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HomeMy WebLinkAbout02-10-2000 BM MinutesALASKA ENERGY AUTHORITY Board Meeting February 10,2000 Minutes ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY /=ALASKA qme™=ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 AGENDA ALASKA ENERGY AUTHORITY 10. Board of Directors February 10,2000 CALL TO ORDER BOARD OF DIRECTORS ROLL CALL = PUBLIC ROLL CALL PUBLIC COMMENTS PRIOR MINUTES --December 10,1999 , OLD BUSINESS NEW BUSINESS A.Appointment of Officers,Resolution #2000-01 B.Four Dam Poo!Update C.Rural Energy Overview D.Status of Hydro Projects Repairs DIRECTOR COMMENTS A.Director's Status Report of AEA Programs and Projects B.Next Meeting Date (June 2000) BOARD COMMENTS . , ADJOURNMENT hiallN\bjfiboard\agenda1 FAX 907 /269-3044 ALASKA INDUSTRIAL DEVELOPMENT =”,AND EXPORT AUTHORITY =A GE =SENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 ALASKA ENERGY AUTHORITY BOARD OF DIRECTORS February 10,2000 -12:56 p.m. Anchorage,Alaska 1.CALL TO ORDER Chairman Hughes called the meeting of the Alaska Energy Authority to order on February 10, 2000 at 12:56 p.m.A quorum was established. 2.BOARD OF DIRECTORS ROLL CALL Directors present in Anchorage:Mr.Wilson Hughes (Chairman/Public Member),Deputy Commissioner Larry Persily (Designee for Department of Revenue Commissioner),Commissioner Deborah Sedwick (Department of Community and Economic Development),Commissioner Joe Perkins (Department of Transportation and Public Facilities),and Mr.Robert Loescher (Public Member). 3.PUBLIC ROLL CALL AIDEA staff present in Anchorage:D.Randy Simmons (Executive Director),James A.McMillan (Deputy Director -Credit),Valorie F.Walker (Deputy Director -Finance),Keith A.Laufer (Financial &Legal Affairs Manager),David E.Germer (Deputy Director-Business Development & Rural Energy),Dennis McCrohan (Deputy Director-Project Development &Operations),Katelyn Markley (Development Specialist),Percy Frisby (Rural Energy Manager),Dick Emerman (Project Manager),Peter Crimp (Development Specialist),Eric Marchegiani (Technical Engineer),and Brenda J.Fuglestad (Administrative Assistant). Others attending in Anchorage:Cindy Cartledge (Wohlforth,Vassar,et.al),Val Tangen (Legislative Audit),Vicki Irwin (Sealaska Corporation),Elizabeth Gabel (Information Insights), Brian Bjorkquist (Department of Law),Jon Rubini (Foster Pepper Rubini &Reeves LLC),and Charles E.Cole,Esq. 4.PUBLIC COMMENTS There were no public comments. 5.PRIOR MINUTES -December 10,1999 The December 10,1999,minutes were unanimously approved as presented. AEA Board Meeting February 10,2000 Meeting Minutes Page 2 6.OLD BUSINESS There was no old business. 7.NEW BUSINESS 7A.Resolution No.2000-01,Resolution Of The Alaska Energy Authority Relating To The Appointment Of Various Officers Of The Authority;And Related Matters Mr.Simmons briefly reviewed Resolution No.2000-01 stating that the resolution reappoints the existing Executive Director and Deputy Directors,and appoints David Germer as Deputy Director- Business Development and Rural Energy and Assistant Secretary. He said the resolution also provides the officers with the power and the authority to exercise their duties and responsibilities under the statutes.It authorizes the Executive Director to sign all contracts,deeds,instruments on behalf of the Authority and it also authorizes the Executive Director to appoint an acting executive director when necessary. Staff recommended approval of Resolution No.2000-01. MOTION:Commissioner Perkins moved for the approval of Resolution No.2000-01. Seconded by Commissioner Sedwick.There being no discussion,the question was called. A roll call vote was taken and the motion passed. 7B.FOUR DAM POOL PROJECT UPDATE Mr.Laufer briefed the Board on recent developments regarding the Four Dam Poo!divestiture. He said that over the last several years staff has been working with the purchasing utilities of the Four Dam Pool on a possible sale of the projects to those utilities and the local communities.At the outset,the Authority and the Governor's office set forth four parameters that would be necessary in order for the Administration to support a sale.Those parameters are that the Power Sales Agreement remain in place until after the transfer;the State receive fair value for the projects;the State be relieved from all risks and liabilities from the projects;and that there be Legislative review of any sale. In July of 1997,the utilities presented a proposal to the Authority to purchase the facilities. Ultimately,that proposal was rejected by the Board because it failed to meet the State's sale parameters.Specifically,it left substantial risks with the State and it was believed that the value and the payment terms were unacceptable.Also,around the same time the Authority received an unsolicited proposal from The Energy Group,which was a group represented by former U.S. Senator Gravel.The Board also deemed that proposal as unacceptable,as it involved significant risks to the State.The State was to finance one portion of the purchase price and guarantee the other.