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HomeMy WebLinkAboutAlaska Energy Authority Initial Data Gathering Request Admin Order 281 2016 2Department of Commerce,Community,Economic Development Department Totals 2015 Spec 015 Final Alaska Energy Authority Owned FY2015 Final FY2015 FY2015 Spec Appn Authorized FY2015 Facilities Authorized Actuals Appn Auth.Actuats*Adj.Actuats Adj. "Component Total** See footnotes for SpecAppns detail Expenditures Personal Services $0.0 $6.0 Travel $30.0 $30.0 $0.0 Contractual $1,024.1 $224.6 $1,024.41 $224.6 Commodities $8.0 8.0 $0.0 Equipment $5.0 55.0 $0.0 Grants/Claims $0.0 50.0 $0.0 Miscellaneous $0.0 $0.0 L $0.0$1,067 4 $2246 fo0 tat bo send Funding 1002 Fed Rcpts $0.0 $0.0 1003 GIF Match $0.0 $0.0 1004 Gen Fund $0.0 $0.0 1005 GF/PR $0.0 $0.0 1007 WA Repts $0.0 $0.0 1036 Cm Fish Ln $0.0 $0.0 1040 Surety Fund $0.0 $0.0 1061 CIP Repts 50.0 $0.0 1062 Power Proj $0.0 $0.0 1070 Fish En Ln $0.0 $0.0 1074 Bulk Fuel 0.0 $0.0 1102 AIDEA Repts 0.0 $0.0 41107 AEA Repts $1,067.1 $224.8 $1,067.14 $2246 1108 Stat Desig $0.0 $0.0 1141 RCA Repis $0.0 $0.0 1156 Rept Svcs 50.0 $0.0 1164 RDIF 0.0 $0.0 1169 PCE Endowment 0.0 $0.0 4170 SmBusEDRLF 0.0 $0.0 1173 GF Misc Ear $0.0 $0.0 1200 VehRnti Tax $0.0 [0.0 1208 BF Brdg LF $0.0 50.0 1209 Capstone $0.0 0.0 1212 Fed ARRA $0.0 $0.0 1216 Boat Repts $0.0 $0.0 1223 CharterRLF $0.0 $0.0 1224 MarladRLF $0.0 $0.0 1225 Cquota RLF $0.0 $0.0 1227 MicroRLF $0.0 $0.0 1229 AGOC4SP $0.0 $0.0 1235 AGOC-LNG $0.0 $0.0 $4,067,1 $224.6 $0.0 eo 6 Theol ace 77Koeooooiy)0.29 00 Staffing Full-Time 0 0 Part-Time 0 0 Temporary 0 0 AEA FY2015 Final Auth and Actusta.xex /AEA Owned Fac 9/8/2016 Department of Commerce,Community,Economic Development Department Totals [F¥2018 Spec FY2015 Final Alaska Energy Authority Technical FY2015 Final FY2015 FY2015 Spec Appn Authorized FY2015 Assistance Authorized Actuals Appn Auth.Actuals*Adj.Actuals Adj. "Component Total*** See footnctes for Spec Appns deta! Expenditures Personal Services $0.0 $0.0 Travel $0.0 $43.3 $0.0 $43.3 Contractual $576.7 $354.7 $576.7 $354.7 Commodities $0.0 $8.7 $0.0 $8.7 Equipment $0.0 $0.0 $0.0 $0.0 Grents/Claims $0.0 $0.0 $0.0 Miscellaneous $0.0 $0.0 $576.7 $406.7 eth gb aa Funding 4002 Fed Repts $0.0 $0.0 1003 G/F Match $0.0 $0.0 1004 Gen Fund $406.7 $408.7 $408.7 $406.7 1005 GF/PR $0.0 $0.0 1007 VA Repts $170.0 $0.0 $170.0 $0.0 1036 Cm Fish Ln $0.0 $0.0 1040 Surety Fund $0.0 $0.0 1061 CIP Repts $0.0 $0.0 1062 Power Proj $0.0 $0.0 1070 Fish En Ln $0.0 $0.0 1074 Bulk Fuel $0.0 $0.0 1102 AIDEA Repts $0.0 0.0 1107 AEA Repts $0.0 $0.0 1108 Stat Desig 50.0 $0.0 1141 RCA Repts $0.0 $0.0 1156 Rept Svcs $0.0 $0.0 1164 ROIF $0.0 $0.0 11639 PCE Endowment $0.0 $0.0 1470 SmBusEDRLF $0.0 $0.0 1173 GF Mise Eam $0.0 $0.0 1200 VehRnil Tex 1208 BE Brdg LF soe a 1208 Capstone $0.0 0.0 1212 Fed ARRA $0.0 $0.0 1216 Boat Repts $0.0 $0.0 1223 CharterRLF $0.0 $0.0 1224 MartculRLF $0.0 $0.0 1225 Cquota RLF $0.0 30.0 1227 MicroRLF $0.0 $0.0 1229 AGDC-ISP 50.0 $0.0 1235 AGOC-LNG 50.0 $0.0 $578.7 $400.7 0.0 re eeaetna:{>periremmparmemt167%;|oo 08 os 00 0.0 00 StaffingFul+-Time 0 0Part-Time 0 0Temporary00 AEA FY2015 Final Auth and Actuals.xisx /AEA Tech Asst 08/2016 Department of Commerce,Community,Economic Development Department Totals [FY20T8 Spec 5 Final Alaska Energy Authority Power Cost FY2015 Final FY2015 FY2015 Spec Appn Authorized FY2015 Equalization Authorized Actuals Appn Auth,Actuats*Adj.Actuals Adj. "*Component Total*** See footnotes for Spec Appns detail Expenditures Personal Services $0.0 $0.0 Travel $0.0 $2.5 $0.0 $2.5 Contractual $355.0 $352.5 $355.0 $352.5 Commodities $0.0 $0.0 $0.0 $0.0 Equipment $0.0 $0.0 $0.0 $0.0 Grants/Claims $41,000.0 $37,777.3 $41,000.0 $37,777.3 Miscellaneous $0.0 $0.0 $0.0 $0.0 *includes encumbrances $41,355.0 $38,132.35 41,355 0 $36,132 3 Funding 1002 Fed Repts $0.0 $0.0 1003 G/F Match $0.0 $0.0 1004 Gen Fund $0.0 $0.0 1005 GF/PR $0.0 $0.0 1007 VA Repts $0.0 $0.0 1036 Cm Fish Ln $0.0 $0.0 1040 Surety Fund $0.0 $0.0 1061 CIP Repts $0.0 $0.0 1062 Power Proj $0.0 $0.0 1070 Fish En Ln $0.0 0.0 1074 Bulk Fuel $0.0 $0.0 1102 AIDEA Repts $0.0 $0.0 1107 AEA Repts $0.0 $0.0 1108 Stat Desig $0.0 $0.0 1141 RCA Repts $0.0 $0.0 1156 Rept Svcs $0.0 $0.0 1164 RDIF $0.0 $0.0 1169 PCE Endowment $41.355.0 $38,132.3 $41,355.0 $38.132.3 1170 SmBusEDRLF $0.0 $0.0 1173 GF Misc Eam $0.0 $0.0 1200 VehRnti Tax $0.0 0.0 1208 BF Brdg LF $0.0 0.0 1209 Capstone $0.0 50.0 1212 Fed ARRA 0.0 $0.0 1216 Boat Repts 50.0 $0.0 1223 CharterRLF 50.0 $0.0 1224 MaricuiRLF $0.0 50.0 1225 Cquota RLF $0.0 0.0 1227 MicroRLF 0.0 0.01229AGDCHSP0.0 50.0 1235 AGDC-LNG $0.0 $0.0 $41,398.as4.1323 s0.0 eo SSoD00060.0 62 08 StaffingFull-Time 0 0 Part-Time 0 0 Temporary 0 0 AEA FY2016 Finel Auth and Actualp.xiex/AEA PCE GA/2015 Department of Commerce,Community,Economic Development Department Totals FY¥a0tS Spec][FY201S Final |FY 2015 Final FY20185 FY2015 Spec Appn Authorized FY2015 Alaska Energy Authority Rural Energy Authorized Actuals _Appn Auth.Actuats*Adj.Actuals Adj.| "Component Totai™See for Spec Appns detail Expenditures Personal Services $0.0 $0.0 Travel $135.3 $19.1 $135.3 $19.4 Contractual $5,984.56 $2,778.9 $5,984.5 $2,778.9 Commoditles $48.0 $101.9 $48.0 $101.8 Equipment $10.0 $74.7 10.0 __$74.7 Grants/Claims,$100.0 $0.0 $100.0 $0.0 Miscellaneous $0.0 $0.0 $0.0 $0.0 *includes encumbrances $6.277.8 $2,974.6 62778 $29745 Funding 1002 Fed Repts $230.0 50.0 $230.0 $0.0 1003 G/F Match $0.0 $0.0 1004 Gen Fund $1,224.14 $1,224 4 $1,224.1 $1,224.4 1005 GF PR $100.0 $0.0 $100.0 $0.0 1007 VA Repts $0.0 $0.0 1036 Cm Fish Ln $0.0 50.0 1040 Surety Fund __]$0.0 $0.0 1081 CIP Repts $3,576.9 $1,278.3 $3,576.9 $1,278. 1082 Power Proj $996.8 $457.3 $996.8 $457. 1070 Fish En in $0.0 $0.0 1074 Bulk Fuel $0.0 $0.0 1102 AIDEA Repts $0.0 $0.0 1107 AEA Repts $0.0 $0.0 1108 Stat Desig $150.0 $14.9 $150 0 $149 1141 RCA Repts $0.50.0 1156 Rept Svcs $0.0 50.0 1164 RDIF $0.0 $0.0 1169 PCE Endowment $0.0 $0.0 1170 SmBusEDRLF $0.0 $0.0 1173 GF Misc Eam $0.0 $0.0 1200 VehRril Tax $0.0 $0.0 1208 BF Brdg LF $0.0 $0.0 1209 Capstone 0.0 $0.0 1212 Fed ARRA $0.0 $0.0 1216 Boat Repts $0.0 $0. 1223 CharterRLF $0.0 $0. 1224 MariculRLF $0.0 $0.0 1225 Cquota RLF $0.0 0.0 1227 MicroRLF $0.0 50.0 1229 AGDC-ISP $0.0 $0.0 1235 AGDC-LNG $0.0 $0.0 96,2778 52,5748 $00 ae )6=6EC vf hea |Bsreel 08 oe os on on oe StattingFul-Time 0 0 Part-Trne 9 (") Temporary 0 0 FY15 Authorized $6,277.8 Revised Program -Transfer to Statewide 539.5 ($539.5 PPF transfer to Statewkde Project Dev.,AEE -see attached) 6,738.3 AEA FY2018 Pinal Auth and Actuals xt;/AEA Rural 982015 Department of Commerce,Community,Economic Development Department Totals pec Statewide Project Development,FY2015 Final FY2018 FY2015 Spec Appn Authorized FY20185 Alaska Energy Authority Authorized Actual Appn Auth.Actuate*Adj.Actusts Adj. **-Component Total |_Bee footnotes for Spec Appna drial Expenditures Personal Services $0.0 $0.0 Travet $438.5 $121.4 $48.6 $124.1 Contractual $9,087.6 $6,999.4 $9,087.$6,909.4 Commodities $0.0 $31.$0.0 $81.8 Equipment $12.2 $33.$12.2 $38GrantsiClaims$0.0 |$0.0 |$0.0 $0 Miscellaneous $0.0 $0.0 $0.0 $0.0 *Includes encumbrances $9,148.3 $7.150.7 soteny $7,150.7 Funding -_--1002 Fed Repts $451.7 $271.2 $4617 $274.2 1003 G/F t atch 50.0 $0.0 1004 Gen Fund $2,985.7 $1,163.7 $2,985 7 $1.163.7 GFAPR $0.0 $0.0] 1007 VA Repts $6 $0.0 $50.0 $0.0 1036 Cm Fish Ln 30.0 $0.0 1040 Surety Fund $0.0 $0.0 1081 CIP Ropts $3.388.9 $2,964 5 $3,388.9 $2,064.9 1082 Power Proj 356.4 $595.9 $564 $595.9 1070 Fish En Ln $0.0 $0.0}1074 Buk Fuet $0.0 $0.0|1102 AIDEA Repts $0.0 $0.0 1107 AEA Repts $0.0 $0.0 1108 Stat Desig $60.6 $0.0 $50.6 $0.0 1141 RCA Repts Ee)$0.0 1156 Rept Svcs 50.0 $0.0 1164 ROIF 0.0 $0.0 1169 PCE Endowment $2.0 $0.0] 1170 SmBusEDRLF $0.0 $0.01173GFFhiscEar$0.0 $0.0 1200 VehRnd Tax $0.0 $0.0 1208 BF Brdg LF $0.0 $09 1209 Capstone $0.0 $0.0 1210 Ren Energy $2,155.90 $2,155.0 __$2,455.0 $2,165.0 1212 Fad ARRA $0.0 281216BoatRepts$0.0 0.0 1223 CherterRLF "$0.0 $0.0 1224 MMartcuRLF $0.0 $0.0 1228 Cquota RLF $0.0 $0.0 1227 MicroRLF $0.0 $5.0 1229 AGDOCASP $0.0 $0.0 1235 AGDC-LNG $0.0 $0.0 90.148.3 87,150.7 wos a)ESSoeaoasesosas StaffingFull-Time 0 Part-Time 0 Temporary 0 FY16 Authorized 6,728.7 tauti-Year Fed Receipt EETF Dota Collect 409.8 Mult-Year AK Alaska Energy Strategy 2,009.8 9,148.3 Revised Program-Transfer from Rural 639.5 $530.5 PPF trensfer from Rural Energy Operations-see attached)9,687.8 EA FY2015 Fine!Auth end Actvats..dex /AEA Gtetewide inc Mul-Yr Auth.1 Section 3(f) Other program or authority constraints. Statutory,regulation,and bylaw constraints.See response to Section 