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Home My WebLink AboutGVE Assoc Northern Intertie Decision 1998File Se Roe AsD,te a ALAS /Fy oon on /TONY KNOWLES,GOVERNORFigiWyASIA/ jDEPARTMENTOFNATURALRESOURCES=/(NORTHERN REGION{FAIRBANKS,ALASKA 99709-4699DIVISIONOFLAND_,!"PHONE.ah451-2740aye,iVi7Lot June 17,1998 Ud 24 1998 Al.-<a industrial DeProposedDecisionendExoortAuman”Golden Valley Electric Association Northern Intertie The Department of Natural Resources,Division of Land (DL)has completed a proposed decision on the Golden Valley Electric Association (GVEA)Northern Intertie Project. Comments must be received at the Northern Regional Office,DL before 5:00 P.M.on July 24,1998.A final decision will be made after all comments have been reviewed and analyzed. The DL's proposed decision is based on the Bureau of Land Management's (BLM) Environmental Impact Statement for the project and uses that information to support the state's decision for a preferred route.The preferred alternative (Rex-South)in the BLM's Final Environmental Impact Statement is the DL's recommended route. Comments must be submitted in writing or sent by e-mail to:Bob_Craig@dnr.state.ak.us. Written comments should be sent to: Bob Craig Department of Natural Resources Division of Land Northern Regional Office 3700 Airport Way Fairbanks,Alaska 99709-4699 If you have any questions on the proposed decision or need further information,please contact me at (907)451-2722 or write to the above address. Sincerely, 4 cc;VWetd.Kony KL Robert D.Craig Natural Resource Manager re,le _-fé pThun wee "Develop,Conserve and Enhance Natural Resources for Present and Future Alaskans” Proposed Decision ADL 415854 Golden Valley Electric Association Northern Intertie Proposed Action Golden Valley Electric Association (GVEA)has applied to the Division of Land (DL)for a 150 foot wide public utility right-of-way for a 230 kilovolt transmission line between Healy and Fairbanks.The project is commonly known as the Northern Intertie.Eight alternative routes were under consideration,all of which crossed state lands.Depending on the route,from 50 to 100 miles of state land would be traversed by the line. Some of the proposed routes also cross Ft.Wainwright Military Reservation,which requires the Bureau of Land Management (BLM)to be involved with the project.BLM procedures require that the National Environmental Policy Act be followed,which is in the form of an Environmental Impact Statement (EIS).This proposed decision will be based on information containedin the EIS and will use that information to support thestate's decision for a preferred route. Authority A.S.38.05.850(a)and (b).The authority to approve a public utility right-of way has been delegated to the Regional Manager.The authority to approve a fee waiver under AS 38.05.850(b)has been delegated to the Director of the DL. Administrative Record Right-of way application,ADL 415854,and BLM's EIS for the GVEA Northern Intertie Project comprise the administrative record for this case. Legal Description and Location The location of all of the alternative routes are depicted on the maps included with the Draft EIS (Figure 3.9-1).Each route begins in Healy at the GVEA power plant,heads north and terminates at a substation in south Fairbanks.All sections of state land, including waterbodies,crossed by the route are noted on the maps.Right-of-way width for the transmission line will be 150 feet (75 feet either side of centerline). Proposed Decision,ADL 415854 GVEA Northern Intertie Page 2 Planning and Classification All the alternative routes are within the Tanana Basin Area Plan (TBAP).Multiple management units are crossed within Subregions 1,2,3,and 4.There is no prohibition in any of the management units against the issuance of a right-of-way for a transmission line.Right-of-way permits are allowed in all of the land classifications. Title - State land crossed by the Intertie is a combination of Tentatively Approved and Patented lands.One township (T.6S.,R.7W.,F.M.)is state selected.BLM will need concurrence from the state,pursuant to ANILCA,Section 906(k)for its permit issuance to GVEA on state selected land.This decision and notice will be made part of the casefile established for the concurrence to BLM. Approximately 8 miles of the route north of Healy crosses Mental Health Trust Lands. These lands are managed by the Alaska Mental Health Trust Land Office and will require a separate permit to be issued by that office to GVEA for the Intertie. Access Access to the project will be along existing roads and trails (see DEIS section 2.4.1 and page 3 of the Executive Summary).Before any new access routes are constructed across state land,the appropriate authorizations will need to be acquired from DL.Temporary construction access may require a land use permit. Environmental Risk Assessment Environmental risks associated with the Intertie and its construction is expected to be low.A formal risk assessment has not been conducted.The applicant has completed an Environmental Risk Questionnaire (ERQ)as part of its right-of way application.Fuels would be used for construction equipment and helicopters.Several areas within Townships 9 &10 South,Ranges 6 &7 West have been extensively mined and many of the operations may not have been monitored.The immediate areas around the mining operations could be contaminated.The state will need to be informed of any potentially' contaminated sites that are encountered during construction. Survey After a Final Decision is made and the appeal period is completed,an Early Entry Authorization (EEA)will be issued to GVEA to begin construction and survey.A Department of Natural Resources (DNR)approved as-built survey will be required prior to the issuance of the final right-of-way permit. Proposed Decision,ADL 415854 GVEA Northern Intertie Page 3 Performance Guarantee and Insurance The DL has established a performance guarantee matrix to predict the costs of repairing state land if it is damaged or the project is abandoned by the responsible party.After using the performance guarantee matrix,it is estimated that $60,000 would cover the costs associated with the potential damage to state land should GVEA or its contractors not pay for or repair the damage.GVEA itself is bonded and any of its contractors working on the project are required to be bonded. The performance guarantee will be released upon satisfactory completion of the project and submittal of the required survey. A liability insurance policy must be provided by the applicant listing the state as an additional insured party with minimum limits in the amount of $1,000,000 combined single limit per occurrence and $2,000,000 annual aggregate. Term of Permit and Use Fee 11 AAC 05.010(e)(13)states that a public utility right-of-way will be assessed a one time fee of 10 cents per linear foot.A.S.38.05.850(b)allows right-of-way fees to be waived for a transmission line established by a nonprofit cooperative association for the purpose of supplying power to its members and the waiver is considered to be in the best interest of the state.GVEA is a nonprofit cooperative association and will be supplying power to its members via the Intertie transmission line.The Intertie will benefit the Fairbanks area and railbelt communities by meeting the increased demand for power,improving the reliability of electric service and increasing