[t required significant modifications to the power sales agreement and it did not have the support of any of the communities involved. AEA continued to pursue possible divestiture with the utilities and the utilities continued to work on preparing a new proposal.Over the last six months or so,the utilities have spent substantial time in developing a simplified proposal and last month presented that proposal to AEA.The terms of the proposal are that the utilities will make an initial payment of $74 million in cash to the State at AEA Board Meeting February 10,2000 Meeting Minutes Page 3 closing,however,the utilities would keep the State's existing insurance fund,which has approximately uncommitted funds of $14 million.The net funds to be paid to the State would equal approximately $60 million.In addition,there would be a contingent payment of $10 million in year 2020,if repairs,R&R payments,and the risks actually experienced by the utilities were substantially less than those that have been estimated for the projects.The proposal would relieve the State from all risk and liabilities of the project and there would be no changes to the Power Sales Agreement,at least initially,until after the sale.A new entity would be formed by the utilities which would assume the State's position and that new entity would have the same Power Sales Agreement relationship with the underlying utilities. The strength of the proposal is that it fully releases the State from liability.Under the Power Sales Agreement,legally,only the utilities can do that.If the State were to transfer these projects to some other entity without obtaining a release from the utilities,the State would be contingently liable for the existing Power Sales Agreement liabilities.The utilities,in their proposal,have specifically said that they would fully release the State.They are also making this proposal with full Knowledge of what the Four Dam Pool projects are about and how they are operated. The weakness in the utility proposal is that the value,we believe,is less than what could probably be expected from another buyer. Over the last couple of months we have received an expression of interest from an entity called CHI Energy,Inc.This is a company that owns small hydro projects in the Lower 48.Their letter of interest expressed their belief that they could pay at least $80 million for the projects.They specifically stated that the Power Sales Agreement would remain in place.The strength of that offer is obviously more significant in dollars than the utilities offer.The weakness is the converse of what was said about the utilities offer,this group would not be in a position to relieve the State of its liability in the Power Sales Agreement unless they were able to obtain that type of release from the utilities themselves.In order to mitigate against that,we believe that to accomplish the goal that the State be relieved from liabilities,this entity would somehow have to indemnify the State and provide specific nonproject related assets to back that pledge in order to fully release the State.It is unclear whether they would be willing or how they might do that.In addition,they have not done significant due diligence prior to putting forward this letter of interest. Recently,CHI and the utilities met to talk about a possible partnership to make a joint proposal to the State.Our understanding is that the utilities have elected to proceed independently of CHI and,if unsuccessful,would then consider going back and partnering with the CHI group. Mr.Laufer reviewed the methodology for looking at the value of the Four Dam Pool.He said the State has significant risks under the existing agreement for uninsured facility repairs,deficiencies in the Reserve &Replacement (R&R)account,and for uninsured losses.On the current analysis, staff has assumed an inflation rate of 3%,and an investment rate for the project fund for R&R accounts,etc.of 5%. Staff believes that reasonable estimates of growth are in the 1-2%range and reasonable discount rates for this purpose are in the 6-7%range. Discussions ensued as to the calculation of the present value range. Mr.Laufer said that at this time,the Authority is still