund. 2.Loan terms: a)$9,000,000 zero interest,zero payment,two-year construction loan; b)$9,000,000 33-year term loan payable; i.3.33%interest for the first three years with semi-annual payments of interest only due each January 1 and July 1 then, ii.Statutory rate (on the date of AEA board approval)with 60 equal semi-annual payments of principal and interest. Conditions: 1.Both Haida Corporation and AP&T shall each fully and unconditionally guarantee both the construction and term loans,or; A non-cancelable take or pay Power Sales Agreement between Haida Energy,Inc. and Alaska Power Company,in form and substance acceptable to the Authority,that provides a minimum debt service coverage of 1:1 and assigned to AEA for security purposes. 2.Standard PPF loan conditions and requirements. 3.$2,900,000 borrower cash equity,exclusive of grants. 4.Award of,and compliance with,all AEA grants. 5.Loan disbursement shall be made in conjunction with disbursement of state grants on a pro rata basis. Collateral: 1.Deed of Trust,UCC-1,Security Agreement and assignment of easements and permits;recorded first lien position on the 5MW hydroelectric power plant,its equipment and appurtenances and all replacements thereof,and all revenue generated from the power it produces. 2.Assignment for security purposes on the Power Sales Agreement between Haida Energy,Inc.and Alaska Power Company. wo "AIDEN (=NASISSXAlaskaIndustrialDevelopmentWMExportAuthority MEMORANDUM TO:Board of Directors Alaska Energy Authority FROM:Steven H.Haagenson *ne Executive Director DATE:June 8,2010 SUBJECT:Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project)Resolution No.2010-02 (the "Fifth Supplemental Resolution”) Before you is Resolution No.2010-02.This resolution authorizes the Authority to issue up to $34,000,000 principal amount of the Authority's Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project)(the "Sixth Series Bonds”).The Sixth Series Bonds will be revenue obligations of the Authority and supported by revenues from the Bradley Lake Hydroelectric Project. The purpose of the Sixth Series Bonds is to redeem and refund the Authority's $30,640,000 outstanding Power Revenue Refunding Bonds,Fifth Series (Bradley Lake Hydroelectric Project) (the "Refunded Bonds”).The Authority issued the Refunded Bonds in 1999 for the purpose of refunding bonds issued in 1989 which financed a portion of the Bradley Lake Hydroelectric Project. The Refunded Bonds are fixed rate bonds.The reason for the refunding is to provide lower interest rates and,therefore,debt service savings. The Bradley Lake Project Management Committee ("PMC”)directed the Budget Subcommittee of the PMC to analyze a potential refunding transaction for cost savings benefits.The Budget Subcommittee determined refunding the Refunded Bonds results in a projected 7%present value savings (at the time of the analysis)and recommended PMC authorization of the transaction.The PMC,on June 3,2010,is expected to approve a resolution authorizing the refunding.On July 1,2010,the call premium on the Refunded Bonds drops by .5%,a savings of $153,200.Therefore,staff anticipates issuing the bonds on July 1,2010. Resolution No.2010-02 establishes the parameters of the Sixth Series Bonds.It delegates authority to a Designated Representative to finalize the terms of the Sixth Series Bonds at the time of marketing pursuant to a Bond Purchase Agreement.It is currently anticipated that the Sixth Series Bonds will be issued in the approximate principal amount of $29,000,000 (the additional authorization is being requested in case market conditions occur which requireoriginalissuediscount).The final interest rates,principal maturities and redemption features will be determined on the date of marketing (currently expected to occur on June 16,2010).A draftofthebondpurchaseagreementandaclosetofinaldraftofthepreliminaryofficialstatementfortheSixthSeriesBondsisattachedforyourreviewandcomment.Staff recommends,in particular,that you review the preliminary official statement,as this documentis the Authority'ssalesprospectusfortheSixthSeriesBonds;if you have comments or questions,please contact _813 West Northern Lights Boulevard °Anchorage,Alaska 99503-2495oa--m-Ann INnnn nena -B eeebeta.ee Memorandum June 8,2010 Page 2 me.Prior to posting,AEA will need to approve the preliminary official statement as final (and Resolution No.2010-02 authorizes the Designated Representative to execute that approval). Merrill Lynch,Pierce,Fenner &Smith is acting as the underwriter for the Sixth Series Bonds. Michael Cunningham,Chief Financial Officer and Senior Vice President of Chugach Electric Association,representing the Power Purchasers,will be in attendance at the meeting to answer any questions the Board may have regarding the decision to refund the outstanding bonds. Cynthia Weed of K&L Gates LLP,the Authority's bond counsel,will be participating by phone to explain the resolution and related documents in more detail.Eric Whaley of Merrill Lynch, Pierce,Fenner &Smith will also participate and be able to answer any questions the Board members may have of the underwriter. Staff recommends approval of Resolution No.2010-02. AEA Resolution No.2010-01 ALASKA ENERGY AUTHORITY RESOLUTION NO.2010-02 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF POWER REVENUE REFUNDING BONDS, SIXTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT), IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $34,000,000 AND DETERMINING RELATED MATTERS Adopted June 8,2010 Section 101. Section 102. Section 103. Section 201. Section 202. Section 203. Section 204. Section 205. Section 206. Section 207. Section 208. Section 301. Section 302. Section 303. Section 304. Section 401. Section 501. Section 601. Exhibit A TABLE OF CONTENTS ARTICLE I Definitions and Authority ARTICLE II Authorization;Terms and Issuance Authorization,Principal Amount,Description and Serries...............00065 Purposes;Redemption Account ..........cccsssssssssssseesecsstesseeresseseesenseeneens Issue Date and Form;Book-Entry .0..........ccccesscssseesesessseesseessnsceseceeeeeees Places and Manner of Payment..............:cccsccsssssssccssscssseessceeseeeesseeseeensees Maturities and Interest Rates 20.0.0...esccsssessescseessnscsssesscesseeeeseesensessees Numbers and Letters...ce ecsessscetcssseseseecesesssceseesseesseeseessseesesenssneessees Redemption...eeccssessceseeesseserssescecessecescesseeeseecsecesseseseesesnecenecnseenness No Redemption of Bonds from Construction Fund Moneys..............05 ARTICLE III Sale and Delivery of Bonds SY.)(0)Wl810)016 eeee Approval of Official Statement and Continuing Disclosure.................. Investment Agreement 0.0...cceeceecsscrcecsseeeesesseeeescssseeeessseneecessesneeeeeeee Delivery of Bonds ..0.......eceecceseesssseseceseeeescesceenseeneceeseessnesssesssessneeeneees ARTICLE IV Paying Agent Appointment of Paying Agent ..........ccccscsscsssecseecerscsessessecsesesseeeensseenes ARTICLE V Ratification Ratification,Confirmation and Approval ............ccccsscesseeeens deceseseseseeees ARTICLE VI Effective Date Fifth Supplemental Resolution Effective Date .............ccccsssssseseneeseeeees Bond Terms -l-P:\20287_CMWA20287_8UG Page 06/02/10 ALASKA ENERGY AUTHORITY RESOLUTION NO.2010-02 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF POWER REVENUE REFUNDING BONDS, SIXTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT), IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $34,000,000 AND DETERMINING RELATED MATTERS BE IT RESOLVED by the Board of Directors of the Alaska Energy Authority on the 8th day of June,2010,that pursuant to the Power Revenue Bond Resolution adopted on September 7,1989 (hereinafter referred to as the "Resolution”),this Supplemental Resolution is adopted as follows: ARTICLE I Definitions and Authority Section 101.Short Title.This resolution may hereafter be cited by the Authority,and is hereinafter sometimes referred to,as the "Fifth Supplemental Resolution.” Section 102.Definitions. (A)All defined terms contained in the Resolution shall have the same meanings in this Fifth Supplemental Resolution as such defined terms are given in Section 102 of the Resolution. (B)In addition,as used in this Fifth Supplemental Resolution,unless the context shall otherwise require,the following terms shall have the following respective meanings: Bond Insurance Policy means the insurance policy,if any,issued by the Insurer guaranteeing the scheduled payment of principal of and interest on the Bonds when due. Beneficial Owner means the person in whose name a Bond is recorded as the beneficial owner of such Bond by the respective systems of DTC and the DTC Participants or the registered owner of the Bond if the Bond is not then held in book-entry form under Section 203. Bond Purchase Agreement means that certain Bond Purchase Agreement between the Authority and the Underwriter relating to the sale of the Bonds. Bonds means the Sixth Series Bonds. Continuing Disclosure Agreement means the Continuing Disclosure Agreement executed by the Authority and dated the date of the Settlement Date,as such term is defined in the Bond Purchase Agreement,and relating to the Bonds,as originally executed and as it may be amended from time to time in accordance with the terms thereof. Designated Representative means the Executive Director of the Authority and the Deputy Director -Finance. DTC means The Depository Trust Company,a limited purpose trust company organized under the laws of the State of New York,and its successors and assigns. DTC Participant means a trust company,bank,broker,dealer,clearing corporation and any other organization that is a participant of DTC. Fifth Series Bonds means the Authority's Power Revenue Refunding Bonds,Fifth Series (Bradley Lake Hydroelectric Project)issued in the initial aggregate principal amount of $30,640,000. Fourth Supplemental Resolution means the Supplemental Resolution of the Authority adopted under the terms of the Resolution on December 16,1998. Insurer means the bond insurance company,if any,selected by the Designated Representative to issue a Bond Insurance Policy. Letter of Representations means the Blanket Issuer Letter of Representations dated October 24,1997,from the Authority to DTC. Settlement Date means July 1,2010,or such other date or dates as may be established for the issuance of the Sixth Series Bonds pursuant to the terms of the Bond Purchase Agreement. Sixth Series Bonds means the Bonds of the Authority authorized by this Fifth Supplemental Resolution and herein designated "Power Revenue Refunding Bonds, Sixth Series.” Underwriter means Merrill Lynch,Pierce,Fenner &Smith Incorporated. Section 103.Authority for this Resolution.This Fifth Supplemental Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization;Terms and Issuance Section 201.Authorization,Principal Amount,Description and Series. (A)_In order to provide funds necessary for the purposes specified in Section 205 of the Resolution,in accordance with and subject to the terms,conditions and limitations established herein and in the Resolution,a Series of Power Revenue Bonds is hereby authorized to be issued in an aggregate principal amount to be determined in accordance with Section 301 hereof.The Authority is of the opinion and hereby determines that the issuance of the Bonds in said amount is necessary to provide sufficient funds to be used and expended for the purposes -2-P:\20287_CMWA\20287_8UG 06/02/10 specified in Section 202 of the Resolution.The Bonds of such Series shall be designated and entitled "Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project).” (B)The Authority hereby finds and determines that the establishment in the Resolution of the Capital Reserve Fund will enhance the marketability of the Bonds. Section 202.Purposes:Redemption Accounts. (A)The purpose for which the Bonds are being issued is to refund the outstanding Fifth Series Bonds. (B)There is hereby established within the Construction Fund the Fifth Series Redemption Account.The Trustee shall deposit proceeds of the Bonds,together with other amounts held in other Funds or any accounts therein as directed by the Authority,into the Fifth Series Redemption Account and shall hold such proceeds and such other amounts in such account for the defeasance of the Fifth Series Bonds in accordance with Paragraph2 of . Section 1201 of the Resolution;provided,however,that the Designated Representative may instruct the Trustee to hold a portion of such proceeds or such other amounts for payment of Costs of Issuance,and the Trustee shall apply such proceeds or such other amounts to pay such costs as instructed by the Designated Representative.On August 2,2010,or as soon thereafter as possible,the Trustee shall apply the amounts then held in the Fifth Series Redemption Account to the redemption of the Fifth Series Bonds in accordance with the Fourth Supplemental Resolution.If any amounts remain in the Fifth Series Redemption Account after the redemption of the Fifth Series Bonds,the Trustee shall treat such remaining amount as Revenues and shall forthwith transfer such Revenues to the Revenue Fund. Section 203.Issue Date and Form:Book-Entry. (A)The Bonds shall be dated as of the Settlement Date,or such other date as the Designated Representative may select. (B)Subject to (E)of this Section,the Bonds shall be registered initially in the name of "Cede &Co.,”as nominee of DTC,and shall be issued initially in the form of a single Bond for each maturity in the amount of such maturity.Registered ownership of the Bonds,or any portions thereof,may not thereafter be transferred except (i)to any successor of DTC or its nominee,provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it;(ii)to any substitute depository's successor;or (iii)to any person as provided in paragraph (E)below. (C)|Upon the resignation of DTC or its successor (or any substitute depository or its successor)from its functions as depository or a determination by the Authority that it is no longer in the best interest of Beneficial Owners to continue the system of book-entry transfers through DTC or its successors (or any substitute depository or its successor),the Authority may appoint a substitute depository.Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (D)Inthe case of any transfer pursuant to clause (i)or (ii)of paragraph (B)above,the Trustee shall,upon receipt of all Outstanding Bonds,together with a written request of an -3-P:\20287_CMW\20287_8UG 06/02/10 Authorized Officer and a supply of new Bonds,authenticate a single new Bond for each maturity of Bonds then Outstanding,registered in the name of such successor or such substitute depository,or its nominee,as the case may be,all as specified in such written request. (E)Inthe event that (i)DTC or its successor (or substitute depository or its successor) is not available to function as depository for the Bonds or resigns from its functions as depository,and no substitute depository can be obtained,or (ii)the Authority determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bond certificates,the Bonds may be issued,or ownership of Bonds may then be transferred,to any person or entity as provided in the Resolution,and the Bonds shall not,or shall no longer,be held in book-entry form.An Authorized Officer shall deliver a written request to the Trustee to issue Bonds as provided in the Resolution in any authorized denomination,together with a supply of definitive Bonds.Upon receipt of all then Outstanding Bonds by the Trustee,together with a written request of an Authorized Officer to the Trustee,new Bonds shall be issued and authenticated in such denominations and registered in the names of such persons as are requested in such written request. (F)For so long as the Bonds are held in book-entry form under this Section,the Authority and the Trustee may treat DTC (or its nominee)as the sole and exclusive registered owner of the Bonds registered in its name for the purposes of payment of principal or Redemption Price of and interest on such Bonds,selecting such Bonds or portions thereof to be redeemed,giving any notice permitted or required to be given to Bondholders under the Resolution,registering the transfer of such Bonds and obtaining any consent or other action to be taken by Bondholders and for all other purposes whatsoever,and neither the Authority nor the Trustee shall be affected by any notice to the contrary.Neither the Authority nor the Trustee shall have any responsibility or obligation to any DTC Participant,any person claiming a beneficial ownership interest in the Bonds under or through DTC or any DTC Participant,or any other person not shown on the registration books of the Trustee as being a registered owner with respect to the accuracy of any records maintained by DTC or any DTC Participant,the payment by DTC or any DTC Participant of any amount in respect of the principal or Redemption Price of or interest on the Bonds,any notice which is permitted or required to be given to Bondholders under the Resolution,the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of the Bonds,or any consent given or other action taken by DTC as Bondholder.The Trustee shall pay from monies available under the Resolution all principal and Redemption Price of and interest on Bonds only to or upon the order of DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to the principal or Redemption Price of and interest on the Bonds to the extent of the sum or sums so paid. Section 204.Places and Manner of Payment.For so long as all Outstanding Bonds are registered in the name of Cede &Co.or its registered assigns,payment of principal and interest thereon shall be made as provided in the Letter of Representations and the operational arrangements referred to therein as amended from time to time.In the event that the Bonds are no longer registered in the name of Cede &Co.or its registered assigns,(i)payment of interest on the Bonds will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee,or,upon the written request of a registered owner of at least $1,000,000 in principal -4-P:\20287_CMW\20287_8UG 06/02/10 amount of Bonds received at least 15 days prior to an interest payment date,by wire transfer in immediately available funds to an account in the United States of America designated by such registered owner;and (ii)principal of the Bonds will be payable at the corporate trust office of the Trustee upon surrender of the Bonds representing such principal.Both principal of and interest on the Bonds are payable in any coin or currency of the United States of America which, on the respective dates of payment thereof,shall be legal tender for the payment of public and private debts. Section 205.Maturities and Interest Rates.The Bonds shall be issued in denominations of $5,000 or any integral multiple thereof,shall mature on July I in the years and principal amounts,and shall bear interest at the rates all as determined by the Designated Representative pursuant to Section 301 hereof. Section 206.Numbers and Letters.Bonds shall be numbered and lettered in such manner as the Designated Representative shall determine prior to delivery thereof. Section 207.Redemption.The Bonds shall be subject to redemption (including redemption by application of sinking fund payments)as determined by the Designated Representative pursuant to Section 301 hereof. Section 208.No Redemption of Bonds from Construction Fund Moneys.The Bonds shall not be subject to redemption pursuant to subsection 503(8)of the Resolution. ARTICLE III Sale and Delivery of Bonds Section 301.Sale of Bonds. (A)The Bonds shall be sold at negotiated sale to the Underwriter pursuant to the terms of the Bond Purchase Agreement.The Designated Representative is hereby authorized to negotiate terms for the purchase of the Bonds,review,approve and execute the Bond Purchase Agreement,with such terms as are approved by him or her pursuant to this Section and consistent with this Fifth Supplemental Resolution.The Underwriter has advised the Authority that market conditions are fluctuating and,as a result,the most favorable market conditions may occur on a day other than a scheduled meeting date of the Authority.The Authority has determined that it would be in the best interest of the Authority to delegate to the Designated Representative for a limited time the authority to approve the final interest rates,aggregate principal amount,terms of redemption and redemption rights and principal amounts of each maturity of the Bonds.The Designated Representative is hereby authorized to approve the final interest rates,maturity dates,aggregate principal amount,principal maturities,terms of redemption and redemption rights for the Bonds in the manner provided hereafter so long as the aggregate principal amount of the Bonds does not exceed $34,000,000;provided,however,that notwithstanding the foregoing the Designated Representative is not authorized,empowered,or directed to execute or deliver the Bond Purchase Agreement until the Project Management Committee or its designee for the Project shall have approved the final terms of the Bond Purchase Agreement and shall have requested the Authority to execute and deliver the Bond Purchase Agreement.The provisions of subsection (C)of this Section further authorize the -5 -P:\20287_CMVWV\20287_8UG 06/02/10 Designated Representative to determine whether the Bonds shall be secured by a Bond Insurance Policy,consistent with the approval granted by the Power Management Committee. In determining the final interest rates,aggregate principal amounts,principal maturities, terms of redemption and redemption rights,the Designated Representative,in consultation with Authority staff,shall take into account those factors that,in his or her judgment,will result in the most favorable terms for the Bonds,including,but not limited to current financial market | conditions and current interest rates for obligations comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in this Section 301,the Designated Representative is hereby authorized to execute the final form of the Bond Purchase Agreement,upon the Designated Representative's approval of the final interest rates,aggregate principal amount, principal maturities,terms of redemption and redemption rights set forth therein.Such terms shall be set forth in Exhibit A to the Bond Purchase Agreement and an exhibit setting forth such final terms of the Bonds shall be attached to this Fifth Supplemental Resolution as Exhibit A, and thereby incorporated into this Fifth Supplemental Resolution.The authority granted to the Designated Representative by this Section 301 shall expire 90 days after the date of approval of this Fifth Supplemental Resolution.If a Bond Purchase Agreement for the Bonds has not been executed within 90 days after the date of final approval of this Fifth Supplemental Resolution, the authorization for the issuance of the Bonds shall be rescinded,and the Bonds shall not be issued nor their sale approved unless such Bonds shall have been re-authorized by resolution of the Authority.The resolution re-authorizing the issuance and sale of such Bonds may be in the form of a new Supplemental Resolution repealing this Fifth Supplemental Resolution in whole or in part or may be in the form of an amendatory resolution approving a Bond Purchase Agreement or establishing terms and conditions for the authority delegated under this Section 301. (B)Upon the passage and approval of this Fifth Supplemental Resolution,each Designated Representative is authorized and directed to undertake all action necessary for the prompt execution and delivery of the Bonds to the Underwriter,to purchase the Bond Insurance Policy,if so determined,and further to execute the Bond Purchase Agreement and all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the Bond Purchase Agreement. (C)The Designated Representative is hereby further authorized at his or her option to solicit proposals from municipal bond insurance companies for the issuance of a Bond Insurance Policy.The Designated Representative may execute a commitment received from the Insurer selected by the Designated Representative.The Authority further authorizes all proper officers, agents,attorneys and employees of the Authority to cooperate with the Insurer in preparing such additional agreements,certificates,and other documentation on behalf of the Authority as shall be necessary or advisable in providing for the Bond Insurance Policy,if any. -6-P:\20287_CMW\20287_8UG 06/02/10 Section 302.Approval of Official Statement and Continuing Disclosure. (A)_The distribution of the Preliminary Official Statement of the Authority in the formpresentedtoandmadeapartoftherecordsofthismeetingisapproved.The distribution of a final Official Statement,which is in substantially the form and content of the draft Official Statement,and the use thereof by the Underwriter in connection with the offering of the Bonds, is hereby ratified,confirmed and approved.There is hereby delegated to the Designated Representative the power to deem the Official Statement,or any draft thereof which he or she considers appropriate,final on behalf of the Authority for purposes of Securities and Exchange Commission Rule 15¢2-12(b)(1). (B)The Authority hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement as the Continuing Disclosure Agreement may be completed and attached as an Exhibit to the final Official Statement. Notwithstanding any other provision of the Fifth Supplemental Resolution,failure of the Authority to comply with the Continuing Disclosure Agreement shall not be considered a default of the Authority's obligations under this Fifth Supplemental Resolution,the Resolution or the Bonds;however,the Beneficial Owner of any Bond may bring an action for specific performance,to cause the Authority to comply with its obligations under this Section. Section 303.Investment Agreements.The Chair or Vice Chair,Deputy Director- Finance or the Executive Director be,and each of them hereby is,authorized and empowered to execute and deliver appropriate investment agreements with financial institutions providing for investment of proceeds of the Bonds and amounts to be transferred from other funds of the Authority to secure the Bonds in such form and on such terms and conditions as they deem appropriate. Section 304.Delivery of Bonds.The Chair,Vice Chair,Executive Director,Deputy Director-Finance and such other person or persons as may be designated by the Executive Director are specifically designated as Authorized Officers as defined in the Resolution,and they hereby are severally authorized,after execution of the Bonds,to deliver the Bonds to the Trustee for authentication under the Resolution and,upon authentication and upon receipt of the balance of the purchase price of the Bonds,to deliver to the Trustee a written order in the name of the Authority directing the Trustee to deliver the Bonds to or upon the order of the Underwriter and to receive the proceeds of sale of the Bonds and give a written receipt therefor on behalf of the Authority,to apply said proceeds and the other moneys required to be transferred or deposited in accordance with the terms of the Resolution and this Fifth Supplemental Resolution and in such manner as is required to cause the conditions precedent to the issuance of the Bonds to be complied with,and to do and perform or cause to be done and performed,for and on behalf of the Authority,all acts and things that constitute conditions precedent to the authentication and delivery of the Bonds or that are otherwise required or convenient to be done and performed by or on behalf of the Authority prior to or simultaneously with the delivery of the Bonds.Such Authorized Officers are hereby severally authorized for and on behalf of the Authority to do or cause to be done all acts and things required or desirable to be done by the Authority under and pursuant to the terms of the Resolution and in accordance with the terms and conditions of the Bond Purchase Agreement. -7-P:\20287_CMW\20287_8UG 06/02/10 ARTICLE IV Paying Agent Section 401.Appointment_of Paying Agent.U.S.Bank National Association is appointed Paying Agent for the Bonds pursuant to Section 902 of the Resolution. ARTICLE V Ratification Section 501.Ratification,Confirmation and Approval.Pursuant to Section 713 of the Resolution,the Authority has assigned,pledged and transferred its rights under the Power Sales Agreement to the Trustee for the benefit of Bondholders and further agreed to enforce its terms. This Board hereby ratifies,approves and confirms the Power Sales Agreement as a valid and binding obligation of the Authority and further authorizes and directs that the Power Sales Agreement,including all amendments thereto,certified by an Authorized Officer,be filed with the Trustee. ARTICLE VI Effective Date Section 601.Fifth Supplemental Resolution Effective Date.This Fifth Supplemental Resolution shall take effect immediately. Supplemental Resolution approved and adopted by the Alaska Energy Authority on June 8,2010. ALASKA ENERGY AUTHORITY Chair [SEAL] ATTEST: Secretary -8 -P:\20287_CMW\20287_8UG 06/02/10 Draft Preliminary Official Statement ThisPreliminaryOfficialStatementandtheinformationcontainedhereinaresubjecttocompletionandamendment.UndernocircumstancesshallthisPreliminaryOfficialStatementconstituteanoffertosellorasolicitationofanoffertobuy,norshalltherebeanysaleoftheBondsinanyjurisdictioninwhichsuchoffer,solicitationorsalewouldbeunlawfulpriortoregistrationorqualificationunderthesecuritieslawsofsuchjurisdiction.DRAFT:05/27/10 PRELIMINARY OFFICIAL STATEMENT DATED ,2010 NEW ISSUE (See the caption "RATINGS”herein) FULL BOOK-ENTRY In the opinion of K&L Gates LLP,Bond Counsel,assuming compliance with certain covenants of the Authority,interest on the Sixth Series Bonds is excludable from gross income for federal income tax purposes under existing law,except for interest on any Sixth Series Bondfor any period during which such Sixth Series Bond is held by a "substantial user”of the facilities financed or refinanced by such Sixth Series Bonds,or a "related person”to such "substantial user,”within the meaning of Section 147(a)of the Internal Revenue Code of 1986,as amended.Interest on the Sixth Series Bonds is not an item of tax preference for purposes of either individual or corporate alternative minimum tax.Interest on the Sixth Series Bonds may be indirectly subject to corporate alternative minimum tax and certain other taxes imposed on certain corporations.Interest on the Sixth Series Bonds is exempt from taxation by the State of Alaska except for transfer,estate and inheritance taxes.See "TAX MATTERS”herein. $ Alaska Energy Authority Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Dated:Date of Delivery Due:1 The Alaska Energy Authority (the "Authority”)is issuing its Power Revenue Refunding Bonds,Sixth Series (the "Sixth Series Bonds”)to refund $30,640,000 aggregate outstanding principal amount of the Authority's Power Revenue Bonds,Fifth Series (Bradley Lake Hydroelectric Project)due July 1,2021,and to pay costs of issuing the Bonds. The payment of the Sixth Series Bonds is secured under the Authority's Bradley Lake Power Revenue Bond Resolution on a parity with the Authority's outstanding Bradley Lake Power Revenue Bonds by a pledge of the revenues received by the Authority fromtheoperationoftheBradleyLakeHydroelectricProject(the "Project”),including payments to be made by the municipal utilities and electric cooperatives that have agreed to purchase all of the Project Capacity of the Project and to pay the Annual Project Costs of the Project pursuant to the Power Sales Agreement described herein. The Sixth Series Bonds are also secured by a pledge of the moneys and investments in certain funds and accounts maintained under the Bradley Lake Power Revenue Bond Resolution,including the Capital Reserve Fund.The Chair of the Authority is required to certify at least annually to the Governor and the State Legislature the amount,if any,required to restore the Capital Reserve Fund to the Capital Reserve Requirement.The State Legislature may,but is not required to,make an appropriation in the required amount. THE SIXTH SERIES BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR LIABILITY OF THE STATE OF ALASKA OR OF A POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS.THE SIXTH SERIES BONDS DO NOT DIRECTLY,INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OF ALASKA OR ANY POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS TO APPLY MONEY FROM,OR LEVY OR PLEDGE,ANY FORM OF TAXATION WHATEVER TO THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER.NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF ALASKA,ANY POLITICAL SUBDIVISION THEREOF,OR THE POWER PURCHASERS IS PLEDGED FOR THE PAYMENT OF THE SIXTH SERIES BONDS. The Sixth Series Bonds will mature in the principal amounts and bear interest at the rates set forth on [the inside of]this cover page.The Sixth Series Bonds are issuable in authorized denominations of $5,000 and integral multiples thereof within a maturity.Interest on the Bonds is payable on each 1 and 1,commencing 1,2010.