access to economical energy.Therefore,it is proposed to waive the public utility right-of-way fees to GVEA because the benefits of the transmission line may be in the state's best interest.If,at any time,the owner/operator of the transmission line does not qualify as a nonprofit cooperative association organized under A.S.10.25 then the DL reserves the right to assess an annual use fee based on current fee schedules or a fair market value appraisal. It is recommended that the term of the permit be for an indefinite period of time.If the use fee is waived,this will reduce the cost to the state to process a renewal.The permit will be revoked upon abandonment. Public Notice and Agency Review All of the public notices sent out by the BLM for the Intertie EIS included a statement that said the information and comments gathered during the EIS review would be used in the state's right-of-way decision process. Proposed Decision,ADL 415854 GVEA Northern Intertie Page 4 Public Scoping meetings for the EIS were held in Fairbanks,Healy,Anderson and Nenana from June 23,1997 through June 26,1997.Further meetings were held in Healy, Nenana and Fairbanks from August 19,1997 through August 21,1997 to provide input on the screening process used to narrow the range of alternatives for evaluation in the 'EIS.Public Hearings were held in Fairbanks,Nenana,Anderson and Healy from February 9,1998 through February 12,1998. Notice of the above meetings and hearings was sent to all parties who commented during the Environmental Assessment (EA)and sent to state and federal agencies,municipalities and various special interest groups.BLM has a list of all parties who received a notice. Notices were also posted in post offices and communities along the Parks Highway from Fairbanks to Healy.Additionally,notice was published in the Fairbanks Daily News- Miner and the Valley Newspaper in Anderson and broadcast over radio stations servicing the area. The public comment period for the DEIS,published in December 1997,ended on March 5,1998.The DEIS or Executive Summary was sent to all parties who received notice of the above meetings and hearings.Over 600 comments were received by BLM by the time the public comment period ended.The Final EIS (FEIS)contains a list of all substantive comments received and the response to those comments.BLM has a record of all those who received notice or made comments. All parties who received notice or made comments on the EA or DEIS will receive a copy of this proposed decision.In addition,a notice will be published in the Fairbanks Daily News Miner. Discussion The Northern Intertie project is comprised of two basic elements:the construction ofa second transmission line (230 kilovolts)between Healy and Fairbanks and the addition of a battery energy storage system (BESS)that will supply 40 megawatts of reserve capacitytotherailbeltsystemfor20minutes. GVEA applied to the DL in the summer of 1996 for a 150 foot wide right-of-way for the transmission line,which was at the same time the BLM began preparation of an EA for the project.BLM became involved with the Intertie because some of the route alternatives crossed Fort Wainwright Military Reservation.The Rural Utilities Service (RUS)is involved because they are responsible for the approval of any federal funds associated with the construction or operation of the project.Federal procedures require that NEPA be followed,which can be in the form of an EA or an EJS.The EA included eight separate route alternatives plus a "No Action”alternative.The amount of state land that was crossed by each separate route varied from 50 to 100 miles. Proposed Decision,ADL 415854 GVEA Northern Intertie Page 5 Public meetings on the EA were held in August,1996.Agency meetings were held later that winter.Some of the issues raised were route selection,wildlife,fire management, aviation,military operations,recreation,and visual resources.These and other issues were included and discussed in the EA.The DL worked closely with BLM during the preparation of the EA and in the selection of the preferred alternative.The EA was published in January,1997 and selected the Rex/South Route as the preferred alternative. Because of substantial public and agency controversy over the significance of impacts and other issues the decision was made to advance the project to the EIS level of assessment.Preparation of the EIS began in Spring 1997.Because of the detailed analysis involved with the EIS and the full public and agency review received during the process,the DL decided to use the information contained in the document as the basis for its proposed decision.The DL use of the EIS as the basis for its proposed decision was included in the public notices sent out and posted for all of the public scoping meetings and public hearings.A DL representative was present at all of these meetings including all of the agency meetings that were held for the project. Scoping meetings for the EIS were held in Fairbanks,Nenana,Anderson,and Healy in June,1997.All of the routes were again open for consideration plus comments were taken on any new route alternatives.Many issues raised were similar to the issues brought up during the review of the EA.In August further public meetings were held to provide input on the screening process used to narrow the range of alternatives for evaluation in the EIS.Asa result of these meetings two routes were dropped from consideration and a change to the Rex/South route near Chicken Creek north of Healy was added as a new alternative.Seven route alternatives,plus a "No Action”alternative, were examined in the DEIS.All of the alternatives and issues were discussed further in agency meetings held in November,1997.As part of these meetings design features were discussed and mitigation measures were developed.After all the alternatives were analyzed it was decided to select the Rex/South Route with Option B as the preferred alternative in the DEIS.The DL worked closely with BLM in selecting the preferred alternative. Public hearings were held in February,1998 in Fairbanks,Nenana,Anderson,and Healy as part of the 60-day public review of the DEIS.There were a large number of comments made in favor of the Rex/South Route,but against the inclusion of Option B (Chicken Creek Bypass)as part of the preferred alternative.Other comments ranged from supporting the use of the existing route to the suggestion of an entirely new route alternative that headed east along the foothills of the Alaska Range to the Richardson Highway then north to Fairbanks.All of these comments plus all written comments (both totaling more than 600)were evaluated by BLM and an analysis is included in the FEIS. After analyzing all the issues and comments and reevaluating the alternative routes the Rex/South Route,without Option B,was selected as the preferred alternative in the FEIS. Proposed Decision,ADL 415854 GVEA Northern Intertie Page 6 As with the EA and DEIS,the DL worked closely with BLM in reviewing and evaluating all of the comments,issues and alternatives and was included in the process to make the decision on the preferred alternative. The design features and mitigation measures included in Sections 2.4.5 and 2.4.6 of the DEIS will be included as special stipulations in the DL early entry authorization and right-of-way permit.To allow for safety and engineering concerns,all trees higher than 10 feet