2. Conditions imposed in Grant and Other Agreements (Exhibit GA-1 -List of grant and other agreements,copies of which are available upon request).AEA has received federal grant money to implement projects or programs from the Denali Commission,the Department of Energy,the US Forest Service,and other federal agencies.AEA must comply with grant conditions imposed. Bradley Lake Hydroelectric Project -constraints arise from: a.FERC License P-8221 (Exhibit BL-1).AEA must comply with license conditions and plans, FERC orders,and project permits.License amendments and plans,FERC orders,and project permits are available upon request. b.Bond resolution restrictions (Exhibit BL-2).Specific covenants of AEA are identified in Article Vil of the bond resolution.Supplemental resolutions for series 2-6 bonds are available upon request. c.Bradley Lake Power Sales Agreement (Exhibit BL-3). d.Agreements for the operation and maintenance of the project.Available upon request. e.Operating and other standards adopted by the Bradley Lake Management Committee. Available upon request. Alaska Intertie -constraints arise from: a.The Amended and Restated Alaska Intertie Agreement (Exhibits Al-1 and Al-2). b.Reliability,operating,and other standards adopted by the Intertie Management Committee.Available upon request. Procurement by AEA under the Alaska Procurement Cade is limited by the terms of the delegations to AEA by the Department of Administration and the Department of Transportation and Public Facilities.See response to Section 2 (Exhibits D-1 and D-2). ALASKA ENERGY AUTHORITY Active Federal Awards -Updated March 31,2016 FEDERAL AWARD AWARDING AGENCY CFDA#GRANT TITLE TERM YEAR AMOUNT USDA 10.672 USDA-Forest Svc 2013 DG-11100106-777 06/18 61f/39s 06/30/18 156,131.00 USDA 10.672 USDA-Forest Sve 2013 CA-11100106-782 09/16 41f/59s 09/30/16 225,000.00 USDA 10.674 USDA-Forest Svc 2015 15-DG-11100106-808 65f/35s 09/30/18 97,500.00 USDA N/A USDA-Forest Service2015-JV-11261975-061 6/18 50/50 06/30/18 10,000.00 USDOE 81.041 USDOE FY16 SEP DE-EE0006977 06/30/16 83f/17s 06/30/16 300,560.00 USDOE/WSU 81.117 FY14/15 WSU121240_G003316 10/1/13-12/31/14 50F/50S 12/31/14 40,000.00 USDOE/WSU 81.117 FY15/16 WSU121240_G003316 10/1/14-09/30/16 50f/50s 09/30/16 40,000.00 USDOE 81.117 USDOE RACEE TECH ASSIST DE-EE0007352 03/31/19 03/31/19 600,000.00 USDOE 81.119 DOE FFY15 SEP COMP DE-EE0007227 06/30/16 299,330.00 USDOE 81.122 DOE Deployment of Microgrid Tech in AK DE-OE0000795 03/31/19 250,000.00 DENALI COMMISSION 90.100 DC 369-03 ALT ENERGY RFP&PM (50F/25S/25M)09/30/16 09/30/16 2,226,373.00 DENALI COMMISSION 90.100 DC 01041 FY08 Project Administration -03/30/18 03/30/18 1,762,717.00 DENALI COMMISSION 90.100 DC 01312 Emerging Energy Tech -12/30/18 12/30/18 911,079.48 DENALI COMMISSION 90.100 DC 01349 Twin Hills RPSU CDR 12/30/16 42/30/16 150,000.00 DENALI COMMISSION 90.100 DC 01399 Akiak RPSU Construction(50F/50)-12/31/15 12/31/15 2,000,000.00 DENALI COMMISSION 90.100 DC 01421 St.George RPSU (55F/45S)-12/30/15 42/30/15 2,100,000.00 DENALI COMMISSION 90.100 DC 01417 Shishmaref Bulk Fuel (84F/16S)-12/30/17 12/30/17 2,517,778.00 DENALI COMMISSION 90.100 DC 01434 Nunam lua RPSU (25F/75S)-12/31/16 12/31/16 760,000.00 DENALI COMMISSION 90.100 DC 01438 EETF Cold Climate Heat Pump Demo 9/30/16 09/30/16 50,385.42 DENALI COMMISSION 90.100 DC 01440 EETF Ult Eff Gen Die/Elec Prop 12/31/16 12/31/16 103,486.56 DENALI COMMISSION 90.100 DC 01441 EETF Biomass Reforest/Boreal 12/31/16 12/31/16 20,700.00 DENALI!COMMISSION 90.100 DC 01442 EETF Arctic Therm Shutter/Doors 12/31/16 12/31/16 62,560.00 DENALI COMMISSION 90.100 DC 01443 EETF Enh.Conden Org Rankine Cyc 12/31/16 12/31/16 76,380.00 DENALI COMMISSION 90.100 DC 01444 EETF High Eff Die/Elec Gen Set 09/30/15 12/31/16 311,654.00 DENALI COMMISSION 90.100 DC 01445 EETF High Cap Airborne Wind Tur 09/30/16 09/30/16 340,453.00 DENALI COMMISSION 90.100 DC 01446 EETF Wind-Dies!Batt Hybd/Kwig 12/31/16 12/31/16 471,845.00 DENALI COMMISSION 90.100 DC 01447 EETF RivGen PwrSys Commercial 12/31/16 12/31/16 651,989.60 DENALI COMMISSION 90.100 DC 01448 EETF EcoCyc Wd Tur Arctic FidTst 12/31/16 12/31/16 102,359.20 DENALI COMMISSION 90.100 DC 01451 EETF Oceana In-stream HydroDevice 12/31/16 12/31/16 566,235.00 DENALI COMMISSION 90.100 DC 01452 EETF Small Comm Self-Reg Grid -12/31/16 12/31/16 142,531.74 DENALI COMMISSION 90.100 DC 01432 Tatitlek Bulk Fuel (80/20S)-12/30/17 12/31/17 4,472,000.00 DENALI COMMISSION 90.100 DC 01437 Koliganek RPSU Design -12/31/18 12/31/18 300,000.00 DENALI COMMISSION 90.100 DC 01455 Bulk Fuel Inventory Assessment 06/30/16 06/30/16 275,000.00 DENALI COMMISSION 90.100 DC 01456 Port Heiden Bf Facility 50/50 09/30/16 09/30/16 780,000.00 DENALI!COMMISSION 90.100 DC 01457 Kake BF Storage Upgrade 17/83 12/31/16 12/31/16 585,000.00 DENAL!COMMISSION 90.100 DC 01461 Emerging Energy Tech -12/31/17 12/31/17 345,000.00 DENALI COMMISSION 90.100 DC 01466 Perryville RPSU 12/30/17 (80F/20S)42/30/17 2,560,000.00 DENALI COMMISSION 90.100 DC 01473 Clark's Point RPSU Design 12/31/16 12/31/16 360,500.00 DENALI COMMISSION 90.100 DC 01474 Chalkytsik BFU Design 12/31/16 12/31/16 257,500.00 DENALI COMMISSION 90.100 DC 01485 START Communities Tech Assist-03/30/17 03/30/17 375,000.00 Total $ 24,657,048.00 USDOE =US DEPT.OF ENERGY USDA =US DEPARTMENT OF AGRICULTURE WSU =WASHINGTON STATE UNIVERSITY (USDOE FUNDS PASSED THROUGH WSU) Exhibit Al-1 AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT Among ALASKA ENERGY AUTHORITY; MUNICIPALITY OF ANCHORAGE,ALASKA d.b.a.MUNICIPAL LIGHT AND POWER; CHUGACH ELECTRIC ASSOCIATION,INC.; GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.; ALASKA ELECTRIC GENERATION and TRANSMISSION COOPERATIVE,INC. November 18,2011 TABLE OF CONTENTS Table of Contents............cccecsecececneeeesenceeeeeeeeeeeeeeeeeeeeenneeeeeeeeeeeeteeeseeeeesenseenenees 1-8 Incorporated Exhibits List..............ccccecceeececeenceeeeeteneeeeeneeneeeeeeeeeeeneeeeseneenseeeseestes9 Recitals...cece cccececeeee ee neee eee eee nsec rene nsec eee eens ee ee eee neeeeeeees ee eee eneneeeeeenenen sees 10 Article 1.Defimitions......cece csecseeseceeessessesaceaeesessceseeeseseseesaecseeseenerenesasseseeseeeteeeecseeeesaees 12 Article 2.Term and Effective Date 00.00.00..ecccessscccescssseseescesneeseeseeaeeeeenececeesesaeeececacenseesecaeeseeeaees 12 Section 2.1 Effective Date...cccceeeeseesceseeececeecsecsnceseeseessecaseeneasseseesseeseeaeeeseessesseesseseesecas 12 Section 2.2 Termination oo...ec ceessssccssccsecsceeeesceeeeeeceeesseeeacesaecaeeseeecenesseeeeseceeateeaeeesaeeseees 12 2.2.1 Mutual Consent.0.0.0...cece ssecssceseesseesseeeeesseesseesscessneesaeceescesineeseeeeeerseeeeeseneeeenees 12 2.2.2 Participant and AEA.........c cc ccccccccssecessccssscessscceseecesceccasseneecsessecsseeessesesseesaseeses 12 2.2.3 AEA Financial Obligations.20.00.00...seeessceseeeceesteeeeeseecceneesesenceceseseeneceeeaseateaees 12 2.2.4 Limitation for Financing,...........eccesescescescceseceseeesesceceeecseneeseceecaeeseeaeeaesneeneatens 12 Article 3.Operating and Reliability Standards and Enforcement.............cccsseesesceseceeeeeeseeeseoees 13 Section 3.1.Adoption of Operating Policies and Procedures,and Reliability Standards.......13 3.1.1 AEA Responsibilities.0.0.0.0...ccecesscsceseseseeeeeereeeeesceceeseeaecssesseeaseesecaeenneeasensenseeeees 13 3.1.2 Notice Required.......eeeesccessesecsscsseeeeseeseeseesecenceseeeenseesseeseesseseeesseneceeeseeaeceeceaseass 13 Section 3.2.Compliance with Standards ...0........0cccccccccccccscssccesesscseecsseeeecseceesesensesesanseeeseeeevens 13 Section 3.3.Implementation -Participants and Users ............ccccccsssesseescessecessesseceseeseeenseseees 14 Section 3.4 Replacement of Reliability Standards ..0......ccc cesesesseeneeseseeenseneesseeseeaecsseeaeeaes 14 Section 3.5 Operating Committee ...........ccccccsesessesnecseeesseeseeesseesseceaeeescesseseesesaeeeseeeaeseseesanens 14 Section 3.6 Required Data Submissions...............:ccccccssssccessecssscesssesesseessseceseceeeseesssseceeesseeess 14 Section 3.7 AEA Power Project Compliance..........ccceccesssessscessessseeseeeseeeeeeseesseseneeeeessseesasens 14 Article 4.Participant .........ccccssccssecescesseesscesscssnessecsecssscenseescessecesaceeseeessevscecessssesecseeessseneeesseeees 15 Section 4.1 Participant Defined .......eee ecceceesceseeeecsceseeseessecsceseceseenaeeaeeseesaeeseeeceeneeaeesseeneeees 15 Section 4.2 New Participant 0.00...cc ececeesessecseesceeeeeceesnessessaeeseeeeeeseeaececessesareeseeaeeatensenaeease 15 Section 4.3.Membership in IMC 000...eeeeeceesesessessecseesseesncesseecesecsaessneceseseaeesseeeneesaeseseesaeens 