considering the utilities offer and the other options that are available.However,it is important to recognize the direct link between these AEA Board Meeting February 10,2000 Meeting Minutes Page 4 projects and the Power Cost Equalization fund.On an annual basis 60%of the revenue from these projects is applied and contributed to the Power Cost Equalization Fund,which results in a contribution to that fund of approximately $5,000,000 -$7,000,000 a year depending on what the revenues are in any given year.Staff believes that as you look at a sale you also have to look at what the long-term impact would be on Power Cost Equalization. Discussions ensued as to the projected growth rate. As for CHI,unless the utilities are willing to release the state under the Power Sales Agreement, we would have to negotiate with CHI for some kind of indemnification to cover the State's risk. Ultimately,staff believes this risk factor lowers the value of the Dams to only third party purchasers. In response to Board questions,Mr.Simmons said that previously staffs only interest was from an AEA big project standpoint,basically what the fair market value was of these projects. However,as of July 1,1999,AEA is now also responsible for PCE and operating the program. Staff now has the responsibility not only with operating but also with being a part of finding funding for PCE.As the Board looks at the potential divestiture of the Four Dam Pool we cannot ignore what the effects may be on PCE from the negative or a positive standpoint. Discussions ensued as to the sale of the Four Dam Pool. Mr.Loescher encouraged staff to get CHI and the utilities together to forge a partnership to purchase the Four Dam Pool.He said the utilities are willing to forge the partnership,but they are not going to be willing if they do not have an indication from AEA that their current proposal is unacceptable.Staff needs to make that step,but encourage the utilities to take the next step.Mr. Loescher stated that Southeast Alaska needs this sale.He said there is a public policy purpose that could be served and the timing is right. Mr.Loescher said that the Board should direct management to reject the proposal that the utilities have offered and work as a facilitator to encourage the parties to get together to produce a better proposal which would satisfy their concerns and our perceived concerns of liabilities for the Power Sales Agreement,indemnification,and a fair consideration. 7C.RURAL ENERGY OVERVIEW Mr.Germer stated that the mission of the rural energy programs is to assist rural communities throughout Alaska in the development of safe,reliable,effective energy systems,and tank farms that are financially viable and economically sound.The mission is accomplished through a variety of assistance programs as well as capital improvement projects.The core rural energy program consists of bulk fuel consolidations,rural power systems upgrades,Power Cost Equalization,and loan programs,primary of which is the bulk fuel revolving loan fund. Mr.Germer said the twenty-seven former Division of Energy positions plus two administrative services positions were added to the AIDEA organization as a result of the merger. Predominately,all of the core Division of Energy activities and programs were kept in a single unit, which is referred to as the Rural Energy Group.Also,a second smaller unit consisting of alternative energy was added.Mr.Frisby continues to directly supervise the core energy programs including all capital construction projects,emergency response,and technical assistance,as well as Power Cost Equalization.He said that his own role,aside from continuing AEA Board Meeting February 10,2000 Meeting Minutes Page 5 to manage the Authority's business development program,is to work with the rural energy staff to ensure that their programs operate effectively under the AIDEA/AEA structure. Mr.Frisby briefed the Board on the rural energy programs.He stated that the rural energy group did an assessment five years ago to determine the problems in Rural Alaska.After the study was completed it was determined that approximately $250 million was needed to correct the tank farm problems in Rural Alaska.The first issues were that the private operators were being put in harms way because staff consolidated the school district and the municipality tank farms.Staff then reassessed the plan to figure out how to take care of the State and the community,as well as the private sector.After completing the analysis with the incorporation of all the other tank farm operators in these communities,the monies needed to make the improvements jumped to $450 