may be cleared within 75 feet either side of the centerline.Clearing to ground level,up to 150 feet either side of the centerline,will be allowed in areas where large stands of black spruce occur and a danger from forest fires is expected.The vegetative mat must remain intact.After a final route is approved,these areas will be identified in consultation with the State Division of Forestry and the Alaska Fire Service. A separate permit is being processed by the Alaska Mental Health Trust Land Office where the transmission line crosses Mental Health lands as required in A.S.38.05.801 and terms consistent with the Alaska Mental Health Enabling Act. Proposed Decision The DL has determined that the issuance of a 150 foot public utility right-of-way and granting a fee waiver under A.S.38.05.850(b)to GVEA for the construction of the Northern Intertie transmission line may be in the best interest of the state.The permit will be issued with an indefinite term.The Preferred Route (Rex/South)in BLM's FEIS is DL's recommended route.Design features and mitigation measures in Sections 2.4.5 and 2.4.6 of the DEIS will be included as special stipulations in the early entry authorization and right-of-way permit. (te p).a,6-16 -Fe Robert D.Craig Natural Resource Manager haggle -p-1b-FbNancyWelch}(/Date Northern Regiorfal Manager Alaska Department of Natural Resources Division of Land,Northern Region 3700 Airport Way Fairbanks,Alaska 99709-4699 vuthaw Jrdobe Gy GOLDEN VALLEY ELECTRIC ASSOCIATION INC.Box 71249,Fairbanks,Alaska 99707-1249,Phone 907-452-1151 a . ; et Sewels:we | : :i fie an tone Ori}ow wh oue January 2,1996 Alaska trotesti)Gos uieod.uet Dan Beardsley Grant Administrator AIDEA 480 West Tudor Anchorage AK 99503 RE:Northern Intertie Reimbursement Requests Dear Dan: Attached is a sample copy of the "Summary of Invoices Under $10,000"report that we have routinely provided with each Northern Intertie billing.Please indicate how you would like this report changed to comply with your letter of December 27, 1995,to Dave Calvert.Thanks for your help. Sincerely, Jodine Stoots Finance &Accounting Manager cc:Dave Calvert,City of Seward Mike Kelly,GVEA DATE 16-11-95 21-07-95 20-10-95 16-11-95 28-10-95 NORTHERN INTERTIE Summary of Invoices Under $10,000.00 Relating to Contract Commitments Account 107.26 SUPPLIER #SUPPLIER 2783 DRYDEN AND LARUE DAMES &MOORE GOLDER ASSOCIATES GOLDER ASSOCIATES ALASKA BIOLOGICAL RES INVOICE #ACCOUNT # 9868 020-05894 50737 50765 545 107.26 107.26 107.26 107.26 107.26 SUB # 1600.00 AMOUNT 5,841.97 8,490.66 §,851.18 258.90 3,660.75 24,103.46 November 20,1995 William R.Snell |aExecutiveDirectorLpLA a Alaska Industrial Development and Export Authority :a 480 West Tudor Road Blobs teh Be, Anchorage,Alaska 99503 wael fee : Re:Northern Intertie Project Dear Mr.Snell: The Intertie Participants Group (IPG)met on November 6,1995.The IPG selected me as chairman of the group for the coming year and asked that I inform you of the actions taken by the group at its most recent meeting. The Intertie Participants are pleased to inform you that they have voted unanimously to resolve certain issues involving the allocation of benefits of the Northern Intertie Project.In addition,the IPG unanimously adopted a Northern Intertie Project budget,scope,and schedule which will be documented as exhibits to the Northern Intertie Construction Management Agreement.Finally,the representatives of the Intertie Participants have finalized and agreed upon a Northern Intertie Construction Management Agreement and a Northern Intertie System Agreement and have recommended that those two agreements be executed as soon as possible by the respective governing boards,councils,and assemblies of the Intertie Participants.Duplicate original copies of those documents are currently being circulated for execution.I have arranged to provide AIDEA with copies of these final agreements as soon as they have been executed by the parties. If you have any questions,please feel free to contact me at 224-4071. Sincerely yours, TIE PARTICIP S30, =be ie -_-(aDaveCalvert,Chairman cc:IPG Members hiioxbED November 20,1995 William R.Snell |fs b fs |W fe ]Executive Director Alaska Industrial Development and Export Authority 480 West Tudor Road Alaska Industriz]CovelopmentAnchorage,Alaska 99503 ovoandExrortAuthority NOY 5 0 qoaseed Re:Northern Intertie Project Dear Mr.Snell: The Intertie Participants Group (IPG)met on November 6,1995.The IPG selected me as chairman of the group for the coming year and asked that I inform you of the actions taken by the group at its most recent meeting. The Intertie Participants are pleased to inform you that they have voted unanimously to resolve certain issues involving the allocation of benefits of the Northern Intertie Project.In addition,the IPG unanimously adopted a Northern Intertie Project budget,scope,and schedule which will be documented as exhibits to the Northern Intertie Construction Management Agreement.Finally,the representatives of the Intertie Participants have finalized and agreed upon a Northern Intertie Construction Management Agreement and a Northern Intertie System Agreement and have recommended that those two agreements be executed as soon as possible by the respective governing boards,councils,and assemblies of the Intertie Participants.Duplicate original copies of those documents are currently being circulated for execution.I have arranged to provide AIDEA with copies of these final agreements as soon as they have been executed by the parties. If you have any questions,please feel free to contact me at 224-4071. Sincerely yours, SSCL.Dave Calvert,Chairman cc:IPG Members Mek (OMCUM CAT.Irene QsServices(907)274-1056 Dae MAR 2 3 1995 CHUGIAK-EAGLE RIVER STAR Client No.Y2%eA \any MEA postpones Intertie agreementRlOf30230%31 339 347 OF 2qT HAeH By LEE JORDAN Alaska Star Editor Participation in the Northern Electrical Intertie may not be ben- eficial to Matanuska Electric Asso- ciation (MEA)and its membership. That assessment was enough to cause postponement during Tuesday night's MEA board meeting of a resolution authorizing an agreement for the utility.to.participate in the .project. "Our cost-benefit analysis of the Northern Intertie shows that con- struction of this project would result in a negative economic impact to MEA's members,”said Bruce Scott, MEA director of member and pub- lic relations. "Under the 'mid-range'scenario in our analysis,MEA would need to increase its rates by 1.28 percent to cover an additional revenue require- ment of slightly over half a million dollars annually to pay its share of the $70 million intertie's costs,”he added. The intertie was to be a joint ven- ture between electric utilities and would improve switching and inter- connection grids between Healy and Fairbanks.Part of the project would include the installation of what amount to gigantic storage batteries which would supplement direct gen- eration in case of emergencies. Most of the financing would come from the Railbelt Energy Fund, the remaining money left in a pool set aside for various power projects once intended for construction of a large hydroelectric project. The intertie recently became an object of discussion after a study or- dered by Chugach Electric Associa- tion showed that construction costs would be high as a result of an agree- .ment to use only contractors who have labor agreements with the