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HomeMy WebLinkAboutAK Intertie Operating Committee 7-21-2005Alaska Industrial Development and Export AuthorityAl Alaska Energy Authority August 17,2005 Mr.Bradley P.Janorschke General Manager Homer Electric Association,Inc. 3977 Lake Street Homer,Alaska 99603 Fax:(907)235-3323 Mr.Dave Calvert Utility Manager City of Seward P.O.Box 167 Seward,Alaska 99664 Mr.Joe Griffith Chief Executive Officer Chugach Electric Association,Inc. P.O.Box 196300 Anchorage,Alaska 99519-6300 Fax:(907)562-0027 Mr.Steve Haagenson President &Chief Executive Officer Golden Valley Electric Association,Inc. P.O.Box 71249 Fairbanks,Alaska 99707-1249 Fax:(907)224-4085 Fax:(907)458-5951 Mr.Jim Posey Mr.Wayne Carmony General Manager General Manager Anchorage Municipal Light &Power Matanuska Electric Association,Inc.and 1200 East First Avenue Alaska Electric Generation and Anchorage,Alaska 99501 Transmission Cooperative,Inc. Fax:(907)263-5204 P.O.Box 2929 Palmer,Alaska 99645 Fax:(907)761-9349 RE:July 21,2005 IOC Meeting Transcript July 22,2005 Alaska Intertie Work Session Transcript Alaska Intertie Repairs Financing Scenarios Gentlemen: Enclosed for your information: 1.Transcript of the July 21,2005 IOC meeting at Matanuska Electric Association; 2.Transcript of the July 22,2005 Alaska Intertie Work Session;and3.Alaska Intertie Repairs Financing Scenarios. The recording of the IOC meeting on July 21,2005 was not of the best quality so there are some textual gaps in the transcript,but the substance of the discussions was recorded.The Intertie Repair Financing Scenarios include bond and loan financing of $3,$5,and $7 million over periods of 7,15 and 20 years.A summary table of these scenarios is provided as a cover sheet for the detailed analyses.The table also lists the assumptions for the loan and Bond 813 West Northern Lights Boulevard *Anchorage,Alaska 99503 ONT 1940 INNA 2A LAV ANT INED INAA «2 TAIE Donn FAL ACIZA CNATINA O00 FANN AEN.oe August 17,2005 .*Page 2 analyses.Please call Bernie Smith at 269-4643 if you have questions regarding the transcriptsandValorieWalkerat269-3011 for questions on the financing scenarios. I heFcoutiveDirector RWM:bjmf H:\AEA Projects\Alaska Intertie Project\Correspondence\GM2005-02.doc cc:Valorie Walker,Deputy Director-Finance Bernie Smith,Project Manager INTERTIE OPERATING COMMITTEE MEETING July 21,2005 ; Matanuska Electric Association Conference Room Verbatim Transcript 1.CALL TO ORDER Chairman Dale called the meeting of the Intertie Operating Committee to order on July 21,2005.A quorum was established. _Members present:Henri Dale,(GVEA),Bernie Smith (AEA),Brian Bjorkquist (Department of Law), John Cooley (Chugach Electric,OC Vice-Chairman),Paul Williams (Dryden &LaRue),Tom Kelly (Matanuska Electric),Doug Hall (ML&P),Bob Drake (MEA),Bob Day (ML&P),Frank Bettine (MEA),Brian Hickey (Chugach Electric),Jim Walker (MEA) 2.PUBLIC COMMENTS [INDISTINCT DISCUSSIONS:STARTED AT 0450 ON THE TAPE COUNTER] Chairman Dale:|sent out two sets of meeting minutes;the April 21°from GV and on June 9"we had interim meeting at AIDEA.I'd like everybody to review or comment on those minutes.|dohavesomecommentsontheJune9"minutes.In my email |mentioned the title of the documents as being approved by the Committee but it's still considered draft.Various people's names weremisspelled.I'm in there twice;once spelled correctly and the 2™time incorrectly.Charley beeeee [indistinct]...From Chugach is John Cooley.From Homer Mr.Bob Drake is actually Mr.Bob Drake from MEA. We were at AIDEA and |think he held over.There were two things going on and |think he was there in the office;he's a member of the IOC. Chairman Dale:There was a member there before him that was there._[indistinct]..... Chairman Dale:Last time,not this set of minutes but the time before,and |know you weren't here, there was a large argument that the members of the IOC be separated from visitors and the representatives from MEA and AEG&T. It was asked that they be separated in the January minutes. [indistinct conversations] Chairman Dale:So we were joined by Brian Hickey (Chugach Electric). Also on the June 9"minutes,there is a reference in the 2™page about ¥2 way down to the 138 KBline;that should be read "KV line”.On the 3°page about %way down there is a quote from me; apparently |was incoherent at the time.I'm not sure what |was getting at and the author wasn't either.|don't exactly remember the context of it.We were obviously talking about not being able to do controls at certain times due to the rivers being frozen;that sort of thing.We were talking lOC Meeting Minutes July 21,2005 Page 2- about access and what was safe.|don't exactly remember what |said so |don't have a problem striking it.It may very well be what |said. There's one more on the last page reference to the IOCMSC.There was some discussion at the time having to do with Martin....[indistincf]..... Any other comments? Bob Drake:At some point in the June 9"meeting you'd made a comment that [indistinct] instructed to stop work on his project.There was no mention in the April minutes. Chairman Dale:{don't remember a vote or what we said.My recollection was that the tower project that they were doing would use the remaining monies of that project to do the other things we'd asked them to do based on the spreadsheet.|don't remember a vote as such. Any other comments on the minutes? John Cooley:On the 2 page under ......[indistinct]...,the TOC authorizes a base veveee [indistinct]...and |think the word should be "requires”a base project and in the nextparagraph,the 2™sentence goes,"that's basically "The first part is the electrical component whichis4%ft per 185 KV”and delete the rest of that.whatever.....and then the 3"to the last paragraph it says (lets change the last sentence to read),"from the design standpoint,it is usually less than 3 feet'.The last paragraph,"the final calculations”...........change the word "calculations”to minimum clearance,snow depth,and then continue with data and obstruction height. That's it. John Cooley:After the work order what was the decision on the wording error;the decision "from the design standpoint”? Bob Drake:"It is usually less than 3 feet”. Bernie Smith:|think "1 to 3 feet'would be more appropriate. Chairman Dale:On adoption for our meeting,we will adopt the June 9"minutes withmodifications.What about the April 21°minutes? Chairman Dale:April is ok as submitted.Any other comments or is everybody reading? Chairman Dale:Modification of the agenda.You have the agenda before you.Are there any changes or additions anyone would like to add to it?There are two things in there that are not commonly in our agenda is the discussion of some outages that we've had recently. Bob Drake:The only change |request we make to the agenda is under 6L.That's an opinion and not a fact so it should be stated in such a way as to not look like a fact. Chairman Dale:Any additional changes.Well,we will approve it then.Any reports and correspondence?Dispatch Committee has met recently. Doug Hall:Dispatch Sub-committee met/conducted a teleconference Tuesday at 10 o'clock.The primary was discussing the outages that have been occurring and maintenance.Primarily was the outage that occurred last Thursday.It had a significant impact on the electrical system.[indistinct] One of the biggest things the Dispatch Sub-committee came up with was communications between control centers.The Dispatch Committee is meeting next Tuesday prior to [indistinct » !OC Meeting Minutes July 21,2005 Page 3 Chairman Dale:Reliability/Protections Sub-committee.As far as |know right now they haven't met.Last regular meeting we assigned Doug Reuter to be the chairman.As far as |know he hasn't brought you guys together.Care to give us a status report on where you are? UNIDENTIFIED SPEAKER:!haven't heard anything from Doug. Chairman Dale:You guys haven't met this quarter? Doug Hall:No. Chairman Dale:Ok.[indistinct........]One of the big issues you have being at these meetings; there's a lot of things we need you guys to look at and if you can't do it yourselves,we need you guys to propose how else it is to be dealt with.|know we all have a lot of construction going on and I've written letters to Brian and others.They all say that you guys are really busy but there are things we need you guys to look at also.I'll talk to Doug about getting you guys together. [indistinct] Were either gonna meet tomorrow.|think they were gonna meet on Friday.Anybody here that normally sits on that.|think Barton usually did;isn't he involved in that?Oh well,|know how it feels. We were talking about "Machine Rating”Sub-committee.Barton used to sit on that;|assume that you do also,or will.[indistinct].Ok,so we'll be hearing from them when they do meet. [indistinct]and Communication Sub-committee.|'ve been seeing some information.....They were to have a recommendation for communications control center but at the time my understanding is that at the last moment there was some discussion on termination and |know that Paul Johnson is talking with my guy on that. Bernie Smith:What termination are you talking about? Chairman Dale:Instead of using the old control microwave because ......[indistinct]...,we're talking about using fiber and it's called terminating at different locations.[indistinct.......] There was also some discussion that there be dual caps.That doesn't seem to be the case. Apparently we don't have dual caps anyway but one of the selling points they were working on was having.........+and that may not be the case either,they are still looking at that. Heat Maintenance Sub-committee?We have the minutes from that.We discussed that. keene [indistinct]...Sub-committee had met,or some of the people did.There is a -Bernie did send out the minutes on that also.We have a topic before session to discuss the budget itself.|guess we'll defer......... The Sub-committee usually meets once a year prior to budget time. Chairman Dale:Yes,everybody else wasn't sure whether we were meeting or not meeting and I'd called Baron the day before as |was on vacation |suddenly see that we were meeting tomorrow in Anchorage with a question mark behind it."Il”knew we were meeting. Doug Hall:They actually adopted a budget...... IOC Meeting Minutes July 21,2005 . Page 4 Chairman Dale:There was no vote to adopt which is why we're going to be discussing that one in session.My comment on the budget minutes is ......[indistinct]...attributed to working for MEA and there was something about this 3 FDS's having something to do with Bradley and it did not. Chairman Dale:Ok,Intertie Status Reports;|have seen some go through,any that we talked about at all in the Budget Sub-committee,any comments on the related status report? John Cooley:You have a question that said the outage reporting ......{indistinct}....MEA getting those off the web and being able to update them.[indistinct] You need to fill out the data for years on any of those outages that affected you. Chairman Dale:Ok,communications received,major communications that we received......letters. One of the things that ......[indistinct]...ordered us to do was to have everybody send each other letters authorizing who was to follow up on that.|sent mine out.{don't know that MEA has responded.|think Tom was at our current meeting;he wasn't in position to say one way or another as to who the person is that the authorized representative.The Dispatch Sub-committee, when we met backin April,a day or two later,you guys had sent out your letters.Ok,then we got various proposals on statements of work mostly from Dryden &LaRue and Art having to do with snowload. Ok,we have some visitors.Any comments related to items on the agenda?After recess,|wouldrecommendthatwedeferuntillunchtime. Chairman Dale:Ok,we're in a work session.Dispatch Sub-committee,is there anything this body needs to discuss related to the activities that they are doing?Remember that the last time they met they discussed one of the reasons,outages....and we'll talk about that one later in work session;so is there anything else we need to discuss about the activities of the Dispatch Sub- committee? John Cooley:One of the things we need to discuss is _re-emphasize ...[indistinct]....communication,particularly as it involves switching...[indistinct]........ ....online without telling us its online....36 hours ...[indistinct].......dispatchers were working through the numbers figuring out why the numbers were out of range and we looked at manual points and yeah,there it is.It started yesterday about 1400 hours and we called MEA and asked them.........[indistinct]...We called yesterday about 1400 and there's the same thing.You guys choose to leave the switch open in the position,that's your prerogative,it's your switch,but we need to know when you're doing that because it does change the flows system,and depending on which way the ....it's significant and we need to know when you guys are doing that......{indistinct]..... In the control centers,we're trying to get everybody to talking to everybody else as far...[indistinct]. ...way to improve communications between control centers.What we need more than anything else is for supervisors to reaffirm with their people that it's imperative that you keep the other utilities advised of your actions and not just to pick on you because all of our people in kind do the same thing.They support this mentality where they think they are cut off from the world when they are not,they are connected to the world.What you do here impacts everything else.Pick up the phone and talk to Golden Valley.It's just something as supervisors we need to make sure that all the people working in the control center understand. Chairman Dale:The other part is that they need to be specific whether than "can you help me”,or "have you got a little bit for me?” JOC Meeting Minutes July 21,2005 Page 5 Doug Hall:A little bit to MEA is a hell of a lot different than a little bit to you.And that is true;we have actually pulled communications off the tapes where one dispatcher says something,and knows exactly what he means but he says it in such a generic way like "can you help me”.Well, what are you looking for,reactive,real;exactly what kind of trouble are you getting?What the hell are you asking for and ask the questions specifically;say what you mean and mean what you say is what |tell my guys.Pick up the phone and say,"did you loose a unit,did you loose a line?” Something,be strong and specific.[indistinct] [indistinct discussions] Doug Hall:There is an excellent article in the Power News issue of May.It talks about what the Midwest.........[indistinct]....basically holding exercises now because .........[indistinct]....these blackouts.If we can't help each other,we're in trouble.This is what they are doing,they are setting up exercises to try to enhance communications between the control centers and actually putting the guys through drills because that's the key and our systern is getting more complicated and more difficult to work than it was 20 years ago.We gotta get our people better adept to handling it and we're gonna have to step up to the plate and figure how best to get some hands on communication training that will allow .........[indistinct].......out there. . Chairman Dale:|agree that the control centers do need to communicate with each other more.At one time just before the end,just before MEA got dumped off there was one of my guys |think went through you as ("Southem ")operator to one of your guys as Southern operator to tell MEA they needed to reduce load and it became apparent that they were off.Your guys weren't too familiar with being a middle man in that position.Do you think that's where you should be,if I'm in an "islanded”position and |need to talk to MEA,should |be going through the southern operator; which is what we normally do? Chairman Dale:Yeah,that would normally be correct.|think the difference was even at that point in time;I'm not sure if.......findistinct].....middle man You were islanded with MEA.|think that you were still sitting there thinking,"well you guys were out there......[indistinct]... Doug Hall:We didn't fully understand because of the 6 pages or 8 pages of alarms coming in. That fact that you guys were.......[indistinct]|don't think he understood;there was a breakdown in communications.Your frequency was not saved correctly. Chairman Dale:We had...[indistinct]......frequency but lousy voltage;we couldn't save a lot of voltage. Doug Hall:So |don't think he understand,and it was a breakdown in communication. Chairman Dale:One thing for you guys,|know you don't control the telephone people but during this outage and not uncommonly in other outages for whatever reason your phone book out here has Golden Valley listed and it's not uncommon for us to get MEA customers calling us with outages.|don't know why that is because MEA serves Cantwell..........and we do get a lot of them and we just tell them to keep on trying;that we don't serve that area.It's gone on for years and every time there's a big outage we get a few calls.It's just something you may want to talk to the telephone people about and clarify ............. There is some confusion in the telephone.Usually when you're having outages,we don't,so it's not a big thing for us;it's not like my guys are busy but there's some confusion for your membership. lOC Meeting Minutes July 21,2005 . Page 6 Bob Day:Especially if they don't know who they are a member with [laughter,chatter] Chairman Dale:Reliability/Protection Sub-committee Chairman Dale:Guess we'll just say again what we've said before.I'll be getting with your chairman on that;all you guys,not just you but all the committee leaders,committee members need to get together.And now MEA have its representative for that?Is that gonna be Frank or do you have somebody else that's gonna be on the Committee. Bob Drake:We haven't talked about that yet but |think Frank will probably be involved. Chairman Dale:So is there anything that the IOC needs to discuss versus the work of the Machine Ratings people?I'm not aware of anything. [indistinct].......they are busy doing things,they have not produced anything yet but |know they have quotes from all the vendors and have me doing it.|don't have anything that needs to be discussed on that./ Bob Drake:You were going to be replacing ("Douglas”).Have you? Chairman Dale:That's correct.We haven't yet,however,the engineer that's doing that work has 'been checking in to substations that we have those other meters at.I think he's back on the project.|think the last time |talked to you,it was going to be like fall or somewhere in that time period and we will certainly continue to have access to it also.We all are supposed to have access but nobody has bothered to call........ We also putting in a recording meter at Douglas that takes 15 minute data for the entire month. We have older recording meter that's getting harder to keep software updated on so we're replacing all our old stuff and we're replacing that one also since they are bringing us up to speed on that;we're supposed to be up to speed;gotta get that stuff installed.We have a really old PC sitting in the corner of our dispatch center.|don't even remember if it has Windows on it.It's software we used with those recording meters;|can't throw away that PC.The operating system it uses is the vintage that the DG's use,there's no upgrade for.Every now and then that PC starts making noise and we worry about it. Chairman Dale:Ok,the maintenance Sub-committee;is there anything this body needs to discuss about their activities? Chairman Dale:There was a question we had the other day;apparently you guys had sent a copy of the clearing contract out to all the GM's or something like that.Steve sent it out.Why,after 6 months did that suddenly surface?|thought he'd received it. Doug Hall:Steve asked me to send this;one to you,Posey,Waggoner,Diane,[indistinct] TAPE 1 ENDS Tape 2 (side 1) John Cooley:.....outside of a single year. BERNIE SMITH:|don't understand why one of them (indiscernible)one of them that goes. Chairman Dale:The SVC one is critical according to the procedures... 10C Meeting Minutes July 21,2005 Page 7 Bernie Smith:It's obvious that you need at least a spare for that particular one?Whether the maintenance plan works or not -|mean how long is it going to take you to get one (indiscernible). Chairman Dale:We would not be able to get one if it did fail.The manufacturing time to have something reverse engineered would be extensive.However,one of the topics that the Reliability Committee is supposed to look at is this need for the SVC is worded back in 1984 the way our systems were.Since then I've built the Northern Intertie,plus upgrading on 37+builder bar best which is just like SVC that's at the end of that 138 line. Chairman Dale:The intertie works just fine without the Healy SVC.The concern is that if it was off and that you had a problem (many people talking at once,indiscernible)-by default that there could be damage to the Healy (indiscernible).It may be that Golden Valley releases you guys from the liability on the Healy unit. Chairman Dale:That kind of situation.