million.He said that at this point in time,staff believes approximately $450 million is needed to correct the tank farm problems in Rural Alaska.There is presently an infusion of cash from the Denali Commission.Staff is looking to other funding sources and has been successful in getting EPA funding,HUD funding,American Indian energy funds,and private sector funding (cash contributions from the local communities). The other problem is in dealing with the rural system upgrades.There are outdated,old distribution systems in the communities in Rural Alaska.In some communities,staff is looking at trying to do hybrid systems and upgrade their existing generation distribution systems.It is estimated that it will take approximately $90 million to upgrade these systems. The Rebuild America program is a conservation program.Staff assesses schools and hospitals and makes recommendations on retrofits.Basically,once all of these assessments are completed there will be a database of information to conduct a thorough analysis in terms of infrastructure and economic development in the rural communities. Staff works with all the communities on Power Cost Equalization.Some communities have been in the program for years and still can't fill out the reports.This creates time consuming work for staff as they work with the community to fill out their reports so they can maintain their current status and continue to be a participant in the program.If staff does not take care of the reports then the community will fall off the program,which has a snowball affect that increases costs of electricity.The utilities then end up crashing which creates an emergency situation for staff. This year alone staff has responded to nineteen emergencies in the rural communities:eleven were electrical and eight were bulk fuel emergencies.Staff encourages school districts to loan the community fuel to get them through until breakup when fuel can be barged in.In most cases,fuel can be flown in,however,it is extremely expensive (approximately $2.50-$3.00 a gallon). In response to Board questions,Mr.Frisby said that part of the problem is that communities only have two delivery dates;a spring and a winter delivery date.This year the communities are running low because there has been approximately a 32%increase in the use of heating fuel due to long extended periods of cold weather.Also,there are quite a few communities that do not have sufficient storage capabilities,which the tank farm program is working to correct. Staff estimates that to complete the tank farm program it would take approximately $450 million. He said the communities currently get deliveries twice a year.The ultimate scenario would be to have enough storage capacity to have one delivery a year,so they would not run out of fuel and try to schedule a delivery at the most inopportune times.However,we are trying not to produce large systems by expanding the volume in the community because our mission is to clean up and AEA Board Meeting February 10,2000 Meeting Minutes Page 6 remove the threats to the environment.When staff does a "compliant system”they are doubling the size of the current system,so there remains the question as to whether or not staff is accomplishing the mission. To date 21 tank farms have been completed with a cost of approximately $38 million.There are 14 projects close to completion and 20 additional projects to be started.The program is currently funded through this fiscal year with approximately $19 million:$10 million from the Denali Commission and $9 million from the EPA. Mr.Simmons said there is approximately $8 million of TAPL monies that the Denali Commission is getting that is passed through to AEA on a yearly basis.Staff has had discussions with the Denali Commission about floating a bond issue in order to receive monies to correct some of the rural community problems.Staff has also been in contact with underwriters to see what would be needed to allow an $8 million revenue stream to be used to issue bonds. In response to Board questions,Mr.Frisby said the bulk fuel plan opened the door to EPA.The consolidated tank farms were put together with EPA funding and we are currently working on a 15-year bulk fuel plan.To date $12 million has been received from the EPA.Staff is currently looking at 15 years before we have 87%of what is needed to correct the current deficiencies in Rural Alaska. Staff is conducting the power system and distribution assessments,which are rolled in with the tank farm inspections to create a compliance schedule.The Coast Guard and the EPA have agreed to check the compliance schedule to find out where the