15 Article 5.Withdrawal of AEG&T and Other Participant and User Status ..0..0...ce eeeseeseeeeees 15 Section 5.1 Withdrawal of AEG&T 00...ee cceseeseessececeseerereceecenerseeeseeeneeeeseetseeeneeeateeeeeseres 15 Section 5.2.Substitution of HEA and MEA,and Admission of City of Seward and the United States Army ........cccccccssccsscssssceesecseecsseecsnecssacecsaeeseaecessesesaesesneeesaeessagersuaecsaecesaes 16 Article 6.Minimum Rights of the Participants and Users to Use Intertie Facilities...16 Section 6.1 Minimum Intertie Transfer Capability Rights ("MITCR”).........0.eeeeeseeseeeeeeee 16 Page 1 of 53 -Amended and Restated Alaska Intertie Agreement 6.1.1 Right of First Refusal............cc:cccsssccssccssseeessscesscesseesseeeesseeeseecesseeeeseaeessnseseaesesaes 16 6.1.2 Allocation of Transfer Capability...cee eeseeeecsessesceeecneecsseesseesseesseteeensneese 16 6.1.3 Emergency Operations............::cccssscsssccessseesssessseesccccceseseseeecuecossnaeessccosueeesssooonecs 16 Section 6.2 Determination of MITCR..............:cscccesscessccnscenccscssscenccsstconsersterscovessscesconacensoees 17 6.2.1 Methodology...........csccscsseccccerssccsesssvecoreseessssvevessscessesssecennsseseaasetsscansacessessoceoneass 17 6.2.2 Unused MITCR..0....cececescescesscceeeeeeceecsecscesecesceseeeeseessesceeseceeesessasceeesecsaeeaaesasess 17 6.2.3 Right to Contractually Transfer MITCR.........eeesccssecsrcesneceeeeseeeeeeeneeessseeaeenseers 17 6.2.4 IMC Authority to Change Capacity Allocation Methodology............ccesseeseeee 18 6.2.5 New State Power Projects.........ccccsccssssesecesseetecssecseceeessceeseeeeeesecesseeseeessecesseonates 18 Section 6.3.Maximum Intertie Transfer Capability...ee eseeeccrecseeseeeseeeeeseaeseesseesevensees 18 Section 6.4 Improvements to the Intertie 2.0.0.0...eee seesseeesecceseeeeneceeseceeseeecseseeesseerseereseeoees 19 6.4.1 Development of Improvements..............cssccecssseeseeeseeeeceeseessersseeeseeesseseneseseoeaeeess 19 6.4.2 Requests for Improvements...........:cesccsscssesesscessereesseeescceceesscenaceeseeceeseeaeeseeeeaseees 19 6.4.3 Responsibility for Cost of Improvement............:ccsessecesceeseeesererecerseenecesueseasoees 20 6.4.4 Right to Make Improvements -Required Wolk..0.......eee ceeesseecneeeereeeseeeseeees 20 6.4.5 NOtiCE.woes eee eeeceesesseecseccnsesescesseeesecsseesseesseesseessscseessesesessssseseasescsssensesssesesesesesoeues 20 Section 6.5 Additional Project Taps...........ccccccssssesssescsscesseceeseecsacesesnecssneessaeeeseaeeeseeeennarsesaes 20 Article 7.Costs for Intertie Transfer Rights.............:ccscssscsseecscessseceeaeeeceseeseesevseeessesescesseeoeeenses 21 Section 7.1 Intertie Costs...ceseescssssesseecseceseeesccesseesesesceeseesseessesesesessseeseseecseessserseeesssoneeeees 21 7.1.1 Costs to Be Shared by Participants and USefS...............c:c:ccsscceesseceeseecesncceseeeenees 21 7.1.2 Annual Budget and Fiscal Yeat...........cccccecccsssscecseceeeseeesceseseeeesneronaeesensasessesones 22 Section 7.2 Calculation of Intertie Costs and Rates 00.0...eeeeeneesscserereesesesessesseeseesensees 22 7.2.1 Participant and User Estimates,Participant Historical Data...eee eee 22 7.2.2 IMC Estimates.............-:cecscesscessccssccsossccescccaseonssencceeecsssocsscosecssecessevosooessensscosesseee 22 7.2.3 COmMmMentlS..........:cceecccsssceeseceessecesseceesaceesceessaceessesesseeseaeerssesesseeesseeseseesesseeesnererseae 23 7.24 IMC Determination of Estimated Intertie Usage..............ccccescceeseceeeeeeeeteeessnooes 23 7.2.5 Energy Rate......cccscsssccessecessceetseesseeesseessacesssecesssosessecsasesssecceseesessscesseeeesssenegaee 23 7.2.6 Capacity Rate.0...ceececcesesnceeseccseeeseeeesseseecsesceesseeeeesseeeessesersseseseseseseesesseeneeees 23 Section 7.3.Allocation of Intertic Costs 00.0...ecesecseeesereeesseseeeeeeseseessasseteesssesseessesesessenened 23 7.3.1 Participant and User Payment..0......0....:ccecessseeescssessssesscssseseesecssssseseseseesssssseesees 23 7.3.2 Annual Payment of Intertie Costs.20.0.0...cee eeeeseeseesssesessssseessceseseesssseseseeeseeasesees 24 Page 2 of 53 -Amended and Restated Alaska Intertie Agreement 7.3.3 Monthly Use.oe eeesececesceceeeseceseesecsececeneeseeseeseesscssessesseesseecesessseesesseessseceeses 24 7.3.4 Excess REVeMUES.........ce eeesssescesseesceeseseeeceescessenecneesessseesecscensenteensensessestesseesaeente 24 7.3.5 Revenue Deficiencies..............cccscsscessssssesceccosconcceressootsessesssonsosscncenseenseseesasseaoaees 24 Article 8.Intertie Management Committe€................csccsccssssossscescssscssscnsscseccsscestscesccseccssccssscsescuss 24 Section 8.1 Establishment of the Intertie Management Committee,Right to Vote...............24 8.1.1 Eligibility to Vote...secsccccsssesseeceseeecessecsessenseseeseesseseesscaescesssseesesaseaeeaeseesnes 25 8.1.2 MUNUIES.oo.cee ececsscseeceecseeseesesscenssceesssececsnecessseseaecaseaesseessssseseaseseeaessesecseeseenees 25 Section 8.2.Adoption of Procedural Rules or Bylaws..........cc:cccscsssccssccsscesssesseesssensessseseeessess 25 Section 8.3 Effect of Abstention.2.0.0.0...ccecesessecsesscecessesceeesececeseeseesensessesaesaeaecsesseeneseeseeseess 25 Section 8.4 Meetings by Electronic Communication.............ccccscesssseesceeseeeeessceseesessesseesseneees 25 Section 8.5 IMC Responsibilities ..........cccccscssessscsssssessessceseesecscesessscsecesecsecssecsscseesessscssssenen 25 8.5.1 IMC Responsibilities and AEA Duties..0........ccccccssccssesssecsscesscsssessssssesesesssseeees 25 8.5.2 IMC Approvals.oo...eeeeesscesecssceceseeeecenceensecesceesseseessesnecssecsesssesesseseassseeeseeasenses 26 Section 8.6 IMC Actions...ccsescesssscssesceseescecececessessesessessesseseseesssaesseseessenecateaeesteseseeaes 26 8.6.1 Intertic Operation,........cccccccsscsscsscccessesseeseessecsscssscesseseeessecsuecsseesscesseenesessasessesass 26 8.6.2 Intertie User Agreement...cicecccesescessceecseeecsessceneesessessesesseeesesussesseeecenesevanes 26 8.6.3 Non-Compliance Appeals...........ccsccsssscsssesssesscesceseescescesscsseeseeeseestsetessesatenseaeeues 26 8.6.4 O&M and Scheduling........ee eecescsseccssccssesesccssceseesecesseeessesseeesseeseessaeesscesseeneerses 27 8.6.5 Budget.wo.ccscecsssecsescsscsecsesscseesesseceesacesssceeaesaesesseeseeeesceasensesesseesesseeseeeseeeeeees 27 8.6.6 Cost Allocation and Payment Schedule.............cccccsccsssessscsesessecssessscsesssesssesvees 27 8.6.7 Maximum Capability and Capacity Allocation..........ccsccscsssssseeseeseeeseeseceseseeeees 27 8.6.8 Determination of Actual Payment Obligation.............cccccccesseseessesseseeeeeeeeeeseesees 27 8.6.9 Funding Methods........cc ceeeecesesssesscesrcececcenseeatsaseseeeseeseeseeesessecseesseaessesseeessesesenees 28 8.6.10 IMprovementts..........::ccsscccecccsssccenseccssecorsccsssconsscessecsscessssscenseceneecesescessscesteeseceeses 28 8.6.11 Maintenance..0........ccs eeeesooscceeessesoeeneesceecsessesesceseosceecotessecoesessesscasenssesscenesateasens 28 8.6.12 Creation of Reserve Fund.............:ccsccsccessesseesecccecccseeceescessceeseeessessesaecseeeuesateenes 28 8.6.13 Procurement Of Services..........sccccesesesececeeesseecesseeseeseesscenecsesseceneesscsseseceeeerseneees 28 8.6.14 Miscellaneous.............c:sscccsscsccetsesseseesceseesessesecccesecacceeessonsessensessonseatenseeaeseceneees 28 Section 8.7 Payment Obligation Unimpaired .............ccccccssssecseseessceseesssesseesseesseeesecesseeseeeeeees 28 Section 8.8 AEA's Ability to Perform Required Work...........cscesscescssreesssceesestsesscesteesseeeseees 28 Section 8.9 Payment Obligation and Rights of ReView ..........c:ccssccsccesrssesseseecsesesseeeseeseesetens 29 Page 3 of 53 -Amended and Restated Alaska Intertie Agreement Section 8.10 AEA Authority to Collect Payments and Disburse Funds ..............:eeeeeeeeeeeeeeees 29 Article 9.Operating COMMIttee 0...ce ecccesesseeenececeesnseseeeeetseceesceeeesceeeseceseesseeseeesaesseesseeesesaasens 29 Section 9.1 Establishment of the Operating Committee 00.0...eeeeseesereceeeeeeteseeererserseeaeeas 29 9.1.1 Establishment...........:.:ccesssccecceseesessesscccessccecorsecseeccoesovececoeseeseesaeaseassaneaneaeeateatves 29 9.1.2 REPTeSentatives..............cceccceccesocsccescecssesscsecoescoecoosessessceeoenstssccseccessesescesseessenses 29 Section 9.2 Meetings of the Operating Committee .........cece ceeeeeeeecesceseereceeeeeteceeesaeeeseeonaees 30 9.2.1 MEEHINGS.0.00...eeseceseeeseseeesseecseessscessaecnseeesseeesseeesseceessevessesessecesesesesooeeseseseeseees 30 9.2.2 VOTING.oo.eeeeessesecsseeeescesecssceesecneesceaecaesssecsnceneesseseseceaeceaeeesesseresaeeeaeesseseneesaeenees 