|realize you guys don't understand all of what's behind this but there are a lot of options as it goes out.But right now we have a procedure that we follow that is written up in the mid-1980s that says when the Healy SVC is off you take the intertie out of service. Bernie Smith:(indiscernible)rob parts from other SVCs? Chairman Dale:Unfortunately you can't,with some parts you but there are parts that are unique to each one.Unfortunately when they build them the guy came out there -the back of the board is all wire wrapped pins and they put components on as needed and didn't necessary document what they did so the motherboards are unique for each one and it would be debatable whether you would be able to look at that mass of wires and in a timely manner put the proper components on the droper(sic)pins. BERNIE SMITH:So,that just means that you just go out and the Northern Intertie goes,we have to shut it down? UNIDENTIFIED SPEAKER:Controlled shutdown. Bernie Smith:Controlled shutdown.That means that you would be the one to (indiscernible) GVEA.You depend on the (indiscernible).But you do backup correct?You do have enough power to generate MEA? Chairman Dale:Yes. Bernie Smith:It just costs you more. Chairman Dale:That's correct. John Cooley:We depend on Golden Valley for spinning reserves. Chairman Dale:....barges,they would also have to carry larger staying reserves -it costs everybody,it is not just me -but |suspect I'm probably affected as much or bigger than anybody else.There are options,one of which is for our reliability.... JOC Meeting Minutes July 21,2005 . a Page 8 Chairman Dale:...To look at are we in the same situation that we were back in 1984?Back in 1984,my night time load in the summer would drop down below 30megawatts.100 megawatts was something you didn't even think about -we were 70 or 80 megawatts for a peak load. Much different system now then we were then.The big thing is that the SVC is a huge -the best,which is a huge SVC compared to what we have installed.Further away but is that sufficient.We don't know but we'd like to know. Bernie Smith:As long as it keeps operating for x number of minutes. Chairman Dale:No,the best -the far side of the (indiscernible)is contiguous.As a matter of fact |can disconnect all of the batteries and it runs just fine. John Cooley:|have a question that's more for the Reliability Committee -would that be better to make a motion and give that to the System Analysis Committee.One thing that we probably ought to face up to is that there is nobody on the Relo Committee who runs a PSSE anymore, that all went to the SAC of ASCC. (Indiscernible -many people talking at once) Chairman Dale:|don't see -|can't really delegate that to the ASCC as such.|can't delegate things... (indiscernible -many people laughing/talking at once) Chairman Dale:At one time we had discussed that probably SAC is -the thing is -well,|don't know about the goods on both sides -essentially the same group of people that... Bob Drake:Yeah,but my question was how would we relay the Liability Sub-committee to delegate to the SAC... Chairman Dale:It's something that we would like to see done because it is an important issue. And... Chairman Dale:This is something that being delegated to the utilities,the utilities have absorbed the cost of their own people same as the dispatch centers are absorbing... John Cooley:|think it's a question is that you could just hire Cody to go do it. Chairman Dale:And that's one of the things that we asked them to meet,is how are you going to conduct business when you guys are too busy to do business -are you going to hire consultants,are you going to do that -and they cost money. Bob Drake:At the very least if we're going to do that,say that we hire (indiscernible)then do it. Chairman Dale:Cody would be using the proper model,but somebody needs to oversee what he's doing,interface with him,tell him what to do and make sure the results are reasonable. But,I'm pretty sure that through the stuff that Cody is using model. Bernie Smith:Does that have the best -the intertie model in it? Doug Hall:(indiscernible)last |heard. iOC Meeting Minutes July 21,2005 Page 9 Chairman Dale:|don't know.I've asked on several occasions if we got the parameters and | believe we do.But!don't know that he has. Chairman Dale:Okay.Shall we....So I'm going to put up for a vote item 7 to not adopt the SVC.-Okay,Item G on the work session:Upgrade extension of intertie to Elin.We kind of talked about that.It's on our agenda as ongoing.Last |heard was it was in ML&P's board and it's just an update is that... Chairman Dale:I've seen a draft this morning (indiscernible)and |would like comments back and |don't know where -further negotiations with you guys or exactly what or...It's pretty rough -maybe you can get it cleaned up and (indiscernible)the comments,even just that | made this morning were typo (indiscernible) John Cooley:So do you think it is close? Doug Hall:|don't see any reason why not. (Laughter,various people talking at once -indiscernible) Bob Day:This is being half a decade,and |hate to make it sound that bad but just getting a project manager to start the process and that's just unheard of. Chairman Dale:Okay. Chairman Dale:Anybody have anything to add onto that -we'll move on. Bob Day:It's just that it's the draft of the (indiscernible)they would be project managers.. Bernie Smith:(inaudible)if that happens,are ya all ready to start the project? Bob Day:You guys got to approve it -it is a stage thing. Bob Day:|did talk to Phil the other day on other things and he was saying that he has a... Chairman Dale :....must be looking for work or something saying they had people available and he really wanted to get started on engineering that project so they're -either business is slow or... Bob Day:Yeah. Chairman Dale :So anyways,they are interested in getting started so they are ready to do engineering as soon as we get past this project management problem.Again,Item H is probably a placeholder,|don't know if |should keep leaving it in there,|was expecting the Corps to respond in a timely manner...We'll just keep it in there.As we all know,MEA,when the RCA gave the order,MEA went to the courts with it and we're waiting to hear back from them.That's your understanding also is that some day they'll give us a date.So basically that's a placeholder in the schedule to see how that goes.In the meantime we're getting our stuff in order with the RCA.The items they asked us to do. Doug Hall:(indiscernible)...do you guys want to receive all schedules? 1OC Meeting Minutes July 21,2005 . re ::Page 10 | John Cooley:The schedule (indiscernible)and that schedule can change almost two to three times an hour but sometimes 10 times a day,sometimes 12 times a day.|believe the order... Chairman Dale :The order says that MEA's board delegate will be copied on everything.Now, ML&P is the Southern operator,they get all the paperwork.And |guess the question is ML&P getting all of the paperwork which we have access to look at?Is that what you want or do you want the sheets coming over your fax machine? Bernie Smith:That's a lot of paperwork. Doug Hall:Yeah,it's significant.No problem for my guys to (indiscernible)plus your time,the fax will be huge. Chairman Dale:Each one,we get a stack about that high,you know,of all the schedules. Bob Day:(indiscernible)if that's what you want.You just need to let us know.If you want it. Chairman Dale:Next issue is Item |,Interconnect Agreement.You guys are waiting on me to provide the draft -1 haven't got that ready yet.The intent was that the way the Interconnect Agreement that all of the utilities'have agreed to so far really we're talking about small generation.I'm not talking about large generation,so...|will be providing you guys an update on that |don't have one at this time. John Cooley:Is this -|just gotta ask this question,is this -is this the one that Basin (sp)had put together that all of the utilities signed off on,|think it was a collaborative effort,|may have a copy of that here -it talks about... Chairman Dale:Is that the new one or the old one that we're talking about here? Doug Hall:The old one. John Cooley:Chugach did one for small generations for our own system but |think people are more interested in,you know,if somebody put a 10 or 20 megawaitt... Doug Hall:The way this thing stays is less than 200 kw,above 200 kw,above a megawatt, well,there are some things |would do with somebody that was 1 megawatt than somebody that was 100 megawatts.There is a big difference between those levels. UNIDENTIFIED SPEAKER:You ought to look at what we did -you shouldn't be starting from ground... (many speakers at once -indiscernible) Chairman Dale:You got stuck with this and my,what I'm doing on the draft is adding a new section and |don't recall what was said. Chairman Dale:It's inappropriate for working with a large generator.For example |think the way this is wrote up,if this were a small generator you're responsible for coming up with 100% of your load,is that what you would expect from a larger generator or would we offer to share it with spinning reserves kind of concept. Doug Hall:Um huh. 10C Meeting Minutes July 21,2005 Page 11 Chairman Dale:Okay.So,we're waiting on that. Chairman Dale:!'ll ask Brian.CEA's more modern copy. Doug Hall:|got it. Chairman Dale:Okay. Chairman Dale:Intertie insurance issues.That was the topic that Art had unless he has... Bernie Smith:(indiscernible)that |understand was do we want to spend $25,000 for the Patriot Act,in other words is there...terrorism insurance? Bernie Smith:...terrorism insurance.And |don't see any reason to spend it -it's not going to shut down if somebody blows up the intertie it's just going to make it more costly,so... Chairman Dale:Like good neighbors to the South? (Indiscernible -many people talking at once) Chairman Dale:What |was thinking was also,we did a comprehensive review and we're still reviewing it,but mostly done on Bradley Lake on various coverages.On what is appropriate in this day and age.|think Mike Cunningham of Chugach spearheaded that I'm envisioning something similar of that order -the amounts of insurance that we're all supposed to carry and that sort of things dates back to 1984 -are they appropriate figures in this day and age.It is certainly time for a review.There was a quantity put in the budget for doing that sort of thing,| believe it was $50,000.I'll leave that in there as a placeholder but since we have it budgeted we'll have the study done and then we'll have something to talk about in the future. Item K,Intertie snowloading problems and best practices.On the snow load problems,we had an interim meeting a month or so ago -various scenarios of what we could expect to see under the line with the snow conditions -criteria for designing lines -we were unable too -Chugach at that time had made a suggestion for a combination of them,the rest of us needed time to debate it.I'd like us all to decide what we want to do on that and we will be doing a vote on that. There was emails going back and forth and |think everybody was copied on it.Chugach had made a proposition -John had proposed that we use 23 feet as a minimum recommended ground clearance consisting of 4 %feet of electrical,5 %feet of snow,1 foot safety factor and a 12 foot obstruction height,which could be characterized as a skier with a 4 foot pole.He also proposed that the operator would calculate for actual snow depth.If there was less than 5 % feet on the ground could be allowed depending on actual footage.He says that Golden Valley in the email it says that they were good with that concept.ML&P in an email said they were good with that concept.MEA or AEG&T needed more time to study it and they did get back and emailed us that they did not believe that it was rated off,they did not believe it to be prudentbusinesspracticetorelyonloadceilsononlyonephaseonevery10"tower to tell what is happening on any conductor in any span.Therefore,AEG&T votes no to approving any minimum ground clearance as acceptable before the intertie is deenergized.We weren't actually asking for a vote but they stated what their position was. Does anybody care to discuss any changes to their opinion at this time.GVEA still feels that Chugach's proposal is a good one. lIOC Meeting Minutes July 21,2005 Page 12 Bernie Smith:Were you waiting for ML&P? Chairman Dale:Yes,|did get a reply from ML&P. Bernie Smith:You didn't read it... Chairman Dale:No,|just verbally said --|didn't read it.Yes,we did get one from Doug and | got some comments from the State also. Doug Hall:Do you think that statement says it all or is there more you want to expand on or... Chairman Dale:no. Doug Hail:...detract from it,or...Okay.Has anybody changed their opinion from what they had in the emails? Chairman Dale:Nope. Chairman Dale:We will put it up for a vote. Bob Drake:There's one thing |might add.I remember looking at the snow report supplied by (indiscernible)Construction.If |remember right,on one particular day,the snow station at Susitna High School measured at 45 inches of new snow and the one in Talkeetna was just a couple of inches.Tremendous difference between snow stations that are 20 miles apart.That's why we view that it is just not appropriate to base some arbitrary number that is not completely arbitrary.On what conditions may be throughout the entire length of that section of the line - conditions can be vastly different from a few miles away -the way those snow monitoring stations are. Chairman Dale:My understanding was that there would be some kind of a spread sheet so that you would be looking at each station -is that... Paul Williams:...to look at what the snow pack was doing out there... Paul Williams:...at every station... Paul Williams:...basically means every two miles. Bob Drake:The snow pattern this year was significantly different then what we have seen in the past.The snow pattern this year provided unbelievable amount of snow to the entire area that we are talking about here west of the Parks Highway.Trapper Creek,8 miles in off the highway at Trapper Creek,they had 12 foot of snow.It was nothing short of -on the east side of the Parks Highway there was never more than 2 or 3 feet of snow.The conversations we have had with the National Weather Service have indicated that the patterns subs -they were pushing the storms up the mountain and they were holding by the mountain and just dumping.They used the Parks Highway,they said that west of the Parks Highway is getting dumped on and there is very little snow falling to the East.We saw the pattern the entire winter.It was an unusual year and there was conceivably heavy snows and it always seemed to stay west of the Parks Highway. Paul Williams:The other thing is with patrol there -if we do want to start looking at the snow pack itself -they're basically wanting the entire look for the line,there is nothing keeping us tOC Meeting Minutes July 21,2005 Page 13 from adding a little bit more flexibility.If we want to have a peak at every mile or every half mile, that is certainly a possibility. Chairman Dale:We are still,as |understand,still planning on every 2 inches (indiscernible) decided to patrol out or by command by the ML&P dispatch center. Paul Williams:Somebody was... Brian Bjorkquist:MEA do you have any suggestions on how to improve the processes? Bob Drake:Well,there's a solution out here too.And that's (indiscernible)Part of our concern is that at the last meeting it was mentioned that they had no processes set.The snow needs to be taken care of.There needs to be a solution to the problem.Monitoring is not a solution to the problem. Bernie Smith:The estimates are from $18-$30 million... Chairman Dale:$32 million.The cost is only going to go up. Bernie Smith:So,question is who's... Doug Hall:ML&P's position is (indiscernible)for $32 million dollars we can build one hell of a fence around that right of way and keep people out.You can fence that right-of-way and keep people off a lot cheaper than you can do with inset towers with $32 million dollars.It's just a ridiculous solution with those kind of costs. Jim Walker:You wouldn't think it was a ridiculous solution if it was in your service center and if someone got killed.. Doug Hall:Then |guess we need to look at... Doug Hall:...then your liable... Doug Hall:...(indiscernible)this is what they do in America. Jim Walker:(inaudible)The problem is that we are picking up all of the liability issues because if there is a lawsuit if someone gets electrocuted,their estate comes looking for MEA because it is an MEA service center. UNIDENTIFIED SPEAKER:(inaudible) Jim Walker:The last time |looked it doesn't require you to be the owner to be on the lawsuit. Doug Hall:And that's the point.And the reality of it is,that's -the reality is every utility represented in addition with the State of Alaska is going to be named in the lawsuit.Golden Valley for buying,ML&P for selling,Chugach for selling,MEA for general purposes,and the State for owning it. Jim Walker:Probably AEA as owner and the utility responsible for maintaining and operating that track of the line. Doug Hall:Well,you maintain it,you don't operate it. IOC Meeting Minutes July 21,2005 Oe ,Page 14 Chairman Dale:Somebody was going to talk to you about the ability of removing snow load while it was energized.Did that every happen? Tom Kelly:Yeah.Actually,basically there are only two ways to go about this -either through a helicopter or you get out there on snow machines or an all track vehicle or something like that and |figure every time a storm comes through for seven miles of line (I think that's about 5 to 10 miles)a line is usually impacted on the bigger snow storms.So,that's about $20,000 to clear out a line and if we wanted to do it where we clear out the pole line every time it builds up an inch or whatever else then that's somewhere around $50,000. Bernie Smith:How do you clear it off? Tom Kelly:(inaudible)....hot stick Doug Hall:...The helicopter would clear the line... (indiscernible -many people talking) Paul Williams:Yes,it really has to be done on the ground either with a stick or Tom mentioned a bow and arrow. Paul Williams:It really depends on if the loads out and it sticks on there and basically the snow starts to kind of freeze to the line and you get ice build up and it is extremely difficult to remove only a foot or two so that means walking the entire length of line he is clearing.If it's fresh snow that it will unload the stand. Tom Kelly:|take it,it was mentioned earlier that even if we did inset towers that would be several years down the line.: Tape 2 (side 2) Chairman Dale:Okay,back to the budget.We were discussing the SVC.Let's continue on down naming off the big items and it looks like the SVC is going to be a contentious issue.The next good one |see down there is the right-of-way clearing which sounds like having the money for clearing it in this upcoming budget is where it is going to need to be so |don't see a problem there.It looks like we're not going to be spending anything last year.And $1,000.... Doug Hall:Last years'budget did not get spent? Chairman Dale:The $100,000.So that big increase probably is -and as |remember we did a mid-year budget authorization when the bids came in,so that's probably where that number came in.The insurance risk that was something Art did and we wanted to start with and to sort of do a review of if the amount of insurance we have is appropriate in this day and age.|think that was an estimate included in there.Well,no,|was down at $50,000,|missed the tower.Of the three towers that are having distress,we will be doing one of them and it doesn't matter which one that we do,but my understanding is the ones in Talkeetna are close enough together that we would like to do both of them when we do one for mobilization reasons. Doug Hall:The measurement... Doug Hall:That's right,it was in the winter and there was snow in the way or something... o {OC Meeting Minutes July 21,2005 Page 15 Paul Williams:(indiscernible)to determine... Chairman Dale:One of them looked like it had stabilized the other one.We weren't sure if we were getting different readings -we weren't sure because we were measuring in spring and one in summer and you know... Doug Hall:Have they ever gone out to confirm that measurement? Chairman Dale:There is a foundation -we thought there was a tower jacking -the grounds people went out there and cored holes and found that it was all ice lenses in the area and now it's --probably won't be anywhere -hopefully it will be under that,it's not looking like the foundation problem it's the ground is subsiding around it.It is not the pole jacking up it's the world lowering.It's not as bad or severe as it could be.|just heard a week.There's -the consultant,when you get this written,this is just discussion verbally,they haven't written the report yet.But we'll probably drill under it,fill up the gap where the concrete has come out around.We burrow under it,do some drainage repair and that will probably continue to be subsided as the ice lens melt out.Apparently they struck several,cored several holes and they were all substantial amounts of ice.It was just shear luck that the one spot that they drilled for grounding was in rock and everything around it is ice or substantial amount of ice.We have that in there. Doing one of them this year,the other one is stabilized,and the other one we still aren't too sure of.Do the tree trimming and then that brings us back to the SVC. The budget,we've got a couple of expensive projects going on;the clearing and the foundation. That's over %million worth of projects there.I'm not sure that is a good year to be doing the SVC -our budget is over $1 million more than what it was last year and that's a 30%increase... Chairman Dale:Might even be a 50%increase depending on how you do the division. Chairman Dale:|want to hear everybody else's opinion but my feeling on the matter is that | would like to strike the one SVC out of there for this year. John Cooley:I'll go first |guess.Since we received three different budgets in the past 6 daysorso.Honestly that causes us some concern.Since obviously yours starts on January 1*it is difficult to take any drastic increase in expenses into account this late therefore,we are not authorizing you to proceed with any of these three proposals.The other thing is funding -the Intertie Agreement,the budget is supposed to be presented to participants 13 months prior to the adoption before the fiscal year starts,and obviously we are a long way from that. Chairman Dale:We haven't... Chairman Dale:We haven't done that since AEA disbanded... Chairman Dale:Well,hopefully this isn't an indication that the legislature be funding... Chairman Dale:13 months. Chairman Dale:...to get it through the legislature and other things of that nature. 10C Meeting Minutes : July 21,2005 -OO -Page 16 John Cooley:So in the absence of having the (indiscernible)we won't agree to any budget expect the extension of the previous budget approved for the fiscal year (indiscernible)With the possible exception of being increased costs for the railway clearing,which is something we approved earlier this year. Bernie Smith:We would probably want to include the increased expense for your wheeling right? John Cooley:Well,if it goes into the budget,it goes into the budget. Chairman Dale:Actually,there were several things that did go down.Let's look at them.