community is on the deficiency list before issuing any citations.The communities that are toward the top of the deficiency list will only be warned,however,if the community is too far down the deficiency list they will probably be cited. In response to Board questions,Mr.Frisby stated they have not done environmental cleanup but there are three demonstration projects scheduled to go through DEC.Part of this is funded by the capital rebate money that the State of Alaska received which will come to DEC through AEA via a reimbursable services agreement.In addition to those three cleanup projects,DEC is going to be conducting an assessment and an evaluation of all the contaminated sites in Rural Alaska.The Rural Energy Initiatives estimated that remediation in Rural Alaska would cost approximately $700 million --$800 million. Commissioner Perkins stated that if it takes 20 years to correct the deficiencies and nobody is taking care of the systems then you will have to start over again,and we will end up in the same position as before.It would seem that the interties would become viable at this point.Is there a program to compare the costs of the rural interties and the potential of tying villages together in comparison to what this is costing,most of which will have to be redone again in 25 years. Mr.Frisby said there have been analyses done and staff has been trying to look at these communities as clusters.Staff is looking at what the trade-offs will be regarding the intertie route versus the tank farm.If we have a central power system in the region,we wouldn't need a powerhouse or a tank farm.We currently don't have the numbers as to whether this would be a more appropriate or practical way to develop or correct the issues in Rural Alaska. AEA Board Meeting February 10,2000 Meeting Minutes Page 7 There have been two interties built in Southeast Alaska.One intertie is on Prince of Wales Island from Klawock to Kasan and another is from Skagway to Haines.However,there have been no small remote interties built. Staff is working on a comparative analysis to see if it warrants taking a serious look at producing a plan to address the clusters of communities for alternative energy or interties.The statewide energy plan will look at some of the deficiency issues in Rural Alaska.If the plan shows that there is merit in terms of looking at clusters of communities and trying to do the small transmission lines, then we will move forward. Mr.Frisby reviewed the revolving bulk fuel loan program stating that they work with the communities on a day to day basis.Most of the work consists of ensuring that these communities do not run out of fuel.This program is very successful and there is outside interest that would like to see more money put into the program.He said that he believes that if more money is put into the program it will be ruined.If you start adding money to the program then you end up in a situation where communities are not working to correct the problems,they end up relying on the State for quick cheap money. The other loan fund is the power project loan fund in which staff works with rural communities of all sizes.Although they are eligible to apply for the loan,the smaller stand alone utilities do not generally apply for power project loans because they do not have personnel to manage a project. In response to Board questions,Mr.Frisby said the waste heat project in St.Paul is saving approximately $40,000 a month in heating costs and the one in Anvik is saving the school district approximately $60,000 a year in heating costs. There are approximately 96 PCE eligible utilities servicing 190 communities and approximately 12-14 of these communities do not participate in the program for a number of reasons. The Board requested a complete briefing on PCE at the next board meeting. Mr.Crimp briefly reviewed the alternative energy programs.He said that in most rural villages diesel is the rule for power production for space heating,with the exception of wood for the areas in which it is abundant.The overall goals for alternative energy are to reduce energy costs, enhance reliability and safety,community self-sufficiency,add to the local economic development, and to reduce the need for tank farms. The biomass energy program provides financing and technical assistance for wood waste,power production,processed fuels,and space heating.It is predominately funded by the U.S. Department of Energy with some State funding.One of the most recent projects is the development of a wood to ethanol production facility in Southeast Alaska.We are also looking to assist in the development of a wood fired