30 9.2.3 MUNUtES.0.0...cee eeeececeseceeneeeeseeesscesscessneesseresseeseseeessecesseacsssesessccnseesseeeesesoseessensenees 30 9.2.4 EXPEeMSES.00.0...cesesesccsseccsscceesecessecensecsneceneceeseesesseessccesssesessscssacesseseseesesseesseesesseeees 30 9.2.5 Meetings by Electronic Communication............:ceseeecessceeeeeeeeeseeeseseseeeseesseoenees 30 Section 9.3 Operating Procedures ............cececesecescssseseecneesneecseeeseesseseneeceeeesesesesseeerssssseeeoe 30 Article 10.Operation of the Intertic 2.0.0...cece esceecceeeeeseeesecesetseeeeeeseseesseeeseceseseaesoseeesessaeeeseoeass 31 Section 10.1 Responsibility for Operation of the Intertie ......lees ceeeteeeeseseeeeeneeeeeeeeeens 31 10.1.1 Responsible Participant............:sececseeccreceseeeceeeesseeseeseeeeenssesceseeseaeseseesesseseseuees 31 10.1.2 AML&P and MEA Responsibilities..............csccessccseesceseeceesecceteeeeeeesseeesseeseneenes 31 10.1.3 GVEA Responsibilities.0.0.0.0...cceeeseccsseceeseceeeeecscecesececseeceneeeetrssesaseseeaeeeeresaeoens 31 10.1.4 Joint Responsibilities...eeecesseseceeecseesscesecesseseeeceseesesessessecesessneesseesssensessees 32 10.1.5 COMPACTING,.....ce eesccesesceeeeeeseceeseceeeceesacenseeenaceeseeecseeescssceeneesecseseeeresseeesaaeeosseesaaees 33 10.1.6 Load Balancing..........seseeesesserecessesessesessecsseesessuesscesesseseesssscsecsesseesseeseosssceeseeree 33 Section 10.2 Suspension of Work in Performance of Operational Duties 0.0.0.0...eee eeeseeee 33 Section 10.3 Budget for Operation of the Intertice 0.0...eee eeseeseeeseeceeeeeesseesscesseeeaeseeneseeees 33 10.3.1 Budget Process..........scssscsccercesecesecsecessessesseeseeeesescneeecaeessesesecsssssesessesssaseeaseeseniees 33 10.3.2 Participant COMMENIS................scccssscsscccstererssossssossescoeccssnssoceeeeessseccnesseeeessceoues 33 10.3.3 IMC Establishes Budget............cc cccsscesseecceseeeceseeseeceecesseeeeeesseesseeseeceascneeenseeeseees 34 10.3.4 IMC Determinations and Payment of AML&P and GVEA.........eee eeeeereeeeee 34 10.3.5 Payment if IMC Unable to Determine Fixed Cost Fee.........cccecsccseesesesseterens 34 Section 10.4 Accounting and Records .00.......cee cescesecereseseessecneeesseeseeesseessessseseseseesteseseseaees 34 Section 10.5 Audits ........cccccsescceseccsecesecsteceesseceeeessassecessecescesescrsccsseoneesseeessesseseseaesescneaessensanen 34 10.5.1 Request for Audit.0.0...ccceesecscesessesccscseesceecesssecsscnssseseeseessessessesesseenesseseaseseeeeeees 34 10.5.2 State Audit........cccesscsesssessesecenseesereesceeescceaecsceseecsecsesesscsacsesssacaessasseseasessasessasenes 35 Page 4 of 53 -Amended and Restated Alaska Intertie Agreement Section 10.6 Payment of Operators ..........cccssssesssseseesssessssssessesescescsssscsscsesecsenssscsesscsesscsessseraeees 35 Section 10.7 Change in Ownership or Control .......ccccccccccsssssseseesseseesessessesesscsssseesessesecsesessueess 35 Section 10.8 Critical Repairs and Maintenance ..............:cccscscecsceucssceseessseseesccscesessssssessesseseues 35 Article 11.Scheduling of Capacity and Energy on the Intertie ............cccccccscscccssccescssccesssssecsvesece 35 Section 11.1 Scheduling Responsibility ............ccccccccssescscessesscesccesecsssosssessecsscessessecescesreceuceesoes 35 11.1.1 Southern Group.oc.cccscesssssscessecsseccsesseeseessesseeesscesecessessseeasesseecsecsccsessssesaeesssents 35 11.1.2 Northern Group.........cccssccssscessesssceseesseeeessesseessessseseneecesesseeseesseseseseasesessseesseceaees 36 11.1.3 Coordination.0...cecccesseseecssccseesecsesseseesceesscesessceaesseeeceeseecrsaeeseeaseesseeneeseeseatereans 36 Section 11.2 Capacity and Energy Schedules ...........ccccccccscccsscessecscessscesecssscssessseseceseesessssees 36 11.2.1 Participant Hourly Schedules.............cccccssssssesssceneessseeseeescesseeseeseeesaeeesecssesasenseees 36 11.2.2 Advanced Scheduling,..0..........ccccccscsssesssessesseesssceasesseeesecesecsesesseesesensecssesssensesssenes 36 11.2.3 PLOCECUIE.0...essesesseserecsececeseesceseseenessseaesseseeeesecascassecaeceesaessseeeeensasesesaeaseaseeaes 36 11.2.4 Short-term Scheduling............ccescsscssecessesscessesseeesscsseessseeaeessscesssssesseceneeseesseeees 36 11.2.5 Modification of Scheduling Procedures............ccsescessceseesseeseeseeseeeeressenseeeeenenes 36 Section 11.3 Intertie Schedule Limitations 200.00...eccccseessessssscesscecesseescesecseeseecseeseeseeeesseenee 36 Section 11.4 Transmission Service to Access the Intertic..............cccceessesscsseeceeeessseeeeseeseseeseee 37 Article 12.Maintenance of the Intertie Facilities...ce cccssscssesssceceescesceseesceeteenesssceseeseeaesaees 37 Section 12.1 Maintenance Responsibility ............cccccscscessesssesesssessescessscseensessessessseseesscsseseenues 37 12.1.1 Responsibility for Maintenance Practices...........ccccccssessesseessessceceecessseeesseeeseeees 37 12.1.2 Availability...tec seesessecceeeeseeseecescenceeesecscsceasceeessesecarsseseeseseesesssseenseseeesssseeeeees 37 Section 12.2 Maintenance Budget and Costs ...........cccscesssssscesseesscesscesecessccseecseesecesesseeseeessseees 37 12.2.1 Development of Budget....cccccccssccsressesssesseessecsseeesessecensesesseeasssscssessseessenseces 37 12.2.2 Cost Records...ceceseecsceeceeseseceesesecsesseesecaeessceneesaeeseeseesaseseeseeseeseseueeseseseereenesgs 37 Article 13.Measurement of Electric Power and Energy...........ccccccccsscesscessscescessecsscsatsesseessesscssus 38 Section 13.1 Required Metering Facilities .............ccccccescesssecssesssesssceseceeessecosseetseeseseseeseesseeens 38 Section 13.2 Access to Metering Facilities and Data...ceeecccceesceneetsenseesecteeseeseesseesesseeees 38 Section 13.3 Installation and Matntenance............ccsseccssesseceecesscesecessessecssceessessecssseseesseesseeeea 38 Article 14.Transmission LOSses .0........c:ccscceceeseeeeeeceeetesencecceaceaeenseeseesceseessesseesceesesseeaeesenssesseaeens 38 Section 14.1 Intertie Transmission and Transmission Service LOSSES...........cccseeseeereeseeseeees 38 14.1.1 Method of Determination of LOSSES...0.......sc ceesesecscceseceeeesetseeaceceeaeeaeeeneeeetaeeaee 38 14.1.2 Compensation for LOSSES...........:c:escesseseeseeeeeeceeseeseesceaeeaceseeaeesceeeseseenereeetatensens 39 Page 5 of 53 -Amended and Restated Alaska Intertie Agreement 14.1.3 Schedules..0........cccccscccsessscssccssssssscnsscseseccsceesvvcssvsssssssseccsccsssassscssessssecveceusvevennenes 39 Section 14.2 Intertie Transmission Loss Compensation ............::ccccesscsccesseseeneeseeesesseceeceseeseeaes 39 Article 15.Rights of Users..............c:ccscsssesscsecscccsscsscescessesssassseosecensoeconsestesssesecsceocsoatesenteessesseotees 39 Article 16.Open Access Principles...............ccccccssccoosccsesscesecoeccesssccosscosssscscascesssosstecesstecsecesascosnes 39 Section 16.1 Definition...sec cccccssccccoeconseooccnsevssuscececcccssceuceccoeersseesssssssaceesesceacsaccessesseasonse 39 Section 16.2 Purpose...ee eeseessesscccsseseccesesserensceseeescesseeesecnaeeeasssneceecaesseeeneeseeeseseeneseneeneeea 39 Section 16.3 Implementation of Capacity Allocation Methodology............::cccssceseessteeteeteees 40 16.3.1 New Methodology...........ccsscccsssessssecssecessecssecseneesssecseeesenseeeseessasesesessceeeesaneseneees 40 16.3.2 Statutory Conditions.........cccccssscsccesscsseeesesseessscsseeeeseecseesseseesseceaseseeessesseeesnesaneses 40 16.3.3 Priority for AEA Contracts..........ecceccescssecsececeecceeeesseeceaceaececeenscseeecensenaeensenenseeees 40 16.3.4 Alternative Allocation of Intertie Capacity.............cccccccssccsscesssecssseeesesessseeenneeees 40 16.3.5 Federal Acquisition Regulations.............cccccscsscsssscesscessssceesscessseseeceesaeeesseeesseessaes 41 Section 16.4 Public Process....iceesesessssssceseeseeteceeseeeeeeenecsecsceasceseceeeneeeersenaesaeeseseseeeecensnseees 41 Section 16.5 Availability of Information...eececsesseeceeeceeeeseesececeaseaeensensseneceeseneeseneeenes 41 Section 16.6 Review of Methodology...cccccsscessecsssccssecessceeseceessesessscsasecsseesssseenseeenseesenes 41 Article 17.Billing and Payment .0...........ccccesscsscesssesseecesseeeseeseecseesseseseeeseeesesuecseessaeeteseeeesseeeses 42 Section 17.1 Billing...cesccssecsssecsssessnecsseecssssessecssecessssesseceseessceceesseessseseseseeeeessaeesseeeesas 42 Section 17.2 Billing Disputes...ce esescesessceseeeeseeseeeeeeseeeeeseeseececeesecaeeasenseaeseseensenseesensenes 42 Section 17.3 Payment of Sanctions ..........cccscescssssssscesecescesnessceeseseseceseesseseecseeecueseseseneeeneseatoes 42 Article 