[The Bonds will be subject to optional redemption and may be subject to mandatory redemption prior to maturity,as described herein.]The Bonds will be issued as fully registered bonds and,when issued,will be registered in the name of Cede &Co.,as nominee of The Depository Trust Company,New York,New York ("DTC”).DTC will act as securities depository for the Bonds.Individual purchases of interests in the Bonds will be made only in book-entry form.Purchasers of such interests will not receive certificates representing their interests in the Bonds.Principal and interest are payable directly to DTC by U.S.Bank National Association,as trustee (the "Trustee”). * MATURITY SCHEDULE Inside of Cover Page This cover page contains certain information for quick reference only.It is not a summary of this issue.Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Sixth Series Bonds are offered when,as and if issued and received by the Underwriter and are subject to the approving legal opinion of K&L Gates LLP of Seattle,Washington,Bond Counsel.Certain legal matters will be passed upon for the Underwriter by Birch Horton Bittner &Cherot of Anchorage,Alaska,andfor the Power Purchasers by their special counsel,McDowell Rackner & Gibson PC,of Portland,Oregon.It is expected that the Sixth Series Bonds will be available for delivery through the facilities of DTC in New York,New York,by Fast Automated Securities Transfer (FAST)on or about July___,2010. BofA Merrill Lynch 2010Dated:> *Preliminary,subject to change. Alaska Energy Authority $* Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Maturities,Amounts,Interest Rates and Yields or Prices (Base CUSIP*No.) Due Principal Interest cusiPt 1 Amount Rate Yield No. *Preliminary,subject to change. ¢Copyright 2010,American Banker's Association.The CUSIP numbers herein are provided by Standard &Poor's CUSIP Service Bureau,a division of the McGraw-Hill Companies Inc.These numbers are not intended to create a database and do not serve in.any way as a substitute for the CUSIP Service.CUSIP numbers are provided for convenience of reference only.CUSIP numbers are subject to change.Neither the Authority nor the Underwriter takes any responsibility for the accuracy of such CUSIP numbers. No dealer,broker,salesperson or other person has been authorized to give any information or make any representations,other than those contained in this Official Statement,and,if given or made,such other information or representations must not be relied upon as having been authorized.This Official Statement does not constitute an offer to sell or solicitation of an offer to buy nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer,solicitation or sale. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of any of the Bonds. The Underwriters have provided the following sentence for inclusion in this Official Statement.The Underwriters have reviewed the information in this Official Statement in accordance with,and as part of,their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction,but the Underwriters do not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THIS OFFERING,THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED,AND IF DISCONTINUED THEN RECOMMENCED,AT ANY TIME. UPON ISSUANCE,THE BONDS WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933,AS AMENDED,AND WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES EXCHANGE,NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL,STATE OR OTHER GOVERNMENTAL ENTITY OR AGENCY WILL HAVE PASSED ON THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS OFFICIAL STATEMENT OR APPROVED THE BONDS FOR SALE.THE RESOLUTIONS WILL NOT BE QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939,AS AMENDED. The Authority makes no representation with respect to the accuracy of information in this Official Statement concerning the Power Purchasers,HEA and MEA,the information under the caption "Restructuring of the Electric Utility Industry in Alaska,”the information under the caption "Pending Disputes”or the information concerning DTC. This Official Statement is submitted by the Authority in connection with the sale of the Bonds referred to herein and may not be reproduced or used,in whole or in part,for any other purpose. The information set forth herein has been furnished by the Authority and other sources which are believed to be reliable,but is not guaranteed as to accuracy or completeness,and is not to be construed as a representation by the Underwriter.The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale of the securities offered hereby shall,under any circumstances, create any implication that there has been no change in the affairs of the Authority or any party described herein, since the date hereof.This Official Statement,including any supplement or amendment hereto,is intended to be deposited with one or more repositories by the Underwriter. ALASKA ENERGY AUTHORITY 813 West Northern Lights Boulevard Anchorage,Alaska 99503 Telephone:(907)771-3044 -www.akenergyauthority.org* BOARD Patrick Galvin,Commissioner of Revenue,Chair John R.Winther,Vice Chair Michael T.Felix Emil Notti,Commissioner of Commerce,Community and Economic Development Leo von Scheben,Commissioner of Transportation and Public Facilities PRINCIPAL STAFF Steven H.Haagenson .......csccsssssssecesseccesssssnsssescssseasssseessesenees Executive Director Chris Anderson .........:cscssessesssssssecesseseeneese Deputy Director-Commercial Finance Bryan Carey ......ssscsscrscsssorensrecssseesecesecsscsesensesesssessseesesessessooees Technical Engineer Sara Fisher-Goad ........cscscssssssssssessesessessscsensssssesessenes Deputy Director-Operations Michael C,Harper.......cccscssssesssesssssensees ....Deputy Director-Rural Energy Valorie F.Walker...escsscscrsssssssssectesseessssnssssesseassees Deputy Director-Finance FINANCIAL ADVISOR BOND COUNSEL TO THE POWER PURCHASERS K&L Gates LLP Walker and Associates Seattle,Washington Richmond,Virginia TRUSTEE U.S.Bank National Association Seattle,Washington *This inactive textual reference to the Authority's website is contact information provided only for convenience. The reference is not a hyperlink and,by this reference,the Authority's website is not incorporated into this Official Statement. -i- TABLE OF CONTENTS Page INTRODUCTION .......ssssssssesoessossessoussosssescessccssssasecesooscuoesesseos 1 Getneral ..........cscccssssccoososssssseetscssccassseaccecossesssconessaeesesnenasoesce 1 The Project ..........:cccosscsssseccoossoorsoncessessconoccsscssonssoeoosonsesanoesses 1 Plan Of Finance ...........cccocscesssssccsoscoceesessosscceessesocsescsocoseasoasors 2SourcesandUsesofFunds.seseensccorees cece ssscvecsosvescece soos nereeeesese 2 Power Revenue Bonds........sccssssessesssesseessesesesseesseesenssasenes 2 Security for the Sixth Series Bonds.3 Power Sales Agreement..........cccssscsesesssosessoressresseeree 3 Capital Reserve Fund ......sssssscsssssssessscstescoconcoscccresrsenssaceavos 4 Moral Obligation of the State ........ssscosssccsssssessercssstereesseeese 4 Rate Covenant ........scscccsseesceeeteterees 4 Additional Bonds.........c.ssccsssssesscosssesessseconccrarssnsaveseseseeseasenees 4 Additional Information...............scscsccssesccsesceesesooeaceseeesensecee 5 DESCRIPTION OF THE SIXTH SERIES BONDS ..............6 5 General...5 Optional Redemption 5 Sinking Fund Redemption......6 Mandatory Redemption Upon a Determination of Taxability ens 6 Notice of Redemption...........csssssssssssssscesesssseserscnsersecseseeesaes 6 Book-Entry Transfer System .........csccssssssscssscsccsesessececceserees 6 SECURITY AND SOURCES OF PAYMENT FOR THE SIXTH SERIES BONDS ....0.......ssecesescsceoenecseeseeeres 7 Pledge Effected by the Bond Resolution ............cscsesseeseees 7 Power Sales Agreementt.........scscsccsscsssesossssesessensees 8 Rate Covenant 9 Capital Reserve Fund and Moral Obligation of the State ss ssetenseccenceossesaceassoesneassoeasees 10AdditionalBonds.10 Pledge of the State....sssscssssessssssesesessesersessessssesessesenes 10 ANNUAL DEBT SERVICE REQUIREMENTS ........ecescsssee 11 THE BRADLEY LAKE HYDROELECTRIC PROJECT ..vee 11 General Description.........11 Permits and Licenses.........12 Geologic and Seismic Considerations ..............cccsesssesssceees 12 Power Production 12 Water Availability...”sees 13HistoricalAnnualProjectCostssasseseeseseanseveeeesnasesensssacenenss14 Transmission ...........14ProjectManagementCommitteesasvecsessonessesesssanessenensessesees15 Project Operation and Maintenance.........scccocssssocsssseeeteaeoe 16 THE POWER PURCHASERS...16 Introduction ........eeessssssseseencseereees eae 16 Rate Regulation .......cccssseesssssesees .17° Power Requirement............csssssssscessssssesscessensssscsesecsceetes 17 Generation Resources and Utilization of the Project..........18 -ii- Page Municipality of Anchorage d/b/a Municipal Light Eo POWET «...occscssesesescorsrsceaceonsscossensecsasoocscecoeseacesosoesesesouss 19 Chugach Electric Association,Inc..........00 seed Golden Valley Electric Association,Inc....oe 24 Homer Electric Association,Inc.......ccsccscsscsessssscceecseoscns0sees 26 Matanuska Electric Association,Inc..........sscsssscsresooesteeses 27 City of Seward ........cccccccssscessecssscescesseesceoossessesecseeseeseessensents 29 RESTRUCTURING OF THE ELECTRIC UTILITY INDUSTRY IN ALASKA us ccsscecsessesetssecesseonsaccessseronse THE ALASKA ENERGY AUTHORITY .......cssscssssssesseorssooes (11S¢:|ee Reorganization of Authority .......csseescsessesseeee General Projects and Transmission Facilities ... Board of Directors .........ssscsssssessesseesseeceeeseees Administration TRUSTEE.. LITIGATION ......ssssssssssessssessessecsessesesessssscsesecescenenseecsessenessesees Authority......... Power Purchasers.........:ccssssssssssessessrsorssesscsscenessessensesseseeees TAX MATTERSNotQualifiedTax-Exempt Obligations siescsecensastossssneeseeeses CONTINUING DISCLOSURE ............. INDEPENDENT AUDITOR.......oe eeeeseescesessesesecnerseaeeenenaesees LEGAL MATTERS UNDERWRITING SOURCES OF CERTAIN INFORMATION .........csccseceseeeeeees MISCELLANEOUS APPENDIX A:Summaries of the Act and the Basic Documents -The Alaska Energy Authority Act -The Power Sales Agreement -The Bond Resolution APPENDIX B:Form of Opinion of Bond Counsel APPENDIX C:Financial Statements of the Authority APPENDIX D:Forms of Continuing Disclosure Agreements APPENDIX E:Book-Entry System OFFICIAL STATEMENT Relating to ALASKA ENERGY AUTHORITY -$® POWER REVENUE REFUNDING BONDS,SIXTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT) INTRODUCTION General This Official Statement,including the cover page and Appendices hereto,was prepared to provide information relating to the Alaska Energy Authority (the "Authority”or "AEA”)Power Revenue Refunding Bonds,Sixth Series(Bradley Lake Hydroelectric Project)in the principal amount of $(the "Sixth Series Bonds”). The Authority is issuing the Bonds pursuant to Chapter 83,Title 44 of the Alaska Statutes,as amended (the "Act”) and pursuant to the Bradley Lake Power Revenue Bond Resolution,adopted by the Board of Directors of the Authority on September 7,1989,as amended,and as supplemented by the Fifth Supplemental Resolution,adopted by said Board of Directors on ,2010 (collectively,the "Bond Resolution”or the "Resolution”).The Authority has appointed U.S.Bank National Association,of Seattle,Washington,as trustee (the "Trustee”)for the Sixth Series Bonds. The Sixth Series Bonds will mature in the principal amounts and in the years,and will bear interest at the rates,as set forth on the inside cover page of this Official Statement. Copies of the Authority's statutes,agreements and documents referred to herein are available for inspection at the office of the Authority,813 West Northern Lights Boulevard,Anchorage,Alaska 99503-6690.Although the Authority maintains a website,the website is not updated on a regular basis and should not be relied upon as a source of information in making investment decisions.A copy of the audited financial statements of the Authority as of and for the year ended June 30,2009 and June 30,2008,with an Independent Auditors'Report,appears as Appendix C hereto.KPMG LLP,the Authority's independent auditor,has not been engaged to perform and has not performed,since the date of its report included therein,any procedures on the financial statements addressed in that report.KPMG LLP also has not performed any procedures relating to this official statement. Summaries of,or references to,provisions of the Internal Revenue Code of 1986,as amended (the "Code”), contained herein are made subject to the complete provisions thereof and do not purport to be complete statements thereof. Capitalized terms which are not defined herein shall have the same meanings as set forth in the Resolution or in the Power Sales Agreement.See "APPENDIX A-SUMMARY OF THE ACT AND THE BASIC DOCUMENTS.” The information within this Official Statement has been compiled from official and other sources considered reliable and,while not guaranteed as to accuracy,is believed by the Authority to be correct.Any statements herein involving estimates,forecasts or projections are to be construed as such rather than as statements of fact. The Project The Bradley Lake Hydroelectric Project (the "Project”)is located in south central Alaska at the southern end of the Kenai Peninsula.The Project includes a 610 foot long,125 foot high concrete-faced and rock-filled gravity dam,a 3.5 mile power tunnel and steel-lined penstock.Construction of the Project was substantially completed in 1991. The Project has 120 megawatts of installed capacity.From 1991 through 2009,the Project has had an average *Preliminary,subject to change. annual output of 386.4 million kilowatt hours.Two 20 mile,115 kilovolt transmission lines connect the Project to a transmission system on the Kenai Peninsula.The Project provides electric power to the most populous areas of Alaska,including the Kenai Peninsula,the Municipality of Anchorage,the Matanuska-Susitna Borough and the Fairbanks area.The Authority has sold 100%of the capacity of the Project to two municipalities and four cooperative utilities under agreements with these power purchasers and two additional parties that are cooperative utilities.See "THE BRADLEY LAKE HYDROELECTRIC PROJECT”herein. Plan of Finance The Sixth Series Bonds are issued for the purpose of refunding $30,640,000 outstanding principal amount of the Authority's Power Revenue Bonds,Fifth Series (Bradley Lake Hydroelectric Project)due July 1,2021 (the "Prior Bonds”),and to pay costs of issuing the Bonds.The Prior Bonds will be redeemed on August ___,2010,ata redemption price of 100.5%,plus accrued interest to the redemption date.The net proceeds of the Bonds,together with amounts deposited by the Authority,will be deposited on the Redemption Date with U.S.Bank National Association,Trustee for the Prior Bonds (the "Refunded Bond Fund”).Amounts deposited in the Refunded Bond Fund will be sufficient to pay (i)the interest accruing on the Prior Bonds to the Redemption Date,(ii)the principal amount of the Prior Bonds on the Redemption Date,and (iii)premium on the Prior Bonds. Sources and Uses of Funds Upon the issuance of the Sixth Series Bonds,proceeds of the Sixth Series Bonds along with certain Authority funds are expected to be deposited and applied as follows: ESTIMATED SOURCES AND USES OF FUNDS Sources Principal Amount of the Bonds [Net Original Issue Premium] [Plus:Authority Equity Contribution] Total Sources Uses Deposit to Refunded Bond Fund Underwriter's Discount and Costs of Issuance Total Uses (1)Includes financial advisor,legal,printing and rating agency costs. Power Revenue Bonds The Authority has heretofore issued its Power Revenue Bonds,First Series (Bradley Lake Hydroelectric Project) (the "First Series Bonds”)and its Power Revenue Bonds,Second Series (Bradley Lake Hydroelectric Project)(the "Second Series Bonds”)for the purpose of permanently financing a portion of the construction cost of the Project. Pursuant to a supplemental resolution adopted October 29,1997,the Authority has issued $59,485,000 principal amount of Power Revenue Refunding Bonds,Third Series (Bradley Lake Hydroelectric Project)(the "Third Series Bonds”)for the purpose of refunding a portion of the First Series Bonds and has issued $47,710,000 principal amount of Power Revenue Refunding Bonds,Fourth Series (Bradley Lake Hydroelectric Project)(the "Fourth Series Bonds”)for the purpose of refunding a portion of the Second Series Bonds.Pursuant to a supplemental resolution adopted December 16,1998,the Authority has issued $30,640,000 principal amount of Power Revenue Refunding Bonds,Fifth Series (Bradley Lake Hydroelectric Project)(the "Fifth Series Bonds”)for the purpose of refunding a portion of the First Series Bonds.In this Official Statement,the term "Outstanding Bonds”includes the First Series Bonds,the Second Series Bonds,the Third Series Bonds,the Fourth Series Bonds,and the Fifth Series Bonds. In this Official Statement,the term "Bonds”includes the First Series Bonds,the Second Series Bonds,the Third Series Bonds,the Fourth Series Bonds,the Fifth Series Bonds,the Sixth Series Bonds,and any Additional Bonds issued pursuant to the Bond Resolution. Security for the Sixth Series Bonds The Sixth Series Bonds are direct and general obligations of the Authority and the full faith and credit of the Authority are pledged to the payment of the principal of and interest on the Sixth Series Bonds.The payment of the Sixth Series Bonds is secured on a parity with the Outstanding Bonds by a pledge of the Revenues of the Project, including all payments to be made by Chugach Electric Association,Inc.("Chugach”),Golden Valley Electric Association,Inc.("Golden Valley”),Alaska Electric Generation &Transmission Cooperative,Inc.(""AEG&T”) (acting on behalf of Matanuska Electric Association,Inc.('MEA”)),Alaska Electric and Energy Cooperative,Inc. ("AEEC”)(acting on behalf of Homer Electric Association,Inc.("HEA”)),the Municipality of Anchorage d/b/a Municipal Light &Power ("ML&P”)and the City of Seward d/b/a Seward Electric System ("Seward”),as Purchasers (collectively the "Power Purchasers”or the "Purchasers”)under the Agreement for the Sale and Purchase of Electric Power,dated and entered into on December 8,1987 (the "Power Sales Agreement”)by and among the Power Purchasers and the Authority.No other revenues or assets of the Authority are pledged as security for the payment of the Sixth Series Bonds. THE SIXTH SERIES BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR LIABILITY OF THE STATE OF ALASKA OR OF A POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS.THE SIXTH SERIES BONDS DO NOT DIRECTLY,INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OF ALASKA OR ANY POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS TO APPLY MONEY FROM,OR LEVY OR PLEDGE,ANY FORM OF TAXATION WHATEVER TO THE PAYMENT OF THE BONDS.THE AUTHORITY HAS NO TAXING POWER.NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF ALASKA,ANY POLITICAL SUBDIVISION THEREOF,OR THE POWER PURCHASERS IS PLEDGED FOR THE PAYMENT OF THE SIXTH SERIES BONDS. Power Sales Agreement Under the Power Sales Agreement,the Authority has sold 100%of the Project Capacity (and associated energy)of the Project to the Power Purchasers in specified Percentage Shares and the Power Purchasers have agreed to pay a like percentage of the Annual Project Costs of the Project.The Percentage Share of each Power Purchaser is set forth in the following table: Power Purchaser Percentage Share Chugach Electric Association,Inc.30.40% Municipal Light &Power 25.90 Alaska Electric Generation &Transmission Cooperative,Inc.13.80 (acting on behalf of Matanuska Electric Association,Inc.) Alaska Electric and Energy Cooperative,Inc. (acting on behalf of Homer Electric Association,Inc.)12.00 Golden Valley Electric Association,Inc.16.90 City of Seward,d/b/a Seward Electric System 1.00 100.00% AEG&T purchases power under the Power Sales Agreement for use by MEA,which has also executed the Power Sales Agreement.If AEG&T at any time fails to meet its payment obligations under the Power Sales Agreement, then,to the extent of such failure by AEG&T and for so long as such failure continues,MEA is obligated to meet directly its Percentage Share of Annual Project Costs (13.8%). AEEC purchases power under the Power Sales Agreement for use by HEA which has also executed the Power Sales Agreement.If AEEC at any time fails to meet its payment obligations under the Power Sales Agreement,then,to the extent of such failure by AEEC and for so long as such failure continues,HEA iis obligated to meet directly itsPercentageShareofAnnualProjectCosts(12.0%) Under the provisions of the Power Sales Agreement,the Power Purchasers are obligated to make payments to the Authority in an aggregate amount sufficient to pay all Annual Project Costs,including costs resulting from the -3- ownership,operation and maintenance of the Project,debt service on all Bonds and any amounts required to maintain the reserves established under the Bond Resolution. Each Power Purchaser is unconditionally obligated to pay from its gross revenues its percentage share of the Annual Project Costs notwithstanding a suspension or reduction in the amount of power supplied by the Project.Similarly, this unconditional obligation continues notwithstanding circumstances in which the Project is completely inoperable and in which the Authority has not remedied the situation that caused such inoperable status. If the Authority projects that the amounts to be deposited into the Revenue Fund will be insufficient to pay Annual Project Costs because of a payment default by one or more Power Purchasers,the Authority may increase each other Power Purchaser's Percentage Share of Annual Project Costs and Project Capacity pro rata to the extent,and for the period,necessary to compensate for such insufficiency;provided that no Power Purchaser's Percentage Share may be increased by more than 25 %above the amount set forth in the Power Sales Agreement. Under Alaska law,Annual Project Costs incurred by a Power Purchaser pursuant to the Power Sales Agreement must be allowed by the Regulatory Commission of Alaska (the "RCA”)in the schedule of consumer rates and charges established by each Power Purchaser and submitted to the RCA. Capital Reserve Fund Under the Bond Resolution,the Authority is required to establish and maintain the Capital Reserve Fund in an amount equal to the Capital Reserve Requirement.As of the date of issuance of the Sixth Series Bonds,the Capital Reserve Requirement will be $ Moral Obligation of the State The Act requires that the Chair of the Authority's Board,at least annually,but not later than January 2 of each year, certify in writing to the Governor and the State Legislature the sum,if any,required to restore the Capital Reserve Fund to the Capital Reserve Requirement.The Bond Resolution requires the Chair to make such certification whenever the Trustee transfers funds from the Capital Reserve Fund to pay principal of or interest on the Bonds. The State Legislature may,but is not obligated to,appropriate to the Authority the sum certified by the Chair of the Authority's Board.Under the Alaska Constitution,appropriations passed by the State Legislature are subject to line item veto by the Governor.The Authority is required to deposit in the Capital Reserve Fund any amounts so appropriated during the then current Fiscal Year. Rate Covenant The Authority,acting in conjunction with the Project Management Committee,is required to determine Annual Project Costs in such amounts as shall be sufficient when collected from the Power Purchasers to provide Revenues in each Fiscal Year,together with available funds,sufficient for the payment of the sum of (a)Operating Expenses of the Project during such Fiscal Year,(b)the amount necessary to restore the Operating Reserve Account to the Operating Reserve Account Requirement,(c)Aggregate Debt Service due on all Bonds during such Fiscal Year,(d) the amount necessary to restore the Capital Reserve Fund to the Capital Reserve Requirement,(e)the amount to be paid during such Fiscal Year to the Renewal and Contingency Reserve Fund to restore such Fund,over a period of not greater than four years,to the Renewal and Contingency Reserve Fund Requirement or such larger amount determined by the Project Management Committee,and (f)all other charges or liens whatsoever required to be paid out of Revenues during such Fiscal Year. Additional Bonds Additional Bonds may be issued under the Bond Resolution on a parity with outstanding Bonds for the purpose of paying the Cost of Acquisition and Construction of any Capital Improvement (related to the Project)upon receipt by the Trustee of (i)evidence that the Project Management Committee has approved the Capital Improvement and (ii)a written opinion of the Consulting Engineer that neither the issuance of the Additional Bonds nor the payment of the Cost of Acquisition and Construction of the Capital Improvement will impair the ability of the Authority to pay Debt Service through the collection of revenues under the Power Sales Agreement.Additional Bonds may also be -4- issued for the purpose of refunding outstanding Bonds upon receipt by the Trustee,among other things,of a certificate of the Project Management Committee stating that the Supplemental Resolution authorizing such Additional Bonds has been adopted in accordance with the Power Sales Agreement. Additional Information Brief descriptions of the Authority,the Sixth Series Bonds,the security for the Sixth Series Bonds,the Project,the Power Purchasers,the Power Sales Agreement,the Act and the Bond Resolution are included in this Official Statement.All summaries herein of documents and agreements are qualified in their entirety by reference to such documents and agreements,and references herein to the Sixth Series Bonds are qualified in their entirety by reference to the information included in the aforesaid documents and agreements,copies of which are available for - inspection at the office of the Authority,813 West Northern Lights Boulevard,Anchorage,Alaska 99503.Copies of the most recent audited financial statements of each Power Purchaser are available for inspection at the office of the Trustee. This Official Statement contains statements which,to the extent they are not recitations of historical fact,constitute "forward-looking statements.”In this respect,the words "estimate,”"project,”"anticipate,”"expect,”"intend,” "believe”and similar expressions are intended to identify forward-looking statements.A number of important factors affecting the Project and the business and financial results of the Power Purchasers could cause actual results to differ materially from those stated in the forward-looking statements. DESCRIPTION OF THE SIXTH SERIES BONDS General The Sixth Series Bonds are issuable only as fully registered bonds,registered in the name of Cede &Co.,as nominee for The Depository Trust Company,New York,New York ("DTC”),as securities depository for the Sixth Series Bonds.The principal of,redemption premium,if any,and interest on the Sixth Series Bonds are payable by U.S.Bank National Association,in Seattle,Washington,as Trustee,to DTC.Individual purchases of the Sixth Series Bonds will be made in book-entry form only in the principal amounts of $5,000 or integral multiples thereof. So long as the Sixth Series Bonds are in book-entry form,the principal of,redemption premium,if any,and interest on the Sixth Series Bonds are payable to Cede &Co.as registered owner thereof and will be redistributed by DTC and the DTC Participants.See "Book-Entry Transfer System”below.The Authority and the Trustee may treat and consider Cede &Co.,as the holder and owner of the Sixth Series Bonds for the purpose of payment of principal and interest with respect to the Sixth Series Bonds,and for all other purposes. The Sixth Series Bonds will be dated the date of delivery,will mature on [,and bear interest from their date at the rate of ____%per annum,payable on January 1,2011 and semiannually thereafter on each January 1 and July 1.] Optional Redemption [TO BE UPDATED AS NECESSARY]The Sixth Series Bonds are subject to redemption prior to maturity,at theoptionoftheAuthority,at any time on and after 1,20___,at the redemption prices (expressed as a percentage of the principal amount of Sixth Series Bonds to be redeemed)set forth below,plus accrued interest to the date of redemption. In the event of the redemption of Sixth Series Bonds,the Authority may direct the amounts thereof to be redeemed. If less than all of the Sixth Series Bonds are to be redeemed,the particular Sixth Series Bonds to be redeemed shall be selected by lot as provided in the Bond Resolution. In the event of the optional redemption of less than all of the Sixth Series Bonds,the principal amount so redeemed shall be credited against the unsatisfied balance of the Principal Installments established with respect to the Sixth Series Bonds,in such amount and against such Principal Installments as shall be allocated by the Authority in a certificate filed with the Trustee prior to the mailing of the notice of redemption of the Sixth Series Bonds or,in the absence of such determination,shall be credited against all such Principal Installments pro-rata. Sinking Fund Redemption [TO BE UPDATED AS NECESSARYJThe Sixth Series Bonds are subject to mandatory redemption in part and by lot,on each July 1 on and after 1,,at a redemption price of par,from Sinking Fund Installments, which are required to be made in amounts sufficient to redeem on 1 of each of the years set forth in the following table,the principal amount of the Sixth Series Bonds specified for each of such years: [Insert Sinking Fund Schedule if applicable] Amounts accumulated in the Debt Service Fund with respect to any Sinking Fund Installment may be applied,prior to the due date of such Sinking Fund Installment,to purchase Sixth Series Bonds.See "APPENDIX A- SUMMARY OF THE ACT AND THE BASIC DOCUMENTS.” Mandatory Redemption Upon a Determination of Taxability The Sixth Series Bonds are subject to mandatory redemption as a whole,at any time,at a redemption price of par, plus accrued interest to the date of redemption,on the earliest practicable date selected by the Trustee after consultation with the Authority,but in no event later than 180 days following the Trustee's receipt of notification of a Determination of Taxability with respect to the Sixth Series Bonds. 