district heating project in Interior Alaska.He stated that the rural energy group has a less active coal/natural gas program.Staff has been working with the University of North Dakota and has developed a computer-screening model for small coal facilities which looks at the economics of developing small coal bed methane fired systems for local energy production.The Rebuild America program promotes energy efficiency in schools and other larger facilities,and provides energy audits,technical training,training for local facility managers to conserve energy,demonstration retrofits for school lighting,and funding for other demonstrations. AEA Board Meeting February 10,2000 Meeting Minutes Page 8 He said there are approximately 10-15 hydroelectric projects that the alternative energy group is currently involved with.Also,the wind program assists in evaluating turbines and developing wind energy systems in rural areas.Staff is currently working in the area of Kotzebue on the wind turbine test and at the Prince of Wales Island on a high penetration hybrid wind diesel system. Staff is also considering installations in Nome and Unalaska.In addition,we are coordinating the State's wind resource assessment program with Kotzebue Electric,ASTF,the National Renewable Energy Lab,and the U.S.Department of Energy. In response to Board questions,Mr.Germer said that in attempting to finance the $100 million Unalaska Geothermal project it was noted that the facility would be required to supply the processors as well as the community of Unalaska.Because of the uncertainties associated with the fishing industry,the level of risk was such that the project proponent has not aggressively pursued the project. In response to Board questions,Mr.Crimp said there are currently ten turbines in Kotzebue,50 kw each,500kw total.There were many turbines installed in the 1980s when the State's involvement was significant. Mr.Crimp said there is a solar installation in Lime Village.Staff is studying the economics and will be having discussions about wind and remote solar applications with the U.S.Department of Energy in April. Mr.Simmons said that the issue with these technologies is the up front capital costs.The wind generators in Kotzebue have been capital intensive compared to what they currently pay for their diesel. Tthe cost of the wind program is predominately paid for by the federal government.Staff is working to discern whether or not the application of the hybrid system is feasible. 7D.STATUS OF HYDRO PROJECTS Mr.McCrohan said there are currently four major projects happening at the large hydro plants. The rebuilding of the Tyee transmission line is complete and was wrapped up just before Thanksgiving before the weather closed in.It was finished on budget and within time.The Terror Lake Tunnel Rebuild Project contract has been let to Red Samm Construction and the physical work will start in early July on Terror Lake. Mr.McCrohan said there is a significant leak in one of the culverts at the Swan Lake Dam,which will be repaired in June/July.He said it is not a structural problem,but a failure of the grouting that was put in around the culvert.Mr.McCrohan said the transmission line failed in Thompson Pass due to avalanches.One tower is on the ground and one tower is damaged.Staff has completed visual inspections,but cannot get to the towers because of the avalanche danger.There are enough spare parts to replace the tower;however,the critical point is if there has been damage to the foundations.If the foundations are damaged then the line will probably be out of service until summer at which time staff can complete repairs.However,none of this will be known until the avalanche danger is clear and the lines can be physically inspected. AEA Board Meeting February 10,2000 Meeting Minutes Page 9 e Four Dam Pool Mr.Brian Bjorkquist stated that there are financial and proprietary business information issues to be discussed related to the negotiations on the Four Dam Pool Project.Under the open meetings act a body,such as the AEA Board,can go into executive session to discuss financial and proprietary issues.The appropriate procedure for doing that is to have a Board member make a motion to go into executive session for that purpose and to vote on that motion. MOTION:Commissioner Perkins moved to go into executive session to discuss financial and proprietary matters related to the negotiations on the Four Dam Pool Project. Seconded by Commissioner Sedwick.There being no discussion the motion passed unanimously. EXECUTIVE SESSION --2:21 p.m. The Board reconvened its regular meeting at 2:49 p.m. Roll call was taken and a quorum was established.Chairman Hughes advised that the Board had not taken any formal action on the matters discussed while in Executive Session. 