In- temational Brotherhood of Electri- cal Workers (IBEW). A memorandum of understand- ing giving preference to IBEW had AP been entered into between IBEW and some of the participating utilities. That agreement resulted from IBEW's assistance in persuading theLegislaturetomakethemoneyfor the project available. A construction management agreement is still to be signed in or- der for the project to proceed. IBEW business agent Gary Brooks charges that "anti-union” forces at Chugach Electric and MEA are attempting to scuttle the agree- ment.He argued that his union earned the guarantee to use its mem- bers for construction by securing the funding when the utilities had failed to deliver. Brooks also contested the claimed "savings”through open bidding,say- ing the Chugach study used distorted figures, The union's intent,Brooks told The Star,is to prevent the work go- ing to Outside firms who bring in low-paid workers,then leave after the job is finished. pivPy om bat PRE Homer Electric Association,Inc==5 CORPORATE OFFICE Central Peninsula Service Center 3977 Lake Street 280 Airport Way Homer,Alaska 99603-7680 Pouch 5280 Phone (907)235-8167 Kenai,Alaska 99611-5280 FAX (907)235-3313 Phone (907)283-5831 FAX (907)283-7122 me A PeNovember16aig(VAG ul Hy |}pete a veWhoisius | "sy aye.RANOY20804 ial Ave me t Mr.Dennis McCrohan Alaska Incustre!oy ": a t Aut! Alaska Energy Authority and Expor 480 West Tudor Road Anchorage,AK 99503-6690 Dear Dennis: Re:Northern Intertie Operations Appeal The managers met and agreed on a meeting date of Thursday,December 15,1994,10:00 AM, at ARECA to begin discussions on ML&P's Northern Intertie Operations Appeal. If for some reason this schedule is not suitable to you,please let my office know immediately. Otherwise,we will see you on December 15. Sincerely, HOMER ELECTRIC ASSOCIATION,INC. N.L.Story tm General Manager intertie.mtg .kls cc:RF AEG&T,Hufman MEA,Carmony ML&P,Stahr Seward,Calvert CEA,Bjornstad FMUS,Mottola SOLDEN VALLEY ELECTRIC"2254s re *2.Pos 412 Cibanks,Atasku 99707-1249,Phone 907-452-1151 »\wB xe L October 27,1994 William R.Snell Executive Director AIDEA 480 West Tudor Anchorage,Alaska 99503-6690 Re;Healy-to-Fairbanks Intertliec Dear Riley: As we discussed at our recent breakfast meeting,some membersoftheIPGseeminclinedtubreaktheNorthernIntertieprojectintophasesbyreducingthescopeoftheinitialconstruction effort to build only a basic transmission line without voltagecompensationorbatteryenergystorage.A basic line will notdeliverthebenefitswhichwerepredictea@bythe1991AEAfeasibilitystudy.Our consultant predicts that only a 4 megawatt power transfer increase will result.Additionally,there is no present contractual comnitment to any future "phases". It would be most helpful if you will tell us at our meeting inFairbanksonNovember1whetherAIDEAwillallowapplicationofthe$45 million grant for the Northern Intertie against the roughly $55millioncostofabasiclinewithoutautilitycommitmenttofund the full project.This decision wil].help the IPG in consideringwhethertoproceedwiththepresentpreliminaryscopeandbudget(line plus battery energy storage at approximately $75 million)or a reduced scope and budget. In spite of the difficulties experienced by the IPG,we areprogressingsmoothlywiththedesignoftheNorthernIntertie.Ifthescopeisreduced,some members will procead with thecompensationorbatterystorageseparatelysoIamnottryingto lobby you one way or the other. See you on Tuesday. Best Regards,Hike (us Michael P.Keyly Golden Valley cc:Jon Rubini Municipal Securities Gronn jj/'Olas ;[rerePaineWebberIncorporatu..j 100 California Street San Francisco,CA 94111 TiPTC TIVE | 415 954-6700 fat |LAA Loa Ste,|eSeptember28,194 ee PaineWebberAlaskadackicbis:D velopmert and Export Authority JMr.William R.Snell,Executive Director Alaska Industrial Development and Export Authority 480 West Tudor U Pyod hAnchorage,Alaska 99503-6690 aeGeDearRiley: |thought the meeting with the bond insurers and the tours of local projects and the Red Dog Mine last week went very well.The latter was especially impressive and the film showing the prefabricated concentrator buildings moving slowly up the road from the Port is still quite vivid in my mind.Thanks for including me. As to financing of the interties which was discussed among team members on Tuesday,we have the following observations/concerns after reading the handout of the several agreements and pressing John Costagliola into service upon our return. Chapter 18 SLA 1993,Sec.29,authorizes AIDEA to issue up to $60 million of bonds to finance an intertie between Healy and Fairbanks "owned,for the benefit of all of the utilities participating in the intertie,by GVEA”.Sec.30,relating to the intertie between Anchorage and the Kenai Peninsula,authorizes a similar par value of bonds for an intertie "to be owned,for the benefit of all of the utilities participating in the interties,by Chugach."Query:Is there significance to the words "owned"in the case of Sec.29 and "to be owned”in Sec.30?Is there significance to the plural language "interties"in Sec.30? The Intertie Grant Agreement provides that the Participating Utilities shall hold undivided ownership interest as tenants in common in the proportion set forth in Attachment 1 thereof. Query:Is this consistent with the bond authorizations of Secs.29 and 30 above which specify ownership by GVEA or Chugach for the benefit of the participating utilities?It is noted that Chapter 19 SLA 1993 in Sections 1 and 2 makes grants to GVEA of $43.2 million and Chugach of $46.8 million,respectively,for the benefit of all utilities participating in the interties. The Participants Agreement expires at the end of the Project's useful life,according to Section 2(b).We suggest that a proviso be added to require that all Project indebtedness must have been retired prior to such a termination. Section 4 (b)(3)of the Participants Agreement sets forth the withdrawal rights of Participants and in regard to the Anchorage-Kenai Segment,provides that the "decision date”will be a date certain after completion of route studies and cost estimates.Section 7 (b)contains a proviso that detailed design and construction will not commence until after completion of the process set forth in Section 4 (b)(3).Query:What if actual costs exceed estimates?Could a Participant allege that if it had known costs would be increased,its economics change and it would have withdrawn? Section 8 (b)(2)of the Participants Agreement requires unanimous agreement among the Parties to participate in a collective financing agreement and to approve the Bond Resolution adopted to implement the collective financing.Section 8 (b)(3)allows each Participant to PaineWebber y separately finance its share of Additional Costs.Query:Should not this apparent contradiction be clarified to provide (3)as an alternative and to require unanimous agreement in (2)only among those participating in the collective financing? Section 10 and definitions in the Participants Agreement relating to "Operating Year,”"Operating Budget,""Annual Project Costs,""Construction Year"and "Annual Payment Obligation”lead to a distinction between the effective date of the Agreement and "Date of Commercial Operation".It is not clear what happens if Commercial Opefation is never achieved.Bondholders will probably insist upon a take-or-pay contract commencing on a date certain,regardless of completion. Participants can