'Determination of Taxability”means,with respect to any of the Sixth Series Bonds,a final decision,ruling,or technical advice by any federal,judicial or administrative authority to the effect that,as a result of a failure by the Power Purchasers or the Authority to observe or perform any covenant,agreement,or obligation on their part to be observed or performed under the Bond Resolution,Power Sales Agreement or the certificate as to arbitrage of the Authority with respect to the Sixth Series Bonds (the "Arbitrage Certificate”)or the inaccuracy of any representation made by any Power Purchaser or the Authority in the Bond Resolution,Power Sales Agreement or the Arbitrage Certificate,interest on such Sixth Series Bond is or was includable in the gross income of the owner of that Sixth Series Bond for federal income tax purposes (other than an owner who is a "substantial user”of the Project or a "related person”as those terms are used in Section 147(a)of the Code);provided that no decision by any court or decision,ruling,or technical advice by any administrative authority shall be considered final (a)unless the owner involved in the proceeding or action giving rise to such decision,ruling,or technical advice (i)gives the Authority and the Trustee prompt notice of the commencement thereof and (ii)offers the Authority the opportunity to control the contest thereof,provided the Authority shall have agreed to bear all expenses in connection therewith,and (b) until the expiration of all periods for judicial review or appeal. Notice of Redemption At least 30 days,but not more than 60 days,prior to the date upon which any Sixth Series Bonds are to be redeemed, the Trustee will mail a notice of redemption to the registered owner of any Sixth Series Bond ail or a portion of which is to be redeemed,at the owner's last address appearing on the registration books of the Authority kept by the Trustee. Cede &Co.,as nominee of DTC and as the only registered owner of the Sixth Series Bonds will receive all redemption notices.Individual purchasers of the Sixth Series Bonds will not receive any notice of redemption directly from the Trustee,but may expect to receive information concerning any redemption of their Sixth Series Bonds through the DTC system.See "APPENDIX E-BOOK-ENTRY SYSTEM.” Book-Entry Transfer System Book-Entry Bonds.DTC will act as initial Securities Depository for the Bonds.The ownership of one fully registered Bond in the aggregate principal amount of each principal maturity,will be registered in the name of -6- Cede &Co.,as nominee for DTC.Neither the Authority nor the Trustee has any responsibility or obligation to DTC participants or Beneficial Owners in respect of the accuracy of any records maintained by DTC or any DTC participant,the payment by DTC or any DTC participant of any amount in respect of the principal or Redemption Price of or interest on the Bonds,any notice which is permitted or required to be given to registered owners under the Series Resolution (except such notices as are required to be given by the Authority to the Trustee or to DTC),the selection by DTC or any DTC participant of any person to receive payment in event of a partial redemption of the Bonds,or any consent given or other action taken by DTC as the registered owner.See "APPENDIX E-BOOK- ENTRY SYSTEM”for additional information. The Authority makes no representation as to the accuracy or completeness of information in Appendix E,provided by DTC.Purchasers ofthe Bonds should confirm its contents with DTC or its participants. Termination of Book-Entry Transfer System.In the event that DTC or its successor (or substitute Securities Depository or its successor)resigns and no substitute Securities Depository can be obtained,or the Authority determines that it is in the best interests of the Beneficial Owners that they be able to obtain Bonds in the form of bond certificates,new Bonds are required to be issued and registered. SECURITY AND SOURCES OF PAYMENT FOR THE SIXTH SERIES BONDS The Sixth Series Bonds constitute direct and general obligations of the Authority,and the full faith and credit of the Authority are pledged to the payment of the principal of and interest on the Sixth Series Bonds.There are no significant revenues,moneys or assets of the Authority that are available or are expected to be available for the payment of the principal of and interest on the Sixth Series Bonds other than the revenues of the Project and the moneys,securities and funds held under the Bond Resolution. THE SIXTH SERIES BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR LIABILITY OF THE STATE OF ALASKA OR OF A POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS.THE SIXTH SERIES BONDS DO NOT DIRECTLY,INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OF ALASKA OR ANY POLITICAL SUBDIVISION THEREOF EXCEPT THE AUTHORITY TO THE EXTENT EXPRESSLY PROVIDED HEREIN,OR THE POWER PURCHASERS TO APPLY MONEY FROM,OR LEVY OR PLEDGE,ANY FORM OF TAXATION WHATEVER TO THE PAYMENT OF THE BONDS.THE AUTHORITY HAS NO TAXING POWER.NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF ALASKA,ANY POLITICAL SUBDIVISION THEREOF,OR THE POWER PURCHASERS IS PLEDGED FOR THE PAYMENT OF THE SIXTH SERIES BONDS. In the event of a default under the Bond Resolution,the Trustee is authorized to proceed to protect and enforce its rights and the rights of the holders of the Bonds,including the right to apply for the judicial appointment of a receiver for the Project.However,neither the Trustee nor the Bondholders may declare all the Bonds due and payable or otherwise accelerate the payment of the Bonds.See "APPENDIX A-SUMMARY OF THE ACT AND THE BASIC DOCUMENTS.” Pledge Effected by the Bond Resolution Pursuant to the Bond Resolution,all of the revenues derived by the Authority from the operation of the Project, including payments to be made by the Power Purchasers pursuant to the provisions of the Power Sales Agreement (the "Revenues”)and all moneys,securities and funds (except the Excess Investment Earnings Fund)held or set aside under the Bond Resolution are pledged and assigned to secure the payment of the principal of,redemption premium,if any,and interest on the Bonds,subject only to the provision of the Bond Resolution permitting the application thereof for the payment of Operating Expenses of the Project and for other purposes specified in the Bond Resolution.No other revenues or assets of the Authority are pledged as security for the payment of the Bonds. The Act provides that any pledge made in respect of the Bonds shall be valid and binding from the time when the pledge is made,that the moneys or property so pledged and thereafter received by the Authority shall immediately be subject to the lien of such pledge without any physical delivery or further act and that the lien of any such pledge shall be valid and binding against all parties having any claims of any kind in tort,contract or otherwise against the Authority irrespective of whether the parties have notice. Power Sales Agreement Under the Power Sales Agreement,the Authority has sold 100%of the Project Capacity (and associated energy)of the Project to the Power Purchasers in specified Percentage Shares and the Power Purchasers have agreed to pay a like percentage of the Annual Project Costs of the Project.The Percentage Share of each Power Purchaser is set forth in the following table: Power Purchaser Percentage Share Chugach Electric Association,Inc.30.40% Municipal Light &Power 25.90 Alaska Electric Generation &Transmission Cooperative,Inc.13.80 (acting on behalf of Matanuska Electric Association,Inc.) Alaska Electric and Energy Cooperative,Inc. (acting on behalf of Homer Electric Association,Inc.)12.00 Golden Valley Electric Association,Inc.16.90 City of Seward,d/b/a Seward Electric System 1.00 100.00% AEG&T purchases power under the Power Sales Agreement for use by MEA,which has also executed the Power Sales Agreement.If AEG&T at any time fails to meet its payment obligations under the Power Sales Agreement, then,to the extent of such failure by AEG&T and for so long as such failure continues,MEA is obligated to meet directly its Percentage Share of Annual Project Costs (13.8%). AEEC purchases power under the Power Sales Agreement for use by HEA which has also executed the Power Sales Agreement.If AEEC at any time fails to meet its payment obligations under the Power Sales Agreement,then,to the extent of such failure by AEEC and for so long as such failure continues,HEA is obligated to meet directly its Percentage Share of Annual Project Costs (12.0%). The Power Purchasers are obligated to make payments to the Authority in an aggregate amount sufficient (together with available funds held under the Bond Resolution)to pay all Annual Project Costs,including all Operating Expenses of the Project,Aggregate Debt Service on all Bonds and any amounts required to maintain the Operating Reserve Account,the Capital Reserve Fund and the Renewal and Contingency Reserve Fund.See "Rate Covenant” herein. The Power Sales Agreement is in full force and effect and will terminate (i)on September 1,2041 (being 50 years after the Date of Commercial Operation of the Project),or (ii)when no Bonds are outstanding under the Bond Resolution and all payment obligations under the Power Sales Agreement have been satisfied or provided for, whichever occurs later. Each Power Purchaser is obligated unconditionally to pay its proportionate share of the Annual Project Costs notwithstanding a suspension or reduction in the amount of power supplied by the Project.Similarly,this unconditional obligation continues notwithstanding circumstances in which the Project is completely inoperable and in which the Authority has not remedied the situation that caused such inoperable status. All payments to be made pursuant to the Power Sales Agreement constitute Revenues of the Project and are pledged under the Bond Resolution.The right of the Authority to receive such payments and its right to enforce the payment obligations of the Power Purchasers under the Power Sales Agreement have been assigned to the Trustee pursuant to the Bond Resolution.For additional information regarding the provisions of the Act authorizing the Power Sales Agreement and granting express authority to the Power Purchasers and the Authority to enter into power sales agreements of like kind and character as the Power Sales Agreement,see "APPENDIX A-SUMMARY OF THE ACT AND THE BASIC DOCUMENTS”under the caption "The Alaska Energy Authority Act-Power Sales Contracts.”The full text of the opinion of Bond Counsel with respect to the Sixth Series Bonds is set forth in Appendix B. The Authority has covenanted in the Bond Resolution to enforce the provisions of the Power Sales Agreement and to perform its covenants and agreements thereunder.The Authority has also covenanted that it will not consent or agree to permit any termination,rescission of or amendment to the Power Sales Agreement,which will reduce the payments required thereunder or materially impair or materially adversely affect the rights of the Authority thereunder or the security of the Bondholders under the Bond Resolution. The amounts payable under the Power Sales Agreement are operating expenses of each Power Purchaser's system, and are valid and binding obligations of each Power Purchaser,payable only from the gross revenues of the Power Purchaser's system as a cost of purchased electric power,and are not payable from any taxes.At the time of issuance of the First Series Bonds,the Authority obtained opinions of counsel from each Power Purchaser with respect to the validity and enforceability of the Power Sales Agreement as to such Power Purchaser.At the time of issuance of the Sixth Series Bonds,the Authority will obtain the opinion of McDowell Rackner &Gibson PC,of Portland,Oregon,special counsel to the Power Purchasers with respect to the continued validity and enforceability of the Power Sales Agreement as to each Power Purchaser,other than Seward. The Authority is not subject to the jurisdiction of the RCA with respect to the Project.The Power Sales Agreement is not subject to RCA jurisdiction until all Bonds are retired.Under Alaska law,Annual Project Costs incurred by a Power Purchaser pursuant to the Power Sales Agreement must be allowed by the RCA in the schedule of consumer rates and charges established by each Power Purchaser.Some of the Power Purchasers are subject to RCA jurisdiction. If the Authority projects that the amounts to be deposited into the Revenue Fund will be insufficient to pay Annual Project Costs because of a payment default by a Power Purchaser,the Authority may increase every other Power Purchaser's Percentage Share of Annual Project Costs and Project Capacity pro rata to the extent,and for the period, necessary to compensate for such insufficiency;provided that no Power Purchaser's Percentage Share may be increased by more than 25%above the amount set forth in the Power Sales Agreement. The Power Sales Agreement establishes the Project Management Committee and contains other substantive provisions relating to the operation of the Project and the sale of power generated by the Project.The Project Management Committee has operation,maintenance,budgetary and other responsibilities under the Power Sales Agreement.Committee actions regarding operation and maintenance arrangements,sufficiency of the annual budget and power rates are subject to Authority approval.The Authority retains the right to take action necessary to meet its obligations under the Act and the Bond Resolution.For more information concerning the Power Sales Agreement,see "APPENDIX A-SUMMARY OF THE ACT AND THE BASIC DOCUMENTS.” Rate Covenant The Authority has covenanted in the Bond Resolution that it shall charge and collect from each Power Purchaser that Power Purchaser's Percentage Share of Annual Project Costs.The Authority,acting in conjunction with the Project Management Committee,or separately to the extent necessary,shall determine Annual Project Costs in such amounts as shall be required to provide Revenues at least sufficient in each Fiscal Year,together with other available funds,for the payment of the sum of: (a)Operating Expenses of the Project during such Fiscal Year; (b)the amount required to restore the Operating Reserve Account to the Operating Reserve Requirement (20%of the Operating Expenses component of the Annual Budget,or such other amount as may be determined pursuant to the Power Sales Agreement); (c)an amount equal to the Aggregate Debt Service due on all outstanding Bonds during such Fiscal Year; (d)the amount,if any,to be paid during such Fiscal Year into the Capital Reserve Fund,which shall be the amount,if any,necessary to restore the Capital Reserve Fund to the Capital Reserve Requirement; (e)the amount to be paid during such Fiscal Year to the Renewal and Contingency Reserve Fund required to restore the Renewal and Contingency Reserve Fund,over a period of not greater than four years,to the Renewal and Contingency Reserve Requirement ($5 million)or such larger amount determined by the Project Management Committee;and (f)all other charges or liens payable out of Revenues during such Fiscal Year. Capital Reserve Fund and Moral Obligation of the State Pursuant to the Bond Resolution,the Authority covenants and agrees to establish and maintain with the Trustee the Capital Reserve Fund in an amount at least equal to the Capital Reserve Requirement (an amount equal to the lesser of Maximum Aggregate Debt Service or ten percent of the proceeds of Bonds;or such lesser amount as is required in order to maintain the tax-exempt status of the Bonds).As of the date of issuance of the Sixth Series Bonds,the Capital Reserve Requirement will be $.The moneys on deposit in the Capital Reserve Fund shall be used for the payment of principal,redemption premium,if any,and interest on Bonds,but only when and to the extent that moneys are not available therefor in the Debt Service Fund.The Act requires that the Chair of the Authority's Board,at least annually,but no later than January 2 of each year,certify in writing to the Governor and the State Legislature the sum,if any,required to restore the Capital Reserve Fund to the Capital Reserve Requirement.The Bond Resolution requires the Chair to make such certification whenever the Trustee transfers funds from the Capital Reserve Fund to pay principal of or interest on the Bonds.The State Legislature may,but is not obligated to,appropriate to the Authority the sum certified by the Chair of the Authority's Board.Under the Alaska Constitution,appropriations passed by the State Legislature are subject to line item veto by the Governor. The Authority is required to deposit in the Capital Reserve Fund any amounts so appropriated during the then current Fiscal Year. Additional Bonds Additional Bonds may be issued under the Bond Resolution on a parity with the then Outstanding Bonds for the purpose of paying a Cost of Acquisition and Construction of any Capital Improvement (related to the Project)upon receipt by the Trustee of (i)evidence that the Project Management Committee has approved the Capital Improvement and (ii)a written opinion of the Consulting Engineer that neither the issuance of the Additional Bonds nor the payment of the Cost of Acquisition and Construction of the Capital Improvement will impair the ability of the Authority to pay Debt Service through the collection of Revenues under the Power Sales Agreement.Additional Bonds may also be issued for the purpose of refunding outstanding Bonds upon receipt by the Trustee,among other things,of a certificate of the Project Management Committee stating that the Supplemental Resolution authorizing such Additional Bonds has been adopted in accordance with the Power Sales Agreement. Pledge of the State Pursuant to the Act,the State has pledged and agreed with the holders of the Bonds that it will not limit or alter the rights or powers vested in the Authority by the Act to fulfill the terms of a contract (including the Bond Resolution) made by the Authority with such holders,or in any way impair the rights or remedies of such holders until the Bonds,including the interest on them with interest on unpaid installments of interest,and all costs and expenses in connection with any act or proceeding by or on behalf of such holders,are fully met and discharged. -10- ANNUAL DEBT SERVICE REQUIREMENTS The following table sets forth the annual debt service requirements for all series of the Bonds. Year Ending Guly 1)First Series Second Series ThirdSeries Fourth Series Sixth Series Total Debt Service 2010 2011 2012 2013 2014 2015 - 2016 - 2017 - 2018 - 2019 2020 - 2021 - 2022 2023 2024 ad 2025 - 2026 - 2027 = Total THE BRADLEY LAKE HYDROELECTRIC PROJECT General Description The Project has 120 megawatts of installed capacity.The Project is located at the northeast end of Kachemak Bay about 27 miles from the City of Homer at the southern end of the Kenai Peninsula. The Project consists of a concrete-faced,rock filled dam,125 feet high and 610 feet long.A 13-foot diameter, concrete-lined power tunnel,18,610 feet in length,transports water from the tunnel intake located at Bradley Lake (elevation 1,080 feet)to a powerhouse at sea level.The powerhouse contains two turbines capable of providing 60 megawatts each,with provision for a third turbine if needed in the future.Associated facilities at the Project site include an airstrip,a barge dock,three small diversion structures to direct additional water to Bradley Lake and a diversion tunnel. The Project includes a 20-mile overhead transmission line,consisting of two parallel 115 kilovolt lines.The transmission line connects with the Fritz Creek-Soldotna transmission line at Bradley Junction. The Project is the largest hydroelectric facility in the State.From 1991 through 2009,the Project has delivered an average of 386.4 million kilowatt-hours of electricity annually.Through interconnection with the existing transmission system,which extends north a distance of 450 miles,the Project serves customers from the Kenai Peninsula to Fairbanks.Approximately 76%of the State's population resides in this area. -1l- Power from the Project is used by the purchasing utilities primarily to meet peak seasonal and daily load demands, thus offsetting a portion of the need for fossil fuel generation and deferring capacity upgrades and additions. Permits and Licenses The Project was originally authorized as a federal project under the Flood Control Act of 1962.The development of the site as a hydroelectric project was studied by the U.S.Army Corps of Engineers from 1962 through 1982. Although the Corps determined the Project to be economically feasible,federal funds were not available for design and construction.Because of the State's interest and ability to finance the Project,the United States Congress deauthorized Bradley Lake as a federal project in December 1982,clearing the way for development by the Authority. The Authority initiated the permitting and licensing process in April 1984,by filing application for a Federal Energy Regulatory Commission ("FERC”)license.The FERC license is the primary regulatory approval governing project development.The license application was accepted by FERC in June 1984,and a license to construct,operate and maintain the Project was issued to the Authority in December 1985.There are no pending matters before the FERC relating to the FERC license for the Project.The FERC license expires on December 31,2035.All state and local permits and licenses required to operate the Project have been issued and remain current. Geologic and Seismic Considerations In conjunction with the planning and design of the Project,a number of studies and investigations were performed by Stone and Webster Engineering Corporation,the Design Engineer,and others to ascertain the geologic and geotechnical conditions of the Project site and of the various Project structures.The investigatory work done by the Design Engineer was performed in a manner consistent with levels of effort normally exercised by the geotechnical profession under similar geologic conditions. The south-central coastal area of Alaska in which the Project is located has a history of seismic activity.In 1964,a major earthquake reported to have a magnitude of 8.5 on the Richter Scale in effect at the time occurred in the Prince William Sound of south-central Alaska,with an epicenter approximately 145 miles northeast of the Bradley Lake site.As such,the "Maximum Credible Earthquake”event occurring on a regional basis and assumed for design purposes by the Design Engineer is an event of magnitude 8.5 on the Richter Scale.According to the Design Engineer an earthquake of this magnitude could cause some structural damage to the Project but all systems would be repairable if damaged.The "Design Basis Earthquake,”up to which level the Project would subsequently continue operation with minimal downtime,is an earthquake of magnitude 6.3. Considering the site geologic conditions,including the two fault zones which cross the tunnel,certain features have been incorporated into the Project design to mitigate damage from earthquake events.For example,to control rock fall within the tunnel,a concrete lining is provided throughout the power tunnel with reinforcement as necessary, except in those areas where geology permits otherwise.Other mitigating features include provisions for dewatering the power tunnel for repairs,specifications of a rock-filled dam to accommodate settling and shifting of the underlayment,and the foundation of major Project facilities,including the powerhouse,on or in bedrock.The Design Engineer stated that the overall approach taken to address geologic and seismic conditions in the Project design was appropriate for the Project site.Seismic design considerations and the results of the site investigations were reviewed and found prudent for the Project by both the Project's Technical Review Board and the FERC Board of Consultants. Power Production The Project includes two 60 megawatt turbine generators,with a combined nameplate rating of a nominal 120 megawatts.The 1989 Design Engineer's evaluation estimated that,with average water available,the Project would be capable of generating 375.9 million kilowatt-hours of electricity annually and,after transmission losses,of delivering 372.2 million kilowatt-hours annually to Bradley Junction,the delivery point for power sales under the Power Sales Agreement.From 1991 through 2009,the Project has delivered annually an average of 386.4 million kilowatt hours of electricity.Set forth below are annual power purchase statistics for the annual periods ended May 31 of the years 2000 to 2009 and for the six month period ended December 31,2009. -12- Project Energy Production (Megawatt Hours) Water Year Golden HEA/MEA/ June -May Valley AEEC AEG&T ML&P Chugach Seward Total June 1999 -May 2000 64,402 45,738 $2,565 81,320 115,824 3,867 363,716 June 2000 -May 2001 49,520 35,184 40,399 92,908 89,050 3,043 310,104 June 2001 -May 2002 74,667 50,974 58,618 112,558 129,129 4,248 430,194 June 2002 -May 2003 97,873 60,958 70,105 139,221 154,426 5,080 527,663 June 2003 -May 2004 66,687 62,251 71,588 111,392 -157,701 5,188 474,807 June 2004 -May 2005 72,067 37,684 67,570 106,179 148,854 4,896 437,250 June 2005 -May 2006 64,028 $3,463 56,487 100,203 124,433 4,094 402,708 June 2006 -May 2007 60,945 $2,211 55,686 107,142 122,670 4,035 402,689 June 2007 -May 2008 $5,295 44,715 35,975 84,029 79,246 2,607 301,867 June 2008 -May 2009 49,035 30,803 35,427 82,697 78,040 2,566 278,568 June 2009 -December 2009 47,987 26,438 30,403 64,198 66,975 2,203 238,204 702,506 500,419 $74,823 1,081,847 1,266,348 41,827 4,167,770 Water Availability Water levels in Bradley Lake are managed between 1,180 feet (spill level)and 1,080 feet (minimum level).This volume of water (assuming average water availability)equates to approximately one year of expected generation from the Project of approximately 376,000,000 kilowatt-hours.Water availability,repairs and planned maintenance on the Project,together with the Power Purchasers'generation requirements and outage schedules for their own generating units,are taken into account in managing Project power generation. HEA,as plant operator,records inflows,lake level,and outflows.The United States Geological Survey gages water inflow on project streams.In addition,short-term climate forecasts and snow pack levels are received from the National Weather Service.These are reported to the Project Management Committee's Operating and Dispatch Sub-Committee to enable the Project and each Power Purchaser to plan their generation requirements.This weather and water information is used to forecast water availability for 12 months.The Project has experienced lower than average water years for the past three years.In 2008 a blockage occurred at the Nuka diversion site that prevented 50,000 acre-feet of water from entering the reservoir.The coming year is projected to have water levels return to average levels. -13- Historical Annual Project Costs The Power Sales Agreement provides for the payment by the Power Purchasers of all the Authority's Annual Project Costs associated with the ownership and operation of the Project.Historical Annual Project Costs for the operating years ended June 30,2005 through 2009 are shown on the following table. Historical Annual Project Costs (Operating Years Ended June 30) (Dollars in thousands) 2005 2006 2007 2008 2009 Operations and Maintenance $1,983 $1,979 $1,734 $2,215 $2,999 Repairs --188 1 -- Administrative and General 340 634 572 499 528 Insurance 654 599 623 545 596 Capital Purchases -----117 167 Contributions to Renewal and Contingency Fund and Operating Reserve Account 1,597 413 1,472 1,370 1,306 Subtotal $4,574 $3,625 $4,589 $4,747 $5,596 Debt Service $12,273 $12,276 $12,274 $12,270 $12,269 Less:Federal Grant Revenue (293)----- Investment Income (1,543)(1,655)(1,617)(1,502)(1,392) Total Cost of Power $15,011 $14,246 $15,246 $15,515 $16,473 Energy Delivered (MWh)404,300 415,300 392,060 287,150 253,140 Total Unit Cost of Energy (cents/kWh)3.71 3.43 3.89 5.40 6.51 Source:Alaska Energy Authority The increase in Total Unit Cost of Energy between 2007 and 2008 was mainly due to increased maintenance costs and project improvements and decreased Energy Delivered because of reduced water levels.The increase between 2008 and 2009 was partially due to additional increased maintenance costs ($467,000)and a substantial increase in the FERC Land Use Fee ($315,000).The increased maintenance costs in 2009 included generator cleaning ($93,000)and Nuka diversion repair and drain cleaning ($83,000). Transmission The Project includes approximately 20 miles of two parallel,115-kilovolt transmission lines to connect the power plant to a switching station at Bradley Junction (the "Project Transmission Line”). To transmit power from Bradley Junction to each of the Power Purchasers,the Power Purchasers or their designated power suppliers have entered into two related transmission agreements,one governing transmission over power lines owned by HEA,and the other providing wheeling rights over power lines owned by Chugach.The transmission agreement with HEA governs transmission of Project power between the Bradley Junction and the Soldotna Substation,along the 59 mile,115-kilowatt transmission line built by HEA.The Power Purchasers or their designated power suppliers acquired transmission capability and either have prepaid the capital costs associated with their share of such line or pay such capital costs quarterly.Operation and maintenance expenses for the HEA line are paid monthly by the Power Purchasers based on actual costs. -14- In the transmission agreement with Chugach (the "Chugach Agreement”),Chugach has agreed to wheel Project power over its transmission facilities from the Soldotna Substation to each Power Purchaser's designated delivery point,either by direct transmission or displacement,for a period commensurate with the projected 50-year life of the Project,or as otherwise agreed by the parties.Chugach has priority use of its transmission facilities for its own system purposes and as a result the Chugach Agreement allows Chugach to ratably reduce the wheeling capacity available to the other Power Purchasers during any period that the Chugach system needs and the needs of the other Power Purchasers exceed available wheeling capacity.However,a number of provisions in the Chugach Agreement provide options for offsetting this lack of wheeling capacity,including power storage services,Chugach's agreement to offer to purchase power that cannot be wheeled,and Chugach's agreement to offset power that cannot be wheeled by delivery of other Chugach power.In addition,the other Power Purchasers may request and pay for upgrades of Chugach's transmission facilities. Pursuant to RCA Order No.U-03-100(4),excess capacity on approximately 20 miles of MEA's 115 kV transmission system is made available to Chugach,Golden Valley,ML&P and Seward for operation at 138 kV as part of the Alaska Intertie.MEA retains priority of use for this line. Project Management Committee Chugach,Golden Valley,ML&P,HEA,MEA,Seward and the Authority each have a designated representative and an alternate on the Project Management Committee.MEA represents itself and AEG&T for purposes of the Project Management Committee.HEA represents itself and AEEC for purposes of the Project Management Committee. The Project Management Committee is responsible for the management,operations,maintenance and improvement of the Project,subject to the Authority's nondelegable rights,duties and responsibilities.Specifically,the Project Management Committee is charged with the following duties: 1.To oversee the operation and maintenance of the Project,and the scheduling,production and dispatch of Project power. 2.To establish procedures for the use of each Power Purchaser's water allocation. 3.To adopt a budget of Annual Project Costs for each fiscal year. 4.To establish the estimated annual payment obligation of each Power Purchaser,and a schedule of monthly payments designed to cover that obligation. 5.To determine the actual Annual Project Costs at the conclusion of each fiscal year.From that determination it is to determine the actual annual payment obligation of each Power Purchaser and the amount of any additional payment to be made by the Power Purchasers,or the amount due them to reimburse overpayments. 6.To evaluate alternative methods of carrying out and funding required project maintenance,repairs,renewals,replacements,improvements or betterments. 