|think it was the taking out the SVC at 1.1 that bring us down to 2.2 compared to 2.0 where we are then 10%of what the other budget was. Doug Hall:Would you still need the 55 from last year's SVC repair? John Cooley:No,that was a study wasn't it? Chairman Dale:Last year there was an SVC repair under FERC 570.Was that the transformers? John Cooley:It was under spare parts. Doug Hall:Yeah,it was transformers. Doug Hall:That's only $12,000 in there,in reality.|mean... John Cooley:There's supposed to... Doug Hall:There was a transformer for you guys.And we used that to provide... John Cooley:They didn't do that -they got -Golden Valley was going to order a new one. Doug Hall:Yeah,we ordered two new ones actually,one for us and one for Golden Valley. John Cooley:Well,|don't think they were... Doug Hall:So you think it was the transformer failure and not some work for the SVC... (Indiscernible -many people talking) John Cooley:...replacing the transformers,the two or three -|called to try to have a work order set up at the job site (indiscernible-coughing)transformer in there so we could get away from the roundhouse. Doug Hall:Pll ask him,|remember there was a 13 inch... John Cooley:|remember that now,I'll have to ask him. Doug Hall:|think we're talking about two different transformers here.We were ordering some potential transformers that we had bought -we had two failures up there,one was a JOC Meeting Minutes July 21,2005 Page 17 (indiscernible)the other was a station service transformer,we actually had a fire in the control room. Doug Hall:Right,and that... Brian Hickey:You're right,we brought it back from Beluga because we had the big barge crisis over it.Getting on the barge,it was....We got it here,it may even be installed,|don't know. Doug Hall:...the reason we went ahead -we put it on hold for awhile and then what happened is the second drive back failed.The 2 year old... Brian Hickey:1|'ll check. Doug Hall:It may be done. Doug Hall:Yeah.|was thinking one of the outages he had he was doing something,maybe he broke it... Bernie Smith:So do we know if we need $55,000 or not? Doug Hall:Well,that's what I say,who cares... Chairman Dale:Yeah,|was just wondering if that was an ongoing... Doug Hall:No... Chairman Dale:Nothing carries over. Chairman Dale:There are certain ongoing repair charges that are up in the upper parts.Since it had called SVC repair that was something specific so that would be taken care of. Doug Hall:But,if he hasn't done it... Chairman Dale:That's correct. Doug Hall:Energy projects shows 530 million kilowatt hours of what Golden Valley's projection to take,is that correct? Chairman Dale:That is correct.I'm expecting that a large increase. Doug Hail:When's the North Pole plant going on there. Chairman Dale:April/May somewhere around that in 2006. Doug Hail:When's the testing start? Chairman Dale:Two months prior to that.It is supposed to be commercial and towards the end of April.I'm pretty sure it is going to be toward the end of May at this point.There will be some testing before then. Chairman Dale:We have load growth of approximately 35 megawatts that we're expecting between now and then. IOC Meeting Minutes July 21,2005 an Page 18 Chairman Dale:Substantial amount of unit that you are going above that and coming off will be taken up by a lot of load growth and stuff. Chairman Dale:Alyeska has been electrified and the Pogo Gold Mine should start operations, it's the smaller ones that you measure with multiple hands above... Doug Hall:How do you know there's such a dramatic increase? Chairman Dale:Well,it goes back when we did the forecast for last year which was April a year ago,|was out forecasting $60 dollar a barrel oil,now that it's looking like $60 dollar barrel oil | expect to be buying a lot more night and day throughout the next year. John Cooley:So the projections would stay the same even if we cut the SVC's? Chairman Dale:By usage?Back when I made my projections of my usage was based on costs similar to what we were already doing,|wasn't expecting an $11 dollar megawatt hour wheeling at that time,|was figuring it would be something like it is now and that was based on that.If we clear things a couple hundred thousand either way that's not going to change things dramatically -if we come out with a couple of million dollars it will change projections.Catch 22 that you are always in when you are trying to budget -how much are you going to buy but you don't know how many...We'd run numbers to see what my purchases would be at the higher number although it's safe to say it would probably be lower which would escalate to an even higher wheeling...The way -typically,basically the intertie is run at cost and what I'm saying is that it is the million dollars or cost.In this budget that we just had handed out and |would like to get it back down.We're doing two expensive projects;the clearing and one foundation and | don't mind doing a few studies;insurance and... John Cooley:Not insurance,the insurance risk assessment. John Cooley:That $50,000 for that. Chairman Dale:We've got money in there to do a variety of things that we wouldn't normally be doing each year and I'd like to cut the SVC out of it. Doug Hall:(indiscernible)SVC should be running through that grant. Chairman Dale:Just in general,in any year not just this year? Chairman Dale:Yes. Chairman Dale:We'd all like to look at that but we'd also like to -you don't have to have an opinion now but when we do assignments something I'd like an opinion for the State on that. And,it is my understanding that it was to extend and upgrade the intertie to the extent that there is money left over from the by-pass.It was that everybody's understanding that could be put toward upgrade sort of projects. Bernie Smith:Is this a State...where the legislators approved it... John Cooley:If it's an appropriation in 2000-2001. JOC Meeting Minutes . July 21,2005 Page 19 Chairman Dale:This is really for the State and ML&P,we got a work item on this to discuss but come up with a project management agreement which |understand has actually been sitting in ML&P's court since July -at the last set of meetings Art said it was in the State's court but I'm hearing that was back in January/April. Brian Bjorkquist:Since end of March and in the middle of May they had a word version of it so they could edit it.So basically nothing has happened since then to my knowledge. Chairman Dale:Anyway,our assumption with several of these things,both the foundations and the SVC was monies left over from that project could be used. Bernie Smith:You have to go back to the intent of the law. Chairman Dale:It's a short paragraph... Brian Bjorkquist:I'm aware of this Bernie,and we can look into it and there have been other expressions from various utilities as to what can and can't be done with the monies.So,it is not just an opinion from the State,it is looking at anything. Chairman Dale:I'm not expecting something right here at the table here.It's just long and drawn out and that we may not ever be able to use then a lot of stuff that I'm putting off is based on that |think that it can be used.If I'm wrong then |need to know about it. Bernie Smith:How much did it appreciate? Chairman Dale:Well it's going to increase the amount that |pay by $1.1 million dollars.For something that is at cost sort of thing -operation of the intertie it goes up $1.1 million dollars. Brian Hickey:Well,from a maintenance perspective we'll continue to maintain it to the best of our ability.That ability is being degraded which will result in -in time it will result in longer outages to the intertie. Chairman Dale:We're aware of that. Brian Hickey:|actually support a package whether we go out for a bond sale or whatever we have to do to replace all three at the same time... Brian Hickey:Rather than trying to push it in one at a time,you're asking for trouble,personally. Chairman Dale:|have concerns with committing the one,now you're trying to force us to commit the other two.It was raised earlier and we didn't discuss it,I'm not too sure that we can commit to future years in the IOC,this is really year to year sort of operation.With the ability of people backing out with relatively short notice and back when -|have concerns like you said of just going by our good faith along saying that in two years from now we agree that we will purchase this item from you -this third component or whatever,but we don't have the... John Cooley:Legally there are organizations that are not allowed to commit to future year purchases without a board of directors approval. Brian Bjorkquist:From the State's standpoint,we need money to pay for it before we could (indiscernible-coughing) 10C Meeting Minutes _July 21,2005 - a - : Page 20 Bernie Smith:$60 dollar barrel of oil. Chairman Dale:|understand where everybody is coming from and anyways,if you guys have an opinion... John Cooley:If you got the $1,150,000 for the SVC out that leaves the budget at $2,176,000 and that puts ML&P's payment at $46,680;Chugach's at $72,830;and AEG&T is at $59,750 which is,you know,3-4 thousand dollar annual budget change,which seems like a reasonable way to go. Doug Hall:|understand your logical about the SVC's and seeing as how you are the one that's paying the lion's share of that bill,you better than anybody understand the ramifications.We cannot under the existing documents that we have fluctuate up... Chairman Dale:And you know which group we're going to be looking at don't you,Luke? Perhaps a year to see if that is still a valid elimination in line of having that vest and having that other intertie coming out of Healy. Bob Day:Gray was looking at that. Chairman Dale:That's when he was... Bob Day:Okay. Doug Hall:My only concern here is the 250,000 dollars for (indiscernible)repair.lf we determine that the Moody Slide area does not require work but Curry Ridge does,in the last estimate we had from Dale,he was talking more like $1/2 million to $3/4 of a million. Chairman Dale:Right.Originally,in Bernie's budget he had $750,000 for two of them. Doug Hall:For both Curry Ridge and Moody? Chairman Dale:No because Holy Cross is going forward. Chairman Dale:Right.(inaudible) Chairman Dale:Yeah.Okay.The $250,000 was something Rich had put in figuring there were problems on the one that is on the Golden Valley side.Which is now looking like it is less than that.And Bernie had --the line above it says zero in the budget that we have that you weren't able to attend.He had $750,000 and we had removed it at that time,or at least |request that it be removed.And it was brought up,the same thing,|remember now,is that we haven't gotten that set.One has to be moving and the other we aren't sure that it wasn't a bad reading at this point. Doug Hall:Right.But it seems to me that all said (indiscernible)If these readings are correct, it's not a question of if,it's a question of when the stacks would fall over -it's going to have to be addressed... Chairman Dale:We had mentioned that -John had reminded us that in the past we had made mid-year corrections.If we get readings saying that something bad has moved over there that's something that we had -one of the things that we wanted to do was get a budget that we could agree to at this meeting because we are in the next fiscal year.The being late is actually not 1OC Meeting Minutes July 21,2005 Page 21 uncommon for it to be ratified in the July meeting although it probably shouldn't be but first bills don't happen until you guys have heard voices in the middle of August so...You know,having the budget wasn't a big problem because the first bills with the new wheeling rates don't show up for another month from now.But |agree,and Bernie had brought up in the budget meeting that we really need to endeavor to have the budget ready for the fiscal year.That's the appropriate thing to do. John Cooley:Because there are so many expenditures that may increase in a project in the future,having most of you... Chairman Dale:And that's a good point.But... John Cooley:How do you prepare in advance of all of our individual budget years probably is appropriate too so that everybody... Bernie Smith:Does everybody have a budget -a budget starts in January 1... Chairman Dale:Yup. Bernie Smith:Why -|mean can't you amend this amendment,this agreement that ya all have and have a budget that... Doug Hall:Don't go there ..... John Cooley:Actually,the general managers are meeting tomorrow,it's my understanding, about this contract and hopefully they will have some kind of decision about how to fix some of this stuff. Chairman Dale:Right now we abide by what's in the Intertie Contract.The thing -one of the things that |find astounding that at one point in our history,if we all agreed to the same thing that's pretty remarkable.It may never happen again,it's happened once. John Cooley:When a contract was written in the early 1980's,the state legislature was set so that the state legislature would fund the operating expenses for the year and the utilities would reimburse the state as the year went on and the budget process had to go along with getting legislative approval ahead of time and all that kind of stuff.There was a big concern that if there overage the state general fund would get a hold of it,definitely the contract makes you zero everything at the end of the fiscal year and there is no way to carry any money over.The AEA got disbanded -APA turned into AEA and then disappeared and they quit doing that so we started sort of paying as you go.So that is where we are today.But,you know,what we really need is a repair fund or something that... Bernie Smith:R&R fund. John Cooley:...everybody contributes to and the excesses go into it and you fund these capital repairs and you audit it but it's never been set up. Chairman Dale:Okay.What we really need to do is to start managing like a business. (Indiscernible many people talking) IOC Meeting Minutes July 21,2005 a Page 22 John Cooley:The only problem is,who's going to pay for it.You know,somebody says I'll operate it and pay for everything,you know,that's... Bob Drake:It's the AEG&T handles all railbelts. Chairman Dale:We have different opinions on what that entity may look like too.We've discussed the budget and does everybody think they can go along with the $2.6 million is that a... John Cooley:Yes. Chairman Dale:$2,176,000. Chairman Dale:Basically,the budget as it is without the $1.15 million for the SVC in there? Chairman Dale:It's not quite what MEA has asked for which is an extension of the existing one but monetarily it is very close to the other one. Bob Drake:Actually itis.If you take the increase they have for their right-of-way,the increase in the budget. Chairman Dale:And the right of way clearly was something that was supposed to happen then...Yahoo,go with it. Chairman Dale:Okay.Then we get to section 7 on budget we'll have a move to adopt the budget as stated without the line item called SVC Repair. Bernie Smith:(Indiscernible) Chairman Dale:What? Bernie Smith:That's one toward your goal. Chairman Dale:Like John said,there is a meeting... TAPE 3 Chairman Dale:Ok,any other discussion on intertie..... Brian Bjorkquist:|just had one thing;that concept is the basis for what was proposed with this de- energizing when you have a certain amount of weight on it;that that was an actual basis for trying to make a determination when the conditions were such that there is a possibility;and if there is some way to improve that -wonderful-but that was the basis for the proposal in the first place.| just want to make that clear.So if anybody has any suggestions,on,how to improve it.|thinkthat's what we're about with moving forward with this and the 2™part that |hope nobody loosestrackofisthatwealsohavethe2”half where this is just the 1°stage where we're going to be establishing some parameters and we're going to have the independent engineer take a look at itandgiveusacertificationthatwe're accomplishing the safety factor type of thing.So there's that part coming also so whatever happens today is not the end of the discussion;if there's some way to improve it from the AEA's perspective.Anything we can do to improve it is wonderful. Bob Drake:[indistinct].....one phase every 7 miles.That's just not sufficient.[indistinct] JOC Meeting Minutes July 21,2005 Page 23 Doug Hall:Since we've had that and since we've been monitoring and we've sent Paul out to proof it,to accumulate information on the database.....[indistinct]......and typically we're at a good point now where we can predict because of the nature of the way the storms come through,we can predict where we are getting accumulations and we can see because we're not doing it beeeeeee [indistinct].....but from 50 to 70 it looks like we're getting accumulation,that's the center of the storm,that's where it's accumulating,.....[indistinct]...,that's what we're looking for.It's proven......[indistinct].......At least we've learned that. Chairman Dale:Ok,we have the majority of the utilities interactive using method of additive distances as Paul has presented.We will have a votein the formal Operating Committee asking for recommendations on the AEA initiative that Mike ran off earlier.We'll put that up for a vote a little bit later. Ok,next issue.Anything going out on that subject? Ok,Item L -recent outages while the MEA 115 KV line was opened.We had a couple of cases with the extreme lightning we've had the 230 line is open that Chugach has where based on an outsider......[indistinct]....it appears that MEA lost significant amount of customers needlessly.If you or Chugach want to talk about .......Golden Valley ended up recording 55 megawatts of your load,approximately 50 megawatts of your load while |had 70 some-odd megawatts ___s and trying to pull a frequency of 59 as high as |could get for about 25 minutes later.We finally had to dump it.Obviously that's not the way my system is designed to have a like that from 60 megawatts importing to 50 some-odd megawatts exporting.Had your 115 line ...[indistinct].......closed,it would probably mean a non-issue.You guys still feeling that's in your best interest to run that way operationally? Bob Drake:Not arguing at all but at times there may well be an argument that having it closed is a good operating decision,but we have found through our own review......[indistinct]....The majority of the time,my system functions better when it's open.[indistinct] Doug Hall:Just so I'm clear,Is this the same issue that we talked about during the RCA/Porter negotiations? Chairman Dale:|wasn't aware that you've had that from an outside view.|don't see a whole lot of what goes on there.The majority of the time I see you loosing half your load as opposed being able to keep it in and continue.Even though you've taken that one piece of loop and broken it so that only %goes out at a time,you've increased your exposure so that when %goes out another big chunk of your load goes out with it and vice-versa on the other side.From all the outages that I've seen,I'm surprised that your numbers in your statistics are saying you've reduced consumer...[indistinct].... Doug Hall:|would agree with him because |deal with quite a bit of analysis on #4 and #5 and we were having a lot of blackouts on the Kenai and at that point and time you guys had the best power ...{indistinct]...grid;better than Chugach because you had 3 sources.In the 80's when we had lots of systems blackouts Chugach commissioned SEI to study the grid and they produce a 1992 Southern Engineering Report that has .....[indistinct].....transmission lines.Basically we eliminated most of those blackouts that used to occur 3 or 4 times per year.One of the recommendations of SEI was that we close all .....[indistinct]....of the system.And we went through and did that.And that's a lot better way to run a transmission grid.It's much more reliable and it's closed.|find it hard to believe the stats are out there showing opposite,at least up until 1994-95 they weren't,so it would be interesting to look at all the data....[indistinct]....,and then we got some bad data,| guess. IOC Meeting Minutes July 21,2005 SO ” -Page 24 Chairman Dale:|appreciate everybody's comments but as |said before.......[indistinct]... Chairman Dale:Anybody have any questions on the outage of the 14°"? Doug Hall:We did have a chance to discuss it,at least in the Dispatch Sub-committee;Doug, myself,Steve from MEA.We discussed it quite a bit.One of my concerns at the time was that the Northern Intertie which contains a big chunk of you guys went .....[indistinct]......on several occasions and |did not see that going on in your system.....[indistinct].... At the time we went out and it was never restored.......[indistinct].....and that's why we never saw; every time we dropped down to......[indistinct].....He felt it was because you'd lost load and it stayed off ........[indistinct]......|had the issue I'd brought up about communication where we were going to talk to you through MLP but that didn't work out too well.As you know |have that relay in place that's supposed to look at rate of change and drop you guys off when we relay out during island conditions.We systemized it so we know that the rate of change is very high.That relay didn't work and we've had emails out trying to figure,find out why the rate of change triggered the reverse power of the 20 megawatts south triggered,there's also a correctional overturn element that triggered as it was supposed to and then dropped out so we think it was either something that ....{indistinct].....algorithm or something bad with relay itself.In either case that element isn't necessary for what we are doing so we will probably turn that piece of ....[indistinct]....off ....[indistinct]....since it is not being used.In this case it did drop you guys off immediately which we could've made the thing a very minor problem for us. Chairman Dale:I'm sure the reliability Sub-committee has a lot to add on to this.[indistinct chatter, laughter] John Cooley:.....If MEA had had a significant outage,our dispatcher would've realized where the problem was and we would've fixed it a lot faster. Chairman Dale:Unfortunately we had,my dispatcher felt pretty strongly that we would likely be islanded but your dispatcher felt pretty strongly that we were together so |didn't want to open up - if we were all going down,we all go down. Chairman Dale:I'm good with that [laughter,indistinct chatter] John Cooley:That's one of those cases of a little ....[indistinct]....,you guys say,"I'm at 59 and | can't hold it'and the other guy says "I'm at 59,9 and I've got a problem”. Chairman Dale:That was one of the problems in the first 5 minutes of frequencies trapped pretty good and that's when my guy called and checked frequency and we were reasonably close.And then immediately |have .........