partially protect themselves by capitalizing interest beyond the estimated completion date,by insurance against damage or destruction and by liquidated damages imposed upon the construction contractors.However,we believe completion risk is just not acceptable to bondholders if attractive borrowing rates are to be achieved. It should be noted that in the case of the Bradley Lake financing,the State's moral obligation was available in addition to the capitalization of interest which extended for six months beyond the estimated date of commercial operation and permitted a full year's delay before a payment was due.We believe Section 23 of Chapter 18 SLA 1993 extends to the intertie financing the State's moral obligation,if desired. There are several references in the various documents to approvals of retail rates,cost considerations,etc.by the Alaska Public Utilities Commission.What would be the effect if there were to be extended downtime of one or both of the Project Segments and the APUC determined that no "benefit"was being received from the Project.Could the APUC mandate the lowering of rates that would jeopardize a Participant's ability to pay?Is there potential for delay in obtaining approvals,if any,by the APUC prior to commencement of construction? In addition to the Work Products required of Participants as outlined in the Intertie Financing handout at our meeting,we would like to see three years of audited operating statements for each Participant in due course. Overall,subject to development of suitable financing documents,we believe a revenue bond issue can be structured based upon the several agreements that we reviewed.The step-up provisions are adequate and cognizance of construction and operating concerns is acknowledged.We defer to tax or bond counsel as to what portion of the financing can be tax- exempt given Project ownership.If the latter was not critical,AIDEA could probably own and finance the Project on a tax-exempt basis. We appreciate the opportunity to comment on this important financing and look forward to implementation of the initial segment in the near future. Very truly yours, wyTerrenceE.Comerford First Vice President TEC:bmb cc:Goldman,Sachs &Co.(Frank Ingrassia,Jeff Brown) LYa-TIS fant 8-93-84mailed any ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY {=ALASKA@@e™=ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /561-8050 FAX 907 {561-8998 MEMORANDUM TO:Jon Rubini,Esq. Keith Laufer,Esq.Pete Wee”FROM:wiles) Executive Director DATE:August 23,1994 Subject:Intertie Participating Group Project Financing We have received a formal inquiry letter by Thomas Stahr,Chairman,on behalf of the Intertie Participating Group,requesting a determination of whether AIDEA is in a position,without further legislative authorization,to finance the Participant's share of the additional cost of the Intertie Projects. Please review the legislation and existing agreements to determine if all necessary legislative and contractual obligations are in place to allow AIDEA to finance the projects.Identify any prerequisites that must be accomplished before AIDEA can proceed with financing. We anticipate providing a detailed response to the Participants by mid September. That response will identify legal requirements,necessary work products from the Participants,and financial marketing requirements.Please coordinate your efforts and provide me with a draft response by the end of the first week of September. DWB:bif h:all\beardsle\aidea\ipggaa6 Attachment cc:Dennis V.McCrohan,Deputy Director (Energy) Valorie F.Walker,Deputy Director (Finance) Daniel W.Beardsley,Contracts Manager GAM -Sfe3/74 WY Municipality of Anchorage Municipal Light &PowerJ]Tom Fink,Mayor 1200 East First Avenue Anchorage,Alaska 99501-1685(907)279-7671,-Lelecopigrs:{9QZ),276-2961-27 2.9272Hy\EGEIVE )August 16,1994 4QWilliamR.Snell AUG 19 1994 Executive Director : Alaska Industrial Development Alaska vere Development&Export Authority and Export Authority 480 W.Tudor Road Anchorage,AK 99503-6690 Re:Intertie Financing Dear Riley: We had earlier talked about the possibility of AIDEA providing the additionalfinancingnecessarytocompletethenorthernandsouthernsegmentsoftheParticipantsIntertieProject.The Intertie Participants Group ("IPG”)at its last meeting directed me,as chairman,toformallyaskyoutodeterminewhetheryouareinaposition,without further legislativeauthorization,to finance the Participants'share of the additional cost of these projects,either asAIDEAorthroughAEA. If you determine that you are in a position to arrange for the joint financing of theParticipants'additional cost of these projects,the IPG would like to request that you take thosepreliminarystepswhicharenecessarytodeterminetheconditionsandcostsofthisjointfinancingoftheproject. The IPG is anxious to determine whether joint financing through AIDEA or AEA isanoptionandtherelativefinancingcostofthisoptiontotheParticipants.Please feel free tocontactmeifyouhaveanyquestionsorrequirefurtherinformationfromtheprojectParticipants. Sincerely yours, AL LIGHT &POWER a? omas R.Stahr General Manager and Chairman,IPG TRS:lka cc:Norm Story,HEA James N.Woodcock,MEA Dave Calvert,City of Seward Vince Mottola,FMUS Robert Hufman,AEG&T Gene Bjornstad,CEA Mike Kelly,GVEA Putting Energy Into Anchorage Eva -Gle 7 ae ALASKA INDUSTRIAL DEVELOPMENT>¢AND EXPORT AUTHORITY {=ALASKA:@@->=ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /561-8050 FAX 907 /561-8998 August 23,1994 Mr.Thomas R.Stahr General Manager and Chairman,IPG Municipal Light &Power 1200 East First Avenue Anchorage,Alaska 99501-1685 Subject:Intertie Participating Group Project Financing Dear Tom: We have received your letter of August 16,1994,concerning AIDEA or AEA's ability tofinancetheInterties.We are proceeding with a legal and financial review to determine any and all necessary prerequisites to finance the projects. By mid September,we should be prepared to discuss with you remaining legislative authorizations,if any,required to go forward with financing,the necessary work products that we will need from the IPG,and the financial marketing issues. Once we have accomplished the above,|will contact you to discuss these matters. Sincerely,ti ZBZ)liam R.Sie Executive Director DWB:bif h:all\beardsle\dwordiaidea\ipggaa6 aEco:a Municipality of Anchorage Municipal Ligh tt&PowerTomFink,Mayor 1200 East First Avenue Anchorage,Alaska 99501-1685 (907)279-7671,CRITEAugust16,1994 " AUG 1 9 1994 Executive Director | Alaska Industrial Development Alaska Industrial Development&Export Authority and Export Authority 480 W.Tudor Road Anchorage,AK 99503-6690 William R.Snell Re:Intertie Financing Dear Riley: We had earlier talked about the possibility of AIDEA providing the additional financing necessary to complete the northern and southern segments of the Participants IntertieProject.The Intertie Participants Group ("IPG”)at its last meeting directed me,as chairman,toformallyaskyoutodeterminewhetheryouareinaposition,without further legislativeauthorization,to finance the Participants'share of the additional cost of these projects,either as AIDEA or through AEA. If you determine that you are in a position to arrange for the joint financing of theParticipants'additional cost of these projects,the IPG would like to request that you take thosepreliminarystepswhicharenecessarytodeterminetheconditionsandcostsofthisjointfinancing of the