7.To adopt provisions to evaluate and approve optional maintenance,repairs,renewals, replacements,improvements or betterments. 8.To adopt procedures for conflict resolution. 9.To make an initial determination of the appropriate amount of,and to obtain,insurance for the Project. 10.To adopt maintenance schedules. 11.To adopt procedures relating to power reserves;and -15- 12.To consider the need for and approve any additional amount of funds to be set aside in the Renewal and Contingency Reserve Fund above that required by the Bond Resolution. The Project Management Committee has been meeting on an as needed basis since 1988. Project Operation and Maintenance HEA is responsible for the on site operation and maintenance of the Project.Chugach has scheduling and dispatch responsibility for the Project to satisfy the scheduling requirements of the Power Purchasers.Golden Valley and ML&P submit desired schedules for their shares of Project output.Chugach either pools or coordinates the shares of the remaining Power Purchasers to allow efficient operation of Chugach's thermal resources and meet its other Obligations to such Power Purchasers. Project capacity and energy are used to reduce the peak loads that must be supplied from thermal resources with the objective of avoiding or delaying the start of thermal units.Secondarily,the Project is used to replace the energy normally supplied from combined cycle plants when they are scheduled out for annual maintenance.The Project Management Committee Operating and Dispatch Subcommittee monitors Project activities. HEA provides normal maintenance which is controlled through an automated maintenance management system that uses technical criteria established by the architects and engineers for the Project and by the Authority.HEA provides emergency operation and maintenance services for the Project.The Authority performs an annual inspection by a licensed engineer,FERC performs an annual inspection by a FERC engineer,and the Project insurer performs an annual insurance inspection. HEA prepares annual Project operation and maintenance budgets.These budgets are reviewed for technical content by the Operation and Dispatch Subcommittee and by the Budget Subcommittee for costs. The budget must be approved by the Project Management Committee and requires the consent of the Authority. THE POWER PURCHASERS Introduction The Power Purchasers are six electric utilities (two of which,AEEC and AEG&T,purchase power on behalf of their members,HEA and MEA,respectively)located in south-central and Fairbanks,Alaska serving nearly all of the electricity requirements for the area between the communities of Seward and Homer on the southern end of the Kenai Peninsula,through Anchorage and into Fairbanks in the interior of the State.This area is generally referred to as Alaska's Railbelt because it corresponds to the route of the Alaska Railroad,a major ground transportation link between the communities of Seward,Anchorage and Fairbanks.The Railbelt is divided economically and geographically into three distinct regions;the Kenai Peninsula,the Anchorage and Matanuska-Susitna area and the Fairbanks area.The population of the Railbelt is presently estimated to be approximately 527,800 representing approximately 76 percent of the total State population.Anchorage,with a population of approximately 290,588 is the largest city in Alaska followed by the greater Fairbanks area with a population of approximately 93,779. For purposes of this transaction,the members of the Project Management Committee that are Power Purchasers are represented by McDowell Rackner &Gibson PC.McDowell Rackner &Gibson PC does not represent any of the Power Purchasers in any other capacity,with the exception of Golden Valley.Four of the Power Purchasers, Chugach,AEG&T (and its member,MEA),AEEC (and its member,HEA)and Golden Valley are electric cooperatives.Chugach,AEEC,HEA,AEG&T and MEA are not Rural Utilities Service (federal)borrowers at this time.The remaining two Power Purchasers,ML&P and Seward are municipally-owned electric utilities.The electric systems of the Power Purchasers are interconnected through a transmission system owned in part by the Power Purchasers and in part by the Authority. The following table provides selected statistics for the Power Purchasers for 2009. -16- Selected Statistics for Calendar Year 2009 Golden AEEC/AEG&T/ ML&P =Chugach") -_--Valley HEA MEA” Average Number of Customers 30,406 78,369 44,019 28,647 $5,158 Peak Load (kilowatts)186,000 489,540 220,500 .88,555 145,077 Energy Sales (megawatt-hours)1,223,752 1,183,705 1,315,323 483,149 695,019 Operating Revenues ($000)120,485 290,247 197,421 79,608 108,154 Gross Investment in Utility Plant ($000)616,594 882,851 647,785 218,195 283,261 Average Cost of Energy to Retail 9.50 13.69 14.86 16.37 15.17 Customers (cents/kilowatt-hour) Source:Indicated Power Purchasers (1)Data includes retail sales only;excludes sales for resale. (2)Excludes Unalakleet Division Rate Regulation The electric rates of the Power Purchasers (except Seward),HEA and MEA are regulated by the RCA.By statute, Annual Project Costs incurred by a Power Purchaser (and Additional Parties,HEA and MEA)pursuant to the Power Sales Agreement must be allowed in the utility's rates by the RCA. Power Requirements During the period 2005 through 2009,the energy requirements of the Power Purchasers'systems in total grew by 3.2%.Since 2005 energy requirements in the Anchorage area have increased by 2.2%.Energy requirements on the Kenai Peninsula have decreased 5.1%during the same period.Golden Valley has experienced a growth in energy requirements of 9.7%from 2005 to 2009.Over this period of time,the estimated population of the Railbelt Region increased from 493,365 to 524,097.The 2010 Power Requirements study of Chugach forecasts no increase in load on the Chugach system in 2010.A summary of the historical energy requirements (individual system or system- level proxy)and peak demands of the Power Purchasers is provided in the following table: -17- Power Purchasers'Energy Requirements Total Energy Requirements (Megawatt-hours) 2005 2006 2007 2008 2009 ML&P 1,199,738 1,459,018 1,403,418 1,365,646 1,249,717 Chugach"1,216,808 1,229,977 1,206,037 1,205,832 1,183,705 Golden Valley 1,262,168 1,334,902 1,426,798 1,419,886 1,384,991 HEA 542,967 531,539 571,089 554,964 512,764 MEA”689,450 723,921 725,149 743,273 740,958 Seward 63,352 58.671 63,941 63,734 62,509 Total 4,974,483 5,338,028 5,396,432 5,353,335 5,134,644 Non-Coincident Peak Hourly Demand (Megawatts) 2005 2006 2007 2008 2009 ML&P 176 177 183 181 186 Chugach'?220 220 226 219 =°-s-227 Golden Valley 195 207 223 218 221 HEA 84 86 89 89 89 MEA”129 130 139 140 145 Seward il 10 10 10 __10 Total 815 830 870 857 878 Source:Indicated Power Purchasers (1)Data includes retail sales only;excludes sales for resale. (2)Excludes Unalakleet division. Generation Resources and Utilization of the Project The existing power supplies for the Power Purchasers consist of Power Purchaser-owned generation or generation acquired under contract.MEA purchases substantially all of its power requirements from Chugach through AEG&T. HEA purchases the majority of its power requirements from Chugach through AEEC.Seward purchases most of its power supply from Chugach with minimal operation of its own generation facilities.Presently,the Power Purchasers own,or contract for,1371.5 megawatts of installed generation of which 153.2 megawatts are hydroelectric,164.5 megawatts are coal-fired and steam turbines,794 megawatts are natural gas-fired combustion turbines and 259.8 megawatts are oil-fired combustion turbines.The Project provides the Power Purchasers with a firm source of power and an important diversification in their resource bases that are heavily dependent on natural gas as a fuel.The Power Purchasers use the output of the Project to offset fossil-fuel generation. The Power Purchasers have the following firm plans for the development of new additional generating resources in the next ten years.Chugach has partnered with ML&P to construct and jointly own a new 183 MW natural gas-fired .power plant.Chugach will own and take approximately 70 percent of the new plant's output and ML&P will own and take the remaining output.Currently,major components have been ordered and engineering is moving forward with the anticipation of awarding an Engineering,Procurement and Construction (EPC)contract in 2010.MEA is presently engaged in a comprehensive planning effort for its future power supply needs,in anticipation of the scheduled December 31,2014 expiration of the Chugach/AEG&T/MEA power purchase agreement.MEA has purchased property,and is proceeding with development of that property,to serve as a potential generation site for some or all of its post-2014 power supply needs.No firm decisions have been reached regarding the manner in which MEA will satisfy those needs.AEEC plans to add 110 MW of capacity by December 31,2013.AEEC -18- anticipates converting the 40MW natural gas fired unit at Nikiski to a combined cycle unit by adding a 35 MW steam turbine generator.AEEC also anticipates adding two natural gas turbines totaling approximately 75 MW of capacity at its Soldotna substation site. Tri-Valley Electric Cooperative,Inc.("Tri-Valley”),a wholly-owned subsidiary of Golden Valley,has entered into an agreement to purchase the Healy Project from the Alaska Industrial Development and Export Authority ("AIDEA”).The project is a 50 MW net low emission experimental coal plant that an independent engineer determined did not pass contractually imposed commercial operating standards during the test period.After many years of legal challenges on both sides,an agreement was made to sell the plant to Tri-Valley so they could perform the necessary repairs to ensure the safe and reliable running of the plant.After the closing process andenvironmentalreview,it is estimated that repairs will be completedin 18-24 months.See,"PENDING DISPUTES-Healy Project Power Sales Agreement Litigation.” Golden Valley is moving forward with plans to develop Eva Creek wind farm in Ferry,Alaska which is near Healy. The proposed project will be financed with an allocation of Clean Renewable Energy Bonds for $93M to obtain a low interest rate.Eva Creek is estimated to have an installed capacity of 24MW (16 turbines generating about 1.5 megawatts each).Once approved,the project is estimated to take two years to complete. Municipality of Anchorage d/b/a Municipal Light &Power The first electric system serving Anchorage was installed in 1916 by the Alaska Engineering Commission,an agency of the United States Department of the Interior,which constructed the Alaska Railroad.A small steam plant and diesel power generators supplied Anchorage with electricity until 1929 when the private Anchorage Power & Light Company began supplying the community with electricity from a hydroelectric power plant on the Eklutna River located 25 miles northeast of downtown Anchorage.The Alaska Engineering Commission distribution system was purchased by Anchorage in 1932.Anchorage then acquired the Eklutna plant from the Anchorage Power & Light Company in 1943.In 1955,Anchorage contracted for 16,000 kilowatts ("kW”)of the generating capacity of a new Eklutna River hydroelectric power project owned by the United States Bureau of Reclamation and transferred its Eklutna plant to that federal agency.Beginning in 1962,ML&P has installed eight turbine generating units fired by natural gas (of which,one was retired in 2005)and one heat recovery steam turbine generating unit.The unit retired in 2005 (old Unit 3)was replaced by an LM2500+simple-cycle turbine generator (new Unit 3),which began commercial operation in August,2007. The ML&P Board of Directors (the "ML&P Board”)was created to govern ML&P by the Anchorage Municipal Assembly on September 9,2008 by passage of Assembly Ordinance No.2008-90(S).The Ordinance established a governance structure intended to allow ML&P to operate in a manner more consistent with standard electric utility industry practices for public utilities.The power to operate and manage ML&P is vested in the ML&P Board.The ML&P Board is composed of nine members appointed to staggered five-year terms by the Mayor subject to confirmation by the Municipal Assembly.Qualifications for ML&P Board members require that two members be in good standing with the Alaska Bar;two members be registered professional engineers in Alaska;two members have experience in finance,accounting,or business administration;one member be a municipal employee;and two members be from the public at-large.The general manager of ML&P shall not be a director but shall serve as executive secretary and staff to the ML&P Board.The ML&P Board is responsible to the Municipal Assembly and may in general exercise any power unless otherwise provided in the Municipal Charter or Title 32 of theMunicipality's Code of Ordinances,or prohibited by state law.Municipal Assembly approval is required for the operating and capital budgets,proposed rate increases for filing with the RCA,the purchase or sale of real estate, proposed changes to Title 32 of the Municipality's Code of Ordinances,the exercise of eminent domain,the incurrence of debt,the appropriation of grants,and confirmation of the general manager and ML&P Board members.The Mayor,with concurrence of the Municipal Assembly,shall appoint the members of the ML&P Board of Directors.During their terms of office,directors may be removed by the Mayor only for cause.The Mayor shall appoint the general manager from candidates recommended by the ML&P Board.The general manager shall serve at the pleasure of the Mayor.The ML&P Board shall set the compensation of the general manager subject to approval by the Mayor.ML&P budgets recommended and approved by the ML&P Board shall be submitted to the Mayor before submittal to the Municipal Assembly for approval. -19- In 2009,ML&P sold 1,115,964 megawatt-hours of electric energy to an average of 30,406 retail customers totaling $110,061,785.In addition,107,788 megawatt-hours of energy was sold to Golden Valley and Chugach totaling $8,522,078.Peak hourly demand for ML&P in calendar year 2009 was 186 megawatts and occurred in January. ML&P owns and operates seven natural gas-fire turbines and one waste heat recovery steam turbine with a total capacity of 343 megawatts and 53%of the Eklutna hydroelectric plant,which has a 44 megawatt capacity.ML&P has partnered with Chugach to construct and jointly own a new 183 MW natural gas fired power plant as discussed further in the Chugach section.ML&P is also planning on installing 88 MW of new replacement generation at its existing power plants. The following table summarizes ML&P's historical energy loads and resources used to meet its loads. Municipality of Anchorage d/b/a Municipal Light &Power Energy Loads and Resources (Megawatt-hours) 2005 2006 2007 2008 2009 SALES TO CUSTOMERS: Residential 147,171 148,255 147,246 147,725 147,643 Commercial 740,139 747,400 753,227 754,542 760,450 Other 113,099 207,513 204,577 216,485 207,871 Sales for Resale 170,049 325,635 268,845 214,333 107,788 Total Energy Sales 1,170,458 =1,428,803 1,373,895 1,333,085 1,223,752 System Losses and Owner Use 29,280 30,215 29,523 32,561 25,965 Total Energy Requirements 1,199,738 1,459,018 1,403,418 1365646 1,249,717 ENERGY RESOURCES: Own Resources 1,089,126 1,375,865 1,309,017 1,284,995 1,155,854 Other 110,612 83,153 94,401 80.651 93,863 Total Energy Resources 1,199,738 1,459,018 1,403,418 1,365,646 1,249,717 Source:Municipality of Anchorage d/b/a Municipal Light &Power -20- The following table summarizes operating results for ML&P for the calendar years 2005 through 2009. Municipality of Anchorage d/b/a Municipal Light &Power Historical Operating Results ($000) 2005 2006 2007 2008 2009 GROSS REVENUES: Revenues from Sales of Electricity $100,479 $100,424 $94,393 $105,682 $118,584 Other Revenues 18,804 21,894 9,453 2,438 1,901 Total Gross Revenues $119,283 $122,318 $103,846 $108,120 $120,485 OPERATING EXPENSES: Cost of Purchased Power 4 8 _39 8 Bradley Lake 4,091 3,777 4,031 4,117 4,397 Production 44.176 22,883 26,614 32,095 35,692 Total Cost of Power $48,271 $26,668 $30,645 $36,251 $40,097 Other Operating Expenses $22,875 $34.465 $12,323 $20,485 $31,399 Total Net Revenue Excluding Depreciation and Amortization $48,137 $61,185 $60,878 $51,384 $48,989 Debt Service $25,960 $32,901 $28,440 $27,071 $26,730 Source:Municipality of Anchorage d/b/a Municipal Light &Power.This includes revenue derived from water used by the Anchorage Water and Wastewater Utility that was not available for power generation. In 2009,ML&P issued $15,240,000 principal amount of Senior Lien Electric Revenue Bonds,2009 Series A (Tax Exempt)with a net effective rate of 4.23%,and $114,760,000 principal amount of Senior Lien Electric Revenue Bonds,2009 Series B (Taxable Build America Bonds)with a net effective rate of 6.53%.ML&P expects to receive a cash subsidy from the United States Treasury equal to 35%of the interest payable on the 2009 Series Bonds.The proceeds of the bonds,together with other legally available funds,will be used for the following purposes:(i)to provide for the cost of certain capital improvement projects (ii)to reimburse ML&P for costs of such capital improvement projects;(iii)to pay costs of issuance;and (iv)to provide funds for deposit in the Reserve Account. Chugach Electric Association,Inc. Chugach is Alaska's largest electric utility supplying power to over 66,000 retail members in the Anchorage and upper Kenai Peninsula areas.In addition to retail sales,Chugach supplies much of the power requirements of MEA, HEA and Seward.Chugach also sells non-firm energy to Golden Valley over the Alaska Intertie.The Chugach board of directors establishes policy and directs the utility and consists of seven members elected from the Chugach membership on staggered three-year terms. In 2009,Chugach sold 1,183,705 megawatt-hours of electric energy to its retail customers and 1,275,003 megawatt- hours of electric energy to its wholesale customers excluding economy energy sales to Golden Valley.Revenue from the sale of electric energy to its retail customers in 2009 totaled $162,101,007,distributed as 51 percent residential,48 percent commercial and one percent street lighting.Revenue from sales for resale in 2009 totaled $125,543,049.Chugach's highest hourly peak demand on record of 490 megawatts for its entire system,including coincident peak demand of its wholesale customers,occurred in January 2009. Chugach owns and operates 533 miles of transmission line,which includes 128 miles of leased transmission lines and Chugach's share of the Eklutna transmission line,916 miles of overhead distribution lines,769 miles of -21- underground distribution lines,499.2 megawatts of natural gas-fired combustion turbines and 30.9 megawatts of hydroelectric generation capacity. Chugach is the principal supplier of power to MEA,HEA and Seward under separate wholesale power contracts. For 2009,its wholesale power contracts,including the fuel and purchased power components,produced $118.3 million in revenues,representing 41 percent of total revenues and 50 percent of total MWh sales to customers. Chugach entered into a new power sales agreement with Seward,nominally effective June 1,2006.The new contract is for five years with two automatic five-year extensions,after RCA review,unless notice of termination is given by either party.This agreement is an interruptible,all-requirements/no reserves contract. Notification was made by MEA in 2004 and by HEA in 2007 that neither organization intends to be on the Chugach system under the current contractual arrangements post 2014. On April 13,2010,HEA issued a press release stating that HEA's solely-owned power generation and transmission entity,AEEC,approved a design engineer to complete design for the Nikiski generation conversion project.AEEC currently owns a 40 MW natural gas fired generation plant that is dispatched as part of Chugach's overall system. The conversion project entails adding a steam turbine and increasing the output of the plant to 77 MW.HEA intends to purchase all of the output from this unit upon expiration of the Chugach contract in 2013.Chugach is currently negotiating with HEA for generation and transmission reserves necessary to meet the balance of HEA's power requirements. At the August 26,2009,Chugach Board of Directors'meeting and in a letter dated September 3,2009,MEA's then Interim General Manager advised Chugach that MEA desires to open discussions regarding power sales possibilities beyond 2014. Chugach is continuing to pursue replacement sources of revenue through potential new firm power sales agreements and transmission wheeling and ancillary services tariff revisions.Chugach believes that successful implementation of new power sales agreements and revised tariffs will mitigate anticipated rate increases in the 2014 and 2015 timeframe.However,Chugach cannot assure that it will be able to replace sources of revenue or that any replacement of revenue sources or revised tariffs will fully mitigate any anticipated rate increases in this timeframe. Chugach has partnered with ML&P to construct and jointly own a new 183 MW natural gas fired power plant. Chugach wi!l own and take approximately 70 percent of the new plant's output and ML&P will own and take the remaining percent. In August of 2009 the RCA approved a new seven-year natural gas contract and is currently reviewing anothercontractwhichChugachsubmittedinAprilof2010.The two contracts,including extension options,could fill 100%of Chugach's unmet needs through 2014. -22- The following table summarizes Chugach's historical energy loads and resources used to meet its loads,including its share of Project capability. Chugach Electric Association,Inc. Energy Loads and Resources (Megawatt-hours) 2005 2006 2007 2008 2009 SALES TO CUSTOMERS: Residential $59,744 564,969 557,081 560,756 551,740 Commercial 652,313 660,262 644,228 640,389 627,298 Other 4,751 4,746 4,728 4,687 4,667 Sales for Resale 1,545,877 .1,523,289 1,405,060 1,579,873 1,351,971 Total Energy Sales 2,762,685 2,753,266 2,611,097 2,785,705 2,535,676 System Losses and Owner Use 156,127 159,663 143,645 173,180 144.643 Total Energy Requirements 2,918,812 2,912,929 2,754,742 2,958,885 2,680,319 ENERGY RESOURCES: Own Resources 2,349,821 2,424,985 2,220,680 2,467,183 2,172,976 Bradley Lake 225,714 164,761 113,835 133,276 152,966 Other (Soldotna #1)343,277 323,183 _420,227 358,426 354,377 Total Energy Resources 2,918,812 2,912,929 2,754,742 2,958,885 2,680,319 Source:Chugach Electric Association,Inc. -23- The following table summarizes operating results for Chugach for the calendar years 2005 through 2009. Chugach Electric Association,Inc. Historical Operating Results ($000) 2005 2006 2007 2008 2009 GROSS REVENUES: Revenues from Sales of Electricity $222,673 $264,625 $254,471 $285,507 $287,644 Other Operating Revenues 3,024 2,918 2,973 2,785 2,603 Total Gross Revenues $225,697 $267,543 $257,444 $288,292 $290,247 OPERATING EXPENSES: Cost of Power $16,228 $19,706 $26,786 $24,429 $27,982 Bradley Lake 7,436 6,274 7,162 7,058 7,708 Production 99,814 135,331 122,195 154.613 152,824 Total Cost of Power $123,478 $161,311 $156,143 $186,100 $188,514 Other Operating Expenses $41,845 $42,247 $46,165 $42,694 $41,953 Total Net Revenue Excluding Depreciation and Amortization $155,857 $196,766 $182,229 $214,769 $216,164 Debt Service $29,816 $32,786 $33,105 $60,314 $67,527 Source:Chugach Electric Association,Inc. Golden Valley Electric Association,Inc. Golden Valley was incorporated in 1946 as a Rural Electrification cooperative to provide electric service to rural areas in central Alaska near the city of Fairbanks.A seven-member board of directors elected from Golden Valley's membership set policy and provides guidance to utility operation.In addition the Member Advisory Committee ("MAC")monitors policy and events and advises the board with member concerns and issues.Golden Valley serves over 44,000 electric member-customers in the Fairbanks,Delta,Nenana,Healy,and Cantwell areas.The Golden Valley electric system includes generation,transmission,and distribution systems and provides interconnection facilities in place to serve the University of Alaska and three military bases:Fort Wainwright,Eielson Air Force base,and Ft.Greely.Golden Valley is interconnected with the electric utility system in Anchorage via the Alaska Intertie. Golden Valley sold 1,315,323 megawatt-hours of electric energy to its retail customers in 2009.Total revenue from the sale of electric energy in 2009 was $195,234,224 of which 28 percent and 72 percent were accounted for from residential and commercial sales,respectively.In 2009,Golden Valley had a system demand for firm and nonfirm loads of 220.5 megawatts. Golden Valley owns and operates 279 megawatts of generation capacity of which 28 megawatts is a coal-fired steam turbine.A five year coal purchase agreement with Usibelli coal mine is in place and ends in 2013.The remaining 251 megawatts is from oil and naphtha fired combustion turbines.An agreement between Golden Valley and Chugach provides for the purchase by Golden Valley of available non-firm energy from Chugach (expires 2013). Golden Valley also has an agreement with Aurora Energy,LLC to purchase the power produced by the 223MW Chena power plant (expires 2025). The following table summarizes Golden Valley's historical energy loads and resources used to meet its loads, including its share of Project capability. -24- Golden Valley Electric Association,Inc. Energy Loads and Resources (Megawatt-hours) 2005 2006 2007 2008 2009 SALES TO CUSTOMERS:;; Residential 318,085 323,153 320,632 310,579 307,809 Commercial 855,252 922,891 1,028,619 1,024,144 1,002,674 Sales for Resale 95 7 312 187 4.840 Total Energy Sales 1,173,432 1,246,051 1,349,563 1,334,910 1,315,323 System Losses and Owner Use 88,736 88,851 77,235 84,976 69,668 Total Energy Requirements 1,262,168 1,334,902 1,426,798 1,419,886 1,384,991 ENERGY RESOURCES: Own Resources $80,212 560,344 851,361 738,173 929,673 Purchases 681,956 774,558 $75,437 681,713 455,318 Total Energy Resources 1,262,168 1,334,902 1,426,798 1,419,886 1,384,99] Source:Golden Valley Electric Association,Inc. The following table summarizes operating results for Golden Valley for the calendar years 2005 through 2009. Golden Valley Electric Association,Inc. Historical Operating Results ($000) 2005 2006 2007 2008 2009 GROSS REVENUES: Revenues from Sales of Electricity $118,937 $163,310 $194,288 $212,233 $195,234 Other Operating Revenues (1,433)1,612 1,971 2,280 2,187 Total Gross Revenues $117,504 $164,922 $196,259 $214,514 $197,421 OPERATING EXPENSES: Cost of Power $34,788 $42,893 $30,072 $46,143 $27,424 Bradley Lake 3,347 2,763 3,383 3,152 3,809 Production 34,036 66,125 99.790 101,545 101,280 Total Cost of Power $72,171 $111,781 $133,245 $150,840 $132,513 Other Operating Expenses $22,370 $22,280 $25,180 $26,164 $26,916 Total Net Revenue Excluding Depreciation and Amortization $14,563 $23,143 $23,757 $22,086 $22,442 Debt Service $20,636 $23,839 $27,382 $28,290 $28,751 Source:Golden Valley Electric Association,Inc. -25- Homer Electric Association,Inc. HEA,incorporated in 1945,serves the majority of the electricity needs on the Kenai peninsula south of Anchorage. HEA's services territory includes the communities of Seldovia,English Bay and Port Graham on the south side of Kachemak Bay and Soldotna and Kenai in the northwest area of the Kenai Peninsula. In 2009,HEA sold 483,149 megawatt-hours of electric energy to an average 28,647 customers.Revenues from sales of electricity were $79,120,631 of which 43.6 percent and 56.0 percent were attributed to residential and commercial sales,respectively.Maximum hourly demand in 2009 was 89 megawatts,consistent with the two prior years. HEA purchases all of its power from AEEC,which in turn,purchases most of its power from Chugach to sell to HEA.AEEC also operates a 38.5 megawatt gas-fired combustion turbine generator that is dispatched by Chugach. HEA is required to pay AEEC for all of the costs associated with the generator to the extent that power is not generated for sale to other utilities.In addition HEA pays for 73 megawatts which AEEC purchases on its behalf under an agreement with Chugach.HEA's requirements exceeding 73 megawatts are supplied by the Project or AEEC generation in some cases. The following table summarizes HEA's historical energy loads and resources used to meet its loads,including its share of Project capability. Homer Electric Association,Inc. Energy Loads and Resources (Megawatt-hours) 2005 2006 2007 2008 2009 SALES TO CUSTOMERS: Residential 168,808 172,789 171,932 180,989 176,400 Commercial 333,305 319,328 356,445 341,037 305,487 Other 1,197 1,265 1,264 1,303 1,261 System Losses and Owner Use 39,657 38,157 41,448 31,635 29,616 Total Energy Requirements 542,967 531,539 571,089 §54,964 512,764 ENERGY RESOURCES: Own Resources 465 251 394 24 180 Purchases 542,502 531,288 570,695 554,940 $12,584 Total Energy Resources 542,967 _531,539 _571,089 =_554,964 512,764 Source:Homer Electric Association,Inc. -26- The following table summarizes operating results for HEA for the calendar years 2005 through 2009. Homer Electric Association,Inc. Historical Operating Results ($000) 2005 2006 2007 2008 2009 GROSS REVENUES: Revenues from Sales of Electricity $50,333 $57,531 $61,560 $69,180 $79,121 Other Operating Revenues 485 597 721 508 487 Total Gross Revenues $50,818 $58,128 $62,281 $69,688 $79,608 OPERATING EXPENSES: Cost of Power $28,224 $32,237 $34,136 $36,473 $46,842 Bradley Lake 1,980 1,657 1,910 1,874 2,072 Production 539 307 292 290 265 Total Cost of Power $30,743 $34,201 $36,338 $38,637 $49,179 Other Operating Expenses $11,485 $13,561 $14,357 $14,615 $16,188 Total Net Revenue Excluding Depreciation and Amortization $6,775 $8,369 $8,336 $12,493 $8,677 Debt Service $5,799 $6,263 $7,626 $8,125 $9,583 Source:Homer Association,Inc. Matanuska Electric Association,Inc. Incorporated in 1941,MEA is Alaska's oldest electric cooperative.MEA provides electric service to over 55,000 customers in its service territory that includes the northeast part of the Municipality of Anchorage (Eagle River/Chugiak)and extends through much of the Matanuska-Susitna Borough,including the communities of Palmer,Wasilla,Willow,Sutton and Talkeetna. MEA purchases essentially all of its power supply from AEG&T,which in turn purchases all of its power from Chugach for resale to MEA.The Chugach/AEG&T/MEA power purchase agreement expires December 31,2014. MEA's Eklutna and Project shares are net-billed through Chugach.MEA also purchases the output of a small (100 kW)independently-owned hydroelectric project located within its service territory.MEA is governed by a seven member board of directors elected from its membership. Pursuant to RCA Order No.U-03-100(4),excess capacity on approximately 20 miles of MEA's 115 kV transmission system is made available to Chugach,Golden Valley,ML&P and Seward for operation at 138 kV as part of the Alaska Intertie.MEA retains priority of use for this line. MEA sold 695,019 megawatt-hours of electric energy to an average of 55,158 customers and received revenues from electric sales totaling $105,422,726 in calendar year 2009.Residential customers provided 66%and commercial customers provided 34%of revenues received from sales.Maximum peak demand in 2009 was 145,077 megawatts. MEA also owns the electrical system serving the community of Unalakleet in Northwestern Alaska.The electric system comprising MEA's Unalakleet division is operated and managed by the Unalakleet Valley Electric Cooperative.The Unalakleet division has its own management staff,and is not interconnected with any other electric utility.All electric energy sold by the Unalakleet division is locally produced,primarily by owned diesel -27- generators.The diesel-fired Unalakleet power plant is being repowered using Federal grant funds administered by the Authority in 2010,at no cost to MEA.As of December 31,2009 