[indistinct].....that he'd already checked frequency so that he didn't think that there was a problem and then of course your guy kept reassuring us that we were still tied together.Yeah,it was just bad luck that when they did check frequency it happened to be a time when we were crossing.What ....[indistinct].....said about continuing communications,hadtheykepttalkingtoeachotherandsay,"I'm going through 1*stage shedding,then you would've known we were definitely different at that point.We would've been able to close the situation a lot sooner.When Dennis checked,the first 5 minutes we actually,surprisingly,because |shed 72 megawatts we were real close to the ......{indistinct}... Chairman Dale:Ok,|just wanted to bring that up;we keep seeing occasions where it looks like it's worse for you and it's certainly worse for us and I'm not seeing that many occasions where it's good for you. OC Meeting Minutes July 21,2005 Page 25 Bob Drake:My question is since you said you're willing to close it up for maintenance,how do wedeterminewhichonesofthoseareappropriate. Bob Drake:...[indistinct]...request it be closed for some particular reason,we would certainly take that reason into account when we discuss it.....[indistinct]....your decision. Doug Hall:.......[indistinct]......|suggest we set the message.......[indistinct]...........that didn'thappenThursdaynight.They were talking but if your guy had said,"You know that's the 2™time I've gone through 59.0 and what the hell is going on down there?”the Chugach and MLP guys are sitting down here going,"what the hell is he talking about 59.0,we are running high” Chairman Dale:|don't know that he brought that up.After the initial,in the first 5 minutes,|think it was discussion going on and various times afterwards.|think when they told you guys you could start restoring load,which didn't help us a whole lot,they also told us we could start restoring load, and that's part of why we kept going for L59 is that we both put in for breakers and frequency go crashing down and my guys said,"you know what,it sure doesn't seem like we're connected.” Bob Drake:How is it that the 3 main generators are the same?It doesn't have a meter up there that shows the other generators,what the frequency is. Chairman Dale:Part of,|don't see what's going on down here and they don't see what's going on.The 230 line was open on one end only and they tended to fixate at the end that was closed and everything looked good and breakers closed line must be in service instead of looking at the bigger picture,the whole picture. Bob Drake:........findistinct]....sshowed me the frequency in the ....[indistinct]....area was 59 and mine was 62.|suspected that we were no longer glued together. Doug Hall:What we were saying here is that there was dispatcher error going on because there's a process,you can go to one map and it'll tell you whether you're idle or not and the guys didn't bring up that map on either assistance.There's dispatcher error and we're not saying guys didn't, you know,there's plenty of information out there and if you've ever been in a control center when the whole thing kinda ices on you......[indistinct]....There's plenty of information out there.......[indistinct]......; Doug Hall:We were absolutely .......[indistinct]........until |talked to Kevin.When |asked how the hell did you have me island ......[indistinct]......He said,'It was easy,lightning struck the MacKenzie terminus and as a result we dumped you on the MacKenzie line.The breaker was outofservice.”These guys were on a2™contingency.The day that breaker was taken out of service for maintenance,the loop should've been wiped out.........[indistinct]...that is it. Bob Drake:Doug,practically we have breakers out of service every day of every week of every year and the loop outta be closed all the time because theirs is;we don't have enough people to sit down and figure out all of the "M”minus 1 scenarios everyday that might take out ceeeeeees [indistinct]......because they chose to open the grid up.|wouldn't buy into that because coming out of me........[indistinct]... Doug Hall:But in this case you got MacKenzie plat 2,you got MacKenzie fueling line all on that one piece of .......You should take that breaker out.... Bob Drake:|understand how the system works Doug.|'m just telling you that we do that everyday of every week,365 days a year somewhere in this system there's a breaker or transformer out of IOC Meeting Minutes July 21,2005 -a a ST Page 26 service and a dozen M minus 1 contingencies or a hundred for every breaker we take out and I'm not saying it could not be fixed figured out everyday with enough time and money an people but,- the answer's close up the transmission system.That's the freaking answer,it's not....[indistinct chatter,noise]..... Chairman Dale:One silver lining that |will add though is that apparently earlier that day MEA when they loop,did report it to .....[indistinct]...control centers.It was in his log and my dispatcher was ....[indistinct]....his memory because we talked about whenever open a loop you need to tell us.When they did open the loop,they did tell us.So at least that was one less thing they had to think about because it was just a few hours earlier,during the day shift -(this was 10 o'clock at night),but during the day they'd done some operations and they did report to everybody what they did. Doug Hall:And that's what happened last night. Chairman Dale:Alright,any other words on the recent outages?Hopefully this lightning season is a rarity.We've gotten more this year than we have any other year,even more than a decade. GENERAL DISCUSSION Chairman Dale:Anything anyone would like to discuss?Let's move on to 7;Formal Operating Committee Actions,and Acclamations. 3.Formal Operating Committee And Acclamations Chairman Dale:|have two letters for us to vote on.One is the Intertie Clearance Distance.Two proposals for our ...[indistinct]....One proposal is for,what I'll call is the CEA proposals,which is to use 23 feet of the minimum ground clearance,consisting of 4 %feet for electrical,5 ¥ft for snow, 1 foot safety factor and 12 ft for obstruction height and also for the actual snow depth.....[indistinct]....Anyways,we have that proposal on the board,which we will vote on and then we also have the MEA proposal.......AEG&T.....So we have the one proposal;the CEA Initiative.Let's go around at the table on the vote: Paul Williams:Before we vote,if |can interrupt for a minute.The snow depth of 5.5 is what Chugach wanted and if it's less than that we interpolate;what is that?|mean typically we have snow depths out there less than 40 inches so does that mean if it's 3 %feet and now instead of 23 we're at 21 or is there a safety factor you want all the snow capped at? Chairman Dale:I'm gonna let you read it here.My intent was that;5.5 feet was the max we've ever recorded out here.So this year if we only got 3 feet out there we could allow 2 %feet more clearance. Chairman Dale:Golden Valley will vote YES to adopt the CEA proposal.Chugach? John Cooley:YES Chairman Dale:....[indistinct,barely audible]....."The State” Bernie Smith:YES Chairman Dale:MLP IOC Meeting Minutes July 21,2005 Page 27 Bob Day:YES Chairman Dale:.....[indistinct,barely audible]...."AEG&T” Bob Drake:No Chairman Dale:|show 4 Yes's and 1 No;80%and it passes. Chairman Dale:Ok,the 2™to vote on and that's the budget.The motion is to adopt the budget as submitted without the line item called SVC repair. Chairman Dale:Golden Valley will vote YES to adopt.Chugach? John Cooley:YES Chairman Dale:....[barely audible]....."The State” Bernie Smith:YES Chairman Dale:MLP Doug Hall:YES Chairman Dale:.....{indistinct,barely audible]...."AEG&T” |Bob Drake:Yes Chairman Dale:The budget as modified is adopted. John Cooley:|think we need one more move to adopt the ....[inaudible "Net Peak')that's listed AEG&T 23.3 megawatts,MLP 18.2,Chugach 28.4 and Golden Valley 70. Chairman Dale:Are we required to adopt that or isn't the formula already there? Doug Hail:The formula's already there. John Cooley:We've always had it in the past. [indistinct discussions] Chairman Dale:|understand that......[indistinct]...don't have a problem with it.Actually Net Peak is a big deal even outside the budget typically because it happens in one direction;what | mean it's a non-issue but back in the day when .......[indistinct]..... John Cooley:If you end up not using all you say you used and made up for the deficit for the year, we get billed by it so |think it's important.And it's also just in case,you think somebody's lying about their peaks or something.It just makes it - Chairman Dale:|don't have a problem with that.Chugach has made a motion to adopt the Net Peak calculations as are proposed in the budget. 10C Meeting Minutes July 21,2005 Bn -re Page 28 Bob Drake:Excuse me but,that part |hadn't considered.|thought that this was something that was already a part of the process and if you have to approve it then I'm gonna have to go look at this closer. Chairman Dale:Is this a closer5 minutes or a closer longer than that?Ok,|guess we will not vote on that.|don't know that that stops the budget but the request that MEA has made is a reasonable request.|didn't have it on the agenda that we would be voting on the Net Per. Bob Drake:.......[indistinct]...long than that... [indistinct discussions] Brian Bjorkquist:On the Net Peak,if you look at §7.2.1,"the Operating Committee shall return aNetPerbyJune1°each year when a new participant becomes a party to this agreement". Doug Hall:It's just a share of that.......[indistinct]......for us to adopt that and |thought that share Brian Bjorkquist:............its is determined each year. Chairman Dale:It 'is'determined each year because it's based on your maximum through year peak demand. Brian Bjorkquist:Now whether that has to be voted upon for it to be determined or whether it's just a calculation that gets determined,|can't read that into this. Chairman Dale:|got last year's notes,July we were here and we voted on the budget but |don't show that we voted on Net Peak.|didn't bring any of my notes from prior to 2004. Bob Drake:Ok,lets go with the numbers that you got findistinct]......I'm not disputing this,|didn't realize that something was there for us to vote on John Cooley:In July of 2003 we're gonna go with the budget [indistinct] Chairman Dale:|was probably conducting the meeting last year and |didn't do it right did 1?| wasn't aware that |was supposed to,So.... |guess it would change some parts of the budget if we did a vote on it next time.Steve Bob Drake:It would be fine with me if everybody wants to vote...[indistinct].......or Chairman Dale:And like so many things,it may not matter [loud laughter,indistinct comments] Chairman Dale:Historically |do not have it on the agenda by mistake.Historicaily it appears that we do generally vote on Net Peak outside of the budget because it does have other ramifications, non monetary ramifications,so John has made a motion to adopt the Net Peak calculations. Golden Valley will vote YES on that,yes to adopt the calculations that are there.CEA: John Cooley:YES Chairman Dale:The State? Bernie Smith:YES .1OC Meeting Minutes July 21,2005 Page 29 Chairman Dale:MLP? Doug Hall:YES Bob Drake:YES Chairman Dale:Do you wanna abstain?[laughter,indistinct chatter] Ok,what we have,4 yeses and a question;it passes.It will only be an issue if some time in the next 12 months that the intertie "heads south”and you guys argue if you're gonna get a fair shareand|think there is a ....[indistinct]....charge;that there is a monetary ....[indistinct]....chargethat's tied up with that. John Cooley:No it's not,once they purchase......[indistinct]......they changed APA to AEA.Then they went away to fix the cash flow. John Cooley:If they can change that,how come you can't change the year end.......[indistinct]... wae? Chairman Dale:It was non-controversial.It's something we knew we were gonna pay and I'm not a lawyer,|don't wanna get into their business.,, John Cooley:But there's no wording in here that says that the Operating Committee can't change this contract. Chairman Dale:Right there,there is a paragraph that we can't change the contract. John Cooley:It has to do with the rates or whatever,so. Chairman Dale:Right.Ok,we had 3 ....[indistinct]....|don't have.Assignments:Dispatch Sub- committee,there are things that they are doing.|don't think we have any additional assignments for them.Anybody recollect differently? Doug Hall:|do have an assignment......[indistinct] Chairman Dale:Ok,Reliability/Protection Sub-committee,|am assigning their chair to get that group together to discuss [indistinct chatter,laughter].We need to know what the solution to that problem is.[indistinct chatter,laughter] Machine Ratings:|have no assignments for those.Heater Metering,continue on,|have no additional assignments for them.Maintenance Sub-committee:Don't really assignments for the Maintenance Sub-committee unless somebody else does.We would like the body or one of the Maintenance Sub-committee needs to be appraised on your clearing contract or if you do end up having to go with somebody else or whatever,we just want to keep informed on that. Chairman Dale:Typically,and |don't know how bad it is down there,but the time is critical but it is something you have to do eventually and if you miss a month or miss a couple of months not a ....[indistinct].... Bob Drake:|will probably give them a letter that says he has two weeks to [indistinct] Chairman Dale:Ok,the Budget Sub-committee,we have no assignments for them. Bernie Smith:We are going to have a mid-year budget review. loc Meeting Minutes July 21,2005 a a a a Page 30 Chairman Dale:...1OC to have mid-year to call the committee together for a review.We've never had one before we'll ask for it and maybe we'll get it.For next year the question is,of course, being several weeks into the fiscal year,is this something we wanna have behind us by the end of June? Bernie Smith:YES Chairman Dale:There was a recommendation in Kenai that if your year ends on June 30",itbetterbeoutthereandapprovedbeforeJune30". {indistinct,indistinct chatter,laughter] Chairman Dale:This is not an assignment but if John could provide me with the Qualified Interconnect Agreement that Chugach has.And last one,Bernie had brought up a good point as being quite some time since we'd gotten a list of all the names and emails of the members and alternates and Sub-committee members so |will send out each Sub-committee chair to compile a list their emails,send to me and |will send a copy to you Bernie so you will have an list of everybody. Bob Drake:Frank is on the committee and then can put himself on any committee he wants [indistinct chatter,laughter] Chairman Dale:So officially as of the end of this meeting Frank is the MEA rep and do you recall who your alternate was?Is it still whoever it was,which |don't remember?Charlie will be your alternate. Brian Bjorkquist:Excuse me.As|tried to explain that's not just a question for the State,that's a questions for everybody also because I've heard many opinions from many utilities represented at this table that are very conflicting and if you think that we are just gonna go out and tell you what it is,and,you know,|don't think that's going to happen. Chairman Dale:Ok,and assignment to ourselves to come back with what our utility........[indistinct] Brian Bjorkquist:We may have some discussions about how,what you think it means as what you thought it meant before and that type of a thing....[indistinct chatter,laughter] Chairman Dale:Ok,anything in particular anybody want to see on the next agenda?It will be at MLP. Doug Hall:In Oct or Jan? Chairman Dale:Next order is Oct,this is July,Aug,Sept,.......[indistinct] Doug Hall:There's 5 people and only 4 meetings per year,it doesn't stay the same. Doug Hail:We've been doing January for years. Chairman Dale:Last year when we did MEA,the next meeting we did MLP,|didn't look at the date on it. John Cooley:We did MLP in January. -1OC Meeting Minutes July 21,2005 Page 31 Chairman Dale:|think we did Chugach in January. [indistinct chatter] Chairman Dale:|have modified that agenda that we will meet at Chugach in October.|think | dropped AIDEA out of there because so many scheduled meetings that,uh.... Doug Hall:Plus AIDEA won't buy you lunch [indistinct chatter,laughter] John Cooley:.....[indistinct]....MEA and Chugach is on that day,so we need to move one of them. Chairman Dale:|will leave it on the agenda as October 20".If there is a conflict that you guys can't resolve,get back to me asap and I'm sure we can find out another time then. Doug Hall:We'll leave this one and change the other one to a week later?Ok. Chairman Dale:How many more assignments do we have;1 or 2?[indistinct chatter] John Cooley:There's like a $250,000 difference between this and here and it shouldn't have been. There maybe should've been a rounding error of $1,000 or something but |don't know what you did wrong.Something's not right.[indistinct chatter,noisy background] RECORDING ENDS Transcript of the Alaska Intertie Work Session July 22,2005 @ 10:00 a.m. Alaska Industrial Development and Export Authority Boardroom Anchorage,Alaska Attendees: Mike Barry,Chairman,AIDEA and AEA Mark Davis,DCCED Ron Miller,Executive Director AIDEA and AEA Brenda Fuglestad,AIDEA and AEA Karl Reiche,AIDEA and AEA Bernie Smith,AIDEA and AEA Brian Bjorkquist,Department of Law Joe Griffith,Chugach Electric Association Steve Haagenson,Golden Valley electric Association Jim Posey,Municipal Light &Power Doug Hall,Municipal Light &Power Ron Saxton,Ater Wynne Don Zoerb,Matanuska Electric Association Jim Walker,Matanuska Electric Association Frank Bettine,Matanuska Electric Association Rick Schikora,Golden Valley Electric Association Brad Evans,Chugach Electric Association Tim Barnum,City of Seward Rick Eckert,Homer Electric Association Convened:10:05 a.m. RON MILLER:We're going to keep a record of this meeting for our Board of Directors.For 'those who don't know Mark Davis has joined us and he is the designee from the Department of Commerce,Community and Economic Development.He is Director of Banking and Securities. Three of the General Managers from the utilities requested a work session prior to the AIDEA and AEA board meeting,after we sent our invitation.The topics for this work session are those set out in that June 24,2005 invitation,which are issues related to the Intertie Operating Agreement;no R&R fund or capital fund to finance major maintenance or upgrades;deferment of needed repairs;lack of compliance with the Agreement's terms and conditions;and we also indicated that we are willing to discuss any concerns or other issues the railbelt utilities wanted to raise.As |said,the General Managers requested this meeting so we will open the floor for the discussion of issues,concerns,problems,and solutions. JOE GRIFFITH:|guess we'd like to hear what are your issues that you reference in the letter. RON MILLER:Starting out,no R&R fund or other capital fund to finance major maintenance or upgrades,we can start with that. JOE GRIFFITH:Okay,what else? Alaska Intertie Meeting Page 2 of 211 June 22,2005 , -7 RON MILLER:Deferment of needed repairs.We can start with those two and then move on. RICK SCHIKORA:What else do you have on your list? RON MILLER:Well... STEVE HAAGENSON:He said lack of compliance or something. RICK SCHIKORA:Let's get the list all out on the table. RON MILLER:The Agreement's terms and conditions.We have been talking about needed repairs for nearly three years and we have not seen any movement to make those repairs or fund those repairs and our Board is pretty concerned about being stuck with liability for a line that is in serious need of upgrades and repairs.What we have heard through the IOC and other sources is that the railbelt utilities cannot understand why we are raising these issues and these seem to be staff issues but |asked our Chairman and Mr.Davis here so the utilities could hear first hand from Board Members that this is a Board issue,it is not a staff issue.That is one of the reasons we had it on the agenda for the Board Meeting for next Monday. JOE GRIFFITH:But there is no list,no agenda for the board meeting?At least we haven't seen one if there is. BRENDA FUGLESTAD:There's an agenda for the AEA meeting.Item 7A has Alaska Intertie, there is no content for the board packet at this time but it is on the agenda. JOE GRIFFITH:Good. RON SAXTON:I'm going to ask Brian,|guess.I'm not sure |understood that we didn't have a plan.|thought we had met a few times with AEA staff to talk about ways of financing repairs and the utilities said that they were agreeable to doing that once we figured out the scope of them and the proper way of financing.I'm not clear why that isn't on track.The IOC was identifying needed repairs and we already agreed and met and talked about working AEA's financing team to move forward and finance that. BRIAN BJORKQUIST:The last |heard with regard to that was that because of moving away from the inset tower fix to the snow load problem there wasn't enough projects to move forward on the financing and so it has falling back to where it was originally.At the |OC meeting yesterday,it was pretty clear that there was no plan.There were conversations about not even funding,even partially funding moving,forward on the repairs because the Alaska Intertie Agreement just doesn't provide a good mechanism for doing so.That there is conversation about not even starting the SVC repairs because to try to finance it in any fiscal year creates too much of a burden on the wheeling rate and therefore it is not doable.There has been some conversation in that regard but again,this is getting back to the Board,there has been no real progress.That is what we heard from the Board and you can hear it from them also,that continuing to talk about possibilities of the utilities possibly doing something to do funding when -at the IOC level anyway,the only thing that |heard yesterday and that |have been hearing from some time is that there is really no mechanism under this agreement to get things done that need to be done.