8.DIRECTOR COMMENTS A.Status Report of AEA Programs and Projects There were no status reports for AEA programs. 9.BOARD COMMENTS There were no Board member comments. 10.ADJOURNMENT There being no objection and no further business of the Board,the meeting was adjourned at 2:50 p.m. LtoubneithA.Lautér,Assis ert Secretary ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY /2 ALASKA@@E™=ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 ALASKA ENERGY AUTHORITY BOARD OF DIRECTORS December 10,1999 -11:50 a.m. Anchorage,Alaska 1.CALL TO ORDER Chairman Hughes called the meeting of the Alaska Energy Authority to order on December 10, 1999 at 11:50 a.m.A quorum was established. 2.BOARD OF DIRECTORS ROLL CALL Roll call was requested.Directors present in Anchorage:Mr.Wilson Hughes (Chairman/Public Member),Deputy Commissioner Ross Kinney (Designee for Department of Revenue Commissioner),Commissioner Deborah Sedwick (Department of Community and EconomicODevelopment),and Commissioner Joe Perkins (Department of Transportation and PublicFacilities). 3.PUBLIC ROLL CALL AIDEA staff present in Anchorage:D.Randy Simmons (Executive Director),James A.McMillan (Deputy Director -Credit),Valorie F.Walker (Deputy Director -Finance),Keith A.Laufer (Financial &Legal Affairs Manager),David E.Germer (Deputy Director-Business Development & Rural Energy),Dennis McCrohan (Deputy Director-Project Development &Operations),Lamar Cotten (Rural Development Manager),Katelyn Markley (Development Specialist),Karl Reiche (Projects Development Manager),Percy Frisby (Rural Energy Manager),Dick Emerman (Project Manager),Kathy Goodwin (Accountant),John Wood (Project Manager),and Brenda J.Fuglestad (Administrative Assistant). Others attending in Anchorage:Ken Vassar and Barbara Dryer (Wohlforth,Vassar,et.al),Tony Hopfinger (Anchorage Daily News),Kathy Porterfield (KPMG LLP),Tim Bradner (Alaska Economic Report),Brian Bjorkquist (Department of Law),Jon Rubini (Foster Pepper Rubini & Reeves LLC),and Charles E.Cole,Esq. 4.PUBLIC COMMENTS There were no public comments. O 5.PRIOR MINUTES -December 16,1998 The December 16,1998,minutes were unanimously approved as presented. AEA Board Meeting December 10,1999 Meeting Minutes Page 2 6.OLD BUSINESS There was no old business. 7.NEW BUSINESS TA.Financial Statements/Audit Presentation Ms.Kathy Porterfield,Managing Partner with KPMG Peat Marwick LLP,summarized the audited financial statements and letter to the Board. Ms.Porterfield said the purpose of the audit is for KPMG to gain reasonable assurance that the financial statements are free of material misstatement.KPMG conducted appropriate audit procedures and has concluded that the financial statements are fairly stated in all material respects in accordance with generally accepted accounting principles,resulting in an unqualified or a clean opinion.KPMG obtained reasonable"assurance during the audit that the financial statements are free of material misstatement. Ms.Porterfield said the Authority has an effective system of internal control in place. Larsen Bay Project In response to Board questions,Mr.Simmons said that AEA is in negotiations with the bank that holds the letter of credit and also with the City of Larsen Bay as to the disposition of the project in the event of default. Mr.Vassar stated the bonds are revenue bonds of the Authority that are secured by a letter of credit.The letter of credit is still in effect so bondholders have been paid to date and will be paid; there is no risk to bondholders.The bonds are secured by revenues but the payment on the bonds comes from the draw on the letter of credit.The bondholders get paid by the draw on the letter of credit then the letter of credit bank gets reimbursed from the revenues of the system. Currently,the revenues are not available to reimburse the bank.He said the bank cannot revoke the letter of credit. Mr.Simmons said the plant still runs and generates power but it probably is not being maintained to our satisfaction partly because of the amount of monies that have not been collected. Ms.Walker said the call date on the bonds is April 1,2001,-and the final maturity date is 2015. She also said that to date all draws on the letter of credit have been reimbursed from the pool of funds previously paid by the City of Larsen Bay.To date there are no payments owing to the Bank. In response to Board questions,Mr.Simmons said that no impacts to AEA are expected. 