project. The IPG is anxious to determine whether joint financing through AIDEA or AEA is an option and the relative financing cost of this option to the Participants.Please feel free tocontactmeifyouhaveanyquestionsorrequirefurtherinformationfromtheprojectParticipants. Sincerely yours, AL LIGHT &POWER a? General Manager and Chairman,IPG TRS:lka cc:Norm Story,HEAJamesN.Woodcock,MEA Dave Calvert,City of Seward Vince Mottola,FMUS Robert Hufman,AEG&T Gene Bjornstad,CEA Mike Kelly,GVEA Putting Energy Into Anchorage JOO IIIA IITA ATI R TK TKD EI TIE TK TITAS DAD DEAD k P,01 k x TRANSACTION REPORT k K AUG-22-94 MON 15:33 x X X x BROADCAST k XK x X DATE START RECEIVER TX TIME PAGES TYPE NOTE Mt DP x X X k AUG-22 15:20 FRANK INGRASSIA G&S 1°06"2 SEND (Mt of 093 x K 15:32 4157883271 48"2 SEND CM 093i XK Xx x X X TOTAL 1M 54S PAGES:4 x x XK POCONO AAO OIA IOI ARIE AAT AIA IAAT AXA AAAI AA ADA .;Pi ALASKA INDUSTRIAL DEVELOPMENT ahi AND EXPORT AUTHORITY / | HE ENERGY AUTHORITY 480 WEST TUDOR ANCHORACE,ALASKA 99503 907 /5361-8050 FAX 907 /561-8998 DATE:Rf.Z zf:q L TIME: NOTICE:This facsimile contains confidential information that is being transmitted to and is intended only for the use of the recipient named below,Reading.disclosure,discussion,dissemination,distribution,or copyiag of thisinformationhyanyoneotherthanthenamedrecipientorhisorheremployeesoragentsisstrictlyprohibited.If you have received this facsimile in error,please immediately destroy it and notify us by telephone.(907)561-8050. PLEASE DELIVER THE FOLLOWING PAGE(s)TO: Frank.LAG LASE/2.,Cold min,SachsTerryComerford,faineldchber TRANSMITTING FROM:RICOH FAX 1000L (907)561-8998THISTRANSMITTALISFROM:V4 ky,Sell7 weewee eee ee Wi _.yy .:dane t's(lg)mecca ot ocr Municipal Light &Power "te \3 4)Tom Fink,Mayor 1200 East First Avenue See Anchorage,Alaska 99501-1685(907)279-7671,Telecopiers:(907 €ff 2;June 14,1994 ENE JUN 75 1994 Alaska Industria]DevelopmentandExportAuthority William R.Snell Executive Director Alaska Industrial Development and Export Authority 480 W.Tudor Road Anchorage,AK 99503-6690 Re:Alaska Intertie Dear Riley: 'The Intertie Participants Group ("IPG")met on Friday,June 10,1994,to hear reports and preliminary approve certain environmental studies necessary for the Healy-Fairbanks segment. One item on the agenda was legal representation and contacts necessary with your agency to finalize the Grant Administration Agreement.Since there may have been some confusion in the past,the IPG took formal action to establish the legal representation for the various members of the IPG. Since initially,and possibly through some part of the construction phases, there may be a difference of interest between the contractor utilities and the non--contractor utilities,Mr.Edwards will represent the contractor utility CEA,Mr.Saxton will represent the contractor utility GVEA,and Mr. Kemppel will represent all of the non-contracting utility/owners -ML&P, MEA,HEA,AEG&T,the City of Seward and FMUS.Mr.Kemppel will act as the lead attorney in correspondence with your legal representatives as well as in coordinating meetings with the involved attorneys. Putting Energy Into Anchorage William R.Snell June 1 4,1994 Page Two The IPG is extremely interested in executing a Grant Administration Agreement as quickly as possible so as not to delay progress on the northern segment and has instructed Mr.Kemppel,Mr.Edwards,and Mr. Saxton to work with your Agency to do whatever is necessary to complete this Agreement. Sincerely yours, MUNICIPAL LIGHT &POWER ee Thomas R.Stahr Chairman,Intertie Participants Group TRS/am cc:IPG Members "ei:J.Rub 4) Dan p. .¢Mike Kelly,General Manager,Golden Valley Electric Assoc.Fffiof /RE:Intertie Participants Group VIA FAX Dear Mike: At the first IPG meeting,the IPG representatives voted to have Roger Kemppel represent the IPG.Subsequently,ChugachStatedtheywantedotherrepresentationandIbelieveyouhaveoptedforbothsidesofthisquestionatdifferenttimes.At last count,for the Grant Administration Agreement this will result in Kemppel,Edwards and SaxtonnegotiatingfortheIPGsideandRubinietalforAEIDA.MyunderstandingisthatEdwardsrepresentsCEA,Saxton represents GVEA and Kemppel the remainder or the IPG members.Since IPG members are only bound by the variousIntertieAgreementsthismaybeappropriateandallowed everybody to do their own thing.I do not choose to be represented by Ron Saxton,including contact with AEIDA. In regard to the Construction Agreement,the situation is radically different.Here GVEA is the contractor and the IPG the owners.The fact that GVEA,in addition to being100%contractor,is a 15%owner does not alter the basic relationship between the IPG/Owners on one side and the contractor on the other.To suggest that the contractorsattorneyalsorepresenttheowneristotallyinappropriate,and it is inappropriate for you to suggest it.If you wantSaxton's firm to represent GVEA that is your right.IexpectKemppelwillrepresenttheotherIPGmemberswiththepossibleexceptionofCEA.Any utility manager who wouldletacontractorattorneyrepresentbothhisutilityandthe contractor on a contract between the utility and the contractor would be breaching his fiduciary duties. Contrary to your understanding,the IPG has authorized legal work on its behalf,the negotiation of the GrantAdministrationAgreementandtheConstructionAgreementand the minutes reflect progress reports on both of theseassignments.In regard to payment for legal services,the members who wanted their own representation have paid for theirs and the majority who have used the IPG's attorneyhavepaidforthat.I hope to see the matter regularized soon SO appropriate payments are made through the IPG.Thequestionoftravel,experts and staff is still before us,but as long as the contractor-owner relationship exists, simple prudence and fiscal responsibility demands that the owners interest be separately represented in matters of construction monitoring,fiscal management,cost accounting and auditing. While I want to minimize costs to the extent practical,I intend to be assured that ML&P funds and State Grant Funds are expended in a fiscally prudent and responsible mannerandtodothisrequiresallthecontractualandconstructionmanagementpracticesofanyotherconstructionproject.Itwouldbeextremelyfoolishtocircumventprudentpractices just to save a little oversight cxpense. Very trily yours, a aa Thomas R.Stahr General Manager Municipal Light &Power ce:IPG Riley Snell WeALASKAELECTRIC, GENERATION AND TRANSMISSION,INC. £91 Bent November 26,1993 NOV 29 1893 fee's Inet Dovalonmant Thomas R.Stahr,AML&P Gidea,on AutroryDavidL.Highers,CEA Norman L.Story,HEA Ken Ritchey,MEA Michael P.Kelly,GVEA David Calvert,City of Seward Virgil Gillespie,FMUS Dennis V.McCrohan,AIDEA Gentlemen: Article 2.6 of the recently executed Grant Transfer and Delegation Agreement states,"AIDEA will consult with the grant recipients before adopting an investment strategy for the amount in custody." It is in our best interest to trigger that investment accom- modation as soon as possible.To that end,I suggest we appoint not more than three members from the participant utility organizations to act as our financial advisors to AIDEA.It may be worthwhile to contact Dave Hutchens relative to utilizing the ARECA Insurance investment team presently in place. Sincerely, Robert L.Huffman Executive Manager PHONE:(907)745-3231 #P.O.BOX 2929 8 PALMER,ALASKA 99645 PHONE:(907)235-8167 =P.O.BOX169 =HOMER,ALASKA 99603 barnes Wot mou RAILBELT RESERVE ISSUES PawbectTJURISDICTIONANDAUTHORITYFORRESOLUTIONf Introduction:Over the course of several months,the Railbelt utilities have been discussing the interpretation of their reserve obligations under various contracts.Of particular concern is the appropriate forum for resolving the Railbelt reserve issues,since some issues require technical expertise,while other issues present policy considerations or questions of contractual intent. Railbelt reserve issues have been considered by the Bradley Lake PMC,the Railbelt Utilities Group (RUG),which has no formal responsibilities for reserve issues,and the Intertie Operating Committee (IOC),established under the Alaska Intertie Agreement (AIA).In addition to the Bradley Lake PMC,the IOC,and the RUG, the Alaska Systems Coordinating Council (ASCC)has been involved and could continue to be involved in evaluating the ramifications of alternative courses of action or suggesting possible solutions to the Railbelt reserve issues.However,the ASCC is a purely advisory group,with non-mandatory participation. Issues:The Railbelt reserve issues stem from the application of the Alaska Intertie Agreement (AIA)to the operation of the Railbelt electric system in the absence of a power pooling agree- ment.The issues are complicated by the existence of separately owned,but jointly operated,generating facilities. Three critical areas emerge from an analysis of Railbelt reserve issues: *The status of the Alaska Energy Authority as a "Particip- ating Utility"under the terms of the AIA and the consequences of that characterization. *The obligations of the Railbelt utilities to provide reserves,and the character of those reserves,under the terms of the AIA. *The role and the authority of the Intertie Operating Committee,under the AIA,to ascertain or determine project characteristics,to interpret,modify,or enforce the provisions of the AIA,or to undertake revisions to the AIA. To resolve these issues,it is first necessary to determine the appropriate forum for addressing these issues and then to do so within the framework of established agreements. Provisions of Existing Legal Agreements:Answers to several key Railbelt reserve questions can be found within the terms of existing agreements,which in turn provide the forum and framework RLS\IOCRES .pp for resolution of the issue.Given the broad latitude Addendum No. 1 gives to the IOC on reserve issues,and the deference given the AIA in the Bradley Lake Agreement,the majority of issues under discussion should be resolved by the IOC under the AIA. 1.Is AFA a "Utility Participant"under the AIA? Section 4.1.1 of the AIA provides that the AEA "will become a Utility Participant at such time as it sells power to a party that is not a Participant and is connected to the Participants' interconnected system."AEA's sale of Bradley Lake Power to Seward,Homer and Matanuska,who are not AIA participants,makes AEA a Utility Participant under the AIA.As a Utility Participant, AEA has a Reserve Capacity Obligation and an Operating Reserve Obligation. 2.How _is a Utility Participant's Reserve Capacity Obligation determined? Addendum No.1 to the AIA establishes the basis for determin- ing the reserve obligation of each Utility Participant.The initial Reserve Capacity Obligation (RCO)of each Utility Partici- pant was set at an amount equal to thirty (30)percent of the projected Annual System Demand of the Utility Participant.The RCO can be adjusted from time to time by the IOC. 3.How_is a Utility Participant's Operating Reserve Obligation determined? In addition to the RCO,each Utility Participant has an Operating Reserve Obligation (ORO).Addendum No.1 to the AIA establishes a Total ORO,which shall be equal to "150 percent of the largest generating unit contingency in operation on the interconnected systems of the Utility Participants."Each Utility Participant's ORO is based on a formula set out in Section B-2.3.1 of Addendum No.1.The AIA does not expressly provide the IOC with the authority to modify this formula. OROs can be modified or adjusted by the IOC from time to time. (Section B-2.1.2 of Addendum No.1). 4.How _much of a Utility Participant's Operating Reserve Obliaa- tion must be Spinning and Non-Spinning Reserves? Section B-2.2.1.1 provides that the "Spinning Reserve portion of the total Intertie System shall not be less than an amount equivalent to 100 percent of the Declared Capability of the largest generating unit contingency in operation on the interconnected systems of the Utility Participants."The Declared Capability of a Utility Participant is determined by that Participant (§B- 2.2.1.1),but the Declared Capability of a generating unit cannot exceed the published capability of that unit (Exhibit A,Definition 2 RLS\IOCRES.pp No.10)and is subject to verification by the I0C for reserve purposes.The balance of the Total ORO can be maintained with Non- Spinning Reserves. Section B-2.4.1 provides that "System Spinning Reserves shall be calculated at any given instant as the difference between the sum of the net capability of all generating units on line in the respective system and the integrated System Demand of the system involved." S.Can load shed be used in lieu of Spinning Reserves? Section B-2.4.2 provides that a "Utility Participant's Spinning Reserve may be satisfied by an automatically controlled load shedding program.The load shedding program shall assure that controlled load can be dropped to meet the requirements of Spinning Reserve and in such a manner as to maintain system stability and not cause objectionable system conditions or cascading effects in other Utility Participants'systems.The Operating Committee shall review and approve the Utility Participant's load shedding program that will be used to satisfy its Spinning Reserve requirements." 6.How should "quality of spin"and "system response"issues be resolved? The IOC has a great deal of authority concerning reserve issues.Section B-2.4.2 requires the IOC to review and approve load shedding programs to assure system stability and section B- 2.4.4 requires the I0C to utilize prudent utility practices in assessing effective utilization of capacity,transmission limita- tions,and local area requirements.In the course of these duties, it would be appropriate for the IOC to discuss and develop criteria for assessing the reliability of various spinning reserve and system reliability issues and options.Independent of the provisions of the AIA,the ASCC could address,and has,in fact, been considering,these issues. 7.Who determines reserve requirements? The AIA delegates authority to the IOC on a number of reserve- related issues.The IOC can establish criteria for automatic load shedding and review and approve a Utility's load shedding programs (§§B-3.2.3,B-2.4.2),adjust Reserve Capacity Obligations (§A- 1.1.2),determine Accredited Capability for each Utility Partici- pant (§A-1.1.3),determine,adjust,or modify each Utility Participants'Operating Reserve Obligations (§§B-2.1.2,B-2.3.1), modify or change Total ORO,Spinning and Non-Spinning Reserve ratios,and criteria for generating unit capability for Operating Reserves (§B-2.2.3),and establish procedures to assure that Operating Reserves are available on the systems of the Utilities at all times (§B-2.4.3). 