|think that is the real concern.The other thing is that,and it came up attheIOCmeetingyesterday,that the real solution to the problems that we have under the Agreement is that we need an R&R fund.You need a mechanism for funding these things and Alaska Intertie Meeting Page 3 of 21 June 22,2005 we're not just talking about what's on the table right now because that is just the immediate problem.But we have a defect in the Agreement;there isn't a mechanism for the next major repair that is going to be necessary and the one after that.We have a significant defect in theAgreement;it just doesn't work for prudent management.|think that is also the perception,and we hearing that from the utilities also.And so that's what |think it is.There's a problem with the Agreement,let's get together and let's fix it. JIM POSEY:Question for you Brian,and maybe for the Board or staff.What is the minimum amount that you would consider bondable in order to have a fund to do these capital improvements?Does it have to be over $5-$6 million dollars or can it be as little as $3.5 to $5 million? BRIAN BJORKQUIST:|think that's the question that is on your shoulders. JIM POSEY:No,the question is back to you as AEA and AIDEA.What is that amount for bonding and paying it off over a series of years?We're talking about making capital improvements not R&R. BRIAN BJORKQUIST:That's a question that goes right back to the utilities because you are the ones that need to be comfortable with the financing package for any capital improvements. JIM POSEY:Let's not turn it into a catch 22.Is there a minimum amount that you guys could bond and put it into 15 years for us to pay off? RON SAXTON:It would have been easier to talk about this more casually.We had already agreed,the utilities collectively,at least most of them,that some reasonable amount of money to make repairs was appropriate and that some side agreement to address that was appropriate.And when we were talking about that the assumption was that it would be an amount large enough that it made sense for AEA to sell some bonds and that we would agree in a side agreement to be responsible for the repayment of that.So none of that sounded contentious or controversial and |thought that we had agreed to that already.The only thing that changed was that it turns out that some of the repairs maybe cost less then people had thought so you get the question of has it gone down enough that bonding doesn't make sense anymore and some other method of finding the money makes sense.That's just sort of out - ask bond people... BRIAN BJORKQUIST:And all I'm trying to articulate Jim,is that |think that it is the question on your shoulders,when do you have enough debt for bond financing to make sense?And that's the question for the borrower and the utilities are basically the borrower. STEVE HAAGENSON:But,you'll be issuing the bonds. RON SAXTON:The question in fact is just do we want to have you sell bonds for us.|can get the answer to that,we can figure that out. STEVE HAAGENSON:We can't sell bonds,we don't own the asset. RON SAXTON:No,we want them.Is it cost effective at $5 million or $6 million or $20 million... Alaska Intertie Meeting . Page 4 of 21 June 22,2005 Oe . BRIAN BJORKQUIST:Let me be clear here,I'm not running the show here and |think you need to hear from the board members also. JIM POSEY:|did address the question to everyone on this side of the table.What is that amount or is there a minimal amount that you would consider as part of a financing package, 10-15 year bond for up to $6 million or $12 million dollars depending on what we voted on,the IOC voted on yesterday. BRIAN BJORKQUIST:And there were just several questions with my name as the premise, and |just want to make it clear that I'm not running the show here. JIM POSEY:Okay. STEVE HAAGENSON:Just a point of clarification too.Brian was talking earlier about the SVC repairs and it would have a big burden on the wheeling costs.That was expensing that season one year,not putting in long term financing.Just so you understand that it won't kill the intertie if you have a long term package,but it will severely limit the intertie's wheeling rate if you try to expense all of the SVC repairs in one year. RON SAXTON:|don't think there is disagreement that some of these repairs need to be made and |don't think anybody arguing about who has to pay for them. MIKE BARRY:Is there disagreement that it would be sensible to have an R&R fund? RON SAXTON:We have to talk about that.Whether you put the R&R fund in front and pay for it or whether you just pay for the repairs and have a plan for paying for them as they arise and spreading it out.I think either one of these mechanisms is reasonable. MIKE BARRY:From my experience as a lender,it is much easier to finance projects that have an R&R fund and have some sense of an operating history that works.And when our board was brought into place in early 2003 we had orientation meetings,most of us didn't know anything at all about this and we were presented,right in this room here,with a laundry list of things related to AEA and the intertie and the Intertie Operating Committee,where the Intertie Operating Committee was presented in October of 2002 with a detailed list and agreed,the Intertie Operating Committee,their Technical Subcommittee agreed that these things needed to be done.And now we are sitting here 2 %years later,after our orientation and nothing,not a single thing on that list has been done.It does not seem to be something that if we own the asset we should allow to continue.If you guys that are responsible for it can't figure out how to get it done then maybe the Agreement doesn't work.That's what the meeting is about.If the Agreement doesn't work,we have the authority to terminate the Agreement with several years notice.It's not like it's going to close the line down tomorrow,but its -how many years should we sit around and wait,until something happens.Do you guys want to go another 10 years or actually until the line itself falls down? JOE GRIFFITH:If it's prudent we should do that,and that's the question that is before us,Mike. MIKE BARRY:It's prudent that we should wait another 10 years? JOE GRIFFITH:|didn't say that. Alaska Intertie Meeting .Page 5 of 21 June 22,2005 MIKE BARRY:That was the question I asked. JOE GRIFFITH:Your question was a hip shot question that said would you want to wait another a 10 years,of course not,we have fixed it in the past and we will fix it in the future, that's where we stand on it. STEVE HAAGENSON:There is a bit of history here also.Every repair that has been done to date on that intertie has been paid for by the utilities>already.It's not like we're ignoringmaintenance,repair.. MIKE BARRY:Nobody is arguing that the utilities aren't responsible to pay it and have the responsibility to pay it and certainly have the capability to pay it.In answer to Jim's question, once the utilities say,we're going to spend X,whether it's $1 million dollars or $20 million dollars then it becomes a financing problem.What's the most economical way to achieve the financing?Nobody's -at your meeting yesterday every time there was a vote to spend money it was voted down. STEVE HAAGENSON:|heard they actually approved the entire budget yesterday. JOE GRIFFITH:They approved the budget. MIKE BARRY:There's no SVC in the budget.Right.Okay.Was there any stanchion repairs? One,out of the three that were identified as defective -one of them is going to get repaired. RON SAXTON:But it's within the last several months that we had meetings in this buildings to talk about,with the utilities acknowledging,once we determine the scope of repairs we'll find a financing mechanism and move forward.We waited for the IOC to determine what the reasonable scope of those repairs was -AEA hired consultants,debated that at different times -they seem to have come to some conclusion so |agree it's time to move forward but it has only been a matter of a couple months since those numbers were figured out so... MIKE BARRY:It's been a matter of nearly three years since the problem was identified and accepted by the IOC,as these things need to be done.It's been nearly three years.And some of them go back longer then that,I'm not here to tell you that some of them don't go back six or seven years,but all of them in the group go back at least to October of 2002.There is a point that that kind of shilly-shally is not acceptable.And there is a point where it becomes prima facie evidence that the agreement doesn't work.The question is whether we are at that point or not. JOE GRIFFITH:Well,apparently you think we are because of the letter you sent out that said you were going to execute the termination arrangement. MIKE BARRY:That's not what the letter said,we're going to consider the termination of... JOE GRIFFITH:Sorta says that. MIKE BARRY:Do you have the letter there Ron? RON MILLER:Yes. Alaska Intertie Meeting Page 6 of 21 June 22,2005 --_- MIKE BARRY:Please read into the record what it says as there seems to be some confusion about what it says. RON MILLER:"...,if no realistic solution is forthcoming,the AEA Board may be compelled to exercise its option to terminate the Agreement under Section 2.2.2,which will enable all the parties to negotiate a new Alaska Intertie Agreement.” MIKE BARRY:We're going to talk about it at the Board meeting but the directors would like to hear from the utilities,what is the impact of the termination of the agreement.There is four years notice on it,that would seem to give people ample time to negotiate a set of documents that would really work.If an R&R fund is necessary then put it in there,in the Agreement. BRIAN BJORKQUIST:And as a backdrop to that -the conventional wisdom I've heard for as long as |have been engaged is that you can't amend the Intertie Agreement.That came out very loudly yesterday at the |OC meeting also.So,if there is a defect in the Agreement and we can't fix it,this is a way to require a fixing -to move forward and to fix the Agreement. STEVE HAAGENSON:|think there are amendments to the Agreement already. RON SAXTON:Why is it that it can't be amended? RICK SCHIKORA:Why can't you amend it? BRIAN BJORKQUIST:That's the conventional wisdom I've heard and that's exactly... RON SAXTON:From who? | BRIAN BJORKQUIST:Well,from the utilities.You can't... JOE GRIFFITH:There have been several amendments to it. BRIAN BJORKQUIST:You can't reopen... RON SAXTON:Not from the lawyers or management you haven't heard that. BRIAN BJORKQUIST:You can't reopen the Agreement because reopening the Agreement will cause too much havoc.Basically... STEVE HAAGENSON:But that's exactly what you're recommending after you terminate the Intertie Agreement -starting over from scratch.No utility wants to start from scratch.We should start from what we got that works and make it work for us better with an amendment.| don't think anybody in the room has a problem with that. BRIAN BJORKQUIST:That would be a good solution to move forward.Let's move forward with amending the Agreement to fix the defects that there are in it so that we don't have the situation where the AEA Board is in a position where it feels it needs to kick us to get going. And |would just throw out,I've been listening to the Board and you may hear them yelling at you,|hear them yelling at AEA staff too that moving forward as we have with no progress is unacceptable.We need to fix this. Alaska Intertie Meeting Page 7 of 21 June 22,2005 RON MILLER:As Brian says,we have been hearing from the IOC that you can't -that it would be impossible to amend the Agreement.And,if what we are hearing from the General Managers is different,that there is interest in moving forward with a plan to amend the agreement it sounds like there is a lack of alignment between General Managers and the IOC. RON SAXTON:The IOC has always been structured as the operators.They are not management,they don't have legal representation,they're just a group of operators there to talk about the right way to operate it efficiently.So,|think a discussion about amendment the Agreement needs to happen at the manager level. JOE GRIFFITH:|agree. STEVE HAAGENSON:|thought we were working towards that solution... JOE GRIFFITH:So did I. STEVE HAAGENSON:...we have a snow load issue out there and we have been studying that quite severely for the last couple years,longer than that probably.We were working on a scope of work to see what was prudent utility practice.Is it wise to upgrade a plant like that,is it not wise -AIDEA has a scope of work on the street right now... BRIAN BJORKQUIST:AEA STEVE HAAGENSON:Sorry,AEA does.There are all of these things you're talking about - static bar compensators.What's the impact if one of them does go down -we need to know that -is it death?Probably not.My guess is,just to my rule of thumb engineer,says you can probably run with one of them down.So,is it the end of the world?No.So,|think we're -all we have to do is sit down and say what's the final solution,which we haven't decided yet,like on the snow load problem,and work on ongoing maintenance.And then we have to deal with issues that were handed to us in the original design,things that are kind of -they're not stable like we thought they were going to be,they're moving around a little bit and we're fixing those too.|think we're way down the path and I'm kind of surprised that you're saying "oh my god, this isn't working,”|don't think it's broken. MIKE BARRY:Maybe the managers should go to the 1OC meetings or at least read the minutes of the meetings. STEVE HAAGENSON:|talk to the guys all the time -our guy. JOE GRIFFITH:We got a report already. MIKE BARRY:And they tell you it's working? JIM POSEY:They also told me they came up -voted on a solution and a number that we can go forward with,so I'm ready to go. MIKE BARRY:So there's,help me here Bernie,|think three stanchions that are precarious? BERNIE SMITH:That's what the (indiscernible)and they are fixing one. Alaska Intertie Meeting Page 8 of 21 June 22,2005 Te a MIKE BARRY:And one of them gets repaired.How did someone decide that this one gets repaired and the other two don't? DOUG HALL:We're still establishing the data.In fact,our consultant has said that we may in fact have on the Curry Ridge,where we have two towers,one of which hasn't moved in 15 years it appears.The other one we have to wait until everything is dry up there so we can actually get in there and see is the soil settled exactly or if has been movement.That's the one we're thinking based upon what our results are telling us that we're going to have to do something on.Golden Valley and the Moody slide area has been doing for the last 18 months - different studies --we have had consultants doing different studies that tell us now.Initially,we 'thought we were losing the foundation,but come to find out we are not losing the foundation at all and that,in fact,the Moody slide area appears that the hill is settling around the foundation and they may just be able to grout it and get away with it.So,this is all information that over time has to accumulate and that is exactly what we have been doing on that.The same thing in relation to the SVC.The SVC replacement project started out as their parts inventory.We needed spare parts for the electronic control boards of the units.We had a consultant go in, study,get a list of everything in the three individual units because they were all manufactured slightly differently on the mother board.We were given a complete inventory of it and then find out if any manufacturer still supports this equipment which we found that no they don't,in fact we have to pull the units out of service,send them to China to be reengineered,reverse engineered and then have recreated them.So that is not prudent utility practice for 25 year old equipment we'll go ahead and proceed with the specification that we can replace these units. And that whole process has been going on since the inventory actually occurred in early 2003. So we have been moving along on that and we just about have a document ready to go on the street now to bid for the three units. MIKE BARRY:Maybe the Board needs to understand more about utility practices.In your own utility,if every manufacturer in the world discontinued supporting equipment and it is 25 years old and you ascertain that your spare parts inventory was depleted,how many years would you study it before you actually implemented the solution? STEVE HAAGENSON:We deal with that every day. JOE GRIFFITH:Every day. STEVE HAAGENSON:You look at taking a sequential staging out of equipment -you keep old technology to pull parts off of as you need them,as you are replacing them or you can just rip the whole thing out and do it at once.The question is what's the best approach to do it? MIKE BARRY:Would the utilities be willing to indemnify AEA from any liability that we have for letting this go on so long? STEVE HAAGENSON:|don't know what you're talking about -letting what go on? MIKE BARRY:The studying of these issues that were brought to our attention years ago. JOE GRIFFITH:Should we not study them?Is that what you're suggesting? MIKE BARRY:All we're saying is that we don't have the control to make the repairs.You folks have the control to make the repairs. Alaska Intertie Meeting Page 9 of 21 June 22,2005 JOE GRIFFITH:And that's exactly where we're going. MIKE BARRY:And so we just want to get that in the record.Apparently then you're saying you have already got the liability and we don't have it.Would that be your interpretation Brian? BRIAN BJORKQUIST:That would be my interpretation of the Agreement,but |certainly don't hear that from the utilities as they discuss these matters. RON SAXTON:I don't think statements on the record is the way to resolve that.What I've heard is,what we've said is,whatever a scope of work is that the |OC agrees is appropriate,at least the three generators that sell power over the line,you told me a year ago to work with your staff and come up with a way to finance the repairs and they'd agree to an arrangement to pay for it.So,|don't see where there is a disagreement over that it is just a matter of IOC determining what are those actually repairs so we know how much money we are financing. BRIAN BJORKQUIST:Mr.Chairman,to interpret what he just said -if he's the attorney for the utilities they will take the position that AEA is liable.That's what |just heard. JOE GRIFFITH:If |might read into the record,your definition,or the |OC's -the agreement's definition of prudent utility practice."Any of the practices methods and acts which in the exercise of reasonable in light of the facts known at the time the decision was made would have been expected to accomplish the desired result at the lowest reasonable cost consistent with the reliability safety and expedition.”And other things,including but not limited practices used across the industry,is in essence what it says and |think that is exactly what the utilities are doing.But the definition is there,then the question that Jim brought up earlier is the relevant question.What size of a bond package is reasonable,and somebody ought to be able to answer that,|would think.|don't know,it's usually smarter to do bigger ones but,do we want to do it?In fact,we had this discussion several times in the last few years. MIKE BARRY:And is a bond the only way that financing could be achieved?Why wouldn't a loan work? JOE GRIFFITH:It would. MIKE BARRY:And there is certainly some amount,if it's low enough a loan would be more efficient than a bond. JOE GRIFFITH:True. STEVE HAAGENSON:That's what the definition just said,what's the lowest cost way to do it. MIKE BARRY:But it doesn't -do you want my staff to do a study for you in $100,000 increments from 0 to $10 million on what the most effective way to finance is? JOE GRIFFITH:No,that's not... MIKE BARRY:Somebody needs to give us some numbers to work with. JIM POSEY:$3 to $7 million. Alaska Intertie Meeting Page 10 of 24 June 22,2005 EEE EE MIKE BARRY:$3 to $7? JIM POSEY:$3 to $7 million.Give use some deals on that and we'll act on them. MIKE BARRY:We can do that.We haven't had -from our perception we haven't had any movement on this.From your perception maybe,you know,this study program is the best way to do,just study it. JOE GRIFFITH:Well,we've been talking to your staff about it,Mike,it hasn't been that we've ignored it or got our heads in the sand,we are gathering the information that we need to comply with that definition #35,right there.And the question is,the one you broached,how do you finance it?Do you do it with a loan or do you do it with a bond,and I don't know the answer to that.You guys can probably answer that overnight. MIKE BARRY:It doesn't sound to me though that you even have a project identified.If you'resayingthatwiththeSVC's -the fix hasn't been determined yet.It was presented to us back in October 2002,the fix was to go buy new ones.That was what the fix was. JOE GRIFFITH:That would be one angle of it,the other way is to put different controllers on it. You have to do the reasonable cost... MIKE BARRY:|guess we can study.... STEVE HAAGENSON:Or you can tear them all out and put new ones in... MIKE BARRY:We can study it until one of them actually fails and then we'd have to figure out what the solution is,|guess. JOE GRIFFITH:That is also an option,yes. MIKE BARRY:And then we can find out whether it closes the line down or not if one of them fails,we'll know for sure.