8.DIRECTOR COMMENTS Mr.Simmons stated that at the next board meeting staff will have a rural energy program presentation. AEA Board Meeting December 10,1999 Meeting Minutes Page 3 A.Status Report of AEA Programs and Projects There were no status reports for AEA programs. 9.BOARD COMMENTS There were no Board member comments. 10.ADJOURNMENT There being no objection and no further business of the Board,the meeting was adjourned at 11:59 a.m. ehhD.Randy Simmon)Secretary ALASKA ENERGY AUTHORITY RESOLUTION NO.2000-01 RESOLUTION OF THE ALASKA ENERGY AUTHORITY RELATING TO THE APPOINTMENT OF VARIOUS OFFICERS OF THE AUTHORITY; AND RELATED MATTERS WHEREAS,the By-laws of the Alaska Energy Authority (the "Authority”)provide that the Executive Director of the Authority is the Secretary-Treasurer of the Authority; WHEREAS,the By-Laws of the Authority "also set out the duties and responsibilities of the Secretary and the Treasurer of the Authority,provide that the members of the Authority may assign all or part of such duties to some other person or persons and give to such person or persons an appropriate title,including that of Assistant Secretary-Treasurer,and that officers of the Authority shall perform such other duties and functions as may from time to time be required by the Authority or the By-Laws or Regulations of the Authority; WHEREAS,D.Randy Simmons became the Executive Director of the Authority on December 16,1996,and,pursuant to the By-Laws of the Authority,on that date the designated Secretary-Treasurer of the Authority; WHEREAS,Valorie F.Walker continues to be a Deputy Director of the Authority and it is desirable and proper that her appointment as Deputy Director-Finance and Assistant Secretary-Treasurer of the Authority be confirmed; WHEREAS,Dennis V.McCrohan continues to be a Deputy Director of the Authority and it is desirable and proper that his appointment as Deputy Director-Project Development and Operations and Assistant Secretary of the Authority be confirmed; WHEREAS,Keith A.Laufer continues to be Financial &Legal Affairs Manager of the Authority and it is desirable and proper that his appointment as Financial &Legal Affairs Manager and Assistant Secretary-Treasurer of the Authority be confirmed. WHEREAS,it is in the best interests of the Authority that David E.Germer be appointed Deputy Director-Business Development &Rural Energy and Assistant Secretary of the Authority; WHEREAS,it is in the public interest to now confirm the appointment of the Executive Director and other officers of the Authority. NOW,THEREFORE,BE IT RESOLVED BY THE ALASKA ENERGY AUTHORITY AS FOLLOWS: Section 1.The previous appointment of D.Randy Simmons as Executive Director and Secretary-Treasurer of the Authority is hereby reconfirmed. Section2.The previous appointment of Valorie F.Walker as Deputy Director- Finance and Assistant Secretary-Treasurer of the Authority is hereby reconfirmed. Section 3.The previous appointment of Dennis V.McCrohan as a Deputy Director-Project Development and Operations and Assistant Secretary of the Authority is hereby reconfirmed. Section 4.The previous appointment of Keith A.Laufer as Financial &Legal Affairs Manager and Assistant Secretary-Treasurer of the Authority is hereby reconfirmed. Section 5.David E.Germer is hereby appointed Deputy Director-Business Development &Rural Energy and Assistant Secretary of the Authority. Section 6.Each Assistant Secretary-Treasurer and each Assistant Secretary shall perform any and all duties of the Secretary-Treasurer as shall from time to time be assigned by the Executive Director. Section 7.From time to time,as may be required on a temporary basis,when the Executive Director is unavailable,the Executive Director may designate any Assistant Secretary or Assistant Secretary-Treasurer of the Authority as Acting Executive Director.The Acting Executive Director shall have all the duties and powers of the Executive Director of the Authority during the period the Executive Director is unavailable. AEA/Appointment of Officers Resolution No.2000-01 h:all\bjfiboard\resoluti\aea officers .Page 2 O Section 8.The Executive Director is hereby authorized to sign on behalf of the Authority all contracts,deeds,instruments and other documents made by the Authority. The Executive Director may delegate,to any member of the Authority's staff,authority to sign contracts,deeds,instruments and other documents made by the Authority. Section 9.This Resolution shall become effective immediately upon its passage and approval. DATED at Anchorage,Alaska,this 10"day of February 2000. Chairman ATTEST [SEAL] Secretary O AEA/Appointment of Officers Resolution No.2000-01 h:all\bjfiboard\resoluti\aea officers Page 3