the Unalakleet division had a gross plant investment of $2,563,308 and 351 customers.Operating revenues in 2009 totaled $1,798,184 on sales of 3,910 megawatt-hours of electric energy.The Unalakleet division has its own retail rate schedules,which are subsidized by the State of Alaska's Power Cost Equalization program. Except as set forth in the preceding paragraph,all data pertaining to MEA in this Official Statement excludes the Unalakleet division. The following table summarizes MEA's historical energy loads and resources used to meet its loads,including its share of Project capability. Matanuska Electric Association,Inc. Energy Loads and Resources” (Megawatt-hours) 2005 2006 2007 2008 2009 SALES TO CUSTOMERS: Residential!405,228 429,468 427,467 441,016 437,185 Commercial 234,546 244,744 249,027 255,029 256,972 Other 810 860 872 866 862 System Losses and Owner Use 48,866 48.849 47,783 46,362 45,939 Total Energy Requirements 689,450 723,921 725,149 743,273 740,958 ENERGY RESOURCES: Purchases 689.450 723,921 725,149 743,273 740,958 Total Energy Resources 689,450 723,921 725,149 743,273 740,958 Source:Matanuska Electric Association,Inc. (1)Excludes Unalakleet division. -28- The following table summarizes operating results for MEA for the calendar years 2005 through 2009. Matanuska Electric Association,Inc. Historical Operating Results” ($000) 2005 2006 2007 2008 -2009 GROSS REVENUES: Revenues from Sales of Electricity $67,432 $82,727 $84,641 $92,763 $105,423 Other Operating Revenues 2,124 2,251 2,240 2,322 2,732 Total Gross Revenues $69,556 $84,978 $86,881 $95,085 $108,154 OPERATING EXPENSES: Cost of Power $42,473 $53,573 $54,196 $59,237 $71,163 Bradley Lake 2,277 1,915 2,187 2,155 2,382 Production -3 1 4 4 Total Cost of Power $42,750 $55,491 $56,384 $61,396 $73,549 Other Operating Expenses”$14,262 $14,678 $16,041 $15,418 $17,903 Total Net Revenue ExcludingDepreciationandAmortization®$5,677 $7,608 $6,896 $10,303 $8,435 Debt Service $4,843 $5,544 $6,601 $6,895 $6,914 Source:Matanuska Electric Association,Inc. (1)Data excluding Unalakleet Division. (2)Net billed to Chugach. (3)Revenue (both operating and nonoperating)less: Total Operating and Maintenance Expense Depreciation and Amortization Expense Tax Expense -Property and gross receipts Tax Expense -Other City of Seward The City of Seward,located on the Kenai Peninsula,owns and operates the Seward Electric System.Seward provides electric service to the City of Seward and to areas up to 25 miles north of the City of Seward adjacent to the Seward Highway.The northern terminus of the Seward transmission system interconnects with a Chugach transmission line at Dave's Creek Substation located 45 miles north of the City of Seward.Seward is a Power Purchaser under the Power Sales Agreement,but its Percentage Share of the Project Capacity is only 1%. RESTRUCTURING OF THE ELECTRIC UTILITY INDUSTRY IN ALASKA Historically,utilities have functioned as rate-regulated monopolies that own generation,transmission,and distribution facilities and serve designated service territories.In the 1990s,policymakers and legislators on the national and state levels began examining alternatives to this traditional model that would allow for competition within the retail electric utility industry.The Energy Policy Act of 1992 ("Energy Policy Act”)specifically prohibited the FERC from ordering "retail wheeling,”under which a utility could be required to deliver another entity's power to an end user over the utility's electric distribution system.The Energy Policy Act did provide that the individual states could decide whether to require restructuring of the electric utility industry for their state. -29- Different levels of restructuring were implemented in some states,but states'interest in restructuring waned significantly in the aftermath of the energy crisis of 2000-2001. Restructuring of the retail electric utility industry did not occur in Alaska.The RCA examined retail electric restructuring in the late 1990s,but ended the inquiry in 2001,finding that any potential benefits to Alaska ratepayers from restructuring were too speculative.No further actions have been taken to restructure or encourage competition in the retail electric utility industry in Alaska. With respect to increasing competition in wholesale sales in the electric utility industry,the Energy Policy Act gave FERC the authority to require a transmitting utility to provide wholesale transmission service to certain entities on an essentially cost-of-service basis.In 1996,FERC issued Order No.888,which requires utilities to file an open access transmission tariff ((OATT”)The primary purpose of the OATT is to ensure that transmission service provided to others is on terms that are comparable to those the owner of the transmission system receives.In 2007, FERC made some changes to the reforms of Order No.888 by issuing Order Nos.890 and 890A.Because none of Alaska's electric transmission systems are interconnected with transmission systems in other states,and therefore do not engage in interstate trade in electricity,FERC's OATT requirements do not apply to utilities in Alaska. There is no state legislation or RCA regulation requiring open access transmission service in Alaska. Although neither federal nor state law requires "open access transmission”and/or "retail wheeling”in Alaska,the loads and revenues of individual Power Purchasers could be materially affected if such laws are enacted.Alaska House Bill 182 and Alaska Senate Bill 143,which expired when the legislature adjourned in April 2010,would have provided authority for four or more municipal or cooperative public utilities with interconnected service territories to organize an energy and transmission corporation,known as the Greater Railbelt Energy and Transmission Corporation ("GRETC”)that would have owned all of the generation and transmission projects in the Railbelt and sold power to the Railbelt utilities.The stated purpose of GRETC was to ensure adequate,reliable,safe,and stable wholesale power to GRETC members without undue discrimination.GRETC was to provide that service at the lowest reasonable long-term cost.It was also intended to be the primary recipient of state financial assistance to develop generation and transmission infrastructure for member utilities.Utilities were not required to join GRETC. HEA.,Seward,Chugach,ML&P,MEA,and Golden Valley had the option to sign a letter of intent to become a member of GRETC. The operative provisions of the GRETC bills were to take effect only if four or more of those utilities provided a letter of intent to the Authority,Even if GRETC had been organized,member utilities would not have been required to purchase power from GRETC.Both bills included some form of RCA regulation over GRETC.Because of the current status of these legislative actions,it is unclear at this time whether the formation of an entity such as GRETC would have any material effect on purchases from the Project made by the individual purchasing utilities. THE ALASKA ENERGY AUTHORITY General The Authority was created by the Alaska Legislature in 1976 under the provisions of the Act.The purpose of the Authority,as stated in the Act,is to promote,develop and advance the general prosperity and economic welfare of the people of the State of Alaska by providing a means of financing and operating power projects and facilities that recover and use waste energy and by carrying out its powers and duties relating to rural and statewide energy programs. Reorganization of Authority In 1993,the Alaska Legislature enacted legislation that significantly reorganized the Authority by transferring the Authority's programs affecting rural Alaska to the Alaska Department of Community and Regional Affairs and by eliminating the Authority's power to construct and acquire energy projects.The Authority continues to own and operate two significant power projects in the State,including the Project.See "Generation Projects and Transmission Facilities”herein.In 1999,however,the Alaska Legislature enacted legislation which transferred back to the Authority most of the Authority's prior programs affecting rural Alaska. -30- As provided in the legislation,the members of the Board of AIDEA also serve as the Board of Directors of the Authority and the Chair and Vice Chair of AIDEA's Board hold the same offices of the Authority.As of April 10, 2008,the Authority and AIDEA each have an executive director,where previously the Authority and AIDEA executive directors were the same.The Authority's executive director is an employee of AIDEA,but is not supervised by the AIDEA Executive Director.AIDEA and the Authority also share a common staff;however,the Authority and AIDEA remain separate legal entities.There is no commingling of funds between the Authority and AIDEA,and there was no assignment to AIDEA of any liabilities of the Authority. For a further description of the provisions of the Act,see APPENDIX A -"SUMMARIES OF THE ACT AND THE BASIC DOCUMENTS.” General Projects and Transmission Facilities The following description of various other projects undertaken by the Authority is included only to give beneficial owners and holders of the Sixth Series Bonds an understanding of the scope of the Authority's activities.The revenues derived from these projects and facilities are neither pledged nor available as security for the repayment of the Bonds. Former Energy Program for Alaska.At present,the Authority owns and operates two hydroelectric projects with a total generating capacity of 120.5 megawatts and owns in excess of 190 miles of transmission lines. The net book value of the Authority's owned assets under the Former Energy Program for Alaska was approximately $242 million at June 30,2009.Besides the Project,the Authority owns: Generation Project The 0.5 megawatt Larsen Bay Hydroelectric 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 City of Larsen Bay operates the project.The Authority is currently planning on transferring the project to the City of Larsen Bay. Transmission Facilities.The Authority owns the Alaska Intertie,a 170 mile,345 kilovolt transmission line (presently operated at 138 kilovolts)that interconnects the power systems in the Anchorage and Fairbanks areas, Board of Directors The Authority is governed by the Board,which consists of two members of the general public appointed by the Governor for two-year terms and three ex-officio members.The ex-officio members are the Commissioner of the DCCED,the Commissioner of the State Department of Revenue and one other member of the Governor's cabinet appointed at his discretion.The Commissioner of the State Department of Transportation and Public Facilities is the cabinet member currently appointed by the Governor as the discretionary cabinet appointee.The Authority's current members are identified on page i of this Official Statement. During the 2010 legislative session,the Alaska Legislature passed two bills which,if enacted into law,could impact the composition of the Authority's board.Neither of these bills has yet been transmitted to the Governor.If the Governor signs either or both bills,it or they would become effective 91 days later. CSHB 363(FIN)is pending legislation which,if enacted into law,will change the composition of the Authority's . board.Under the bill,the board would include five public members and two ex-officio members,for a total of seven members.The five public members would be appointed by the Governor to two year terms,and would serve at the pleasure of the Governor.The two ex officio members would be the Commissioner of the DCCED,and the Commissioner of the State Department of Revenue. HCS CSSB 220(FIN)is pending legislation which,if enacted into law,would require the Governor to include in a report to the legislature on state energy programs,an examination of the existing powers,duties and structure of the -31- Authority and its board of directors,specifically analyzing the relationship between the Authority and the Alaska Industrial Development and Export Authority. Administration The Executive Director is responsible for implementing the policies adopted by the Board,hiring personnel, reviewing staff performance and managing the general operations of the Authority.The Authority's has no staff. AIDEA's total staff includes 75 positions,which includes positions for Alaska Energy Authority work.The following AIDEA employees are key members of the Authority's management and staff. Steve Haagenson,Executive Director.Mr.Haagenson was appointed Executive Director of the Authority and Statewide Energy Coordinator in March 2008.He previously served as the President and CEO of Golden Valley Electric Association for 32 years where he was heavily involved in Alaska energy issues. He attended the University of Alaska-Fairbanks,obtaining an Electrical Engineering degree and a Masters degree in Engineering Management.A registered professional engineer in Alaska since 1981,he has been involved in many electrical generation,transmission and distribution projects from Fairbanks to Homer.Mr.Haagenson was a member of the Alaska Energy Policy Taskforce and the Chairman of the Interior Issues Council-Cost of Energy Taskforce that developed the Fairbanks Energy Study. Chris Anderson,Deputy Director -Commercial Finance.Ms.Anderson was appointed to this position in May 2006.Ms.Anderson is in charge of the Commercial Finance Department,which administers the loan programs for the Authority.In that capacity,Ms.Anderson oversees the Authority's financing programs which include the Power Project Fund and the Bulk Fuel Revolving Loan Fund.A former banker,Ms.Anderson held the position of Vice President and Manager of the Real Estate Construction and Income Property Department,as well as serving as the Appraisal Review Officer during her 19-year career at Key Bank.Ms.Anderson received a Bachelor of Science degree in Occupational Education with an emphasis in Business Administration from Wayland Baptist University. Ms.Anderson passed the state test for general certified appraisers and is an income property financier.Ms. Anderson's has served as the President of the International Right of Way Association,where she obtained her Senior Right-of-Way Agent (SR/WA)certification,has served on the Municipality of Anchorage's Board of Equalization and served on the Board of the American Red Cross,Southcentral Chapter.Prior to taking her current position,Ms. Anderson was the Program Manager for Land and Right of Way at the Alaska Railroad Corporation,responsible for acquiring land for all of the Railroad's capital projects. Bryan Carey PE,Technical Engineer.Mr.Carey was hired in 2001.He is the project manager for the Authority's Bradley Lake Hydroelectric Project,AIDEA owned Snettisham Hydroelectric Project,and the Susitna Hydroelectric feasibility study.In addition,he is the project manager for various rural Alaska energy projects that include bulk fuel facilities,power plants,and small hydroelectric projects.Past work experience includes employment with several engineering consulting companies performing energy and environmental work throughout Alaska.Mr.Carey received a Bachelor of Science degree in engineering from the University of Alaska Fairbanks and a Master of Business Administration from University of Alaska Anchorage.Mr.Carey is a licensed Professional Engineer. Sara Fisher-Goad,Deputy Director -Operations.Ms Fisher-Goad was appointed to this position in October 2006.Her responsibilities include coordinating the Authority's governmental and external affairs,information systems services and energy grant awards;in addition,she serves as the Authority's human resource officer.Ms. Fisher-Goad has been employed with the Authority since November 2000;in her previous position as financial analyst for the Authority Ms.Fisher-Goad acted as legislative liaison and coordinated annual budget submissions to the Legislature.Prior to joining the Authority,Ms.Fisher-Goad worked as a project manager for Springsted Incorporated an independent financial advisory firm in St.Paul,Minnesota.At Springsted,Ms.Fisher-Goad structured bond issues for municipal clients.Ms.Fisher-Goad received a Bachelor of Science degree in Mathematics from University of Alaska Fairbanks and a Master of Business Administration from University of Alaska Anchorage. , Michael C.Harper,Deputy Director-Rural Energy.Mr.Harper was appointed to this position in June 2001 after spending 10 years as President/CEO of The Kuskokwim Corporation,a Village Corporation created pursuant to the -32- Alaska Native Claims Settlement Act.Past work experience includes jobs with Rural Alaska Community Action Program,State of Alaska (the former Department of Regional and Community Affairs and the Governor's Office) and United Bank Alaska.Mr.Harper serves with community groups such as the Salvation Army Board,Rotary and University of Alaska Anchorage Advisory Native Students Steering Committee.Past service includes Doyon Limited Board,Anchorage Chamber of Commerce Board and Commonwealth North Board. Valorie F.Walker,Deputy Director-Finance.Ms.Walker was appointed to this position in 1987.Her responsibilities include accounting,bonding,investments and procurement.Prior to joining the Authority, Ms.Walker was employed in the finance division of an Alaska commercial bank for five years and in an international certified public accounting firm for seven years.Ms.Walker is a certified public accountant and received a bachelor's degree in Business Administration from the University of Notre Dame. TRUSTEE The Trustee is acting as trustee,authenticating agent,and paying agent for the Sixth Series Bonds and will,among other things maintain the Bond Register and apply amounts it has received under the Resolution for this purpose to the payment of principal and interest on the Sixth Series Bonds as they come due. LITIGATION Authority As of the date of this Official Statement,there is no litigation pending,or to the knowledge of the Authority, threatened,challenging the authority of the Authority to issue the Sixth Series Bonds or seeking to enjoin issuance of the Sixth Series Bonds. The Authority is a party in various legal actions and claims that arise during the normal course of business,some of which are covered by insurance.Although certain lawsuits and claims are significant in amount,the final dispositions are not determinable and,in the opinion of Authority management,the final outcome of these matters, taken individually or in the aggregate,will not have a material adverse effect on the financial position of the Authority.In the opinion of Authority management,the financial position of the Authority will not be affected materially by the final outcome of any present legal proceedings and thus no specific legal reserves have been provided. Power Purchasers Upon the delivery of the Sixth Series Bonds,the General Manager and Chief Financial Officer of each Power Purchaser will furnish a certificate to the effect that,among other things,to the knowledge of such officer after reasonable inquiry,there is no litigation pending in any court in any way contesting the validity or enforceability of the Power Sales Agreement. PENDING DISPUTES There are a variety of disputes,issues and proceedings challenging rates,contract matters and other matters among some of the Power Purchasers,HEA,MEA and the Authority.Some of these disputes,issues and proceedings could affect an individual utility's costs,revenues,resources and loads.However,none of these disputes,issues or proceedings affect the obligations of the Power Purchasers,HEA,MEA or the Authority regarding the Power Sales Agreement. Healy Project Power Sales Agreement Litigation A Power Sales Agreement between Golden Valley and AIDEA for the Healy Project was originally entered into in 1991.Golden Valley sued AIDEA in 1998 regarding the Healy Project over safety,contractual,and performance issues.This initial lawsuit was settled in 2000 and the Healy Project was maintained in warm layup status to prevent degradation of the facilities and enable commercial operation.Under the settlement,Golden Valley held the initial -33- rights to put the Healy Project into commercial operation,with AIDEA holding secondary rights if Golden Valley declined.In 2003 Golden Valley notified AIDEA that it did not desire to pursue operation of the Healy Project under the settlement agreement,and terminated the power sales agreement.In 2005,AIDEA filed a lawsuit against Golden Valley alleging breach of the settlement.In 2008-09,the parties negotiated a settlement under which AIDEA agreed to sell the Healy Project to Tri-Valley Electric Cooperative,Inc.("Tri-Valley”),a wholly-owned subsidiary of Golden Valley.AIDEA agreed to finance the $50M sales price with payments due over 25 years. AIDEA also agreed to provide a $45M line of credit for Tri-Valley to bring the Healy Project out of warm layup status and into commercial operation,integrate the project into Golden Valley's system,and pay certain limited administrative costs.As a result of the negotiated sale,the Alaska Superior Court issued orders in February and March 2009 to stay the litigation between AIDEA and Golden Valley pending closing of the sale of the Healy Project.As of May 2010,Tri-Valley,Golden Valley and AIDEA are working to satisfy the various conditions to closing. The Healy Project sale and associated power sales agreement between Tri-Valley and Golden Valley is entirely separate from the Power Sales Agreement. TAX MATTERS In the opinion of Bond Counsel,interest on the Sixth Series Bonds is excludable from gross income for federal income tax purposes,except for interest on any Sixth Series Bond for any period during which such Sixth Series Bond is held by a "substantial user”of the facilities financed or refinanced by the Sixth Series Bonds,or by a "related person”within the meaning of Section 147(a)of the Internal Revenue Code of 1986,as amended (the "Code”).Furthermore,interest on the Sixth Series Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations;however,interest on the Sixth Series Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations.Interest on the Sixth Series Bonds is excluded from taxation by the State except for transfer,estate and inheritance taxes. Federal income tax law contains a number of requirements that apply to the Sixth Series Bonds,including investment restrictions,periodic payments of arbitrage profits to the United States,requirements regarding the use of proceeds of the Sixth Series Bonds and the facilities financed or refinanced with proceeds of the Sixth Series Bonds and certain other matters.The Authority has covenanted to comply with all applicable requirements. Bond Counsel's opinion is subject to the condition that the Authority comply with the above-referenced covenants and,in addition,will rely on representations by the Authority and their advisors with respect to matters solely within the knowledge of the Authority and their advisors,respectively,which Bond Counsel has not independently verified. If the Authority fails to comply with such covenants or if the foregoing representations are determined to be inaccurate or incomplete,interest on the Sixth Series Bonds could be included in gross income for federal income tax purposes retroactively to the date of issuance of the Sixth Series Bonds,regardless of the date on which the event causing taxability occurs. Except as expressly stated above,Bond Counsel expresses no opinion regarding any other federal or state income tax consequences of acquiring,carrying,owning or disposing of the Sixth Series Bonds.Owners of the Sixth Series Bonds should consult their tax advisors regarding the applicability of any other tax consequences of owning the Sixth Series Bonds,which may include original issue discount,original issue premium,purchase at a market discount or at a premium,taxation upon sale,redemption or other disposition,and various withholding requirements. Prospective purchasers of the Sixth Series Bonds should be aware that ownership of the Sixth Series Bonds may result in collateral federal income tax consequences to certain taxpayers,including,without limitation,financial institutions,property and casualty insurance companies,individual recipients of Social Security or Railroad Retirement benefits,certain S corporations with "excess net passive income,”foreign corporations subject to the branch profits tax,life insurance companies and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Sixth Series Bonds. Bond Counsel expresses no opinion regarding any collateral tax consequences.Prospective purchasers of the Sixth Series Bonds should consult their tax advisors regarding collateral federal income tax consequences. -34- Payments of interest on tax-exempt obligations such as the Sixth Series Bonds,are in many cases required to be reported to the Internal Revenue Service (the "IRS”).Additionally,backup withholding may apply to any such payments made to any owner who is not an "exempt recipient”and who fails to provide certain identifying information,Individuals generally are not exempt recipients,whereas corporations and certain other entities generally are exempt recipients. Bond Counsel's opinion is not a guarantee of result and is not binding on the IRS;rather,the opinion represents Bond Counsel's legal judgment based on its review of existing law and in reliance on the representations made to Bond Counsel and compliance with covenants of the Authority.The IRS has established an ongoing program to audit tax-exempt obligations to determine whether interest on such obligations is includable in gross income for federal income tax purposes.Bond Counsel cannot predict whether the IRS will commence an audit of the Sixth Series Bonds.Owners of the Sixth Series Bonds are advised that,if the IRS does audit the Sixth Series Bonds, under current IRS procedures,at least during the early stages of an audit,the IRS will treat the Authority as the taxpayer,and the owners of the Sixth Series Bonds may have limited rights to participate in the audit.The commencement of an audit could adversely affect the market value and liquidity of the Sixth Series Bonds until the audit is concluded,regardless of the ultimate outcome. Not Qualified Tax-Exempt Obligations The Sixth Series Bonds are not "qualified tax-exempt obligations”within the meaning of Section 265(b)(3)(B)of the Code. CONTINUING DISCLOSURE The Authority has covenanted and agreed in a Continuing Disclosure Agreement that the Authority shall comply with the secondary market disclosure obligations of the Securities and Exchange Commission Rule 15c2-12 (the "Rule”)with regard to certain financial information and operating data (the "Annual Financial Information”). These covenants have been made in order to assist the Underwriter in complying with the Rule.A copy of the Authority's Continuing Disclosure Agreement is included in this Official Statement as Appendix D-1. The Power Purchasers have covenanted and agreed in a Continuing Disclosure Agreement that the Power Purchasers shall comply with the secondary market disclosure obligations of the Securities and Exchange Commission Rule 15c2-12 (the "Rule”)with regard to certain financial information and operating data relating to the Project and the Power Purchasers (other than Seward),HEA and MEA (the "Annual Financial Information”),These covenants have been made in order to assist the Underwriter in complying with the Rule.A copy of the Power Purchasers' Continuing Disclosure Agreement is included in this Official Statement as Appendix D-2. The Authority represents that it has complied with each continuing disclosure undertaking that it has previously entered into under the Rule. The Power Purchasers previously were not fully in compliance with regard to their continuing disclosure obligation filings relating to the Third Series Bonds,the Fourth Series Bonds,and the Fifth Series Bonds.They had properly and timely filed their annual reports but omitted updates to certain operating data regarding the Project and the Power Purchasers contained in the Official Statement for that offering.However,recently the Power Purchasers have provided a filing which brings current all of the omitted information.The Power Purchasers have indicated that they understand what is required to comply with any future continuing disclosure requirements and will be conscientious in doing so going forward. INDEPENDENT AUDITOR The financial statements of the Authority as of and for the years ended June 30,2009 and June 30,2008,included in Appendix C,have been audited by KPMG LLP,independent auditors,as stated in their report appearing therein. KPMG LLP,the Authority's independent auditor,has not been engaged to perform and has not performed,since the date of its report included therein,any procedures on the financial statements addressed in that report.KPMG LLP also has not performed any procedures relating to this official statement. -35- LEGAL MATTERS The Bonds are issued subject to the opinion of K&L Gates LLP,Bond Counsel,of Seattle,Washington,the form of which appear as Appendix B.Certain legal matters will be passed upon for the Authority by the Attorney General of the State of Alaska;for the Underwriter by its counsel,Birch Horton Bittner &Cherot,Anchorage,Alaska;and for the Power Purchasers by their special counsel McDowell Rackner &Gibson PC,of Portland,Oregon. RATINGS Moody's Investors Service and Standard &Poor's,a Division of The McGraw-Hill Companies,Inc.,have assigned ratings of "__”and "_”respectively to the Bonds.Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same,at the following addresses:Moody's Investors Service,Inc.,99 Church Street,New York,New York 10007; Standard &Poor's,a Division of The McGraw-Hill Companies,Inc.,55 Water Street,New York,New York 10041. Generally,a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own.There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agencies,if in the judgment of such rating agencies,circumstances so warrant.Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. UNDERWRITING All of the Bonds are being purchased by the Underwriter at an aggregate purchase price of $(the principal amount of the Bonds,plus net original issue premium of $less Underwriter's discount of $)subject to the terms of a bond purchase contract between the Authority and the Underwriter.The bond purchase contract provides that the Underwriter will purchase all of the Bonds if any are purchased and that the obligation of the Underwriter to accept and pay for the Bonds is subject to certain terms and conditions set forth therein,including the approval by counsel of certain legal matters. SOURCES OF CERTAIN INFORMATION Information in this Official Statement concerning the Power Purchasers and their electric systems has been furnished by the Power Purchasers. The Underwriter makes no representations as the accuracy of information in this Official Statement,other than the information under the caption "Underwriting.”The Authority makes no representation with respect to the accuracy of information in this Official Statement concerning the Power Purchasers,HEA and MEA,the information under the caption "Restructuring of the Electric Utility Industry in Alaska,”the information under the caption "Pending Disputes”or the information concerning DTC.Concurrently with the issuance of the Sixth Series Bonds,the General Manager and,except for AEG&T and AEEC,Chief Financial Officer of each Power Purchaser,HEA and MEA,respectively,will deliver a certificate with respect to the accuracy of the information in this Official Statement relating to such Power Purchaser,HEA or MEA,the Project and the information in the sections titled "Introduction,”"Rate Regulation,”"Power Requirements”and "Generation Resources and Utilization of the Project”under the caption "The Power Purchasers,”and the information under the captions "Restructuring of the Electric Utility Industry in Alaska”and "Pending Disputes.”However,the Power Purchasers,HEA and MEA make no representation as to the accuracy of the other information in this Official Statement. MISCELLANEOUS Brief descriptions of the Sixth Series Bonds,the Authority,the Act and certain other statutes and documents are included in this Official Statement.Such descriptions do not purport to be comprehensive or definitive.All references herein to such resolutions,statutes and other documents are qualified in their entirety by reference to each such resolution,statute and other document.The information herein is subject to change without notice,and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Authority since the date hereof. -36- Certain statements contained in this Official Statement reflect not historical facts but forecasts and "forward- looking statements.”No assurance can be given that the future results discussed herein will be achieved,and actual results may differ materially from the forecasts described herein.In this respect,the words "estimate,”"project,”"anticipate,”"expect,”"intend,”"forecast,”"plan,”"believe”and similar expressions are intended to identify forward-looking statements.All projections,forecasts,assumptions and other forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement.- EXECUTION OF OFFICIAL STATEMENT The execution and delivery of the Official Statement has been authorized by the Authority. ALASKA ENERGY AUTHORITY By Steven Haagenson,Executive Director -37- APPENDIX A SUMMARIES OF THE ACT AND THE BASIC DOCUMENTS -THE ALASKA ENERGY AUTHORITY ACT -THE POWER SALES AGREEMENT -THE BOND RESOLUTION APPENDIX B FORM OF OPINION OF BOND COUNSEL July __,2010 Alaska Energy Authority Anchorage,Alaska Merrill Lynch,Pierce,Fenner &Smith Incorporated Seattle,Washington Re:Alaska Energy Authority Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project)-$ Ladies and Gentlemen: We have acted as bond counsel to the Alaska Energy Authority (the "Authority”)and have examined a certified transcript of the proceedings taken in the matter of the issuance by the Authority of its Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project),dated July __,2010,in the aggregate principal amount of $(the "Sixth Series Bonds”),issued pursuant to the Constitution and laws of the State of Alaska,particularly Title 44,Chapter 83,Alaska Statutes,as amended (the "Act”),and pursuant to Resolution No. 1989-12 of the Authority adopted on September 7,1989,as amended,and Resolution No.2010-02 adopted on June 8, 2010 authorizing the issuance and sale of the Sixth Series Bonds (collectively,the "Resolution”),for the purpose of providing funds to refund certain outstanding power revenue bonds of the Authority and to pay costs of issuance. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the Resolution. The Sixth Series Bonds are subject to redemption as provided in the Bond Purchase Agreement. Regarding questions of fact material to our opinion,we have relied on representations of the Authority in the Resolution and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based on the foregoing,we are of the opinion that,under existing law: 1.The Sixth Series Bonds have been legally issued and constitute valid and binding general obligations of the Authority for the payment of which,in accordance with their terms,the full faith and credit of the Authority have been legally and validly pledged,except to the extent that the enforcement of the rights and remedies of such owners of the Sixth Series Bonds may be limited by laws relating to bankruptcy,reorganization,insolvency, moratorium or other similar laws of general application affecting the rights of creditors,by the application of equitable principles and the exercise ofjudicial discretion. 2.Under the Constitution and laws of the State of Alaska (the "State”),the Authority has been duly created,organized,and validly exists as a public corporation and government instrumentality in good standing under the laws of the State,performing an essential public function with full corporate power and authority under the Act, among other things,to enter into,and to perform its obligations under the terms and conditions of,the Resolution. 3.The Resolution has been duly and lawfully adopted by the Authority,is in full force and effect,and is valid and binding upon the Authority and enforceable in accordance with its terms,subject to the enforcement of the rights and remedies relating to bankruptcy,reorganization,insolvency,moratorium or other similar laws of general application affecting the rights of creditors,by the application of equitable principles and the exercise of judicial discretion. 4,The Sixth Series Bonds are secured by a pledge in the manner and to the extent set forth in the Resolution.The Resolution creates a valid pledge of a lien on all funds established by the Resolution and moneys and securities therein which the Resolution purports to create,to the extent and on the terms provided therein. B-1 5.Interest on the Sixth Series Bonds is excludable from gross income for federal income tax purposes,except for interest on any Sixth Series Bond for any period during which such Sixth Series Bond is held by a "substantial user”of the facilities financed or refinanced by the Sixth Series Bonds,or a "related person”to such "substantial user,”within the meaning of Section 147(a)of the Internal Revenue Code of 1986,as amended (the "Code”).Interest on the Sixth Series Bonds is not an item of tax preference for purposes of either individual or corporate alternative minimum tax.Interest on the Sixth Series Bonds may be indirectly subject to corporate alternative minimum tax and certain other taxes imposed on certain corporations,The opinion set forth in this paragraph is subject to the condition that the Authority comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Sixth Series Bonds in order that the interest thereon be,and continue to be,excludable from gross income for federal income tax purposes.The Authority has covenanted to comply with all such requirements.Failure to comply with certain of such requirements may cause interest on the Sixth Series Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Sixth Series Bonds. 6.Interest on the Sixth Series Bonds is exempt from taxation by the State except for transfer,estate and inheritance taxes. The Authority has not designated the Sixth Series Bonds as "qualified tax-exempt obligations”within the meaning of Section 265(b)(3)of the Code. Except as expressly stated above,we express no opinion regarding any other federal or state income tax consequences of acquiring,carrying,owning or disposing of the Sixth Series Bonds.Owners of the Sixth Series Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Sixth Series Bonds,which may include original issue discount,original issue premium,purchase at a market discount or at a premium,taxation upon sale,redemption or other disposition,and various withholding requirements. This opinion is given as of the date hereof,and we assume no obligation to update,revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, K&L GATES LLP APPENDIX D-1 FORM OF CONTINUING DISCLOSURE AGREEMENT CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Agreement”)is executed and delivered by the Alaska Energy Authority (the "Authority”)and U.S.Bank National Association (the "Dissemination Agent”)in connection with the issuance of $aggregate principal amount of its Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project)(the "Bonds”).The Bonds are being issued pursuant to the Power Revenue Bond Resolution adopted by the Authority on September 7,1989,and a Fifth Supplemental Resolution adopted by the Authority on June 8,2010 (together,the "Bond Resolution”).U.S.Bank National Association has been appointed to serve as trustee for the Bonds (the "Trustee”)under the Bond Resolution.Pursuant to Section 302(B)of the Fifth Supplemental Resolution the Authority,the Trustee and the Dissemination Agent covenant and agree as follows: SECTION 1.Purpose of the Agreement.This Agreement is being executed and delivered by the Authority,the Trustee and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C.Rule 15¢2-12(b)(5). SECTION 2.Definitions.In addition to the definitions set forth in the Bond Resolution,which apply to any capitalized term used in this Agreement unless otherwise defined in this Section,the following capitalized terms shail have the following meanings: "Annual Report"shall mean any Annual Report provided by the Authority pursuant to,and as described in, Sections 3 and 4 of this Agreement. "Audited Financial Statements”shall mean the audited financial statements of the Authority for the most recent fiscal year,prepared (except as otherwise noted herein)in accordance with generally accepted accounting principles (or such other accounting principles as may be applicable in the future pursuant to applicable law or accounting standards board). "Beneficial Owner”shall mean any person which (a)has the power,directly or indirectly,to vote or consent with respect to,or to dispose of ownership of,any Bonds (including persons holding Bonds through nominees,depositories or other intermediaries),or (b)is treated as the owner of any Bonds for federal income tax purposes. "Dissemination Agent”shall mean U.S.Bank National Association,acting in its capacity as Dissemination Agent hereunder,or any successor Dissemination Agent designated in writing by the Authority and which has filed with the Trustee a written acceptance of such designation. "Fiscal Year"shall mean any twelve-month period ending on June 30 or on such other date as the Authority may designate from time to time. "Holders”shall mean the registered holders of the Bonds,as recorded in the registration books of the Trustee. "Listed Events"shall mean any of the events listed in Section 5 of this Agreement. "MSRB”shall mean the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934,or any successor thereto or to the functions of the MSRB contemplated by this Agreement. D-1-1 "Official Statement"shall mean the Authority's final Official Statement with respect to the Bonds,dated ,2010. "Participating Underwriter”shall mean Merrill Lynch,Pierce,Fenner &Smith Incorporated. "Project”shall have the meaning assigned to such term in the Bond Resolution. "Rule"shall mean Rule 15c2-12(b)(5)adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934,as the same may be amended from time to time. "State”shall mean the State of Alaska. "Trustee”shall mean U.S.Bank National Association. SECTION 3.Provision of Annual Reports. (a)The Authority shall,or,by written direction,shall cause the Dissemination Agent to,provide to the MSRB,not later than March 31 of each year (the "Submission Date”),commencing on March 31,2011,an Annual Report for the preceding Fiscal Year which is consistent with the requirements of Section 4 of this Agreement.The Annual Report may be submitted as a single document or as separate documents comprising a package,and may cross-reference other information as provided in Section 4 of this Agreement;provided that the audited financial statements of the Authority may be submitted separately from the balance of the Annual Report and later than the date required for the filing of the Annual Report if not available by that date. (b)If not provided as part of the Annual Report provided under subsection (a),the Authority shall,or by written direction,shall cause the Dissemination Agent to,provide to the MSRB the Audited Financial Statements of the Authority when available. (c)If by 15 days prior to the Submission Date,the Dissemination Agent has not received a copy of the Annual Report of the Authority,the Dissemination Agent shall contact the Authority,and the Trustee (if the Trustee is not the Dissemination Agent)to determine if the Authority is in compliance with subsection (a). (d)If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the Submission Date,the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A. (e)The Dissemination Agent shall file a report with the Authority certifying that the Annual Report has been provided pursuant to this Agreement,stating the date it was provided. SECTION 4.Content of Annual Reports.The Authority's Annual Report shall contain or include by reference the following: (a)Audited Financial Statements of the Authority or,if the Audited Financial Statements of the Authority are not available on the Submission Date,the unaudited financial statements for the most recent Fiscal Year in a format similar to the Audited Financial Statements most recently prepared for the Authority;and (b)Information regarding the annual operating and maintenance costs of the Project of the type included in the table in the Official Statement under the caption "Historical Annual Project Costs.” SECTION 5.Reporting of Significant Events. (a)This Section 5 shall govern the giving of notices of the occurrence of any of the following events: 1.Principal and interest payment delinquencies; D-1-2 2.Non-payment related defaults under the Bond Resolution; 3.Unscheduled draws on debt service reserves reflecting financial difficulties; 4.Unscheduled draws on credit enhancements reflecting financial difficulties; 5.Substitution of credit or liquidity providers,or their failure to perform; 6.Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7.Modifications to rights of Bondholders; 8.Unscheduled Bond calls; 9.Defeasance of the Bonds; 10.Release,substitution or sale of property securing repayment of the Bonds;and 11.Rating changes for the Bonds. (b)Whenever the Authority obtain knowledge of the occurrence of a Listed Event that is material,the Authority shall promptly notify the Dissemination Agent in writing.Such notice shall instruct the Dissemination Agent to file a notice of such occurrence with the MSRB.Each notice of a Listed Event hereunder shall indicate that it is a notice of a Listed Event.Notwithstanding the foregoing,notice of Listed Events described in subsections (8)and (9)need not be given under this Section any earlier than the notice (if any)of the underlying event is given to the owners of affected Bonds pursuant to the Bond Resolution. SECTION 6.Termination of Reporting Obligation.The Authority's obligations under this Agreement shall terminate upon the legal defeasance,prior redemption or payment in full of all of the Bonds.If such termination occurs prior to the final maturity of the bonds,the Authority shall give notice of such termination in the same manner as for a Listed Event under Section 5 above. SECTION 7.Dissemination Agent.The Authority may from time to time designate an agent to act on its behalf in providing or filing notices,documents and information as required of the Authority under this Agreement, and revoke or modify any such designation.The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Authority pursuant to this Agreement. SECTION 8.Amendment;Waiver.Notwithstanding any other provision of this Agreement,the Authority may amend this Agreement ,and any provision of this Agreement may be waived,if the following conditions are met: (a)The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal (including regulatory)requirements,a change in law (including rules or regulations)or in interpretations thereof or a change in the identity,nature or status of the Authority or the type of business conducted thereby; (b)The Agreement,as amended or taking into account such waiver would,in the opinion of nationally recognized bond counsel,have complied with the requirements of the Rule at the time of the issuance of the Bonds,after taking into account any amendments or interpretations of the Rule,as well as any change in circumstances;and (c)The amendment or waiver either (i)is approved by the Holders of the Bonds in the same manner as provided in the Bond Resolution for amendments to the Resolution with the consent of Holders,or (ii)does not, in the opinion of nationally recognized bond counsel,materially impair the interests of the Holders or Beneficial Owners of the Bonds. D-1-3 In the event of any amendment or waiver of a provision of this Agreement,the Authority shall describe such amendment in the next Annual Report,and shall include,as applicable,a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles,on the presentation)of financial information or operating data being presented by the Authority.In addition,if the amendment relates to the accounting principles to be followed in preparing financial statements,(i)notice of such change shall be given in the same manner as for a Listed Event under Section 5,and (ii)the Annual Report for the year in which the change is made should present a comparison (in narrative form and also,if feasible,in quantitative form)between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.. SECTION 9.Transmission of Information and Notices.Unless otherwise required by law all notices, documents and information provided to the MSRB shall be provided in an electronic format as prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. SECTION 10.Default.In the event of a failure of the Authority to comply with any provision of this Agreement any Holder of Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate,including seeking mandate or specific performance by court order,to cause the Authority to comply with its obligations under this Agreement.A default under this Agreement shall not be deemed an Event of Default under the Bond Resolution,and the sole remedy under this Agreement in the event of any failure of the Authority to comply with this Agreement shall be an action to compel performance. SECTION 11.Governing Law.This Agreement shall be construed and interpreted in accordance with the laws of the State of Alaska,and any suits and actions arising out of this Agreement shall be instituted in a court of competent jurisdiction in the State,provided that,to the extent this Agreement addresses matters of federal securities laws,including the Rule,this Agreement shall be construed in accordance with such federal securities laws and official interpretations thereof. SECTION 12.Beneficiaries.This Agreement shall inure solely to the benefit of the Authority,the Dissemination Agent,the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds,and shall create no rights in any other person or entity. Date:July __,2010. ALASKA ENERGY AUTHORITY By Designated Representative U.S.BANK NATIONAL ASSOCIATION, as Dissemination Agent and Trustee By Authorized Officer D-1-4 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer:Alaska Energy Authority (the "Authority") Name of Bond Issue:$Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Date of Issuance:July,2010 NOTICE IS HEREBY GIVEN that the Authority has not provided an Annual Report with respect to the above-named Bonds as required by the agreement of the Authority. Dated: Alaska Energy Authority By D-1-5 APPENDIX D-2 FORM OF CONTINUING DISCLOSURE AGREEMENT CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Agreement”)is executed and delivered by Chugach Electric Association,Inc.("Chugach”),Golden Valley Electric Association,Inc.("Golden Valley”),Alaska Electric Generation &Transmission Cooperative,Inc.("AEG&T”)(acting on behalf of Matanuska Electric Association,Inc. ("MEA”)),Alaska Electric and Energy Cooperative,Inc.("AEEC”)(acting on behalf of Homer Electric Association,Inc.("HEA”)),the Municipality of Anchorage d/b/a Municipal Light &Power ("ML&P”)and the City of Seward d/b/a Seward Electric System ("Seward”)(each a "Power Purchaser,”and collectively the "Power Purchasers”)under the Agreement-for the Sale and Purchase of Electric Power,dated and entered into on December 8,1987 by and among the Power Purchasers and the Alaska Energy Authority (the "Authority”)and U.S.Bank National Association (the "Dissemination Agent”)in connection with the issuance of $aggregate principal amount of the Authority's Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project)(the "Bonds”).The Bonds are being issued pursuant to the Power Revenue Bond Resolution adopted by the Authority on September 7,1989,and a Fifth Supplemental Resolution adopted by the Authority on June 8,2010 (together,the "Bond Resolution”).U.S.Bank National Association has been appointed to serve as trustee for the Bonds (the "Trustee”)under the Bond Resolution.Pursuant to Section 302(B)of the Fifth Supplemental Resolution the Power Purchasers,the Trustee and the Dissemination Agent covenant and agree as follows: SECTION 1.Purpose of the Agreement.This Agreement is being executed and delivered by the Power Purchasers,the Trustee and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C.Rule 15c2-12(b)(5). SECTION 2.Definitions.In addition to the definitions set forth in the Bond Resolution,which apply to any capitalized term used in this Agreement unless otherwise defined in this Section,the following capitalized terms shall have the following meanings: "Annual Report"shall mean any Annual Report provided by a Power Purchaser pursuant to,and as described in,Sections 3 and 4 of this Agreement. "Audited Financial Statements”shall mean,with respect to a Power Purchaser,the audited financial statements for the most recent fiscal year,prepared (except as otherwise noted herein)in accordance with generally accepted accounting principles (or such other accounting principles as may be applicable in the future pursuant to applicable law or accounting standards board). "Beneficial Owner”shall mean any person which (a)has the power,directly or indirectly,to vote or consent with respect to,or to dispose of ownership of,any Bonds (including persons holding Bonds through nominees,depositories or other intermediaries),or (b)is treated as the owner of any Bonds for federal income tax purposes. "Disclosure Representative”shall mean the Chair of the Project Management Committee,or his or her designee,or such other person as the Project Management Committee designates in writing to the Trustee,the Authority and the Dissemination Agent from time to time. "Dissemination Agent”shall mean U.S.Bank National Association,acting in its capacity as Dissemination Agent hereunder,or any successor Dissemination Agent designated in writing by the Power Purchasers and which has filed with the Trustee a written acceptance of such designation. "Fiscal Year"shall mean any twelve-month period ending on June 30 or on such other date as a Power Purchasers may designate from time to time. "Holders”shall mean the registered holders of the Bonds,as recorded in the registration books of the Trustee. D-2-1 "Listed Events"shall mean any of the events listed in Section 5 of this Agreement. "MSRB”shall mean the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934,or any successor thereto or to the functions of the MSRB contemplated by this Agreement. "Official Statement"shall mean the Authority's final Official Statement with respect to the Bonds,dated ,2010. "Participating Underwriter”shall mean Merrill Lynch,Pierce,Fenner &Smith Incorporated. "Power Purchaser”shall mean each Purchaser or Additional Party under the Power Sales Agreement that has purchased 10%or more of the capacity (and associated energy)of the Project or is otherwise deemed to be an "obligated person”for purposes of the Rule (collectively,the "Power Purchasers”). "Power Sales Agreement”shall mean the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power dated as of December 8,1987,by and among the Authority as Seller,Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage d/b/a Municipal Light & Power,the City of Seward d/b/a Seward Electric System,and the Alaska Electric Generation &Transmission Cooperative,Inc.,as Purchasers,and Homer Electric Association,Inc.and Matanuska Electric Association,Inc.as Additional Parties. "Project”shall have the meaning assigned to such term in the Bond Resolution. "Project Management Committee”shall mean the Project Management Committee established under the Power Sales Agreement. "Rule"shall mean Rule 15c2-12(b)(5)adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934,as the same may be amended from time to time. "State”shall mean the State of Alaska. "Trustee”shall mean U.S.Bank National Association. SECTION 3.Provision of Annual Reports. (a)Each Power Purchaser shall,or,by written direction,shall cause the Dissemination Agent to, provide to the MSRB,not later than 15 days before September 30 of each year (the "Submission Date”), commencing September 30,2010,each Power Purchaser's Annual Report for the preceding Fiscal Year which is consistent with the requirements of Section 4 of this Agreement.The Annual Report may be submitted as a single document or as separate documents comprising a package,and may cross-reference other information as provided in Section 4 of this Agreement;provided that the Audited Financial Statements of each Power Purchaser may be submitted separately from the balance of the Annual Report and later than the date required for the filing of the Annual Report if not available by that date. (b)If not provided as part of the Annual Report provided under subsection (a),the Disclosure Representative shall,or by written direction,shail cause the Dissemination Agent to,provide to the MSRB the Audited Financial Statements of the Power Purchaser when available. (c)If by 15 days prior to the Submission Date,the Dissemination Agent has not received a copy of the Annual Report of a Power Purchaser,the Dissemination Agent shall contact the Disclosure Representative,and the Trustee (if the Trustee is not the Dissemination Agent)to determine if the Power Purchaser is in compliance with subsection (a). D-2-2 (d)If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the Submission Date,the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A. (e)The Dissemination Agent shall file a report with the Disclosure Representative certifying that the Annual Report has been provided pursuant to this Agreement,stating the date it was provided. SECTION 4.Content of Annual Reports.The Annual Report of each Power Purchaser shall contain or include by reference the following:: (a)Audited Financial Statements of the Power Purchaser or,if the Audited Financial Statements of a Power Purchaser are not available on the Submission Date,the unaudited financial statements for the most recent Fiscal Year in a format similar to the Audited Financial Statements most recently prepared for that Power Purchaser; and (b).Financial information and operating data regarding the Project and the Power Purchaser of the type contained in the final Official Statement under the caption "THE POWER PURCHASERS?”in the following tables: (i)Selected Statistics for Calendar Year 2009; (ii)Power Purchasers'Power Requirements; (iii)Energy Loads and Resources;and (iv)Historical Operating Results. SECTION 5.Reporting of Significant Events. (a)This Section 5 shall govern the giving of notices of the occurrence of any of the following events: (1)Principal and interest payment delinquencies; (2)Non-payment related defaults under the Bond Resolution; (3)Unscheduled draws on debt service reserves reflecting financial difficulties; (4)Unscheduled draws on credit enhancements reflecting financial difficulties; (5)Substitution of credit or liquidity providers,or their failure to perform; (6)Adverse tax opinions or events affecting the tax-exempt status of the Bonds; (7)Modifications to rights of Bondholders; (8)Unscheduled Bond calls; (9)Defeasance of the Bonds; (10)Release,substitution or sale of property securing repayment of the Bonds;and (11)Rating changes for the Bonds. (b)Whenever the Power Purchasers obtain knowledge of the occurrence of a Listed Event that is material,the Power Purchasers shall promptly notify the Dissemination Agent in writing.Such notice shall instruct the Dissemination Agent to file a notice of such occurrence with the MSRB.Each notice of a Listed Event D-2-3 hereunder shall indicate that it is a notice of a Listed Event.Notwithstanding the foregoing,notice of Listed Events described in subsections (8)and (9)need not be given under this Section any earlier than the notice (if any)of the underlying event is given to the owners of affected Bonds pursuant to the Bond Resolution. SECTION 6.Termination of Reporting Obligation.The Power Purchasers'obligations under this Agreement shall terminate upon the legal defeasance,prior redemption or payment in full of all of the Bonds.If such termination occurs prior to the final maturity of the bonds,the Power Purchasers shall give notice of such termination in the same manner as for a Listed Event under Section 5 above. SECTION 7.Dissemination Agent.The Power Purchasers may from time to time designate an agent to act on its behalf in providing or filing notices,documents and information as required of the Power Purchasers under this Agreement,and revoke or modify any such designation.The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Power Purchasers pursuant to this Agreement. SECTION 8.Amendment;Waiver.Notwithstanding any other provision of this Agreement,the Power Purchasers may amend this Agreement ,and any provision of this Agreement may be waived,if the following conditions are met: (a)The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal (including regulatory)requirements,a change in law (including rules or regulations)or in interpretations thereof or a change in the identity,nature or status of the Power Purchasers or the type of business conducted thereby; (b)The Agreement,as amended or taking into account such waiver would,in the opinion of nationally recognized bond counsel,have complied with the requirements of the Rule at the time of the issuance of the Bonds,after taking into account any amendments or interpretations of the Rule,as well as any change in circumstances;and (c)The amendment or waiver either (i)is approved by the Holders of the Bonds in the same manner as provided in the Bond Resolution for amendments to the Resolution with the consent of Holders,or (ii)does not, in the opinion of nationally recognized bond counsel,materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Agreement,each Power Purchaser shall describe such amendment in its next Annual Report,and shall include,as applicable,a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation)of financial information or operating data being presented by the Power Purchaser.In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements,(i)notice of such change shall be given in the same manner as for a Listed Event under Section 5,and (ii)the Annual Report for the year in which the change is made should present a comparison (in narrative form and also,if feasible,in quantitative form)between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 9.Transmission of Information and Notices.Unless otherwise required by law all notices, documents and information provided to the MSRB shall be provided in an electronic format as prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. SECTION 10.Default,In the event of a failure of the Power Purchaser to comply with any provision of this Agreement any Holder of Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate,including seeking mandate or specific performance by court order,to cause the Power Purchaser to comply with its obligations under this Agreement.A default under this Agreement shall not be deemed an Event of Default under the Bond Resolution,and the sole remedy under this Agreement in the event of any failure of the Power Purchaser to comply with this Agreement shall be an action to compel performance. SECTION 11.Governing Law.This Agreement shall be construed and interpreted in accordance with the laws of the State of Alaska,and any suits and actions arising out of this Agreement shall be instituted in a court of D-2-4 competent jurisdiction in the State,provided that,to the extent this Agreement addresses matters of federal securities laws,including the Rule,this Agreement shall be construed in accordance with such federal securities laws and official interpretations thereof. SECTION 12.Beneficiaries.This Agreement shall inure solely to the benefit of the Power Purchasers,the Dissemination Agent,the Participating Underwriter and Holders and Beneficial Owners from time to time of theBonds,and shall create no rightsin any other person or entity. Date:July __,2010. CHUGACH ELECTRIC ASSOCIATION,INC. By. Name: Title: MUNICIPALITY OF ANCHORAGE dba MUNICIPAL LIGHT &POWER By Name: Title: ALASKA ELECTRIC GENERATION & TRANSMISSION COOPERATIVE,INC. (acting on behalf of Matanuska Electric Association,Inc.) By Name: Title: ALASKA ELECTRIC AND ENERGY COOPERATIVE,INC. (acting on behalf of Homer Electric Association,Inc.) By Name: Title: D-2-5 GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. By Name: Title: CITY OF SEWARD dba SEWARD ELECTRIC SYSTEM By Name: Title: U.S.BANK NATIONAL ASSOCIATION, as Dissemination Agent and Trustee By Authorized Officer D-2-6 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer:Alaska Energy Authority Name of Bond Issue:$_-Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Date of Issuance:July___,2010 NOTICE IS HEREBY GIVEN that »a Power Purchaser,has not provided an Annual Report with respect to the above-named Bonds as required by the agreement of said Power Purchaser. Dated: Power Purchaser By D-2-7 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer:Alaska Energy Authority Name of Bond Issue:$Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Date of Issuance:July__,2010 NOTICE IS HEREBY GIVEN that ,a Power Purchaser,has not provided an Annual Report with respect to the above-named Bonds as required by the agreement of said Power Purchaser. Dated: Power Purchaser By D-2-8 APPENDIX E BOOK-ENTRY SYSTEM DRAFT:5/27/2010 ALASKA ENERGY AUTHORITY $ POWER REVENUE REFUNDING BONDS,SIXTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT) BOND PURCHASE AGREEMENT ,2010 ALASKA ENERGY AUTHORITY 813 West Northern Lights Boulevard Anchorage,Alaska 99503-6690 Ladies and Gentlemen: The undersigned,Merrill Lynch,Pierce,Fenner &Smith Incorporated (the "Underwriter”), offers to enter into this Bond Purchase Agreement (the "Purchase Agreement”)with the Alaska Energy Authority (the "Authority”)which,upon acceptance by the Authority on or before 6 p.m., Alaska Time,on the date hereof and upon receipt of the documents and letters referred to in Paragraph 3 hereof,will be binding upon the Authority and upon the Underwriter.If such documents are not received,or if this Purchase Agreement is not so accepted,this Purchase Agreement will be subject to withdrawal by the Underwriter upon notice delivered to the Authority at any time prior to such receipt and acceptance.Upon the Authority's acceptance of this offer,the Purchasers,though not parties to this Purchase Agreement,shall,pursuant to the Power Sales Agreement and an Approving Resolution adopted by the Committee (also referred to herein as the "Project Management Committee”)on June 3,2010 (the "Project Management Committee Approval”),be bound by the payment obligations incurred hereunder by the Authority. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Bond Resolution (defined below). 1.Purchase,Sale and Delivery of the Bonds.Subject to the terms and conditions and in reliance upon the representations,warranties,covenants and agreements herein set forth,the Underwriters hereby agree to purchase from the Authority for offering to the public,and the Authority hereby agrees to sell to the Underwriters for such purpose,all (but not less than all)of $aggregate principal amount of Alaska Energy Authority Power Revenue Refunding Bonds,Sixth Series (the "Bonds”).The Bonds shall be dated the date of delivery and shall mature on the dates and in the principal amounts,shall bear interest at the rates per annum and shall be subject to redemption prior to maturity as set forth in Exhibit A hereto.The aggregate purchase price for the Bonds shall be $(representing the aggregate principal amount of the Bonds [plus a net premium of $,less Underwriters'discount of $)}. F:\506358\5\00121810.DOC 2.The Bonds.(a)The Bonds shall be substantially in the form described in,shall be issued and secured under the provisions of,and shall be payable as provided in the Power Revenue Bond Resolution (the "General Resolution”),adopted on September 7,1989,and the Fifth Supplemental Resolution (Resolution No.2010-02,the "Supplemental Resolution”)of the Authority adopted on June 8,2010,authoring the issuance of the Bonds,the refunding of the Prior Bonds (as defined later herein)and related matters (which Supplemental Resolution and the General Resolution are referred to collectively as the "Bond Resolution”).The Bonds are authorized to be issued pursuant to Chapter 83,Title 44 of the Alaska Statutes,as amended (the "Act”)and the Bond Resolution. (b)U.S.Bank National Association (the "Trustee”)shall be the trustee for the Bonds pursuant to the Bond Resolution. (c)The proceeds of the Bonds will be used to provide for the current refunding of $30,640,000 of the Authority's outstanding Power Revenue Bonds,Fifth Series (Bradley lake Hydroelectric Project)(the "Prior Bonds”),and to pay costs of issuing the Bonds. 3,Official Statement.Upon the Authority's acceptance of this offer,the Authority shall be deemed to have ratified and approved the Preliminary Official Statement of the Authority with respect to the Bonds,dated ,2010,as amended and supplemented (together with any Appendices thereto,any documents incorporated therein by reference and any supplements or amendments thereto,as have been approved by the Underwriter,prior to the date hereof,the "Preliminary Official Statement”)and the use by the Underwriter of the Preliminary Official Statement,in connection with the public offering and sale of the Bonds by the Underwriter prior to the availability of the Official Statement.The Authority shall,with the cooperation and assistance of the Committee and the Purchasers,provide the Underwriter,within seven business days from the date hereof,but in any event prior to the closing,with a reasonable number of copies of the Official Statement in the form of the Preliminary Official Statement with such changes thereto as have been approved by the Underwriter,as requested by the Underwriter,for distribution.The Authority hereby authorizes and approves the distribution by the Underwriter of the Official Statement in connection with the public offering and sale of the Bonds.The Official Statement, including the Appendices thereto,and any supplements or amendments thereto,as have been approved by the Underwriter,on or prior to the Closing,is referred to as the "Official Statement.” The Preliminary Official Statement and/or the Official Statement may be delivered in printed and/or electronic form to the extent permitted by applicable rules of the Municipal Securities Rulemaking Board (the "MSRB”)and as may be agreed by the Authority and the Underwriter.To the extent required by applicable MSRB rules,the Authority hereby confirms that it does not object to distribution of the Official Statement in electronic form. 4,Offering.It shall be a condition to the Authority's obligations to sell and to deliver the Bonds to the Underwriter and to the Underwriter's obligations to purchase,to accept delivery of and to pay for the Bonds that the entire aggregate principal amount of the Bonds referred to in Paragraph 1 hereof shall be issued,sold and delivered by the Authority and purchased,accepted and paid for by the Underwriter at the Closing (as,defined in Paragraph 6 hereof).The Underwriter agrees to make a bona fide public offering of all of the Bonds at prices not in excess of the offering prices set forth on the inside cover of the Official Statement.The Underwriter may offer and sell the Bonds to certain dealers,unit investment trusts and money market funds at prices 2 F:\506358\5\00121810.D0C ; lower than and at yields higher than such public offering prices or yields and the Underwriter may effect transactions that stabilize or maintain the market price of the Bonds. 5.Authority of Underwriter.The Underwriter represents to the Authority that: (a)the Underwriter is duly organized and validly existing under the laws of the jurisdiction of their organization and,if relevant under such laws,in good standing; (b)the Underwriter has the power and the authority to bind itself to this Purchase Agreement,and the person executing this Purchase Agreement on behalf of the Underwriter is authorized to do so;and (c)this Purchase Agreement constitutes a valid and binding agreement of the Underwriter,enforceable in accordance with its terms,except as enforcement may be limited by bankruptcy,insolvency,reorganization or similar laws limiting creditors'rights generally. 6.Closing.Subject to the terms and conditions of this Purchase Agreement,at 11:00 a.m.,Eastern Time,on ,2010,or at such earlier or later time or date as shall be agreed upon by the Underwriter and the Authority (such time and date being herein referred to as the "Closing Date”),the Authority will deliver for the Bonds of each maturity a single typewritten bond in definitive form satisfactory for acceptance by The Depository Trust Company ("DTC”), duly executed by the Authority,to the Underwriter at the offices of DTC in New York,New York, or by FAST closing procedures at such other location as is mutually agreeable to the Authority and the Underwriter,in the aggregate principal amount of $for the Bonds.Subject to the terms and conditions hereof,the Authority will deliver at the offices designated by the Underwriter in Seattle,Washington,or at such other location as is agreeable to the Authority and the Underwriter,the other documents and instruments to be delivered on the Closing Date pursuant to this Purchase Agreement (the "Closing Documents”),and the Underwriter will accept delivery of the Bonds and the Closing Documents and pay the purchase price for the Bonds as set forth in Paragraph 1 hereof in United States Federal Reserve Funds for unconditional credit to the Authority,or as otherwise directed by the Authority (such delivery and payment being herein referred to as the "Closing”).The Closing Documents shall be made available for inspection by the Underwriter and Birch Horton Bittner &Cherot ("Underwriter's Counsel”)at least one full business day before the Closing Date.The Bonds shall be in registered form,registered in the name of Cede &Co.,the nominee of DTC.The Underwriter shall be responsible for (i)applying for CUSIP numbers and notifying the Trustee of such CUSIP numbers at least five days prior to the Closing Date and (ii)qualifying the Bonds for acceptance by DTC.The Authority shall be responsible for causing such CUSIP numbers to be printed on the Bonds. 7.Authority Representations.The Authority represents and warrants to and agrees with the Underwriter that: (a)The Authority is duly organized and existing under the Constitution and laws of the State of Alaska (the "State”'),and is a public corporation of the State and a body corporate and politic constituting a political subdivision of the State within the Department of Commerce,Community and Economic Development,but with separate and independent legal existence. F:\506358\5\00121810.D0C (b)The Authority has entered into a Continuing Disclosure Agreement,or will enter,in accordance with Rule 15c2-12,into a written agreement or contract to be dated as of the Closing Date (the "Authority's Continuing Disclosure Agreement”)for the benefit of bondholders, to provide to the MSRB,(a)certain annual financial information,including audited financial statements and operating data,generally consistent with the information contained or incorporated by reference in the Official Statement,(b)timely notice of any of the eleven events identified in Rule 15c2-12 with respect to the securities being offered in the offering,if material,and (c)timely notice of any failure of any obligated person to provide the required annual information on or before the date specified in the written agreement.A description of this undertaking and the form of the Authority's Continuing Disclosure Agreement is set forth in the Preliminary Official Statement and will be set forth in the Official Statement. (c)The Authority has not failed during the previous five years to comply in all material respects with any previous undertakings in a written continuing disclosure contract or agreement under Rule 15c2-12.The Purchasers previously were not fully in compliance with regard to their continuing disclosure obligation filings relating to the Authority's $59,485,000 principal amount of Power Revenue Refunding Bonds,Third Series (Bradley Lake Hydroelectric Project),the Authority's $47,710,000 principal amount of Power Revenue Refunding Bonds, Fourth Series (Bradley Lake Hydroelectric Project),and the Fifth Series Bonds.They had properly and timely filed their annual reports but omitted updates to certain operating data regarding the Project and the Purchasers contained in the Official Statement for that offering. However,recently the Purchasers have provided a filing which brings current all of the omitted information. (d)The Authority has the full legal right,power and authority (i)to adopt the Supplemental Resolution,(ii)to enter into this Purchase Agreement and the Authority's Continuing Disclosure Agreement,(iii)to issue,sell and deliver the Bonds to the Underwriters as provided herein,(iv)to apply the proceeds of the Bonds to provide for the current refunding of the Authority's Prior Bonds and to pay costs of issuing the Bonds and (v)to take any and all action as may be required on its part to carry out,give effect to,and consummate the transactions contemplated by the Bond Resolution,the Bonds,this Purchase Agreement and the Official Statement,and to carry out and consummate all other transactions contemplated by each of the aforesaid documents,and the Authority has complied with all provisions of applicable law, including the Act,in all matters relating to such transactions. (e)The Authority has duly (i)authorized and approved the execution,delivery and due performance by the Authority of the Bonds,this Purchase Agreement,and the Authority's Continuing Disclosure Agreement,(ii)authorized and approved the Preliminary Official Statement and authorized preparation,execution,delivery and distribution of the Official Statement and the use thereof by the Underwriters in connection with the sale of the Bonds,and (iii)authorized and approved the taking of any and all such action as may be required on the part of the Authority to carry out,give effect to and consummate the transactions contemplated by the Bond Resolution,the Bonds,the Authority's Continuing Disclosure Agreement and this Purchase Agreement.All consents or approvals necessary to be obtained by the Authority in connection with the foregoing (other than consents or approvals that may be required under any state securities or "blue sky”laws,as to which no representation is made)have been received,and the consents or approvals so received are in full force and effect. 4 F:\506358\5\00121810.DOC (f)The Bond Resolution has been duly adopted by the Authority and is in full force and effect and has not been amended,modified or rescinded except as agreed to in writing by the Underwriters;and this Purchase Agreement and all documents to which the Authority is a party,when executed and delivered,will constitute legal,valid and binding obligations of the Authority,enforceable against the Authority in accordance with their terms,except as enforceability thereof may be limited by bankruptcy,insolvency or other laws affecting creditors' rights generally and by the effect of general principles of equity,whether applied by a court of law or equity. (g)The Bonds,the Authority's Continuing Disclosure Agreement and the Bond Resolution conform to the descriptions thereof contained in the Official Statement;the Bond Resolution constitutes a legal,valid and binding obligation of the Authority,enforceable against the Authority in accordance with its terms,except as enforceability thereof may be limited by bankruptcy,insolvency or other laws affecting creditors'rights generally;and the Bonds,when delivered to the Underwriters will have been duly authorized,executed,authenticated,issued and delivered and will constitute legal,valid and binding general obligations of the Authority in conformity with the Constitution and laws of the State,including the Act,and will be entitled to the benefit and security of the Bond Resolution as described in the Official Statement. (h)The Preliminary Official Statement is,and as of the Closing Date will be, true,correct and complete in all material respect and does not,and will not as of the Closing Date, except for the materials permitted under the Rule to be excluded,contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein,in light of the circumstances under which they were made,not misleading (except that the Authority shall not be required to make any representation or warranty with respect to statements under the captions "The Power Purchasers,”"Restructuring of the Electric Utility Industry in Alaska,”"Book-Entry Transfer System,”and "Pending Disputes,”other than the information under the section "Healy Project Power Sales Agreement Litigation,or in Appendix E). (i)The Official Statement is,and as of the Closing Date will be,true,correct and complete in all material respects and does not,and will not as of the Closing Date,contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein,in light of the circumstances under which they were made,not misleading (except that the Authority shall not be required to make any representation or warranty with respect to statements under the captions "The Power Purchasers,”"Restructuring of the Electric Utility Industry in Alaska,”"Book-Entry Transfer System,”and "Pending Disputes,”other than the information under the section "Healy Project Power Sales Agreement Litigation,or in Appendix E). (j)If,between the date of this Purchase Agreement and the earlier of (a)90 days following the "end of the underwriting period”or (b)the time when the Official Statement is available to any person from a nationally recognized municipal securities repository,but in no case less than 25 days following the end of the underwriting period (i)any event shall occur or any pre-existing fact or condition shall become known that might or would cause the Official Statement,as then supplemented or amended,to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein,in light of the F:\506358\5\00121810.DO0C circumstances under which they were made,not misleading (except that the Authority shall not be required to make any representation or warranty with respect to statements under the captions "The Power Purchasers,”"Restructuring of the Electric Utility Industry in Alaska,”"Book-Entry Transfer System,”and "Pending Disputes,”other than the information under the section "Healy Project Power Sales Agreement Litigation,or in Appendix E),the Authority shall promptly notify the Underwriter and (ii)in the reasonable opinion of the Underwriter,such event,fact or condition requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority at its expense,will supplement or amend the Official Statement in a form and in a manner approved by the Underwriter;provided,however,that if such event shall occur on or prior to the date of Closing,the Underwriters in their sole discretion shall have the right to terminate its obligations hereunder by written notice to the Authority and thereafter the Underwriters will be under no obligation to pay for and to purchase the Bonds.Any information supplied by the Authority for inclusion in any amendments or supplements to the Official Statement will not contain any untrue or misleading statement of a material fact or omit to state a material fact necessary to make the statements therein,in light of the circumstances under which they were made,not misleading.The Authority may assume that the end of the underwriting period has occurred upon the later of the Closing or the sale of the last of the Bonds by the Underwriters. (k)|The Authority represents to the Underwriter that pursuant to the Rule it has "deemed final”the Preliminary Official Statement as of its date except for the omission of information dependent upon the pricing of the Bonds and the completion of this Purchase Agreement,such as offering prices,interest rates,selling compensation,aggregate principal amount,principal amount per maturity,ratings,delivery dates,and other terms of the Bonds dependent on the foregoing matters and that it is in compliance with Section (b)(5)of the Rule concerning its undertaking to provide ongoing disclosure as to the Bonds. (I)Neither the adoption of the Bond Resolution,the execution and delivery of this Purchase Agreement,the Authority's Continuing Disclosure Agreement and the Bonds,the consummation of the transactions contemplated herein or therein,nor the compliance with the provisions hereof and thereof will conflict with any provision of the State Constitution or the Act, or constitute on the part of the Authority a violation of,or a breach of or default under,any statute, administrative regulation,rule,resolution,ordinance,judgment,order,decree,indenture, mortgage,commitment,note or other agreement or instrument to which the Authority is a party or by which it is bound or to which the Authority (or any of its officers in their respective capacities as such)or any of its assets is subject.The adoption of the Supplemental Resolution and the execution and delivery of this Purchase Agreement,the Authority's Continuing Disclosure Agreement and the Bonds and the observance and performance of the provisions thereof will not result in the creation or imposition of any lien,charge or other security interest or encumbrance of any nature whatsoever by the Authority upon any of its properties,except as provided by the Bonds and the Bond Resolution. (m)The Authority has never been in default at any time as to the payment of the principal of or the interest on any obligations issued by the Authority and is not in material breach of or default under the Federal Energy Regulatory Commission license to operate the Project,any applicable constitutional provision,law or administrative regulation of the State or the United States of America (the "United States”)or any applicable judgment or decree or any loan agreement,indenture,bond,note,ordinance,resolution,agreement or other instrument to which 6 F:\506358\5\00121810.DO0C the Authority is a party or to which the Authority or any of its property or assets is otherwise subject,the effect or result of which breach or default could have a material adverse effect on the operations or financial position of the Project or the Authority taken as a whole,and no event has occurred and is continuing which with the passage of time or the giving of notice,or both,would constitute a material default or event of default under any such instrument with such effect or result. (n)The Authority is not in material breach of or material default under the Power Sales Agreement or the General Resolution or any resolution supplemental thereto and no event has occurred and is continuing which,with the passage of time,the giving of notice or both, would constitute a default or any event of default by the Authority under the Power Sales Agreement or the General Resolution or any resolution supplemental thereto;and,to the best of the Authority's knowledge,no material default or event of default has occurred,and no event has occurred and is continuing which,with the passage of time,the giving of notice or both,would constitute a material default or an event of default under the Power Sales Agreement by any of the other parties thereto. (0)The Sixth Series Bonds,when issued,authenticated and delivered in accordance with the Bond Resolution and as provided herein,are validly issued and outstanding general obligations of the Authority,entitled to the benefits of the Bond Resolution,and upon such issuance,authentication and delivery the Bond Resolution will provide,for the benefit of the holders from time to time of the Sixth Series Bonds,a legally valid and binding pledge of and lien on the Revenues and the funds and accounts pledged under the Bond Resolution,including the Capital Reserve Fund,on a parity with any outstanding Power Revenue Bonds subject only to the provisions of the General Resolution permitting the application thereof on the terms and conditions set forth in the General Resolution. (p)|Except as disclosed in the Preliminary Official Statement or the Official Statement,or otherwise in writing to the Underwriter,no action,suit,proceeding,inquiry or investigation,at law or in equity,before or by any court,government agency,public board or body,has been served on the Authority nor,to the knowledge of the Authority,is any such action, suit,proceeding,inquiry or investigation threatened against the Authority (i)in any way questioning the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices;(ii)in any way contesting,affecting or seeking to prohibit,restrain or enjoin the issuance or delivery by the Authority of any of the Bonds;(iii)in any way contesting or affecting the validity of the Bonds,the Bond Resolution or this Purchase Agreement or the tax-exempt status of the interest on the Bonds,or contesting the powers of the Authority or any authority of the Authority for the issuance of the Bonds,or the adoption of the Supplemental Resolution or the execution and delivery by the Authority of this Purchase Agreement;(iv)in any way contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contains or contained any untrue statement of a material fact or omits or omitted to state any material fact necessary to make the statements therein,in light of the circumstances under which they were made,not misleading;(v)which could reasonably be expected to result in any material adverse change relating to the financial condition of the Authority or its ability to pay the Bonds;or (vi)in any way contesting,affecting or seeking to prohibit,restrain or enjoin the application of the proceeds of the sale of the Bonds. 7 F:\506358\5\00121810.D0C (q)The Authority has complied with the Act in all material respects,and the Authority has complied with and is not in material violation of any applicable constitutional provision,material law or administrative regulation of the State or the United States or any agency or instrumentality of either or any applicable judgment or decree and has complied with and is not in breach of or in default under the Bond Resolution or this Purchase Agreement and has complied with and is not in material breach of or in material default under any loan agreement,note,bond, resolution,indenture,agreement or other instrument to which the Authority is,or on the date of the Closing will be,a party or to which the Authority or any of its properties or assets is otherwise subject and,to the Authority's actual knowledge,no event has occurred and is continuing that, with the passage of time or the giving of notice,or both,would constitute a material breach of or material default or event of default under any such agreement or instrument. (r)The audited June 30,2009 and June 20,2008 financial statements of the Authority (with Independent Auditors'Report thereon),contained in the Official Statement, including the financial information with respect to the Project,present fairly the financial position of the Authority as of the dates indicated and the results of the Authority's operations for the periods specified,and such financial statements have been prepared in conformity with generally accepted accounting principles consistently applied in all material respects to the periods involved, except as otherwise stated in the notes thereto.There has been no material change in the general affairs,management,properties,financial position,capitalization or results of operation of the Authority since the date of such financial statements except as set forth in the Official Statement. (s)Any certificate signed by any official of the Authority and delivered to the Underwriter shall be deemed a representation and warranty by the Authority to the Underwriter as to the truth of the statements therein contained. (t)The Authority has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. (u)The Authority has not taken or omitted to take and will not knowingly take or omit to take any action which action or omission will in any way cause the proceeds from the sale of the Bonds to be applied in a manner other than as provided in the Bond Resolution or which would cause the interest on the Bonds to be includable in gross income for federal income tax purposes. 8.Covenants of Authority.The Authority covenants with the Underwriter as follows: (a)The Authority will cooperate with the Underwriter in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as the Underwriter may request;provided,however,that the Authority shall not be required to consent to suit or to service of process in any jurisdiction.The Authority consents to the use by the Underwriter in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions of the documents relating to the Bonds,subject to the right of the Authority to withdraw such consent for cause by written notice to the Underwriter. F:\506358\5\00121810.D0C (b)Prior to the earlier of (i)receipt of notice from the Underwriter that Official Statements are no longer required under the Rule or (ii)25 days after the end of the underwriting period,the Authority shall provide the Underwriter with such information regarding the Authority, its current financial condition and ongoing operations as the Underwriter may reasonably request. 9.Termination Options.