|guess everything is hunky-dory.We're just moving right along at the best pace we can. JIM POSEY:So,are we going to get an answer between $3 and $7 million dollars,loan versus bonds fairly soon? MIKE BARRY:Sure. JIM POSEY:The number was $3 million something from the IOC is the possible cost? DOUG HALL:Depending on the extent of the repairs on (indiscernible)Ridge. JIM POSEY:So,we're looking at something in that zone... MIKE BARRY:Ina term of 15 years. JIM POSEY:That's probably a reasonable term,but that depends on the best financing. Alaska Intertie Meeting Page 11 of 21 June 22,2005 RON SAXTON:And|think that |agree with Brian that the terms of the Agreement doesn't lenditselftothesatisfactoryrepaymentobligation,and we're prepared to work on a suitable side agreement to make sure that there is the kind of repayment obligation that needs to exist. BRIAN BJUORKQUIST:And then in addition to that what we should be focusing on to make this Agreement work five years from now,ten years from now so we don't have to have a threat from the Board before everybody gets to the table to really act.You have a different perspective so be it,but if there are things in the Agreement that need to be fixed so that we don't have to get to this point the next time something needs to be done we should do that too at this point. RICK SCHIKORA:So,what items in the Agreement do you think need to be fixed at this point? BRIAN BJORKQUIST:One solution would be to create an R&R fund so that you have a funding mechanism for these types of maintenance so that they don't become deferred maintenance for years and years. RICK SCHIKORA:We've heard about that one,what's the next one? BRIAN BJORKQUIST:Well,we can talk about it. RICK SCHIKORA:You've got some issues with it,what are they?I'd like to write them down. MIKE BARRY:With the R&R fund we can't find any other intertie that doesn't have an R&R fund... RICK SCHIKORA:Well,that's fine,that's one issue... MIKE BARRY:...so when you talk about prudent utility practices you guys can't sit there and say that the accepted prudent utility practices say there's no R&R fund. RICK SCHIKORA:Mike,we have R&R fund on our list,why don't you tell us what the next issue is. MIKE BARRY:Okay,number two,|think is important -you have a mechanism that essentially discourages anyone from recommending a capital improvement or a maintenance fix that costs money.Because if they recommend it,like AEA,if we recommend it,we'd have no funding mechanism,AEA has no capital at all.If we say all of your studies have shown us that you need SVC's and we go out and spend the money to buy new SVC's that's what everybody agrees to then you all decide well,we don't go along with that and you don't have to pay the money back.Or individually you opt out,isn't that right Brian? STEVE HAAGENSON:|think that's covered under the R&R fund isn't it? RON SAXTON:J think it's the same issue. JOE GRIFFITH:Same issue. MIKE BARRY:Same issue,but it's in the Agreement.That's part of the Agreement today. Alaska Intertie Meeting Page 12 of 21 June 22,2005 -EE JOE GRIFFITH:Part of the Agreement that we would agree to fixes and then refuse to pay for them? MIKE BARRY:Today,yeah.Individually,not collectively,but individually. BRIAN BJORKQUIST:And then there is a long list of items that simply are not followed anymore and in particular are not followed after the '93 reorganization of the Alaska Energy Authority.Examples include the budget,the budget process under the agreement is not being followed and the budget provides that it is supposed to be 13 months before the beginning of the fiscal year and that hasn't been done for a decade or more.There are other examples of that type of thing,just things that are no longer applicable,they are ignored by the IOC and there just still in the Agreement lingering.There was some discussion of that yesterday at the IOC meeting,some examples of that and those -your utility members on the IOC probably have a better handle of that then |do right now.Every example of what no longer is followed. RON SAXTON:It was at the IOC meeting yesterday -what I'd like is to get the list so |can look at those and see how we can fix them.Is there a list of what those are? BRIAN BJORKQUIST:There was some discussion of many of the items.|know that John Cooley gave some recitation;|think Henri Dale may have spoken of a few of the matters,but the budget is the one that |remember having more discussion then anything else. MIKE BARRY:|think they make a transcript don't they,Bernie,of the meetings? BERNIE SMITH:Yes. MIKE BARRY:So,we'll get you the transcript then. RON SAXTON:That would be wonderful,thank you.And your sense,Brian,is that they are not being followed is related to AEA's reorganization?Or why aren't they being followed? BRIAN BJORKQUIST:This came from John Colley,the history of it is that before 1993,the legislature appropriated the budget for a fiscal year,so the budget had to be prepared 13 months in advance to give time to go to the legislature for an appropriate and then the utility payments were a reimbursement of what the state had appropriated.From 1993 forward that hasn't been followed.The legislature is not appropriating the intertie budget anymore and it is not a reimbursement,it is a pay as you go type of system. RON SAXTON:You don't have a desire to return to the old way do you? BRIAN BJORKQUIST:|don't think they're... MIKE BARRY:We just have a desire to get a set of agreements that can be complied with. RICK SCHIKORA:What you're saying is that the Agreement says you have to do the budget 13 months in advance and you want to make it three or four,or some number,but you... BRIAN BJORKQUIST:Let the IOC figure out how... Alaska Intertie Meeting Page 13 of 21 June 22,2005 MIKE BARRY:We would like it to work for the utilities.We don't really care how it works,as long as it works. RICK SCHIKORA:It works now,they're just not following 13.That's the...didn't we approve the budget yesterday. MIKE BARRY:|don't think it really works if we're a couple weeks into the year before the budget gets approved.Do you think that works that way? RICK SCHIKORA:|don't know. MIKE BARRY:Is that the way Golden Valley does its budget?They wait -You're on a calendar year so you wait until January to approve your budget for the year? JOE GRIFFITH:Sometimes,yes. MIKE BARRY:That's not in the utility practice. JOE GRIFFITH:Yeah,it is. BRIAN BJORKQUIST:May |share that my perception is that this is a criticism coming from your representatives to the IOC also,that they would like to see this fixed."So what they do matches up with what's in the Agreement.|think they have some ideas how they would like to change it so it would be more useful for them also.Another criticism |heard yesterday was that the Alaska Interite Agreement is tied to the state fiscal year where as the utilities operate on a calendar fiscal year and that is just so awkward for them.That you can't do something that year because utilities can't make adjustments so just moving it so you have the same fiscal years would be an example of a fix that would be more beneficial to the utilities based on what |heard from your representatives to the IOC yesterday. RON SAXTON:But is the budget problem or the calendar year problem causing the State a problem or you're just alerting us that our people want to change this? BRIAN BJORKQUIST:|think it causes us some problems too because we have an Agreement that is not being complied with and that is always a problematic type of situation.It just ignored. JIM POSEY:Since 1993 it has not been followed and the wheels haven't fallen off the vehicle, so since 1993 was the reorganization of AEA,which is part of what happened and we did not change the agreement,what we've done is move forward through expenses and taken care of those things that we have to do.It doesn't seem like it's broken,you just put not applicable and move ahead and look at doing the R&R loan fund to fix the things that you have to do and then look at whatever agreement changes you have to do because the Agreement changes are probably going to be more difficult then coming up with the money to make the things that we need to do in order to make it fun efficiently now. STEVE HAAGENSON:It sounds to me like the Agreement has morphed to what the utilities want and what works for them already. BRIAN BJORKQUIST:With the exception of the two fiscal years. Alaska Intertie Meeting Page 14 of 21 June 22,2005 ©°- STEVE HAAGENSON:And except for that one that one issue where we're going to be late this year -|don't know if they are or not,but if they're late,then |guess you can spank us for that but |don't think it's broken |think it's been morphed into what really works. MIKE BARRY:It might work for you,Steve,to have an Agreement that we're not following,but it does not work for our Board to have an Agreement that nobody is following,okay.And,if you are saying that it is easy to change it,then please.change it.That's all we're asking. STEVE HAAGENSON:|think it's almost a silly point in my mind,because to have to have this message come from the IOC,apparently through staff of AEA back through the AEA Board back to the managers to tell the IOC staff that they should comply with the Agreement we have signed -it's kind of a circuitous path.It's kind of silly.1 think all the guys will say is why aren't you guys complying with the Agreement?It's a short phone call. MIKE BARRY:Well,apparently there are,as Jim said,there are reasons why the Agreement is not being complied with.And it would be better for everyone to change the Agreement so that it could automatically and routinely be complied with instead of routinely be out of compliance. And that's what we would like to do is to get it so that you can operate routinely in compliance. STEVE HAAGENSON:|don't have a problem with that. JOE GRIFFITH:And that's the genesis of your comment about lack of compliances is the difference between what we're doing and what's in the agreement. JIM POSEY:It wasn't something that we did,it's something that the State did in reorganizing AEA that caused it to be off cycle. MIKE BARRY:Nobody is trying to make a blame issue out of this,Jim,we're trying to say -you asked us what doesn't work and we don't -this is one of the items that we don't think works. Being out of compliance every day of the year. RON SAXTON:Not minimizing,but beyond the budget issue and the fiscal year issue are there others where you think that they are routinely not following the contract? BRIAN BJORKQUIST:There certainly may be but I'm not aware of anything right now,but | would encourage you to ask your IOC representatives.They probably have a better idea of what they don't follow exactly in the agreement. RON SAXTON:Changing a budget cycle ought to be a pretty noncontroversial amendment and is easy to do. JIM POSEY:Yes,|agree with that. RON SAXTON:|can't imagine that is going to cause a problem.We can certainly look at how to change that. MIKE BARRY:And changing the requirement that the legislature appropriate the budget,okay. RON MILLER:We have a written document but what is accepted practice isn't reflected in this and so we have a sort of defacto amendment to the Agreement. Alaska Intertie Meeting Page 15 of 21 June 22,2005 STEVE HAAGENSON:So have you tried to go to the legislature lately and get some money appropriated for AEA? BRIAN BJORKQUIST:Are you volunteering? RON SAXTON:|think it would be fortuitous on the funding for repairs and stuff,|think we can work that one through,|didn't realize it had deteriorated as much as it had and |think we already agreed to do that so we can do that.Cleaning up some language about fiscal years and budget process,|don't hear anything controversial about that,it ought to be easy to do. BRIAN BJORKQUIST:Then tied to the first one is fixing so that we will have an easier mechanism in the future. RON MILLER:Do we want to set a work plan today? RON SAXTON:If we get a list of what the issues are,you know,everybody else can do whatever they want but I'll bet Brian and |in pretty short order could put a list or at least something to talk about,a starting document.|don't view this as very hard at all and then whoever wants to play with it can play with it. BRIAN BJORKQUIST:Then the other issue would be on the financing side of the capital repairs that are on the table right now.And correct me if I'm wrong but what |heard was that the desired course,for example,to do all three SVC's at the same time so you have the same model so that you can have a single set of components. DOUG HALL:Absolutely,to ensure that the SVC's,all three SVC's are compatible and then you only have to maintain one set of spare parts.We want to purchase all three at the same time. JIM POSEY:But not install them all. DOUG HALL:Well you can't install them all at the same time because it is a staged installation. But,yes,we would like to be able to purchase them,make a contract for the purchase;they may not be manufactured immediately but sequentially.It's computer basically and you don't want to get the next version where they've upgraded and changed the internal parts. JOE GRIFFITH:It seems like we've addressed then the issues that you have articulated.No R&R fund,major maintenance which is sort of a piece of that.Deferred repairs also a piece of it and lack of compliance because of some anomalies that remain in the Agreement because of the 1993 action. BRIAN BJORKQUIST:And that's what |heard from John Cooley yesterday,that's factually inaccurate,so be it,but the reality is that operational procedures in reality are different than what the Agreement says. JOE GRIFFITH:We never did go back after Ramona killed off AEA and cleaned all of that up. We did not,that's true. MIKE BARRY:Bernie,do you have other things that should be added to that list? Alaska Intertie Meeting Page 16 of 24 June 22,2005 _ BERNIE SMITH:One other thing is that there is no roll over on the budget and if you had a rollover-in other words,you have to give everything back -starts back at zero -if you had a roll over it would seem like that roll over,if there was any extra,could go into the R&R fund.And by the Agreement,from what |was understood,was told that you can't do that.So that would be another thing that you might want to look at.If there is money left over after... 'JIM POSEY:Right back into my auditor who did the Bradley Lake deal... BERNIE SMITH:|don't know,I'm just... JIM POSEY:...we had to change... STEVE HAAGENSON:We have the same issue. JIM POSEY:...the Agreement controlled it and we can't back date the agreement but we can do something forward.It would have to be something that we agreed to... RON SAXTON:|think if we're going to have an R&R borrowing or selling some bonds is a lot cleaner because we do get into the municipal coding and there is tax problems... BERNIE SMITH:The other thing is that the date that the actual budget -everybody else is on fiscal year December 31"this thing starts at June 30.It would see like you would want it all to be at the same time.And if that's in the Agreement then that would be something you might want to change,change it to where it meets the utilities budget line.If you're going to start changing the Agreement let's make it so it's easy for everybody. RICK SCHIKORA:We got that on our list. STEVE HAAGENSON:Bradley Lake is a different fiscal year then the rest of this,it's not a problem there. BERNIE SMITH:I'm just saying that it seems odd. STEVE HAAGENSON:You just have to get busy and get it done on time. MIKE BARRY:Steve,that's not a problem for us,that's a problem that your people on the IOC are saying is a problem.We're just passing it on to you.You've got to look at the Agreement. You can address it or not,we don't care whether you address that part or not. STEVE HAAGENSON:I've got it down here. BERNIE SMITH:Things were brought up in the meeting -you asked what things were brought in the meeting and that's what it was. RON MILLER:Art Copoulos is gathering information.Art Copoulos will be leaving us next month and Bernie will be stepping in with the IOC in his place. STEVE HAAGENSON:Where's Art going? Alaska Intertie Meeting Page 17 of 21 June 22,2005 RON MILLER:DNR.He'll be available during the transition period to work with Bernie.He is going back to the oil and gas sector from whence he came. MIKE BARRY:Can we have some kind of a time table to put in front of our Board as to when we might see the changes? RICK SCHIKORA:Sure.We can come next week. RON SAXTON:How fast can we get a transcript of what else might be on the list. BRIAN BJORKQUIST:|just want to emphasis that is two components to it:1)what was mentioned yesterday and the other thing is that |would ask every General Manager to ask their IOC representative or whoever has been there,is there anything else.Let's all collectively do the best job we can to clean up everything today so |would ask everybody to ask.Art hasn't been here this week and we will ask him also if there is any other examples. RON MILLER:He'll be back Monday so we will make sure... BRIAN BJORKQUIST:We should have the transcript early next week. BERNIE SMITH:Yes,I'm doing it this weekend. JIM POSEY:Then is it a two week or three week project to deal with the $3 to $7 million dollars as to how would best -loan versus bonds?That analysis,|don't know who you would have to do it. MIKE BARRY:In two weeks we can do it with a range.That's all they can do really... JIM POSEY:That's all we want.Based on what the IOC did yesterday... RON MILLER:$3 to $7 million over 15 years? MIKE BARRY:Right. JOE GRIFFITH:And it may come back that it would be smarter to do it at a less period or longer period or something like that.Have them look at the whole financing idea. JIM POSEY:Look at it something like 7 to 15 years,$3 to $7 million,and see where that crosses over.That's how we do it. BERNIE SMITH:In the Budget Subcommittee started also to do a mid-year review of the budget and such as if one of the SVC's happen blows up,especially the one in Healy and you have another option (indiscernible)you can add (indiscernible). MIKE BARRY:So there's nothing in the Agreement that would allow them to have a budget session whenever it was necessary?Maybe that's something that could be added to the agreement. Alaska Intertie Meeting Page 18 of 24 June 22,2005 =re SO BERNIE SMITH:And my understanding from the history from John Colley,they used to have a mid-year review so (indiscernible)for adding to -this gives you an added place to come here and relook at the budget. MIKE BARRY:|would propose that it would be prudent to have the ability to do that whenever it was necessary. RON SAXTON:Henri is the chair at IOC,can we task Henri with gathering these and then sharing back to all of us whatever the collective list is that is found. BRIAN BJORKQUIST:.It's my perception that some utilities have new members on the IOC,if you still have access to the old members ask them too.I'm just encouraging you to get the best information you can.If you have somebody with experience who is no longer on the IOC,still ask them. DON ZOERB:|need to interject a disclaimer here on behalf of MEA.We will be at the Board meeting on Monday and we will respond to the letter that you sent out at that time.|just need to be real sure that you all understand that at this point MEA is not committing to agree to any modifications of the existing agreement.But the input we are getting here is very valuable as we develop our position for Monday.|also want to convey our grave concern that the public safety hazard posed a differential snow loading problem where the intertie passes through our service territory.We cannot overstate our level of concern that someone is going to be hurt. There is going to be a tragic event up there sooner or later and we think it is unconscionable that the problem is continuing to go unaddressed. MIKE BARRY:Thanks for your input. JIM POSEY:Since this is a work session I'll address part of that.It was stated and |brought it up once that the and |noticed that the time the intertie was built,so |have been around a long time,that the right-of-way was never closed,never posted and never fenced,and never noticed. |brought that to the attention of AEA and AIDEA in a public meeting once before and that is an option as opposed to $32 million dollar insets (indiscernible)developed in other places then they know where the snow is at any given time.Clearing out and posting is a way to deal with that particular problem and |think,let's put it on the table today. MIKE BARRY:You might get more prima facie evidence as to why the Agreement doesn't work. JIM POSEY:Yes,that's true. MIKE BARRY:What's your response to assessing the utilities for the fencing capital costs and posting? STEVE HAAGENSON:The R&R fund because that's the path we go down,|think that what we're doing right now working with AEA staff -which one is it? BRIAN BJORKQUIST:It's AEA. STEVE HAAGENSON:Okay,but aren't you AEA/AIDEA staff still?Anyway,working with staff, you guys can pick the right thing -|thought we had been working on prudent utility practice for Alaska Intertie Meeting Page 19 of 21 .June 22,2005 the mitigation of snow load monitoring and |do take objection to you saying we're doing nothing. A few years ago we put in monitoring,which is still functioning out there.The IOC took action at the last meeting yesterday to put the alarm levels in at a certain level which is a very safe prudent utility practice.We're looking at a wide range of things,but |have to bring you back to the idea -as an engineer |went through that thing like 15 years ago when it was first brought up to be an issue.It is not a code violation.So,that's an issue.Everybody keeps saying it's aSafetythingand|liken it back to looking at the Northwest,when you have an ice storm come through.It comes back -you get ice storms down there more regularly then we have problems with this line.They're not saying,sorry we have to make it -build it to withstand one to two or three year occurrences.They're not doing that,they're saying we're going to deal with it when it happens -and we've actually done more than that.We have monitors on it to watch it 24 hours a day,we send people up there to patrol it and keep an eye on it.So,we're not doing nothing. Just for the record. MIKE BARRY:Any other comments on snow load? BERNIE SMITH:I'm new to this so |don't have a lot of history,but it also seems to me that right now when these alarms go off what you're supposed to do is shut the whole intertie down til you get the fix done.It would seem logical that you would have two sets of monitors out there,one to get out there -not to shut the line down -to have it set to where it is getting ready to be shut down without getting to the limit there,you can go out there and look at it first before you actually have the drastic cause of just shutting the whole line down.And that's the way my understanding is it's going to happen if the alarm goes off,the intertie gets shut down at that point.So it seems like if we spent the money,put in external alarms or a second set of alarms to be set lower and go out there and have people look at it.The way it is written into the record that |understand,when the alarm goes off now,the intertie gets shut down.We should be spending the money in there so that you have two sets of monitors.And you may need more monitors in certain areas then others.