18.Insurance and Liability...eee eeeeseessceeceeeeceseeeeeeeceecesceeceeeeesaecaeeserenseneenetenseeeees 42 Section 18.1 Insurance ......ee eeescesecseeseessesseeseescescescesessceceasscessesseeeeseaessecseesceeeeesaseeseaeeaeerees 42 Section 18.2 Types of Insurance ...........:ccccescccscessseesceseesneessesseeescenserseecesseseceeeeesaesereseeessarenneess 43 18.2.1 Workers'Compensation Insurance............:ccscccsscesseeseceeeeceaecsccesseeesecesesseseeeeseeees 43 18.2.2 Comprehensive General Liability Insurance.............c:ccesccesseseceosseotseorsessssnsnssnsees 43 Section 18.3 Other Insurance Coverage Requirementt..............cccccssccesssscesssocstecesseeesseessaseeesees 43 18.3.1 Participants'Cost Responsibility.0...cee eeeseeccesseesnceeeceneeteceesessaeesseeesseeseeeseees 43 18.3.2 Users'Insurance Requirement..........:csscccccsseesecesscescceseeserseeceseeeeecssseaceaseesaeees 43 18.3.3 Coverage and Certificates...........ccccesscescesscceecessecseceeesseceaeesseesseseneeenecnaeesoeseaees 43 Article 19,Review of Decision...ieee eeecscesscescescescesceseestcsseecenecsecsaecaeeseeseseneeseessessceaeteseesaeeds 44 Section 19.1 Review of IMC Decision...ee eesesceseeseeeeneenecsscceeasesersecsnscssesesereeseseaseaeeess 44 Section 19.2 Initiation Of REVICW ..........ececeecessscseeeseseesceseceesencesneeeesesseceeeesesseeneesseesceseeeaseaneenss 44 Page 6 of 53 -Amended and Restated Alaska Intertie Agreement Section 19.3 Review Process.............:ccccsscccsscccccsencceseescscsencccesaeeceecauaceeusucsssuecessacceesacsecesetensse 44 19.3.1 Settlement Conference.20.0...ccsessssscscescesseseeeesseseeseesessesssseesscssescecesesaseaeseesseaceass 44 19.3.2 Disposition Of Dispute................:cececccsscescescescsssesccsecersocsontestsoncosccscensceseessencaseats 44 Article 20.Indemnity ..............cccscccssscssccosscescssseonsenssotsssseenecosscasesstsesussatcnaucasscsuesssscutocsessucsessesssce 45 Section 20.1 Responsibility;Cost of Indemmnity..............ccccsscssccsscssscssccsescscecssssssssecesseceesseeoes 45 20.1.1 Costs Of Indemnity.2.0.0.0...csesssecsseeccsescooeseesesscoucnscssesensesaescssessesecsecsecsesseseessenecas 45 20.1.2 Participant Indemnity..............:..:cccccsccsscsccensetssseescontessesseensessceneeseenessecersesssscsatenss 45 20.1.3 IMC Indemnity.000.0...eccccccsscetecsesssseessesseeessensecseeesseseasesseesssesecsssesssessesesensseeanes 45 20.1.4 User Agreements............:ccsecssscssscesssseescesseeessscesscesaeecsassessscesseeessecsaesesseeessseeseass 45 Section 20.2 Comparative Negligence ............cccscsscssscsssscsscesecessesseenssesscensecsssesssseeessesescuasestsees 45 Article 21.Warranty Denial and Exclusivity of Contract ...........cccccessesseeseessesseseeseesessescseesssersees 46 Section 21.1 AEA Denial of Warranty 0.0...cccccceesscsssesseseenseescescssesssceesseceecsecsscsscseesssssseeses 46 Section 21.2 Exclusivity of Comtract.........cceccsssssssssssesscesceseescessesecetcesesseesseeseesseseesesescsusseeeass 46 Article 22.Uncontrollable Forces .0......eee eecsceseeecceeeeceeeceeceseseccenecsceeeeceeseesseeesnesssenesaeeeeeensees 46 Section 22.1 Limited Excuse of Performance............:cccssssssssesssssessessesseseeesecsecsesseseeseesesecensenes 46 Section 22.2 Suspension of Performance.............ccccccssesssesssceescescessecsecesecsssessscesscssscssseceussasenes 46 Article 23.Waivers ........cc cesscsscscesseeecseceesecsceseeeceesesseesecsncenseneeseessesaseassessceasenseasessessesaeessensenas 46 Article 24.Successors and Assigns;No Third Party Beneficiaries ...........:..c:ccccsscsssesseeseeecsseeseens 47 Section 24.1 Successors and ASSigns ..........cccsccsssssssscstsssecsssssesscescesessesseeesssseescsessscesseucsaeseseass 47 Section 24.2 No Third-Party Beneficiaries 20.0.0...cscecssscssessccescsssecsseessensessesseensessestessesseseeeseee 47 Article 25.Governing Law........ccccscsscessesssescessssessesssesesssescensessesstessesaesusseacsececsscsascnsceuassuseesseenes 47 Article 26.Captions,Merger of Addenda and Exhibits ..0.........ccccccscsesssesseeseescesessecescsecseeessensees 47 Section 26.1 Captions..........cccsccssssssesssssessescessessesseeseescsseesseessesecsecsaesssesecaeessceseessesscseceessessesseese 47 Section 26.2 Merger ............cccsssescessssececsescsscessnssceccestenscessessessonsonecoccessensesessscasseseessesscecsaseaess 47 Article 27.Notices..........cscscscscececsscseceecssccsccscosccaccessssesscssasssvsscceceescesenssseeouesssesccocsesssatonsensensesese 48 Section 27.1 Notices...sececcsssccescessescescescesonccccccsaeceeseesesesesseescessessenesecesasoussorssssessenseeassaces 48 27.1.1 AAI ESS.oc.eeeeseeseeesseceeeceoeeseeeseeseseceesssesseessessnecccoosseceeesseceaeceaersseeaeesssensesatsonseees 48 27.1.2 Means Of Notice...........:ssscssesscoeesccoeesccseesnocccsstoonsesscnscccessssssonsorscsnscesccarstesssonsenss 49 Article 28.Amendment ..........cceeeesceeseeeseeeseeseesseessecsceeseecseecenessaeessecsueessssseesessneesseeseeeseeeueesaes 49 Article 29.Mutual Right of Entry .0......ccc ceceeseeceseceeeseeseeeeessseseesecscesaecesesessessesseesesesseaesaeeeseees 49 Article 30.Agents 0.0...esestcecensesescerseecsscesseasssacessesensascsneesseeeesaecsseesscseeseeeeestessecesereeeeacesseeees 49 Page 7 of 53 -Amended and Restated Alaska Intertie Agreement Article 31.Agreement Approval and Transmittal...eceeeeeeeceseeeeeecereeseesseceeeeenesseeseeereeesneens Article 32.Construction of Agreement .............:ccsceesesessesseeseescesceceeeseersenessaecscesseeseeeeeaetsesneceeeeaes Exhibit A -Former AS 44.83.380 Exhibit B -Definitions Exhibit C -Form of New Participant Addendum Exhibit D -Former AS 44.83.398(f) Exhibit E -Intertie Facilities Diagram Exhibit F -Form of User Agreement Exhibit G -Sample MITCR Calculation Exhibit H -Reserve Capacity and Operating Reserve Responsibility Agreement Page 8 of 53 -Amended and Restated Alaska Intertie Agreement Incorporated Exhibits Exhibit A -Former AS 44.83.380 Exhibit B -Definitions Exhibit C -Form of New Participant Addendum Exhibit D -Former AS 44.83.398(f) Exhibit E -Intertie Facilities Diagram Exhibit F -Form of User Agreement Exhibit G --Sample MITCR Calculation Exhibit H -Reserve Capacity and Operating Reserve Responsibility Agreement Page 9 of 53 --Amended and Restated Alaska Intertie Agreement AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT Among ALASKA ENERGY AUTHORITY; MUNICIPALITY OF ANCHORAGE,ALASKA d.b.a.MUNICIPAL LIGHT AND POWER; CHUGACH ELECTRIC ASSOCIATION,INC.; GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.; ALASKA ELECTRIC GENERATION and TRANSMISSION COOPERATIVE,INC. This agreement ("Agreement”),is made and entered into this 18 day of November,2011 ("Effective Date”),between ALASKA ENERGY AUTHORITY,a public corporation of the State of Alaska ("AEA”);MUNICIPAL LIGHT AND POWER,a department of THE MUNICIPALITY OF ANCHORAGE,ALASKA,("AML&P”);CHUGACH ELECTRIC ASSOCIATION,INC.,a not-for-profit electric cooperative membership corporation of the State of Alaska ("CEA”);GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.,a not-for-profit electric cooperative membership corporation of the State of Alaska ("GVEA”);ALASKA ELECTRIC GENERATION and TRANSMISSION COOPERATIVE,INC.,a not-for-profit electric cooperative membership corporation of the State of Alaska ("'AEG&T”).These entities, other than AEA,and subsequent qualifying signatories to this Agreement shall be referred to individually as "Participant”or collectively as "Participants.” WITNESSETH WHEREAS,AML&P,CEA,GVEA,and AEG&T each own and operate electric utility facilities and/or are engaged in the business of providing Capacity and Energy to customers;and WHEREAS,it is expected that entities other than the Participants will also use the Intertie;and WHEREAS,the State of Alaska funded and AEA constructed the Intertie and made these electrical transmission facilities available to the Utility Participants under the Original Agreement for Capacity and Energy transactions to benefit Railbelt customers,ensure delivery of energy from State-owned projects,and improve reliability and economical Capacity and Energy deliveries to the Utility Participants'customers under the former Alaska Energy Program established by former AS 44.83.380 (attached as Exhibit A);and WHEREAS,the Participants entered into the Original Agreement to improve the reliability of their interconnected electrical systems and engage in transactions for electrical Capacity and Energy with each other under individual contractual arrangements between the Participants using the Intertie;and Page 10 of 53 -Amended and Restated Alaska Intertie Agreement WHEREAS,the Intertie interconnected the Railbelt electric utility systems so that they operate in electrical synchronism;and WHEREAS,AEA and the Participants desire to establish the Intertie Management Committee ("IMC”)and provide it with primary responsibility for the governance,control,operation, maintenance,repair,and improvement of the Intertie;and WHEREAS,AEA and the Participants desire to set forth the responsibilities and rights of all users of the Intertie ("Users”);and WHEREAS,it is desirable to maintain the reliable operation of the Alaska Intertie for all Users; and WHEREAS,it is desirable to have uniformly applicable standards for maintaining and enforcing reliability on the Intertie;and WHEREAS,the Utility Participant Parties to the Original Agreement are also Parties to the Reserve Capacity and Operating Reserve Responsibility Agreement,a separate and independent contract that was made Addendum No.