(a)The obligation of the Underwriter to accept delivery of and to pay for the Bonds on the Closing Date shall be subject,at the option of the Underwriter,to the accuracy in all material respects of the representations and warranties on the part of the Authority contained herein as of the date hereof and as of the Closing Date,to the accuracy in all material respects of the statements of the officers and other officials of the Authority made in any certificates or other documents furnished pursuant to the provisions hereof,to the performance by the Authority of its obligations to be performed hereunder at or prior to the Closing Date and in addition to the conditions set forth in paragraph 10 of this Purchase Agreement,to the following conditions: (1)At the Closing Date,the Bond Resolution shall have been duly adopted,shall be in full force and effect and shall not have been amended,modified or supplemented,except as may have been agreed to in writing by the Underwriter,and there shall have been taken in connection therewith,with the issuance of the Bonds and with the transactions contemplated thereby and by this Purchase Agreement,all such actions as,in the opinion of K&L Gates LLP,bond counsel for the Authority ("Bond Counsel”),shall be necessary and appropriate; and (2)At the Closing Date,the Official Statement shall not have been amended,modified or supplemented,except as may have been agreed to in writing by the Underwriter. (b)Between the date hereof and the Closing Date,the Underwriter may terminate its obligations under this Purchase Agreement,without any liability therefor,by notification to the Authority,if: (1)a tentative decision with respect to legislation shall be reached by a committee of the House of Representatives or the Senate of the Congress of the United States,or legislation shall be favorably reported or introduced by such a committee or be introduced,by amendment or otherwise,in or be passed by the House of Representatives or the Senate,or recommended to the Congress of the United States for passage by the President of the United States,or be enacted or a decision by a federal court of the United States or the United States Tax Court shall be rendered,or a ruling,release,order,regulation or official statement by or on behalf of the United States Treasury Department,the Internal Revenue Service or other governmental agency or an official statement by or on behalf of the Joint Committee on Taxation of the Congress,shall be made or proposed to be made having the purpose or effect,or any other action or event shall occur which has the purpose or effect,directly or indirectly,of adversely affecting the federal income tax consequences of owning the Bonds or of any of the transactions contemplated in connection herewith,including causing interest on the Bonds to be included in gross income for purposes of federal income taxation,or imposing federal income taxation upon revenues or other income of the general character to be derived by the Authority or by any similar body or similar documents or upon interest received on obligations of the general character of the F:\506358\5\00121810.D0C Bonds,or the Bonds,which,in the opinion of the Underwriter,materially adversely affects the market price of or market for the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;or (2)legislation shall be enacted,or actively considered for enactment with an effective date prior to the Closing Date,or a decision by a court of the United States shall be rendered,the effect of which is that the Bonds,or the Bond Resolution,as the case may be,are not exempt from the registration,qualification or other requirements of the Securities Act of 1933, as amended and as then in effect,the Securities Exchange Act of 1934,as amended and as then in effect,or the Trust Indenture Act of 1939,as amended and as then in effect;or (3)-_astop order,ruling,regulation or official statement by the Securities and Exchange Commission (the "Commission”)or any other governmental agency having jurisdiction of the subject matter shall be issued or made or any other event shall occur,the effect of which is that the issuance,offering or sale of the Bonds,or the adoption of the Bond Resolution as contemplated hereby or by the Official Statement,is or would be in violation of any provision of the federal securities laws,including the Securities Act of 1933,as amended and as then in effect,the Securities Exchange Act of 1934,as amended and as then in effect,or the Trust Indenture Act of 1939,as amended and as then in effect;or any proceeding shall be pending or threatened by the Commission against the Authority which in the reasonable judgment of the Underwriter,would materially adversely affect the market for or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;or (4)any event shall occur or any information shall become known to the Underwriter after the date hereof which causes the Underwriter to reasonably believe that the Official Statement on the date hereof includes any untrue statement of a material fact,or omits to state a material fact necessary to make the statements therein,in light of the circumstances under which they were made,not misleading;or (5)there shall occur or escalate any outbreak of hostilities (including, but not limited to,a declaration of war or a de facto state of war by virtue of an actual and sustained combat engagement involving United States Armed Forces)or any national or international emergency,calamity or crisis,including a financial crisis or an actual or imminent default or moratorium in respect of payment of any United States Treasury bills,bonds or notes, the effect of any of which on the financial markets of the United States,in the reasonable judgment of the Underwriter,would materially adversely affect the market for or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;or (6)_there shall be in force a general suspension of trading,minimum or maximum prices for trading shall have been fixed and be in force or maximum ranges or prices for securities shall have been required and be in force on the New York Stock Exchange or other national securities exchange which,in the reasonable judgment of the Underwriter,would materially adversely affect the market for or the market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;or (7)a general banking moratorium shall be declared by federal,New York or State authorities or there shall occur a major financial crisis or material disruption in 10 F\506358\5100121810.DOC commercial banking or securities settlement or clearance services which,in the reasonable judgment of the Underwriter,would make the marketing or sale of the Bonds generally impractical;or (8)additional material restrictions not in force as of the date hereof shall be imposed upon trading in securities generally by any governmental authority or by any national securities exchange which,in the reasonable judgment of the Underwriter,would materially adversely affect the market for or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;or (9)the New York Stock Exchange or other national securities exchange, or any governmental authority,shall impose,as to the Bonds or obligations of the general character of the Bonds,any material restrictions not now in force,or increase materially those now in force,with respect to the extension of credit by,or the charge to the net capital requirements of, the Underwriter;or (10)there shall exist any event or circumstance,including,without limitation,a material misstatement or omission in materials originally provided by the Authority, that in the Underwriter's reasonable judgment either makes untrue or incorrect in any material respect any statement or information in the Official Statement (other than any statement provided by the Underwriter)or is not reflected in the Official Statement but should be reflected therein in order to make any statements therein,in the light of the circumstances under which they were made,not misleading and,in either such event,the Authority refuses to permit the Official Statement to be supplemented to supply such statement or information,or the effect of the Official Statement as so supplemented is to materially adversely affect the market price or marketability of the Bonds or the ability of the Underwriter to enforce contract for the sale of the Bonds;or (11)any ratings of the Authority's Bonds,shall be downgraded, suspended or withdrawn,or a public announcement has been made that such a downgrade, suspension or withdrawal is being considered by Moody's or S&P,or any such rating is placed on a national credit agency's credit watch list with negative implications,and such action or announcement,in the reasonable judgment of the Underwriter,will materially adversely affect the marketability or the market price of the Bonds or ability of the Underwriter to enforce contracts for the sale of the Bonds;or (12)any legislation,ordinance,rule or regulation shall be introduced in or enacted by any governmental body,board,department or agency of the State or the United States,or a decision by any court of competent jurisdiction within the State or any court of the United States shall be rendered,affecting the Authority,which,in the reasonable judgment of the Underwriter,will materially adversely affect the marketability or the market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds. 11 F:\50635815\00121810.DOC 10.Conditions to Obligations of the Underwriter.The obligation of the Underwriter to purchase the Bonds shall be subject to the performance by the Authority of its obligations to be performed hereunder at and prior to the Closing Date,to the accuracy of the representations and warranties of the Authority herein as of the date hereof and as of the Closing Date and to the following conditions,including the delivery by the Authority of such documents as are enumerated herein in form and substance satisfactory to the Underwriter and Underwriter's Counsel. (a)On the Closing Date,(i)the Bond Resolution shall be in full force and effect and shall not have been amended,modified or supplemented from the date hereof except as may have been agreed to in writing by the Underwriter,(ii)the Authority shall have duly adopted and there shall be in full force and effect such resolutions as,in the opinion of Bond Counsel,shall be necessary in connection with the transactions contemplated hereby,and (iii)the Authority shall perform or shall have performed all of the obligations required under or specified in this Purchase Agreement,the Bond Resolution and any other resolutions of the Authority to be performed by the Authority at or prior to the Closing Date. (b)At or prior to the Closing Date,the Underwriter shall receive the following documents,in each case in form,substance and number of counterparts reasonably satisfactory to the Underwriter and to Underwriter's Counsel: (1)a final approving opinion of Bond Counsel,dated the Closing Date, in substantially the forms set forth as Appendix B to the Official Statement; (2)a letter of Bond Counsel and addressed to the Underwriter and dated the Closing Date,to the effect that Bond Counsel's final approving opinion referred to above may be relied upon by the Underwriter to the same extent as if such opinion were addressed to the Underwriter; (3)an opinion of Bond Counsel,dated the Closing Date,and addressed to the Underwriter and to each Purchaser to the effect that (i)the Purchase Agreement has been duly authorized,executed and delivered by,and constitutes a legal valid and binding agreement of, the Authority enforceable against the Authority in accordance with its terms,except to the extent that enforcement may be limited by bankruptcy,insolvency or other laws affecting creditors' rights generally;(ii)assuming no change in applicable law from the law in effect on the date of such opinion,the Bonds are not subject to the registration requirements of the Securities Act of 1933,as amended,and the Bond Resolution is exempt from qualification pursuant to the Trust Indenture Act of 1939,as amended;(iii)the statements contained in the Official Statement under the captions "Introduction,”"Description of the Sixth Series Bonds,”"Security and Sources of Payment for the Sixth Series Bonds,”"Litigation,”and "Tax Matters”in,and in Appendix A to, the Official Statement,insofar as such statements contained under such captions purport to summarize certain provisions of the Bonds,the Bond Resolution,and the Power Sales Agreement, are accurate in all material respect and nothing has come to their attention which leads them to believe that such information contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein,in the light of the circumstances under which they were made not misleading;and (iv)the Authority's Continuing Disclosure Agreement is a valid,binding and enforceable obligation of the Authority; 12 F:\506358\5\00121810.DOC (4)a defeasance opinion of Bond Counsel,dated the Closing Date,as required by the Bond Resolution; (5)an opinion of counsel to the Authority,dated the Closing Date,and addressed to the Underwriter to the effect that the Power Sales Agreement constitutes a legal,valid and binding agreement of the Authority enforceable against the Authority in accordance with its terms,except to the extent that enforcement may be limited by bankruptcy,insolvency or other laws affecting creditors'rights generally; (6)an opinion of Underwriter's Counsel in substantially the form set -forth in Exhibit B hereto; (7)a certificate of the Trustee in form and substance satisfactory to Bond Counsel and Underwriter's Counsel; (8)the Official Statement and each supplement or amendment thereto, if any,executed on behalf of the Authority by the Executive Director; (9)certified copies of the Bond Resolution (with only such changes or amendments thereto as may have been agreed to in writing by the Underwriter)with a statement to the effect that such resolutions,and any additional resolutions of the Authority relating to the transactions contemplated hereby,have not been amended,modified,supplemented or repealed and are in full force and effect; (10)specimen Bonds; (11)|the Authority's Continuing Disclosure Agreement; (12)_the written agreement,entered into by the Purchasers,in accordance with Rule 15c2-12,to be dated as of the Closing Date for the benefit of bondholders,to provide to the MSRB (as set forth in Appendix D-2 to the Preliminary Official Statement and as will be set forth in the Official Statement); (13)a letter from Moody's Investors Service,Inc.and Standard &Poor's Ratings Group to the effect that the Bonds have been assigned ratings of "___”and "___,” respectively,which ratings shall be in effect as of the Closing Date; (14)a certificate of the Authority or any duly authorized officer or official of the Authority satisfactory to the Underwriter and to Underwriter's Counsel,dated as of the Closing Date,to the effect that:(i)each of the Authority's representations,warranties and covenants contained herein are true and correct as of the Closing Date;(ii)the Authority has authorized,by all action necessary under the Act and the laws and Constitution of the State,the adoption of the Bond Resolution and the execution,delivery and due performance of the Bonds, the Bond Resolution and this Purchase Agreement (iii)the Bonds,the Bond Resolution,the . Preliminary Official Statement,the Official Statement and this Purchase Agreement,as executed by the Authority,are in the form or in substantially the form approved for such execution by appropriate proceedings of the Authority;and (iv)the Authority has complied with all agreements 13 F:\506358\5\00121810.D0C and satisfied all the conditions set forth in the Purchase Agreement to be performed or satisfied by the Authority at or prior to the Closing Date; (15)a tax certificate signed by the Authority relating to the Bonds,in form and substance satisfactory to Bond Counsel; (16)a certificate of the Authority (or such officer or official of the Authority as the Underwriter and Underwriter's Counsel may approve),dated as of the Closing Date,to the effect that: (A)_since June 30,2009,there has not been any material adverse change in the properties,financial position or results of operations of the Authority,whether or not arising from transactions in the ordinary course of business,other than as set forth in the Official Statement; (B)_since June 30,2009,the Authority has not entered into any transaction or incurred any debt or other liability material as to the Authority,except as set forth in the Official Statement; (C)the Authority is not a party to nor is the property of the Authority subject to any pending legal or administrative proceedings; (1)_that (a)are material to the Authority;or (b)=may restrain or enjoin the issuance or sale of the Bonds or in any way affect any authority for or the validity or enforceability of the Revolving Fund Bond Resolution,the Bonds or this Purchase Agreement,and (2)_that (a)are not disclosed in the Official Statement;or (b)if decided adversely to the Authority could materially and adversely affect the transactions contemplated hereby or by the Official Statement or the properties,operations or financial condition of the Authority; (D)after due investigation and inquiry by the undersigned of appropriate officers and employees of the Authority,the undersigned has no knowledge of any threatened legal or administrative proceeding of the type described in the foregoing subsection (C); (E)the information contained in the Preliminary Official Statement and the Official Statement is true and correct in all material respects and does not contain any untrue or incorrect statement of a material fact and does not omit to state a material fact necessary in order to make the statements made therein,in light of the circumstances under which they were made,not misleading (except that the Authority shall not be required to make any 14 F:\506358\5\00121810.DOC representation or warranty with respect to statements under the captions "The Power Purchasers,” "Restructuring of the Electric Utility Industry in Alaska,”"Book-Entry Transfer System,”and "Pending Disputes,”other than the information under the section "Healy Project Power Sales Agreement Litigation,or in Appendix E);and (F)except as disclosed in the Official Statement,there has been no change in the Act or in the governmental rules or regulations under which the Authority operates since the date of the Official Statement; (17)certificates,each signed by the General Manager and Chief Financial Officer of each Power Purchaser,in substantially the form attached hereto as Exhibit C; (18)anincumbency certificate for each Power Purchaser; (19)acertified copy of the Power Sales Agreement; (20)a certified copy of the Project Management Committee Approval as required in connection with the issuance of the Sixth Series Bonds; (21)an opinion,dated the Closing Date and addressed to the Authority, the Purchasers and the Underwriter,of Special Counsel to the Purchasers,in substantially the form attached hereto as Exhibit D; (22)evidence that a Form 8038 has been executed by the Authority and filed with the Internal Revenue Service; (23)a letter from the Office of the Attorney General of the State describing any currently pending or threatened litigation involving the Authority other than that described in the Official Statement; (24)_two counterpart originals of a transcript of all proceedings relating to the authorization,issuance,sale and delivery of the Bonds,certified by the Deputy Director-Finance of the Authority; (25)such additional legal opinions,certificates,instruments and other documents as Underwriter's Counsel or Bond Counsel may reasonably request to evidence compliance by the Authority with legal requirements,the truth and accuracy,as of the Closing Date,of the representations of the Authority herein contained and the due performance or satisfaction by it at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by it. All of the opinions,letters,certificates,instruments and other documents mentioned above or elsewhere in this Purchase Agreement shall be deemed to be in compliance with the provisions hereof if,but only if,they are in form and substance reasonably satisfactory to the Underwriter and Underwriter's Counsel. If the Authority shall be unable to satisfy the conditions to the obligations of the Underwriter contained in this Purchase Agreement or if the obligations of the Underwriter to 15 F:\506358\5\00121810.DOC purchase and accept delivery of the Bonds shall be terminated for any reason permitted by this Purchase Agreement,this Purchase Agreement shall terminate and neither the Underwriter nor the Authority shall be under further obligation hereunder except that the respective obligations to pay expenses,as provided in Paragraph 11 hereof,shall continue in full force and effect. -11.Expenses.The Authority shall pay or cause to be paid all reasonable expenses incident to the performance of the Authority's obligations under this Purchase Agreement, including,but not limited to,the cost of preparing,executing and delivering the Bonds to DTC; the cost of preparation,printing (and/or word processing and reproduction),distribution and delivery of the Bond Resolution,the Preliminary Official Statement and the Official Statement and all other agreements and documents contemplated hereby or used in connection with the marketing and sale of the Bonds and drafts of any thereof in reasonable quantities as requested by the Underwriter;the fees and disbursements of Bond Counsel;any fees charged by investment rating agencies for the rating of the Bonds;fees of the Trustee;out-of-pocket expenses including, but not limited to,transportation,lodging,and meals;and any other expenses not specifically enumerated in this Section incurred in connection with the issuance of the Bonds.The Authority agrees that in no event will it look to the Underwriter for the payment of any third-party costs,will protect the Underwriter against any third-party claims for fees,costs or expenses,and will be responsible for the settlement and discharge thereof except as to any such actions as shall be due to the negligence or misconduct of the Underwriter.The Underwriter will pay all advertising expenses in connection with the public offering and distribution of the Bonds,including the fees and disbursements of Underwriter's Counsel,the qualification of the Bonds for sale under the securities or Blue Sky laws of the various jurisdictions and the preparation of the Blue Sky memoranda.If the Authority defaults under this Purchase Agreement,the Underwriter may bring whatever legal action it may have against the Authority to recover damages,if any,incurred by them. 12.Notices,Any notice or other communication to be given to the Authority under this Purchase Agreement may be given by delivering the same in writing at its address set forth above,and any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Merrill Lynch,Pierce,Fenner & Smith Incorporated Attn: 13.No Third Party Beneficiary.This Purchase Agreement is made solely for the benefit of the Authority,the Underwriter (including the successors or assigns of the Underwriter) and the Purchasers,and no other person,including any purchaser of the Bonds,shall acquire or have any right hereunder or by virtue hereof. 14.Governing Law.This Purchase Agreement shall be governed by and construed in accordance with the laws of the State. 15.Effectiveness;Amendments;Survival of Representations.This Purchase Agreement shall become effective when accepted by the Authority and upon the Underwriter's receipt of the documents specified in Paragraph 3 hereof and,when accepted by the Authority in writing as heretofore specified,shall constitute the entire agreement between the Authority and the Underwriter and may not be amended or modified except in writing. 16 F:\506358\5\00121810.D0C 16.Entire Agreement Clause.This Purchase Agreement constitutes the entire agreement between the parties hereto with respect to the matters covered hereby,and supersedes all prior agreements and understandings between the parties.This Purchase Agreement shall only be amended,supplemented or modified in a writing signed by both of the parties hereto. Very truly yours, MERRILL LYNCH,PIERCE,FENNER & SMITH INCORPORATED Accepted and agreed to as of ,2010. ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY By: Valorie F.Walker Deputy Director -Finance Approved on behalf of the Purchasers as of ,2010. BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE By: Chair 17 F\506358\5\00121810.DOC EXHIBIT A Maturity Schedule For Series 2010A Bonds Due Principal Interest - 1 Amount Rate Yield Price *OK KR Ok Optional Redemption A-1 FA506358\5\00121810.D0C EXHIBIT B {Letterhead of Underwriter's Counsel] ,2010 Merrill Lynch,Pierce,Fenner &Smith Incorporated Seattle,Washington 98104 Re:$Alaska Energy Authority Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project) Ladies and Gentlemen: We have acted as counsel for you as Underwriter in connection with your purchase from the Alaska Energy Authority (the "Authority”)of its $Alaska Energy Authority Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project)(the "Bonds”),pursuant to the Bond Purchase Agreement dated ,2010 (the "Purchase Agreement”)between you and the Authority.The Bonds are to be issued pursuant to the Power Revenue Bond Resolution (the "General Resolution”),adopted on September 7,1989,and the Fifth Supplemental Resolution (Resolution No.2010-02,the "Supplemental Resolution”)of the Authority adopted on June 8,2010,authoring the issuance of the Bonds,the refunding of the Prior Bonds (as defined later herein)and related matters (which Supplemental Resolution and the General Resolution are referred to collectively as the "Bond Resolution”)for the stated purposes of refunding a the Authority's currently outstanding Power Revenue Bonds,Fifth Series (Bradley Lake Hydroelectric Project)and financing the costs of issuing the Bonds. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Agreement. In that connection,we have reviewed certain portions of the Bond Resolution,the official statement of the Authority,dated ,2010 with respect to the Bonds (the "Official Statement''),the Purchase Agreement,certificates of the Authority and others,and such other records,opinions and documents we have deemed appropriate as a basis for the opinions and conclusions hereinafter expressed.We have not reviewed any electronic version of the Official Statement and assume that any such version is identical in all respects to the printed version. In arriving at the opinions and conclusions hereinafter expressed,we are not expressing any opinion or view on,and with your permission are assuming and relying on,the validity, accuracy and sufficiency of the records,documents,certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein,including (without limitation)representations and legal conclusions regarding the due authorization,issuance,delivery,validity and enforceability of the Bonds and the exclusion of interest thereon from gross income for federal income tax purposes and the legality,validity and enforceability of the Bond Resolution and all documents and instruments providing for issuance B-1 F:\50635815\00121810.D0C and/or security or payment of the Bonds.We have assumed that all records,documents, certificates and opinions that we have reviewed,and the signatures thereto,are genuine. Based on and subject to the foregoing,and in reliance thereon,as of the date hereof,we are of the following opinions or conclusions: 1.The Bonds are not subject to the registration requirements of the Securities Act of 1933,as amended,and the Bond Resolution is exempt from qualification pursuant to the Trust Indenture Act of 1939,as amended. 2.We are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement and make no representation that we have independently verified the accuracy,completeness or fairness of any such statements.In our capacity as your counsel,to assist you in part of your responsibility with respect to the Official Statement,we participated in conferences with your representatives and representatives of the Authority,representatives of the Attorney General of the State of Alaska,K&L Gates LLP,as bond counsel,and others,during which the contents of the Official Statement and related matters were discussed.No inquiry was made of other attorneys in our firm not rendering legal services in connection with the issuance of the Bonds who may have information material to the issue.Based on our participation in the above-mentioned conferences,and in reliance thereon and on the records,documents,certificates and opinions and matters herein mentioned (as set forth above),we advise you as a matter of fact and not opinion that,during the course of our representation of you on this matter,no facts came to the attention of the attorneys in our firm rendering legal services in connection with such representation which caused us to believe that the Official Statement as of its date and as of the date hereof (except for any CUSIP numbers,financial,statistical or economic or demographic data or forecasts, numbers,charts,tables,graphs,estimates,projections,assumptions or expressions of opinion, any information about real estate or environmental matters,any information presented in the Appendices or any information about book-entry,tax exemption,DTC,and the Independent Auditor included or referred to therein,and any electronic version of the Official Statement all of which we expressly exclude from the scope of this paragraph and as to which we express no opinion or view)contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein,in light of the circumstances under which they were made,not misleading. We are furnishing this letter to you pursuant to paragraph of the Purchase Agreement solely for your benefit as Underwriter.Our engagement with respect to this matter has terminated as of the date hereof,and we disclaim any obligation to update this letter.This letter is not to be used,circulated,quoted or otherwise referred to or relied upon for any other purpose or by any other person.This letter is not intended to,and may not,be relied upon by owners of Bonds or by any other party to whom it is not specifically addressed. Sincerely, BIRCH HORTON BITTNER &CHEROT F:\506358\5\00121810.D0C O EXHIBIT C CERTIFICATE OF POWER PURCHASER REQUIRED BY SECTION OF THE BOND PURCHASE AGREEMENT We,and ,General Manager and Chief Financial Officer, respectively,of (the "Power Purchaser”),hereby certify that: 1.This certificate has been executed in connection with the Closing under (and as defined in)the Bond Purchase Agreement (the "Purchase Agreement”)dated ,2010 between the Alaska Energy Authority (the "Authority”)and Merrill Lynch,Pierce,Fenner &Smith Incorporated relating to the issuance and sale by the Authority of its $Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project),(the "Refunding Bonds”),as more fully described in the Official Statement of the Authority dated relating to the Refunding Bonds (the "Official Statement”).Any capitalized term used and not otherwise defined in this certificate has the meaning given such term in the Purchase Agreement. The description of the business and properties of the power system of the Power Purchaser included in the Official Statement under the caption "THE POWER PURCHASERS”-[enter name of utility],including the financial information and operating and statistical data of the Power Purchaser included under such caption,and the description of the Bradley Lake Hydroelectric Project included therein as of the date of the Official Statement and at all times subsequent thereto up to and including the date hereof,was and is true and accurate. The Power Sales Agreement has not been amended,altered or repealed and is in full force and effect. The Project Management Committee Approval given by the Project Management Committee pursuant to the Power Sales Agreement has not been amended,altered or repealed and is in full force and effect,and all payment obligations incurred by the Authority in respect of the Purchase Agreement,and the Refunding Bonds are included in the Power Purchaser's Percentage Share of Annual Project Costs for all purposes and within the meaning of the Power Sales Agreement and the Bond Resolution. To our actual knowledge after reasonable inquiry,no litigation is pending or threatened in any court in any way affecting the corporate existence of the Power Purchaser,or the titles of its officers to their respective offices,or in any way contesting or affecting the validity or enforceability of the Power Sales Agreement,including the right or authority and obligation of the Power Purchaser to pay its Percentage Share of Annual Project Costs under and as defined by the C-1 F:\506358\5\00121810.D0C Dated: Power Sales Agreement,or to our actual knowledge without investigation seeking to prohibit,restrain or enjoin the sale,issuance or delivery of the Refunding Bonds or in any way contesting or affecting the validity of enforceability of the Refunding Bonds the Bond Resolution,the Purchase Agreement,or the pledge of Revenues pursuant to the Bond Resolution,or the Project Management Committee Approval,or contesting in any way the completeness or accuracy of the Official Statement. We have read the statements contained in the Official Statement under the caption "SECURITIES AND SOURCES OF PAYMENT FOR THE SIXTH SERIES BONDS,”the section titles "Power Sales Agreement,”under the caption "THE BRADLEY LAKE HYDROELECTRIC PROJECT,”under the caption "THE POWER PURCHASERS?”the sections titled "Introduction,”"Rate Regulation,” "Power Requirements,”"Generation Resources and Utilization of the Project,” and to the extent that a section involves the Purchaser,under the caption "STATE AND FEDERAL INITIATIVES REGARDING COMPETITION IN THE ELECTRIC UTILITY INDUSTRY,”and under the caption "PENDING DISPUTES,”to the extent that a section involves the Purchaser,and to our actual knowledge such statements under such captions in the Official Statement,do not, as of its date and does not,as of the date hereof,contain any untrue statement of a material fact,nor did they omit to state a material fact required to be stated therein or necessary to make the statements contained therein,in the light of the circumstances under which they were made,not misleading. During the period from to date,has been appointed to represent the Power Purchaser as a voting member of the Project Management Committee. By: Title: By: Title: C-2 F.A506358\5\00121810.D0C EXHIBIT D [Letterhead of McDowell Rackner &Gibson PC] D-1 F:\506358\5\00121810.DOC