|don't know,it's pretty drastic to shut the thing down when the alarm goes off. STEVE HAAGENSON:Chairman Barry,let me explain a little bit about the snow load issue. When the whole line loads up evenly,there is not a problem.The question is when is the snow going to fall off.You may have two weeks to two months before that snow actually falls off and creates a situation that may or may not occur.A lot of time,it's not like,oh we're going to goalongtodayandthenthere's an alarm,boom the blind goes open -we know days,weeks in advance that there will be an issue because that line will be loaded up with heavy amounts of snow,so it's not like,surprise,shut the line down. BERNIE SMITH:Well,when the alarm goes off -my understanding from the compromise for the $32 million dollar -with these alarms -you set these the alarm at what ever stage that you set it at and when that happens the line gets shut down.And that was what was stated at the IOC meeting. . MIKE BARRY:Steve's not arguing with that,what he's saying is that you'll know weeks ahead of time what might set the alarm off so you'll have time to react to it. STEVE HAAGENSON:You'll know ahead of time so it's not like it's all a big surprise,shut the line down -you'll know it when MEA gets hammered with snow you go look at the line -do your line patrol,see if it is loaded up and if it is loaded up you say at sometime it is going to unload. At that point you may have an issue. Alaska Intertie Meeting Page 20 of 21 - June 22,2005 oT : RICK SCHIKORA:Is there a way to help it unload? STEVE HAAGENSON:Actually,that's really hard.We went down one year when it was really bad and helped MEA out and tried to knock it off with some hotsticks and you could knock off about a foot.It's fairly well loaded up and doesn't come off easy.But when it does come off by itself it really comes off fast. BRIAN BJORKQUIST:But that is something that Dryden and LaRue is looking at. STEVE HAAGENSON:That's right. BRIAN BJORKQUIST:And the way they characterized,Paul Williams characterized it yesterday;if you have icing of the snow it is the situation that you described,a foot at a time -if you get it earlier before it starts icing up you can whack one line and three spans can unload at the same time.Something of that nature.But Dryden and LaRue is looking at that question - what could be done to help with that. STEVE HAAGENSON:My guess,to maintain,if you snow conditions that were earlier enough they could go out and whack it and it would come off,|guess. BRIAN BJORKQUIST:I'd like to add one more thing.|know that MEA doesn't think that the direction that the IOC is going is the ideal solution,but if you have any suggestions to improve what we are doing,notwithstanding the fact that it's not ideal,that would be useful also.If it is MEA or AEG&T,whoever,any suggestions that you have would be useful. DON ZOERB:Okay. RON MILLER:You guys are designating Henri Dale for the contact for all of the IOC members to... STEVE HAAGENSON:He's the chairman of the IOC,that's why we picked Henri... RON MILLER:I'll have Art and Bernie work next week to gather all of the information we have and to share that with you through him,so we have focused points of contact. STEVE HAAGENSON:I'll call him right after this meeting to give him a heads up to get ready. JIM POSEY:We appreciate you calling this work session because|think this is a better way to at least talk through our concerns and gather data so we can move forward.It is really good. STEVE HAAGENSON:It's nice to have a two way interaction instead of just testimonial. RON MILLER:As you can see we have two Board members here at a work session,if we have another board member it would be a board meeting so that was one of the reasons we had it set for a board meeting. STEVE HAAGENSON:|understand.Mark's probably feeling like he's drinking through a fire hose right now. Alaska Intertie Meeting Page 21 of 21 June 22,2005 MARK DAVIS:Yes,but |do understand what the Chairman is saying as |am a bank commissioner and we look at loans to banks to see whether there is a way to maintain the security of the loans.And if the loan is unsecure because of maintenance then they place the loan into a special category. JIM POSEY:On this loan there is no existing debt so we're talking assuming debt in order to do what needs to be done. MARK DAVIS:|understand. MIKE BARRY:|don't want,Jim,to have you guys perceive this as threat because it is not threatening.We're trying to look at a constructive way to make the intertie work better for everybody.But when you look at financing for example,it's difficult for us in good faith to sponsor financing when we're being told by the !OC that the agreements don't work.As a board,the only way we can force the agreements to work is to terminate them and start over again.If you guys collectively come to an agreement to change it that's the best solution for everybody,but |think it needs to be addressed before somebody talks about financing or we can limit the financing term less than four years. STEVE HAAGENSON:|think we made a big step toward solving it today.Thanks again for themeeting.: Adjournment:11:05 a.m. End of Transcript Alaska Intertie Repair Financing Scenarios Annual Payment Comparison AIDEA Loan Participation vs.AEA Revenue Bonds -Net Proceeds Term 3 million 5 million 7 million Loan: 7 years §53,211 922,018 1,290,826 15 years 330,264 550,440 770,616 20 years 284,980 474,966 664,952 Taxable Revenue Bonds: 7 years Debt service 616,804 1,012,679 1,407,721 Net debt service 604,074 990,619 1,375,760 15 years Debt service 351,285 577,053 802,320 Net debt service 337,402 552,309 767,640 20 years . Debt service 296,377 486,341 675,369 Net debt service 285,143 466,337 645,499 Loan assumptions: AIDEA rate 5.87%for 7 years,6.53%for 15 years and 6.67%for 20 years Bank rate 7%(bank portion 10%of total loan) 3%fee on entire loan which is estimated to include all financing costs Annual payment listed Taxable Revenue Bond assumptions: Rates:5.5%for 7 years;5.6%for 15 years;5.8%for 20 years Debt Service Reserve Fund is estimated at 8.6-10%of amount borrowed and is funded from bond proceeds Debt service listed is average annual Net debt service is maximum annual debt service,net of interest earned on reserve fund investment.Debt service for final bond year is reduced by debt service reserve fund investment. Costs of issuance include underwriter's discount,bond counsel,AEA costs and typical closing costs (trustee fee,printing).No rating agency fee is included.No utility closing costs are included. 8/17/2005 AkintertieFinancingScenario.xls Recap AIDEA Loan Participation $3 million 7,15 and 20 years NOOOPWD=WOONOOhWNH=OOnNOOAWN=Alaska Intertie Financing Scenario AIDEA Loan Participation Program $3 Million Net Proceeds Total AIDEA Portion Bank Portion 3 Fee % 7 Year Rate:Rate: 3,000,000 Needed 5.87%2,700,000 Needed 7.00%300,000 Needed Payment Interest Principal 90,000 Fee Payment Interest _Principal 81,000 Fee Payment Interest Principal 9,000 Fee 3,090,000 Loan 2,781,000 Loan 309,000 Loan 553,211 184,875 368,336 2,721,664 495,875 163,245 332,630 2,448,370 57,336 21,630 35,706 273,294 553,211 162,850 390,361 2,331,303 495,875 143,719 352,156 2,096,214 57,336 19,131 38,205 235,089 553,211 139,504 413,707 1,917,596 495,875 123,048 372,827 1,723,387 57,336 16,456 40,880 194,209 553,211 114,758 438,453 1,479,143 495,875 101,163 394,712 1,328,675 57,336 13,595 43,741 150,468 $553,211 88,526 464,685 1,014,458 495,875 77,993 417,882 910,793 57,336 10,533 46,803 103,665 $553,211 60,721 492,490 521,968 495,875 53,464 442,411 468,382 57,336 7,257 50,079 53,586 §53,211 31,245 521,966 2 495,875 27,494 468,381 4 57,336 3,751 53,585 1 Total AIDEA Portion Bank Portion 15 Year Rate:Rate: 3,000,000 Needed 6.53%2,700,000 Needed 7.00%300,000 Needed Payment Interest Principal 90,000 Fee Payment Interest Principal 81,000 Fee Payment Interest Principal 9,000 Fee 3,090,000 Loan 2,781,000 Loan 309,000 Loan 330,264 203,229 127,035 2,962,965 296,337 181,599 114,738 2,666,262 33,927 21,630 12,297 296,703 330,264 194,876 135,388 2,827,577 296,337 174,107 122,230 2,544,031 33,927 20,769 13,158 283,546 330,264 185,973 144,291 2,683,286 296,337 166,125 130,212 2,413,819 33,927 19,848 14,079 269,467 330,264 176,485 153,779 2,529,507 296,337 157,622 138,715 2,275,104 33,927 18,863 15,064 254,404 330,264 166,372 163,892 2,365,616 296,337 148,564 147,773 2,127,330 33,927 17,808 16,119 238,285 330,264 155,595 174,669 2,190,947 296,337 138,915 157,422 1,969,908 33,927 16,680 17,247 221,039 330,264 144,108 186,156 2,004,791 296,337 128,635 167,702 1,802,205 33,927 15,473 18,454 202,585 330,264 131,865 198,399 1,806,392 296,337 117,684 178,653 1,623,552 33,927 14,181 19,746 182,840 330,264 118,817 211,447 1,594,945 296,337 106,018 190,319 1,433,233 33,927 12,799 21,128 161,712 330,264 104,910 225,354 1,369,591 296,337 93,590 202,747 1,230,485 33,927 11,320 22,607 139,106 330,264 90,088 240,176 1,129,415 296,337 80,351 215,986 1,014,499 33,927 9,737 24,190 114,916 330,264 74,291 255,973 873,442 296,337 66,247 230,090 784,409 33,927 8,044 25,883 89,034 330,264 57,454 272,810 600,632 296,337 51,222 245,115 539,293 33,927 6,232 27,695 61,339 330,264 39,510 290,754 309,878 296,337 35,216 261,121 278,172 33,927 4,294 29,633 31,706 330,264 20,384 309,880 -1 296,337 18,165 278,172 0 33,927 2,219 31,708 -1 Total AIDEA Portion Bank Portion 20 Year Rate:Rate: 3,000,000 Needed 6.67%2,700,000 Needed 7.00%300,000 Needed Payment Interest_Principal 90,000 Fee Payment Interest Principal 81,000 Fee Payment Interest _Principal 9,000 Fee 3,090,000 Loan 2,781,000 Loan 309,000 Loan 284,980 207,123 77,857 3,012,143 255,812 185,493 70,319 2,710,681 29,167 21,630 7,537 301,463 284,980 201,904 83,076 2,929,068 255,812 180,802 75,010 2,635,671 29,167 21,102 8,065 293,397 284,980 196,337 88,643 2,840,425 255,812 175,799 80,013 2,555,658 29,167 20,538 8629 284,768 284,980 190,396 94,584 2,745,842 255,812 170,462 85,350 2,470,308 29,167 19,934 9,233 275,534 284,980 184,057 100,923 2,644,919 255,812 164,770 91,042 2,379,265 29,167 19,287 9,880 265,654 284,980 177,293 107,687 2,537,233 255,812 158,697 97,115 2,282,150 29,167 18,596 10,571 255,083 284,980 170,075 114,905 2,422,328 255,812 152,219 103,593 2,178,557 29,167 17,856 11,311 243,771 284,980 162,374 122,606 2,299,723 255,812 145,310 110,502 2,068,055 29,167 17,064 12,103 231,668 284,980 154,156 130,824 2,168,899 255,812 137,939 117,873 1,950,182 29,167 16,217 12,950 218,717 284,980 145,387 139,593 2,029,307 255,812 130,077 125,735 1,824,447 29,167 15,310 13,857 204,860 284,980 136,031 148,949 1,880,358 255,812 121,691 134,121 1,690,326 29,167 14,340 14,827 190,032 284,980 126,047 158,933 1,721,426 255,812 112,745 143,067 1,547,259 29,167 13,302 15,865 174,167 284,980 115,394 169,586 1,551,840 255,812 103,202 152,610 1,394,649 29,167 12,192 16,975 157,192 284,980 104,026 180,954 1,370,887 255,812 93,023 162,789 1,231,860 29,167 11,003 18,164 139,027 284,980 91,897 193,083 1,177,804 255,812 82,165 173,647 1,058,212 29,167 9,732 19,435 119,592 284,980 78,954 206,026 971,779 255,812 70,583 185,229 872,983 29,167 8,371 20,796 98,795 284,980 65,144 219,836 751,943 255,812 58,228 197,584 675,399 29,167 6,916 22,251 76,544 284,980 50,407 234,573 517,371 255,812 45,049 210,763 464,636 29,167 5,358 23,809 52,735 284,980 34,682 250,298 267,073 255,812 30,991 224,821 239,815 29,167 3,691 25,476 27,258 284,980 17,904 267,076 -2 255,812 15,996 239,816 -1 29,167 1,908 27,259 -1 Taxable Revenue Bonds -$3 million 7 years SOURCES AND USES OF FUNDS Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $3 Million in Proceeds,7-Year Amortization Sources: Bond Proceeds: Par Amount 3,505,000.00 3,505,000.00 . Uses: Project Fund Deposits:. Deposit to Project Fund 3,000,000:00 Other Fund Deposits::; Debt Service Reserve Fund 350,500.00 Delivery Date Expenses:: Cost of Issuance 41,999.15 Underwriter's Discount 111,287.50 153,286.65 Other Uses of Funds: 'Contingency 1,213.35 *3,505,000.00 BOND DEBT SERVICE Alaska Energy Authority : Rail Belt Utility Group Intertie Project -Taxable Revenue Bonds,Series 2006 $3 Million in Proceeds,7-Year Amortization Annual Period : ,Debt Ending -Principal Coupon Interest Debt Service _Service 01/01/2006 .. 07/01/2006 96,387.50 .96,387.50 01/01/2007 ©425,000 5.500%96,387.50 |521,387.50 617,775 07/01/2007.-84,700.00 84,700.00 01/01/2008 445,000 "5.500%84,700.00 529,700.00 614,400 07/01/2008 ;*72,462.50 _72,462.50 . 01/01/2009 .470,000 5.500%72,462.50 542,462.50 -614,925 07/01/2009 .59,537.50 59,537.50 01/01/2010 500,000 5.500%59,537.50 559,537.50 619,075 07/01/2010 45,787.50 *45,787.5001/01/2011 525,000 5.500%45,787.50 570,787.50 616,575 07/01/2011 .31,350.00 31,350.00 |i 01/01/2012 -555,000 $500%-31,350.00 586,350.00 617,700 07/01/2012 16,087.50 16,087.50 01/01/2013 "-§85,000 5.500%16,087.50 601,087.50 617,175 -3,505,000 812,625.00 4,3 17,625.00 4,317,625 NET DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $3 Million in Proceeds,7-Year Amortization Period Total -Debt Service Net Ending Debt Service Reserve Fund Debt Service - 01/01/2007 617,775 °15,001.40 602,773.60 01/01/2008 _614,400 .15,001.40 599,398.60 -01/01/2009 614,925 15,001.40 599,923.60 01/01/2010 619,075 15,001.40 604,073.60 01/01/2011 616,575 15,001.40 601,573.60 01/01/2012 617,700 15,001.40 602,698.60 01/01/2013 617,175 365,501.40 251,673.60 4,317,625 455,509.80 3,862,115.20 Taxable Revenue Bonds $3 million 15 years SOURCES AND USES OF FUNDS Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $3 Million in Proceeds,15-Year Amortization Sources: "Bond Proceeds: Par Amount 3,505,000.00 3,505,000.00 Uses: Project Fund Deposits: Deposit to Project Fund 3,000,000.00 Other Fund Deposits: Debt Service Reserve Fund 350,500.00 Delivery Date Expenses:>-7 Cost of Issuance 41,999.15 Underwriter's Discount 111,287.50 153,286.65 Other Uses of Funds: Contingency 1,213.35 3,505,000.00 BOND DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 | $3 Million in Proceeds,15-Year Amortization :Annual Period Debt Debt Ending Principal Coupon Interest Service Service 01/01/200607/01/2006 _98,140 98,140 01/01/2007 155,000 5.600%98,140 253,140 |351,280 07/01/2007 93,800 93,800 01/01/2008 165,000 5.600%93,800 258,800 352,60007/01/2008 89,180 89,180 01/01/2009 175,000 5.600%89,180 264,180 -353,360 07/01/2009 84,280 84,280 01/01/2010 185,000 5.600%84,280 269,280 353,560 07/01/2010._79,100 79,100 01/01/2011 -195,000 5.600%79,100 -274,100 353,200 07/01/2011 ;73,640 73,640 01/01/2012 205,000 5.600%73,640 278,640 352,280 07/01/2012 67,900 67,90001/01/2013 215,000 5.600%67,900 .282,900 350,800 -07/01/2013 61,880 61,880 .01/01/2014 225,000 5.600%61,880 286,880 "©348,760 07/01/2014 55,580 55,580 01/01/2015 240,000 5.600%-55,580 295,580 -351,160 07/01/2015 48,860 48,860 01/01/2016.255,000 5.600%48,860 303,860 352,720 07/01/2016 41,720 41,720 01/01/2017 265,000 5.600%41,720 306,720 348,440 07/01/2017 ,34,300 -34,30001/01/2018 280,000 5.600%34,300 |314,300 348,600 07/01/2018 26,460 26,460 01/01/2019 300,000 5.600%26,460 326,460 352,920 © 07/01/2019 , 18,060 18,060 01/01/2020 315,000 5.600%-18,060 333,060 351,120 07/01/2020 9,240 9,240 01/01/2021 330,000 5.600%9,240 339,240 348,480 3,505,000 1,764,280 5,269,280 5,269,280 NET DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $3 Million in Proceeds,15-Year Amortization Period Total Debt Service Net Ending Debt Service Reserve Fund Debt Service 01/01/2007 351,280 16,158.06 335,121.94 01/01/2008 352,600 16,158.06 336,441.94 01/01/2009 353,360 16,158.06 337,201.94 01/01/2010 353,560 16,158.06 337,401.94 01/01/2011 .353,200 16,158.06 337,041.94 01/01/2012 352,280 16,158.06 336,121.94 01/01/2013 350,800 16,158.06 334,641.94 01/01/2014 348,760 16;158.06 332,601.94 01/01/2015 351,160 16,158.06 335,001.94 01/01/2016 352,720 16,158.06 -336,561.94 01/01/2017 348,440 16,158.06 ,332,281.94 01/01/2018 348,600 16,158.06 332,441.94 01/01/2019 .352,920 16,158.06 -336,761.94 01/01/2020 354,120 "16,158.06 334,961.94 01/01/2021 348,480 366,658.06 18,178.06 5,269,280 592,870.90 4,676,409.10 ° Taxable Revenue Bonds $3 million 20 years SOURCES AND USES OF FUNDS Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $3 Million in Proceeds,20-Year Amortization Sources: Bond Proceeds: Par Amount 3,455,000.00 3,455,000.00 Uses: Project Fund Deposits: Deposit to Project Fund 3,000,000.00 Other Fund Deposits:.. Debt Service Reserve Fund 299,080.00 Delivery Date Expenses:° Cost of Issuance 41,809.65 Underwriter's Discount 110,912.50 152,722.15 Other Uses of Funds: Contingency 3,197.85 3,455,000.00 BOND DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $3 Million in Proceeds,20-Year Amortization ,Annual _Period Debt Debt Ending Principal Coupon Interest Service Service 01/01/2006 07/01/2006 100,195 100,195. 01/01/2007 95,000 5.800%100,195 195,195 |295,390 07/01/2007 .97,440 97,440 01/01/2008 --100,000 5.800%97,440 197,440 294,880 07/01/2008 94,540 94,540 01/01/2009 110,000 * §.800%94,540 204,540 299,080 07/01/2009 :91,350 -91,350 01/01/2010 115,000 5.800%91,350 206,350 297,700 07/01/2010 :88,015 88,015 01/01/2011 120,000 5.800%88,015 208,015 296,030 07/01/2011 ,84,535 84,535 01/01/2012 125,000 5.800%84,535 209,535 294,070 07/01/2012 80,910 80,910 . 01/01/2013 " .135,000 5.800%80,910 215,910 -296,820 07/01/2013 76,995 76,995 01/01/2014 140,000 5.800%_76,995 216,995 293,990 07/01/2014 72,935 72,935 01/01/2015 150,000 5.800%72,935 222,935 295,870 07/01/2015 .-68,585 68,585 . ' 01/01/2016 160,000 5.800%68,585 228,585 297,170 07/01/2016 63,945 63,945 01/01/2017 170,000 5.800%63,945 '233,945 297,890 07/01/2017 :59,015.§9,015 01/01/2018 180,000 5.800%59,015 239,015 298,030 07/01/2018 53,795 53,795 01/01/2019 190,000 5.800%33,795 243,795 297,590 07/01/2019 48,285 48,285 01/01/2020 200,000 5.800%48,285 248,285 296,570 07/01/2020 :42,485 42,485 . 01/01/2021 210,000 5.800%42,485 252,485 294,970 07/01/2021 36,395 36,395 01/01/2022 225,000 5.800%36,395 261,395 297,790 07/01/2022 . ;29,870 29,870 01/01/2023 235,000 5.800%29,870 264,870 294,740 07/01/2023 23,055 23,055 01/01/2024 250,000 5.800%23,055 273,055 296,110 07/01/2024 15,805 15,805 ° *01/01/2025 265,000 5.800%_.15,805 .280,805 296,610 07/01/2025 8,120 -8,120 . 01/01/2026 280,000 5.800%8,120 288,120 296,240 3,455,000 2,472,540 5,927,540 .5,927,540 NET DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $3 Million in Proceeds,20-Year Amortization Period Total Debt Service Net .Ending Debt Service Reserve Fund Debt Service 01/01/2007 295,390 13,937.12.281,452.88 01/01/2008 294,880 13,937.12 280,942.88 01/01/2009 299,080 13,937.12 285,142.88 01/01/2010 297,700 13,937.12 283,762.88 01/01/2011 296,030 13,937.12 282,092.88 01/01/2012 294,070 13,937.12 280,132.88 01/01/2013 296,820 13,937.12 282,882.88 01/01/2014 293,990 13,937.12 280,052.88 01/01/2015 295,870 13,937.12 281,932.88 01/01/2016 297,170 .13,937.12 283,232.88 01/01/2017 297,890 13,937.12 283,952.88 01/01/2018 298,030 13,937.12 284,092.88 01/01/2019 »297,590 13,937.12 283,652.88 01/01/2020 296,570 13,937.12 282,632.88 01/01/2021 _-;.294,970 13,937.12 281,052.88 01/01/2022 297,790 13,937.12 283,852.88 01/01/2023 294,740 13,937.12 280,802.88 01/01/2024 _.296,110 13,937.12 282,172.88 01/01/2025 296,610 13,937.12 -282,672.88 01/01/2026 296,240 313,017.12 -16,777.12 5,927,540 577,822.40 5,349,717.60 AIDEA Loan Participation | $5 million 7,15 and 20 years NOOawnd=OOWNOAaAWNH=OONOOLWDHDAlaska Intertie Financing Scenario AIDEA Loan Participation Program $5 Million Net Proceeds 2m RAN IEAM AL inbatin£l ian vile AKmillian Total AIDEA Portion Bank Portion .3 Fee % 7 Year Rate:Rate: 5,000,000 Needed 5.87%4,500,000 Needed 7.00%§00,000 Needed Payment Interest Principal 150,000 Fee Payment Interest Principal 135,000 Fee Payment Interest Principal 15,000 Fee 5,150,000 Loan 4,635,000 Loan 515,000 Loan 922,018 308,125 613,893 4,536,107 826,458 272,075 554,383 4,080,617 95,560 36,050 59,510 455,490 922,018 271,416 650,602 3,885,504 826,458 239,532 586,926 3,493,690 95,560 31,884 63,676 391,814 922,018 232,507 689,511 3,195,993 826,458 205,080 621,378 2,872,312 95,560 27,427 68,133 323,681 922,018 191,263 730,755 2,465,238 826,458 168,605 657,853 2,214,458 95,560 22,658 72,902 250,779 922,018 147,544 774,474 1,690,764 826,458 129,989 696,469 1,517,989 95,560 17,555 78,005 172,774 922,018 101,200 820,818 869,945 826,458 89,106 737,352 780,637 95,560 12,094 83,466 89,309 922,018 52,075 869,943 2 826,458 45,823 780,635 1 95,560 6,252 89,308 1 Total AIDEA Portion Bank Portion 15 Year Rate:Rate: §,000,000 Needed 6.53%4,500,000 Needed 7.00%500,000 Needed Payment Interest Principal 150,000 Fee Payment Interest Principal 135,000 Fee Payment Interest Principal 15,000 Fee 5,150,000 Loan 4,635,000 Loan §15,000 Loan 550,440 338,716 211,724 4,938,276 493,896 302,666 191,230 4,443,770 66,544 36,050 20,494 494,506 550,440 324,793 225,647 4,712,629 493,896 290,178 203,718 4,240,053 56,544 34615 21,929 472,577 §50,440 309,955 240,485 4,472,145 493,896 276,875 217,021 4,023,032 56,544 33,080 23,464 449,112 550,440 294,142 256,298 4,215,847 493,896 262,704 231,192 3,791,841 56,544 31,438 25,106 424,006 550,440 277,287 273,153 3,942,694 493,896 247,607 246,289 3,545,552 56,544 29,680 26,864 397,142 §50,440 259,325 291,115 3,651,579 493,896 231,525 262,371 3,283,181 56,544 27,800 28,744 368,398 550,440 240,180 310,260 3,341,319 493,896 214,392 279,504 3,003,678 56,544 25,788 30,756 337,641 §50,440 219,775 330,665 3,010,654 493,896 196,140 297,756 2,705,922 56,544 23,635 32,909 304,732 550,440 198,028 352,412 2,658,243 493,896 176,697 317,199 2,388,724 56,544 21,331 35,213 269,519 550,440 174,850 375,590 2,282,653 493,896 155,984 337,912 2,050,812 56,544 18,866 37,678 231,841 550,440 150,147 400,293 1,882,360 493,896 133,918 359,978 1,690,834 56,544 16,229 40,315 191,525 550,440 123,818 426,622 1,455,738 493,896 110,411 383,485 1,307,350 56,544 13,407 43,137 148,388 550,440 95,757 454,683 1,001,055 493,896 85,370 408,526 898,824 56,544 10,387 46,157 102,231 550,440 65,849 484,591 516,464 493,896 58,693 435,203 463,622 56,544 7,156 49,388 52,843 550,440 33,973 516,467 -2 493,896 30,274 463,622 0 56,544 3,699 52,845 -2 Total AIDEA Portion Bank Portion 20 Year Rate:Rate: 5,000,000 Needed 6.67%4,500,000 Needed 7.00%500,000 Needed Payment Interest Principat 150,000 Fee Payment Interest Principal 135,000 Fee Payment Interest Principal 15,000 Fee 5,150,000 Loan 4,635,000 Loan 515,000 Loan 474,966 345,205 129,761 5,020,239 426,354 309,155 117,199 4,517,804 48,612 36,050 12,562 502,438 474,966 336,508 138,458 4,881,781 426,354 301,337 125,017 4,392,785 48,612 35,171 13,441 488,996 474,966 327,229 147,737 4,734,044 426,354 292,999 133,355 4,259,430 48,612 34,230 14,382 474,614 474,966 317,327 157,639 4,576,406 426,354 284,104 142,250 4,117,181 48,612 33,223 15,389 459,225 474,966 306,762 168,204 4,408,202 426,354 274,616 151,738 3,965,443 48,612 32,146 16,466 442,758 474,966 295,488 179,478 4,228,724 426,354 264,495 161,859 3,803,585 48,612 30,993 17,619 425,139 474,966 283,459 191,507 4,037,217 426,354 253,699 172,655 3,630,930 48,612 29,760 18,852 406,287 474,966 270,623 204,343 3,832,874 426,354 242,183 184,171 3,446,760 48,612 28,440 20,172 386,114 474,966 256,927 218,039 3,614,835 426,354 229,899 196,455 3,250,305 48,612 27,028 21,584 364,530 474,966 242,312 232,654 3,382,181 426,354 216,795 209,559 3,040,747 48,612 25,517 23,095 341,434 474,966 226,718 248,248 3,133,933 426,354 202,818 223,536 2,817,211 48,612 23,900 24,712 316,722 474,966 210,079 264,887 2,869,047 426,354 187,908 238,446 2,578,766 48,612 22,171 26,441 290,281 474,966 192,324 282,642 2,586,405 426,354 172,004 254,350 2,324,416 48,612 20,320 28,292 261,988 474,966 173,378 301,588 2,284,817 426,354 155,039 271,315 2,053,102 48,612 18,339 30,273 231,715 474,966 153,162 321,804 1,963,013 426,354 136,942 289,412 1,763,690 48,612 16,220 32,392 199,323 474,966 131,591 343,375 1,619,638 426,354 117,638 308,716 1,454,975 48,612 13,953 34,659 164,663 474,966 108,573 366,393 1,253,245 426,354 97,047 329,307 1,125,668 48,612 11,526 37,086 127,577 474,966 84,012 390,954 862,291 426,354 75,082 361,272 774,397 48,612 8,930 39,682 87,895 474,966 57,805 417,161 445,131 426,354 51,652 374,702 399,695 48,612 6,153 42,459 45,435 474,966 29,840 445,126 §426,354 26,660 399,694 2 48,612 3,180 45,432 3 Taxable Revenue Bonds $5 million 7 years SOURCES AND USES OF FUNDS Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $5 Million in Proceeds,7-Year Amortization Sources: Bond Proceeds: Par Amount 5,755,000.00 5,755,000.00 Uses: Project Fund Deposits: Deposit to Project Fund -5,000,000.00 Other Fund Deposits: -Debt Service Reserve Fund 575,500.00 Delivery Date Expenses:° Cost of Issuance 49,088.65 Underwriter's Discount .128,162.50 177,251.15 Other Uses of Funds:Contingency 2,248.85 5,755,000.00 BOND DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $5 Million in Proceeds,7-Year Amortization Annual Period Debt Ending Principal Coupon Interest Debt Service Service 01/01/2006 07/01/2006 158,262.50 158,262.50 . 