|to the Original Agreement in order to provide for the reliable operation of the Intertie and the interconnected Railbelt electrical system;and WHEREAS,it is desirable for all Users to execute an Intertie User Agreement ("User Agreement”)under the same terms and conditions and to be subject to the same operating policies and procedures,Reliability Standards,and compliance measures in keeping with Open Access principles;and WHEREAS,the IMC is the appropriate organization to transition Intertie operations and policies to Open Access principles;and WHEREAS,the management of the Intertie will be most effective if the IMC membership is made up of representatives of AEA and electric utilities who are qualifying Participants;and WHEREAS,AEG&T shall be allowed to terminate its Participant status immediately upon its execution of this Agreement;and WHEREAS,the members of AEG&T,Homer Electric Association,Inc.a not-for-profit electric cooperative membership corporation of the State of Alaska ("HEA”)and,Matanuska Electric Association,Inc.a not-for-profit electric cooperative membership corporation of the State of Alaska ("MEA”)individually shall have the one-time opportunity to become Participants immediately upon their timely execution of a New Participant Addendum;and WHEREAS,the United States Army and the City of Seward individually shall be allowed to become a Participant immediately upon their timely execution of a New Participant Addendum; THEREFORE,in consideration of the mutual covenants in this Agreement,AEA and the Participants agree as follows: Page 11 of 53 -Amended and Restated Alaska Intertie Agreement Article 1. DEFINITIONS Definitions are as specified in Exhibit B,attached hereto and incorporated herein by this reference.Exhibit B shall remain in effect during the term of this Agreement,but may be amended from time to time in the manner provided in Article 27,AMENDMENTS. Article 2. TERM AND EFFECTIVE DATE Section 2.1 Effective Date This Agreement supersedes the Original Agreement,and shall become effective immediately upon its execution by AEA and the Participants.This Agreement shall remain in full force and effect unless otherwise terminated as provided herein. Section 2.2 Termination 2.2.1 Mutual Consent.This Agreement may be terminated at any time by the mutual consent of all Participants. 2.2.2 Participant and AEA.Any Participant may terminate its participation in this Agreement by giving at least thirty-six (36)months advanced written notice and paying or settling all of its outstanding obligations for Intertie Costs existing before the effective date of its termination,and including any other obligations related to Intertie financing or other funding or sanctions for non- compliance with Reliability Standards.AEA may terminate this Agreement by giving at least thirty-six (36)months advance written notice,and,if applicable,paying any amounts it is obligated to pay that were due and owing before the effective date of its termination.Termination of this Agreement is conditional upon AEA making a determination that such action is required to improve power systems serving utilities in the Railbelt.Unless it is otherwise agreed in writing,any Participant that terminates its participation shall be liable only for those Intertie Costs and other obligations that existed before the effective date of its termination,as set out above. 2.2.3.AEA Financial Obligations.In the event AEA incurs,or intends to incur, financial obligations that are recoverable from the Participants pursuant to Article 7,COSTS FOR INTERTIE TRANSFER RIGHTS,the Participants' requirement to provide advanced written notice of termination shall be thirty (30)calendar days.Termination under this Section shall not be effective until the terminating Participant has satisfied the requirements of Section 2.2.2, Participant and AEA. 2.2.4 Limitation for Financing.The Participants and AEA may agree to limit their respective rights under Sections 2.2.1,2.2.2,and 2.2.3 to terminate this Page 12 of 53 -Amended and Restated Alaska Intertie Agreement Agreement in conjunction with bond or debt financing for repairs or improvements to the Intertie.To be effective,any such limitation agreed to pursuant to this Section 2.2.4 shall require the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA. Article 3. OPERATING AND RELIABILITY STANDARDS AND ENFORCEMENT Section 3.1 Adoption of Operating Policies and Procedures,and Reliability Standards The IMC shall determine the operating policies and procedures for handling the obligations and responsibilities for providing Reserve Capacity and Operating Reserves for the Intertie.The IMC shall have the authority to adopt and implement operating policies and procedures, Reliability Standards for the Intertie,and enforcement processes,including sanctions and other remedies.All Participants and Users shall be obligated to comply with all operating policies and procedures and Reliability Standards adopted by the IMC.All operating policies and procedures and Reliability Standards shall be adopted,applied and enforced by the IMC in a uniform,non- preferential,just and reasonable manner that is not unjustly discriminatory.The adoption, amendment,or modification of operating policies and procedures shall require the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC.The adoption,amendment,or modification of Reliability Standards and enforcement processes,including sanctions and other remedies shall require the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA. 3.1.1 AEA Responsibilities.AEA shall have the authority to void any operating policies and procedures or Reliability Standards that AEA reasonably believes would adversely affect the safe operation of the Intertie,breach AEA's statutory mandates,or directly jeopardize AEA-owned Intertie assets in a manner that would be inconsistent with Prudent Utility Practices. 3.1.2 Notice Required.Except in the case of an emergency,AEA shall provide the IMC at least ten (10)business days prior written notice of its decision to void any operating policy and procedure or Reliability Standard. Section 3.2 Compliance with Standards In the event a User fails to comply with the Intertie operating policies and procedures or Reliability Standards,the User may be subject to any sanctions or other enforcement policies adopted by the IMC applicable to such non-compliance.Compliance with Intertie operating policies and procedures and Reliability Standards is a material obligation of this Agreement and the User Agreement. Page 13 of 53 -Amended and Restated Alaska Intertie Agreement Section 3.3 Implementation -Participants and Users All Users shall execute any necessary agreements and take such reasonable actions as may be requested by the IMC in order to implement operating policies and procedures or Reliability Standards and any sanctions for non-compliance approved by the IMC.Each Participant or User shall require or be responsible for all non-residential customers or generation projects on the Participant's or User's system to comply with all applicable operating policies and procedures or Reliability Standards approved by the IMC as a condition of connection to the Participant's or User's system.The IMC,excluding AEA,shall assist in the enforcement of this provision. Section 3.4 Replacement of Reliability Standards In the event Reliability Standards adopted by the IMC are replaced or superseded in whole or in part by the order of a state or federal regulatory agency or by the terms of a state or federal regulation or statute,the IMC shall make amendments to or terminate the Reliability Standards to the extent the IMC deems prudent or necessary upon such change