3 RLS\IOCRES..pp If the IOC members are dissatisfied with capacity or operating reserve obligations or criteria for the Railbelt,the IOC is an appropriate forum to resolve those differences. 8.How should a jointly-owned generating unit be treated for the purpose of determining reserve obligations? The AIA does not specifically address jointly-owned generating units.In the absence of IOC direction,it would be reasonable to assign each utility a percentage of the generating unit based on its ownership interest for reserve purposes. 9.Should Utility Participants be allowed to make non-firm sales of their Spinning Reserves? Nothing in the AIA precludes Utility Participants from making non-firm sales of Spinning Reserves,provided the non-firm sales can be discontinued quickly enough to insure system reliability. (§B-2.4.2) 10.If a Utility Participant sells firm or non-firm power,should the selling or the purchasing utility be required to provide reserves for that sale? This is an issue that must be resolved on a contractual basis between the selling and the purchasing utility.Interconnected utilities should seek a consistent approach. Jurisdiction and Authority for Resolution:Only the IOC has contractual responsibility for resolving issues related to reserve obligations in the Railbelt.However,the IOC has tended to focus on the technical expertise of the Railbelt utilities and has been unsuccessful in resolving some of the fundamental policy questions inherent in this debate.Thus,it may be appropriate to convene the Railbelt Utility Managers to resolve these policy questions. In addition,resolution of certain technical questions may depend on the resolution of closely-related policy issues. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Although the majority of the Railbelt reserve issues are contractu- ally reserved for the IOC,there are certain limited issues for resolution by the BPMC. *Declare Project capability *Establish criteria for the allocation of capacity and energy *Establish criteria for Participant Project scheduling RAILBELT UTILITY MANAGERS --POLICY ISSUES The following issues arise under the AIA,but have not successfully 4 RLS\IOCRES.pp been resolved on a technical level by the existing IOC members. These policy issues require the immediate attention of the Railbelt utility managers. *Address AEA's status as a "Utility Participant"under the AIA. *Determine the acceptability of selling spinning reserves under AIA and IOC operating criteria. *Discuss and consider possible amendments ormodifications to the technical and/or procedural provisions of the AIA. *Clarify the status of the investigation into "quality" and "system response"criteria for reserves.(Currently being discussed by ASCC.) *Affirm or,if necessary,recommend modification to,ASCC planning and operating criteria for interconnected utilities. INTERTIE OPERATING COMMITTEE --TECHNICAL ISSUES The following issues are assigned to the IOC by the provisions of Addendum No.1.The relevant contract provision is cited. *Determine each Utility Participant's Reserve Capacity Obligation.(B-2.1.2) *Determine each Utility Participant's Operating Reserve Obligation.(B-2.1.2) *Establish criteria for the approval of programs to provide load shed in lieu of spin (SILOS).(B-2.4.2) *Determine the spinning and non-spinning portions of each Utility Participant's Operating Reserve Obligations.(B- 2.4.3) *Determine the availability of each Utility Participant's Operating Reserves.(B-2.4.3) *Establish criteria for assessing the capability of a generating unit used to provide Operating Reserves.(B- 2.2.2 and .3) *Determine each UtilityParticipant'sAccreditedCapabili-ty.(A-1.1.3) *Establish criteria for system response when Spinning Reserves are sold.(B-2.4.3) *Establish criteria for determining the reserve require- ments of jointly-owned generating units.(B-2.1.2) Summary and Recommendations The range of issues outlined above is extensive and potentially contentious among the Railbelt utilities.Issues that the IOC has been unable to resolve are identified above and should immediately be considered by the Railbelt utility managers.Simultaneously, the IOC should begin the task of establishing the various technical criteria,definitions,and requirements it is charged withdevelopingundertheAIA.The establishment of objective,agreed- 5 RLS\IOCRES .pp upon criteria for accrediting generating resources,determining reserve obligations,assessing generating capability,etc.could allow many of these issues to be resolved on a more objective,less political basis,thus insuring that adequate reserve capability is provided in the Railbelt. 6 RLS\IOCRES .pp le .---aa DR AFT RAILBELT™ ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY RESOLUTION NO. A RESOLUTION OF THE ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY RELATING TO THE ADMINISTRATIONOFINTERTIEGRANTS WHEREAS,in Chapter 19,SLA 1993,the Alaska Legislature appropriated approximately $90 million in grants to finance the development of power transmission interties between Healy and Fairbanks and between Anchorage and the Kenai Peninsula; WHEREAS,Chapter 19 further established certain conditions which had to be satisfied before such grant appropriations were effective; WHEREAS,one such pre-condition required that the Alaska Industrial Development and Export Authority ("Authority")and the Alaska Department of Administration ("Department")approve an agreement executed by and among the utilities participating in the Intertie projects; WHEREAS,the utilities participating in the respective intertie projects (the "Participating Utilities")have negotiated an Intertie Grant Agreement,attached hereto as Exhibit A; WHEREAS,the Authority and the Department executed the Intertie Grant Agreement;Post-It™brand fax transmittal memo 7671 |4 of pages >cc Ca.¢©[alien Sool Ton Lab Oept.Phone # Fax #Fax # owe ww -Fe ated NE Oe Pree we ae mae 8 tee te ee WHEREAS,execution of the Intertie Grant Agreement by all of the Participating Utilities is anticipated on or before November 15,1993; WHEREAS,the Authority,the Department,and the Participating Utilities also intend to execute a Delegation and Transfer Agreement,attached hereto as Exhibit B,on or before November 15,1993; WHEREAS,the Delegation and Transfer Agreement provides, inter alia,for the delegation of the Department's grant administration responsibilities to the Authority; WHEREAS,the Delegation and Transfer Agreement further provides that the Authority shall act as the custodian of the grants,and establishes terms and conditions with respect to administration and disbursement of the grants; WHEREAS,the Delegation and Transfer Agreement provides, among other conditions,that grant funds may not be disbursed until the Authority and the Participating Utilities execute a Grant Administration Agreement; NOW,THEREFORE,BE IT RESOLVED: 1.Execution of the Intertie Grant Agreement and the Delegation and Transfer Agreement by the Executive Director is hereby confirmed and ratified. 2.The Executive Director,or his designee,is hereby authorized to take such actions which,in the Executive Director's reasonable discretion,are necessary to undertake those rights and responsibilities required to implement the Delegation and Transfer RESOLUTION NO.PAGE 2 Agreement,including (but not limited to)execution of a Grant Administration Agreement. DATED at Anchorage,Alaska this day of 1993. Chairman (S EA L) ATTEST Secretary Fs \AIDEA\ENERGY \KAEO998 RESOLUTION NO.PAGE3