01/01/2007 695,000 5.500%158,262.50 853,262.50 "1,011,525 07/01/2007 139,150.00 139,150.00 01/01/2008 735,000 5.500%139,150.00 874,150.00 1,013,300 07/01/2008 118,937.50 118,937.50 01/01/2009 775,000 5.500%118,937.50 893,937.50 1,012,875 07/01/2009 97,625.00 97,625.00 01/01/2010 820,000 5.500%97,625.00 917,625.00 1,015,250 07/01/2010 75,075.00 75,075.00 01/01/2011 860,000 5.500%75,075.00 935,075.00 1,010,150 07/01/2011 $1,425.00 $1,425.00 01/01/2012 910,000 5.500%51,425.00 961,425.00 1,012,850 07/01/2012 26,400.00 26,400.00 01/01/2013 960,000 5.500%26,400.00 986,400.00 1,012,800 5,755,000 -1,333,750.00 7,088,750.00 7,088,750 NET DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $5 Million in Proceeds,7-Year Amortization Period Total Debt Service Net Ending Debt Service 'Reserve Fund Debt Service 01/01/2007 1,011,525 24,631.40 986,893.60 01/01/2008 1,013,300 24,631.40 988,668.60 01/01/2009 1,012,875 24,631.40 988,243.60 01/01/2010 1,015,250 24,631.40 990,618.60 01/01/2011 1,010,150 24,631.40 -985,518.60 01/01/2012 |1,012,850 24,631.40 988,218.60 01/01/2013 1,012,800 600,131.40 412,668.60 7,088,750 747,919.80 6,340,830.20 Taxable Revenue Bonds $5 million 15 years | SOURCES AND USES OF FUNDS Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $5 Million in Proceeds,15-Year Amortization Sources: Bond Proceeds: Par Amount §,755,000.00 §,755,000.00 Uses: Project Fund Deposits: Deposit to Project Fund §,000,000.00 Other Fund Deposits: Debt Service Reserve Fund 575,500.00 Delivery Date Expenses:. Cost of Issuance 49,088.65 Underwriter's Discount 128,162.50 177,251.15 Other Uses of Funds:. Contingency 2,248.85 5,755,000.00 'BOND DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 -$5 Million in Proceeds,15-Year Amortization .Annual Period .Debt Debt Ending Principal Coupon Interest Service Service 01/01/2006 07/01/2006 161,140 161,140 01/01/2007 255,000 5.600%161,140 416,140 577,280 '07/01/2007 154,000 154,000 01/01/2008 270,000 5.600%154,000 424,000 578,000 07/01/2008 146,440 146,440 , 01/01/2009 285,000 5.600%"146,440 431,440 577,880 07/01/2009 138,460 138,460 . 01/01/2010 300,000 5.600%138,460 438,460 _576,920 07/01/2010 130,060 130,060 01/01/2011 315,000 5.600%130,060 445,060 .$75,120 07/01/2011 .121,240 121,240 : 01/01/2012 335,000 »5.600%121,240 456,240 577,480 07/01/2012 :111,860 111,860 . 01/01/2013 355,000 5.600%111,860 466,860 $78,720 07/01/2013 101,920 .101,920 01/01/2014 375,000 5.600%101,920 476,920 578,840 07/01/2014 91,420 91,420 01/01/2015 395,000 5.600%91,420 486,420 577,840 07/01/2015 80,360 80,360 01/01/2016 415,000 5.600%80,360 495,360 575,720 07/01/2016 68,740 68,740 01/01/2017 440,000 .5.600%68,740 508,740 577,480 07/01/2017 56,420 ,56,420 *01/01/2018 465,000 5.600%56,420 $21,420 577,840 07/01/2018 43,400 43,400 01/01/2019 490,000 5.600%-43,400 $33,400 576,800 07/01/2019 29,680 29,680 .. 01/01/2020 515,000 5.600%29,680 544,680 574,360 07/01/2020 15,260 15,260 01/01/2021 545,000 5.600%15,260 560,260 575,520 5,755,000 2,900,800 8,655,800 8,655,800 NET DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $5 Million in Proceeds,15-Year Amortization Period Total Debt Service Net Ending Debt Service Reserve Fund|Debt Service 01/01/2007 577,280 26,530.56 550,749.44 01/01/2008 578,000 26,530.56 551,469.44 01/01/2009 577,880 26,530.56 551,349.44 01/01/2010 576,920 26,530.56 550,389.44 01/01/2011 $75,120 26,530.56 548,589.44 01/01/2012 577,480 26,530.56 |550,949.44 01/01/2013 578,720 26,530.56 552,189.44 01/01/2014 :578,840 26,530.56 552,309.44 01/01/2015 577,840 26,530.56 551,309.44 01/01/2016 575,720 26,530.56 549,189.44 01/01/2017 577,480 26,530.56 550,949.44 01/01/2018 577,840 26,530.56 551,309.44 01/01/2019 ,576,800 26,530.56 550,269.44 01/01/2020.$74,360 26,530.56 547,829.44 01/01/2021 §75,520 '602,030.56 --26,510.56 8,655,800 973,458.40 7,682,341.60 Taxable Revenue Bonds $5 million 20 years SOURCES AND USES OF FUNDS Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $5 Million in Proceeds,20-Year Amortization Sources: Bond Proceeds: Par Amount 5,670,000.00 §,670,000.00 Uses: "Project Fund Deposits: Deposit to Project Fund 5,000,000.00 Other Fund Deposits: Debt Service Reserve Fund 489,130.00 Delivery Date Expenses:° Cost of Issuance 48,926.10 Underwriter's Discount 127,525.00 176,451.10 Other Uses of Funds: Contingency 4,418.90 _5,670,000.00- BOND DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $5 Million in Proceeds,20-Year Amortization Annual Period .Debt Debt Ending Principal Coupon Interest Service Service 01/01/2006 07/01/2006 164,430 164,430 01/01/2007 160,000 5.800%164,430 324,430 488,860 07/01/2007 159,790 159,790 : 01/01/2008 165,000 5.800%159,790 324,790 484,580 07/01/2008 155,005 155,005 01/01/2009 175,000 5.800%155,005 330,005 485,010 07/01/2009 149,930 149,930 01/01/2010 185,000 5.800%149,930 334,930 484,860 07/01/2010 144,565 144,56501/01/2011 200,000 5.800%144,565 344,565 489,130 07/01/2011 ,138,765 138,765 01/01/2012 210,000 5.800%138,765 348,765 487,530 07/01/2012 132,675 132,675 01/01/2013 220,000 5.800%132,675 352,675 .485,350 07/01/2013 ;126,295 126,295 - 01/01/2014 235,000 5.800%126,295 361,295 487,590 -07/01/2014 : ;119,480 119,480 01/01/2015 245,000 5.800%119,480 364,480 483,960 07/01/2015 112,375 112,375 01/01/2016 260,000 5.800%112,375 372,375 484,750 07/01/2016 104,835 104,835 01/01/2017,275,000 .5.800%104,835 379,835 484,670 07/01/2017 96,860 96,860 01/01/2018 295,000 5.800%96,860 391,860 488,720 07/01/2018 88,305 88,305 01/01/2019 310,000 5.800%88,305 398,305 486,610 07/01/2019 '79,315 79,315. 01/01/2020 330,000 5.800%79,315 409,315 488,630 07/01/2020 69,745 69,745 01/01/2021 345,000 5.800%69,745 414,745 484,490 07/01/2021 59,740 59,740 01/01/2022 365,000 5.800%59,740 424,740 484,480 07/01/2022 .49,155 49,155 01/01/2023 390,000 5.800%49,155 439,155 488,310 07/01/2023 37,845 37,845 01/01/2024 410,000 5.800%37,845 447,845 485,690 07/01/2024 25,955 25,955 01/01/2025 435,000 |5.800%25,955 460,955 486,910 07/01/2025 ;13,340 13,340 01/01/2026 460,000 5.800%13,340 473,340 486,680 5,670,000 4,056,810 9,726,810 9,726,810 NET DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006$5 Million in Proceeds,20-Year Amortization Period Total Debt Service Net Ending Debt Service Reserve Fund Debt Service 01/01/2007 488,860 22,793.46 466,066.54 01/01/2008 484,580 22,793.46 461,786.54 01/01/2009 485,010 22,793.46 462,216.54 01/01/2010 484,860 22,793.46 462,066.54 01/01/2011 489,130 22,793.46 466,336.5401/01/2012 487,530 22,793.46 *464,736.54 01/01/2013 485,350 22,793.46 462,556.54 01/01/2014 487,590 22,793.46 464,796.54 01/01/2015 483,960 22,793.46 461,166.54 01/01/2016 484,750 22,793.46 -461,956.54 01/01/2017 484,670 22,793.46 461,876.54 01/01/2018 488,720 22,793.46 465,926.54 01/01/2019 »486,610_22,793.46 463,816.54 01/01/2020 488,630 22,793.46 465,836.54 01/01/2021 484,490 22,793.46 461,696.54 01/01/2022 484,480 22,793.46 461,686.54 01/01/2023 488,310 22,793.46 465,516.54 01/01/2024 485,690 22,793.46 462,896.54 01/01/2025 *486,910 22,793.46 464,116.54 01/01/2026 486,680 -$11,923.46 . 25,243.46 9,726,810 944,999.20 8,781,810.80 AIDEA Loan Participation $7 million 7,15 and 20 years Alaska Intertie Financing Scenario AIDEA Loan Participation Program $7 Million Net Proceeds Total AIDEA Portion Bank Portion 3 Fee % 7 Year Rate:Rate: 7,000,000 Needed 5.87%6,300,000 Needed 7.00%700,000 Needed Payment Interest Principal 210,000 Fee Payment Interest _Principal 189,000 Fee Payment Interest Principal 21,000 Fee 7,210,000 Loan 6,489,000 Loan 721,000 Loan 1 1,290,826 431,374 859,452 6,350,548 1,157,042 380,904 776,138 5,712,862 133,784 50,470 83,314 637,686 2 1,290,826 379,983 910,843 5,439,706 1,157,042 335,345 821,697 4,891,166 133,784 44638 89,146 548,540 3 1,290,826 325,509 965,317 4,474,389 1,157,042 287,111 869,931 4,021,235 133,784 38,398 95,386 453,154 4 1,290,826 267,767 1,023,059 3,451,331 1,157,042 236,046 920,996 3,100,239 133,784 31,721 102,063 351,092 §1,290,826 206,560 1,084,266 2,367,065 1,157,042 181,984 975,058 2,125,181 133,784 24,576 109,208 241,884 6 1,290,826 141,680 1,149,146 1,217,919 1,157,042 124,748 1,032,294 1,092,888 133,784 16,932 116,852 125,032 7 1,290,826 72,904 1,217,922 -2 1,157,042 64,152 1,092,890 -2 133,784 8,752 125,032 0 Total AIDEA Portion Bank Portion 15 Year Rate:Rate: 7,000,000 Needed 6.53%6,300,000 Needed 7.00%700,000 Needed Payment Interest Principal _210,000 Fee Payment Interest Principal 189,000 Fee Payment Interest Principal 21,000 Fee 7,210,000 Loan 6,489,000 Loan 721,000 Loan 1 770,616 474,202 296,414 6,913,586 691,454 423,732 267,722 6,221,278 79,162 50,470 28692 692,308 2 770,616 454,711 315,905 6,597,681 691,454 406,249 285,205 5,936,073 79,162 48,462 30,700 661,608 3 770,616 433,939 336,677 6,261,005 691,454 387,626 303,828 5,632,245 79,162 46,313 32,849 628,759 4 770,616 411,799 358,817 5,902,188 691,454 367,786 323,668 5,308,578 79,162 44,013 35,149 593,610 5 770,616 388,203 382,413 5,519,775 691,454 346,650 344,804 4,963,774 79,162 41,553 37,609 556,001 6 770,616 363,054 407,562 5,112,213 691,454 324,134 367,320 4,596,454 79,162 38,920 40,242 515,759 7 770,616 336,251 434,365 4,677,849 691,454 300,148 391,306 4,205,148 79,162 36,103 43,059 472,701 8 770,616 307,685 462,931 4,214,918 691,454 274,596 416,858 3,788,290 79,162 33,089 46,073 426,628 9 770,616 277,239 493,377 3,721,541 691,454 247,375 444,079 3,344,211 79,162 29,864 49,298 377,330 10 770,616 244,790 525,826 3,195,715 691,454 218,377 473,077 2,871,135 79,162 26,413 52,749 324,581 11 770,616 210,206 560,410 2,635,306 691,454 187,485 503,969 2,367,166 79,162 22,721 56,441 268,140 12 770,616 173,346 597,270 2,038,036 691,454 154,576 536,878 1,830,288 79,162 18770 60,392 207,748 13.770,616 134,060 636,556 1,401,480 691,454 119,518 571,936 1,258,352 79,162 14,542 64,620 143,128 14 770,616 92,189 678,427 723,053 691,454 82,170 609,284 649,068 79,162 10,019 69,143 73,985 15 770,616 47,563 723,053 1 691,454 42,384 649,070 -2 79,162 5.179 73,983 2 Total AIDEA Portion Bank Portion 20 Year Rate:Rate: 7,000,000 Needed 6.67%6,300,000 Needed 7.00%700,000 Needed Payment Interest Principal _210,000 Fee Payment Interest Principal _189,000 Fee Payment _Interest__Principal 21,000 Fee 7,210,000 Loan 6,489,000 Loan 721,000 Loan 1 664,952 483,286 181,666 7,028,334 596,895 432,816 164,079 6,324,921 68,057 50,470 17,587 703,413 2 664,952 471,111 193,841 6,834,493 596,895 421,872 175,023 6,149,898 68,057 49,239 18,818 684,594 3 664,952 458,120 206,832 6,627,660 596,895 410,198 186,697 5,963,201 68,057 47,922 20,135 664,459 4 664,952 444,258 220,694 6,406,966 §96,895 397,746 199,149 5,764,052 68,057 46,512 21,545 642,914 5 664,952 429,466 235,486 6,171,480 596,895 384,462 212,433 5,551,619 68,057 45,004 23,053 619,861 6 664,952 413,683 251,269 5,920,211 596,895 370,293 226,602 5,325,018 68,057 43,390 24,667 595,193 7 664,952 396,843 268,109 5,652,102 §96,895 355,179 241,716 5,083,302 68,057 41,664 26,393 568,800 8 664,952 378,872 286,080 5,366,021 596,895 339,056 257,839 4,825,463 68,057 39,816 28,241 540,559 9 664,952 359,697 305,255 5,060,766 596,895 321,858 275,037 4,550,426 68,057 37,839 30,218 510,340 10 664,952 339,237 325,715 4,735,051 596,895 303,513 293,382 4,257,044 68,057 35,724 32,333 478,007 11 664,952 317,405 347,547 4,387,504 596,895 283,945 312,950 3,944,094 68,057 33,460 34,597 443,410 12 664,952 294,110 370,842 4,016,661 596,895 263,071 333,824 3,610,270 68,057 31,039»37,018 +406,391 13 664,952 269,252 395,700 3,620,961 596,895 240,805 356,090 3,254,180 68,057 28,447 39,610 366,781 14 664,952 242,729 422,223 3,198,738 596,895 217,054 379,841 2,874,339 68,057 25,675 42,382 324,399 15 664,952 214,426 450,526 2,748,212 596,895 191,718 405,177 2,469,162 68,057 22,708 45,349 279,050 16 664,952 184,226 480,726 2,267,486 596,895 164,693 432,202 2,036,960 68,057 19,533 48,524 230,525 17 664,952 152,002 512,950 1,754,535 596,895 135,865 461,030 1,575,930 68,057 16,137 51,920 178,605 18 664,952 117,617 547,335 1,207,200 596,895 105,115 491,780 1,084,151 68,057 12,502 55,555 123,050 19 664,952 80,926 584,026 623,174 596,895 72,313 524,582 559,569 68,057 8613 59,444 63,605 20 664,952 41,775 623,177 3 596,895 37,323 559,572 3 68,057 4,452 63,605 0 em Om Ak att et 8 tee Onnnasia vie Fmillian Taxable Revenue Bonds $7 million 7 years woe BEmeeeBee SOURCES AND USES OF FUNDS Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 __$7 Million in Proceeds,7-Year Amortization _ Sources: Bond Proceeds: Par Amount 8,000,000.00 8,000,000.00 Uses: .Project Fund Deposits: Deposit to Project Fund 7,000,000.00 Other Fund Deposits: Debt Service Reserve Fund 800,000.00 Delivery Date Expenses:° Cost of Issuance $3,365.00 'Underwriter's Discount 145,000.00 198,365.00 Other Uses of Funds: Contingency .1,635.00 8,000,000.00 5BBOND DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $7 Million in Proceeds,7-Year Amortization Annual Period Debt Ending .Principal Coupon Interest Debt Service Service 01/01/2006 07/01/2006 220,000.00 220,000.00 01/01/2007 970,000 5.500%220,000.00 1,190,000.00 1,410,000 07/01/2007 193,325.00 193,325.00 01/01/2008 1,020,000 5.500%193,325.00 1,213,325.00 1,406,650 07/01/2008 165,275.00 165,275.00 01/01/2009 1,075,000 5.500%165,275.00 1,240,275.00 1,405,550 07/01/2009 ,135,712.50 135,712.50 01/01/2010 1,135,000 5.500%135,712.50 1,270,712.50 1,406,425 07/01/2010 104,500.00 104,500.00 01/01/2011 1,200,000 5.500%104,500.00 1,304,500.00 1,409,000 07/01/2011 oo,71,500.00 -71,500.00 01/01/2012 1,265,000 5.500%©71,500.00 1,336,500.00 1,408,000 07/01/2012 .36,712.50 36,712.50 01/01/2013 1,335,000 5.500%36,712.50 1,371,712.50 1,408,425 8,000,000 1,854,050.00 9,854,050.00 9,854,050 - NET DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $7 Million in Proceeds,7-Year Amortization Period Total Debt Service .Net Ending Debt Service Reserve Fund Debt Service 01/01/2007 1,410,000 34,240 1,375,760 01/01/2008 1,406,650 34,240 1,372,410 01/01/2009 1,405,550 34,240 1,371,310 01/01/2010 1,406,425 34,240 1,372,185 01/01/2011 -1,409,000 34,240 1,374,760 01/01/2012 ”1,408,000 34,240 1,373,760 01/01/2013 1,408,425 834,240 574,185 9,854,050 1,039,680 8,814,370 Taxable Revenue Bonds $7 million 15 years SOURCES AND USES OF FUNDS Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $7 Million in Proceeds,15-Year Amortization Sources: Bond Proceeds: Par Amount 8,000,000.00- 8,000,000.00 Uses: Project Fund Deposits: Deposit to Project Fund 7,000,000.00 Other Fund Deposits: Debt Service Reserve Fund Delivery Date Expenses:. Cost of Issuance Underwriter's Discount Other Uses of Funds: Contingency 800,000.00 53,365.00 145,000.00-_-_- 198,365.00 1,635.00 8,000,000.00 BOND DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $7 Million in Proceeds,15-Year Amortization Annual Period .'Debt Debt Ending Principal Coupon Interest Service Service 01/01/2006 07/01/2006 224,000 224,000 01/01/2007 355,000 $.600%224,000 $79,000 803,000 07/01/2007 214,060 214,060 01/01/2008 ”375,000 5.600%214,060 589,060 803,120 07/01/2008 ,203,560 -203,560 01/01/2009 395,000 5.600%203,560 598,560 802,120 07/01/2009.-192,500 .192,500 01/01/2010 415,000 5.600%192,500 607,500 800,000 07/01/2010 180,880 180,880 01/01/2011 440,000 5.600%180,880 620,880 801,760 07/01/2011 >168,560 168,560 01/01/2012 465,000 5.600%168,560 633,560 802,120 07/01/2012 155,540 155,540 01/01/2013 490,000 5.600%155,540 645,540 801,080 07/01/2013 141,820 141,820 01/01/2014 520,000 .5.600%141,820 661,820 -803,640 07/01/2014 127,260 .127,260 01/01/2015 550,000 5.600%127,260 677,260 804,520 07/01/2015 . :111,860 111,860 01/01/2016 580,000 5.600%111,860 691,860 803,720 07/01/2016 .95,620 95,620 ° 01/01/2017 610,000 5.600%95,620 705,620 801,240 07/01/2017 :78,540 78,540 01/01/2018 645,000 5.600%78,540 723,540 802,080 07/01/2018 ..60,480 60,480 01/01/2019 680,000 5.600%60,480 740,480 800,960 07/01/2019 41,440 41,440 01/01/2020 720,000 5.600%41,440 761,440 802,880 07/01/2020 21,280 21,280 01/01/2021 760,000 "5.600%21,280 781,280 802,560 8,000,000 4,034,800 12,034,800 12,034,800 NET DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $7 Million in Proceeds,15-Year Amortization Period Total Debt Service Net Ending Debt Service ReserveFund Debt Service 01/01/2007 803,000 "36,880 766,120 01/01/2008 *803,120 36,880 '766,240 01/01/2009 802,120 36,880 765,240 01/01/2010 800,000 36,880 763,120 01/01/2011 801,760 36,880 764,880 01/01/2012 802,120 36,880 765,240 01/01/2013 ,801,080 36,880 764,200 01/01/2014.803,640 36,880 766,760 01/01/2015 804,520 _36,880 767,640 01/01/2016 803,720 36,880 766,840 01/01/2017 801,240 36,880 764,360 01/01/2018 802,080 36,880 765,200 01/01/2019 .800,960 36,880 764,080 01/01/2020 802,880 "36,880 766,000 01/01/2021 802,560 -836,880 -34,320 12,034,800 1,353,200 10,681,600 Taxable Revenue Bonds $7 million 20 years SOURCES AND USES OF FUNDS Alaska Energy Authority Rail Belt Utility Group Intertie Project Taxable Revenue Bonds,Series 2006 $7 Million in Proceeds,20-Year Amortization Sources: Bond Proceeds: Par Amount 7,875,000.00 7,875,000.00 Uses: Project Fund Deposits: Deposit to Project Fund 7,000,000.00 Other Fund Deposits:: Debt Service Reserve Fund 677,050.00 Delivery Date Expenses:> Cost of Issuance 53,127.25 Underwriter's Discount 144,062.50 197,189.75 Other Uses of Funds: Contingency 760.25 7,875,000.00 ifBOND DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project >Taxable Revenue Bonds,Series 2006 $7 Million in Proceeds,20-Year Amortization Annual Period Debt Debt Ending Principal -Coupon Interest Service *Service 01/01/2006 07/01/2006 228,375 228,375 01/01/2007 220,000 5.800%228,375 448,375 676,750 07/01/2007 221,995 221,995 01/01/2008 230,000 5.800%221,995 451,995 ©673,990 07/01/2008 215,325 215,325 01/01/2009 245,000 .5.800%215,325 460,325 675,650 07/01/2009 .208,220 208,220 ; 01/01/2010 260,000 5.800%208,220 468,220 676,440 07/01/2010 200,680 200,680 01/01/2011 275,000 5.800%200,680 475,680 676,360 07/01/2011.,192,705 192,705 01/01/2012 290,000 5.800%192,705 482,705 675,410 07/01/2012 184,295 184,295 01/01/2013 305,000 5.800%184,295 489,295 673,590 07/01/2013 .175,450 175,450 01/01/2014 325,000 5.800%175,450 500,450 675,900 07/01/2014 166,025 166,025 01/01/2015 345,000 5.800%166,025 511,025 677,050 07/01/2015 156,020 156,020 - .01/01/2016 365,000 5.800%156,020 521,020 677,040 07/01/2016 145,435 145,435 01/01/2017 _385,000 5.800%145,435 530,435 675,870 07/01/2017 '134,270 134,270 01/01/2018 405,000 5.800%134,270 .539,270 673,540 07/01/2018 122,525 122,525 01/01/2019 430,000 5.800%122,525 552,525 675,050 07/01/2019 110,055 110,055 01/01/2020 455,000 5.800%110,055 565,055 675,110 07/01/2020 56,860 96,860 01/01/2021 480,000 5.800%96,860 576,860 673,720 07/01/2021 82,940 82,940 ; 01/01/2022 510,000 5.800%82,940 592,940 '675,880 07/01/2022 -68,150 68,150 01/01/2023 ,540,000 5.800%-68,150 608,150 676,300 07/01/2023 .*.52,490 52,490 01/01/2024 570,000 5.800%52,490 622,490 674,980 07/01/2024 ; 35,960 35,960 01/01/2025 605,000 5.800%35,960 640,960 676,920 07/01/2025 18,415 18,415 . 01/01/2026 635,000 5.800%18,415 653,415 671,830 7,875,000 °5,632,380 13,507,380 13,507,380 NET DEBT SERVICE Alaska Energy Authority Rail Belt Utility Group Intertie Project - :Taxable Revenue Bonds,Series 2006 $7 Million in Proceeds,20-Year Amortization Period Total Debt Service Net Ending Debt Service Reserve Fund °Debt Service 01/01/2007 676,750 31,550.54 645,199.46 01/01/2008 673,990 31,550.54 642,439.46 01/01/2009 675,650 31,550.54 644,099.46 01/01/2010 676,440 31,550.54 ©644,889.46 01/01/2011 676,360 31,550.54 644,809.46 01/01/2012 675,410 31,550.54 643,859.46 01/01/2013 673,590 31,550.54 642,039.46 01/01/2014 675,900 31,550.54 644,349.46 01/01/2015 677,050 31,550.54 645,499.46 01/01/2016 677,040 31,550.54 645,489.46 01/01/2017 675,870 31,550.54 644,319.46 01/01/2018.673,540 31,550.54 641,989.46 01/01/2019 ,§75,050 31,550.54 -643,499.46 01/01/2020 -675,110 31,550.54 643,559.46 01/01/2021 673,720 31,550.54 642,169.46 01/01/2022 675,880 31,550.54 644,329.46 01/01/2023 676,300 -31,550.54 -644,749.46 01/01/2024 674,980 -31,550.54 643,429.46 01/01/2025 676,920 31,550.54 645,369.46 01/01/2026 671,830 708,600.54 -36,770.54 13,507,380 1,308,060.80 12,199,319.20