in accordance with Section 3.1,Adoption of Operating Policies and Procedures,and Reliability Standards. Section 3.5 Operating Committee The Operating Committee,established under Article 9,OPERATING COMMITTEE,shall advise the IMC on setting operating policies and procedures for the Intertie.The members of the Operating Committee shall have experience and expertise in the operation of electric utility transmission and distribution systems and the Railbelt's transmission system.The IMC shall give consideration to the group's proposals and take action to adopt,modify or reject any such proposal within one-hundred-twenty (120)calendar days. Section 3.6 |Required Data Submissions. Each Participant and User (or their designated agent or Designated Contractor)shall submit to the IMC all data as reasonably requested by the IMC,whether related to any operating policies and procedures,Reliability Standards,or otherwise.A Participant or User shall notify the IMC of its designation of an agent or Designated Contractor prior to having that agent submit any data on behalf of the Participant or User. Section 3.7 AEA Power Project Compliance AEA anticipates that Users engaging in Intertie Transactions for transporting power from state projects (such as AEA's Bradley Lake Hydroelectric Project or future state-owned projects)will contractually assume responsibility for compliance with all applicable Intertie operating policies and procedures or Reliability Standards,and accept responsibility for any sanctions or other duties required of such Users by any operating policies and procedures or Reliability Standards.If Users transporting power from state projects assume those responsibilities,AEA or the state agency owning a power project shall not be directly or indirectly responsible for such compliance or sanctions absent their written agreement to assume such responsibility. Page 14 of 53 -Amended and Restated Alaska Intertie Agreement Article 4. PARTICIPANT Section 4.1 Participant Defined Participants will be responsible for the governance of the Intertie through participation in the IMC in accordance with Section 4.3 Membership In IMC.For purposes of this Agreement,a Participant is:an electric public utility with at least an Annual System Demand of 5MW of retail load,holding a Certificate of Public Convenience and Necessity from the Regulatory Commission of Alaska,or having other equivalent authority;and,having a certificated service territory,or other equivalent authority,with physical or contractual access to the Alaska Intertie for the transport of electric power.A Participant must also meet all of the requirements of and agree to comply with the terms of this Agreement.Participants shall execute a User Agreement to have the right to transport power on the Intertie. Section 4.2 New Participant An entity seeking Participant status shall execute a New Participant Addendum to this Agreement in the form attached as Exhibit C,and such other agreements as may be required by the IMC from time to time.The entity shall also be required to execute a User Agreement to have the right to transport power on the Intertie.The entity shall then give twenty-four (24) months written notice to AEA and the Participants of its intention to become a Participant.The entity shall become a Participant upon expiration of the twenty-four (24)month notice period required in this section and the IMC's determination that all of the requirements of this Agreement have been completely satisfied.The IMC's determination under this section shall require the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC, including the affirmative vote of AEA. Section 4.3 Membership in IMC An entity with Participant status shall be allowed,but not required,to appoint one member to the IMC.IMC members'voting rights shall be as provided in Article 8,INTERTIE MANAGEMENT COMMITTEE. Article 5. WITHDRAWAL OF AEG&T AND OTHER PARTICIPANT AND USER STATUS Section 5.1 Withdrawal of AEG&T Notwithstanding the provisions of Section 2.2,Termination,AEG&T shall effect the termination of its Participant status under this Agreement immediately upon its execution of this Agreement. Page 15 of 53 -Amended and Restated Alaska Intertie Agreement Section 5.2 Substitution of HEA and MEA,and Admission of City of Seward and the United States Army Notwithstanding the provisions of Section 4.2,New Participant,HEA and MEA individually shall have the right to obtain Participant status immediately upon their execution of a New Participant Addendum in the form attached as Exhibit C,provided,however,that this right shall terminate twenty-four (24)hours after the termination by AEG&T pursuant to Section 5.1, Withdrawal of AEG&T,The City of Seward and the United States Army shall also have the right to obtain Participant status immediately upon execution of a New Participant Addendum in the form attached as Exhibit C if such execution occurs within twenty-four (24)hours of the execution of this Agreement by AEA and the Participants.In the event that United States Army has not obtained Participant status,then after July 2013,the United States Army shall have the right to become a User by executing a User Agreement and providing three (3)months written notice to the IMC,so long as the available Intertie Capacity is not fully subscribed. Article 6. MINIMUM RIGHTS OF THE PARTICIPANTS AND USERS TO USE INTERTIE FACILITIES Section 6.1 Minimum Intertie Transfer Capability Rights (""MITCR”) The established MITCR rights as well as the MITCR methodology for allocation of Capacity on the Intertie from the Original Agreement are temporarily retained in this Agreement and shall be administered by the IMC during the period from the Effective Date until July 1,2013.The MITCR methodology is set forth in this Article 6.The IMC shall implement a new methodology for allocation of Capacity before July 1,2013,which shall comply with the provisions of Article 16,OPEN ACCESS PRINCIPLES. 6.1.1 Right of First Refusal.For so long as the IMC has not amended or replaced the MITCR methodology,Participants shall have the right of first refusal to an allocated portion of the maximum Intertie transfer capability,as determined pursuant to Section 6.2,Determination of MITCR.Intertie Capacity not scheduled or used by the Participants for the purpose of transmitting or receiving Energy over the Intertie shall be allotted to the Participants in the manner provided in Section 6.2.2,Unused MITCR. 6.1.2 Allocation of Transfer Capability.The Intertie transfer capability shall be shared by the Participants in the Northern and Southern Groups in the manner described in Section 6.2,Determination of MITCR.If a Participant is not using part of its MITCR in either direction,other Participants shall have the right to use that unused part to make transfers across the Intertie,either as a purchase or a sale of Capacity and/or Energy,pursuant to a procedure adopted by the IMC. 6.1.3.Emergency Operations.During emergencies when it is necessary to use the Intertie to transfer Energy to maintain system integrity,a Participant's MITCR Page 16 of 53 -Amended and Restated Alaska Intertie Agreement will be adjusted by the IMC as required pursuant to Intertie operating policies and procedures and Prudent Utility Practices.To the extent practical,such adjustments shall be shared proportionally among all Participants in the affected Group(s). Section 6.2 Determination of MITCR 6.2.1 Methodology.For so long as the IMC has not amended or replaced the MITCR methodology,the IMC shall determine the MITCR of each Participant each year prior to the final approval of the fiscal year budget,or when a new Participant becomes a Party to this Agreement.The MITCR of each Participant shall be calculated as follows: MITCR shall be determined each year based on the average of the three most recent Annual System Demands submitted by each of the Participants under Section 7.2.1,Participant_and User_Estimates, Participant Historical Data.Temporary reductions of the maximum Intertie transfer capability may be required for periods due to maintenance,safety,or equipment failure.MITCR shall be determined separately for the Participants of the Northern Group and of the Southern Group.A Participant's MITCR shall be the ratio of its average Annual System Demand to the sum of the average Annual System Demands of its respective group (Northern or Southern) multiplied by the maximum Intertie transfer capability set forth in Section 6.3,Maximum Intertie Transfer Capability. 6.2.2 Unused MITCR.MITCR not used by a Participant shall be available to the other Participants in the same group (i.e.,Northern Group or Southern Group) in the same proportion as remaining Participants'MITCR is to the total MITCR of the remaining Participants in the group that are allocating the unused MITCR.If no Participant chooses to use the unused MITCR,the IMC may make it available to any User subject to the requirements set forth in Section 8.6.7,Maximum Capability and Capacity Allocation.Unless otherwise agreed upon,a Participant whose unused MITCR is being used by other Participant(s)or User(s)shall have the right to its full entitlement immediately upon notification to the Participant(s)or User(s)using its MITCR. 6.2.3.Right to Contractually Transfer MITCR.A Participant has the right to transfer on a contractual basis all or part of its MITCR to other Participants or Users with reasonable written notice to all Participants.A Participant whose unused MITCR is being used by another Participant or User under this Section 6.2.3 shall be paid by the using Participant or User a prorated amount of the Intertie Capacity Rate determined by the following formula: P =ICR/12 x CP x HR/THR where: Page 17 of 53 -Amended and Restated Alaska Intertie Agreement P -is the monthly payment due to the Participant whose MITCR,or portion thereof,is being used by another Participant or User; ICR/12 -is the relevant monthly Intertie Capacity Rate as defined in Section 7.2.6,Capacity Rate,of this Agreement; CP -is the average amount of Capacity in kilowatts which is used by another Participant; HR-is the number of hours in the month during which the unused MITCR was scheduled by another Participant or User;and THR-is the total number of hours in the relevant month. 6.2.4 IMC Authority to Change Capacity Allocation Methodology.The IMC shall have the authority to amend or replace the Intertie Capacity allocation methodology with a different methodology.Any amendment or replacement of the Intertie Capacity allocation methodology shall require the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA.In amending or replacing the Intertie allocation methodology,the IMC shall employ Open Access principles to the extent practicable. 6.2.5 New State Power Projects.The IMC shall amend or replace the Intertie Capacity allocation methodology if requested by AEA to facilitate the transfer of power from a new state-owned generation project,provided,that the then- existing rights of Participants and Users for firm service shall be preserved. Section 6.3 Maximum Intertie Transfer Capability The maximum transfer capability of the Intertie is 78 MW,net of losses,unless and until it is changed pursuant to this section.No provision of this Agreement shall prohibit the IMC from temporarily reducing the maximum Intertie transfer capability for maintenance,equipment failure,safety considerations,or other reasonable causes in compliance with Prudent Utility Practices.|Such temporary reductions of maximum Intertie transfer capability shall proportionally reduce the rights of each Participant and User,for that temporary period.The IMC,upon the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA,shall have the authority to change the maximum Intertie transfer capability. Page 18 of 53 -Amended and Restated Alaska Intertie Agreement Section 6.4 Improvements to the Intertie 6.4.1 Development of Improvements.Modifications,additions,deletions and changes to the Intertie ("Improvements”)shall be designed and constructed so as not to reduce the Intertie's reliability.All Improvements shall be implemented in accordance with Prudent Utility Practice and,with commercially reasonable consideration of the costs and benefits of such improvements. 6.4.1.1 Except as provided in Section 6.4.1.2,the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA,shall be required to approve any Improvements. The design and specifications,including engineering studies for proposed Improvements to the Intertie shall be submitted to the IMC for review and approval.The IMC may require additional studies.Approval of the design and specifications of Improvements shall require the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA. 6.4.1.2 AEA shall have the right to make Improvements to the Intertie,including taps to provide electrical services at locations that AEA deems beneficial and reasonable. Costs related to Improvements covered by this Section 6.4.1.2 will not be deemed to be Intertie Costs unless such Improvements are of direct benefit to the Participants and/or Users as determined in advance by the IMC under Section 6.4.3,Responsibility for Cost of Improvements.The design for such Improvements shall be submitted to the IMC for review and comment. The comments of the IMC shall be incorporated into the design of the Improvements as they relate to maintaining the Intertie's reliability. 6.4.1.3 The IMC shall not unreasonably delay the implementation of any Improvements provided for under Section 6.4,Improvements to the Intertie. 6.4.2 Requests for Improvements.Participants and Users,individually or otherwise,shall have the right to request the IMC to make Improvements. Page 19 of 53 -Amended and Restated Alaska Intertie Agreement 6.4.3 6.4.4 6.4.5 Section 6.5 Each request shall include a detailed written explanation of the requested Improvement and demonstrate its compliance with the requirements of Section 6.4.1,Development of Improvements. Responsibility for Cost of Improvements.The cost of Improvements may be apportioned among the requesting Participants and Users pursuant to a written agreement and may be adjusted to include other sources of funding.If there is no such written agreement,an Improvement shall be made at the expense of the requesting Participant(s),User(s),and/or AEA (AEA only if the Improvement is undertaken pursuant to Section 6.4.1.2)unless the IMC determines prior to performing the Improvement that the Improvement directly benefits other Participants or Users,or may provide direct benefit to other Participants or Users in the future,in which case the cost of the requested Improvements shall be deemed Intertie Costs.The IMC may also, but shall not be required to,determine that the cost of an Improvement shall be born only by the group of directly benefitted Participant(s)or User(s)if some will not be directly benefitted.The IMC shall have the right to consider the cause or need for any Improvements when making its determination of cost responsibility.The IMC shall also determine prior to performing the Improvement whether the cost of such Improvements shall be recovered in the Intertie Energy Rate or in the Intertie Capacity Rate.AEA shall be the owner of all Improvements without regard to the sources of funding.The determination and setting of the responsibility for payment of costs associated with an Improvement and any allocation of recovery between the Intertie Energy Rate and the Intertie Capacity Rate shall require the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA. Right to Make Improvements -Required Work.AEA shall have the right to require Improvements to the Intertie as provided in Section 8.8,AEA's Ability to Perform Required Work. Notice.The IMC shall give reasonable advanced notice to all Participants before approving any Improvements as provided in this Article 6. Additional Project Taps Terms and conditions applicable to new taps and interconnections for new projects shall be subject to,and shall be handled in accordance with,the rules,Reliability Standards,and procedures in effect at the time the tap or interconnection is constructed and as they may be amended from time to time.This Section shall also apply to proposed temporary taps or interconnections. Page 20 of 53 -Amended and Restated Alaska Intertie Agreement Section 7.1 7.1.1 Article 7. COSTS FOR INTERTIE TRANSFER RIGHTS Intertie Costs Costs to Be Shared by Participants and Users.Costs incurred in operating and and this Agreement. maintaining the Intertie and the annual debt service on any bonds or other debt issued by AEA or contractual obligations incurred by AEA or the IMC for the Intertie facilities,including those incurred for renewals,replacements,repairs, Required Work,and Improvements,("Intertie Costs”)shall be shared by the Participants and Users.Intertie Costs shall be identified in accordance with the provisions of former Alaska Statute 44.83.398(f)(attached as Exhibit D) Participants and Users shall also contribute to the recovery of Intertie Costs through rates and charges approved by the IMC.At a minimum,the following costs shall be included in Intertie Costs: 7.1.1.1 "Operation and Maintenance Costs”are all operation costs as provided for in Article 10,OPERATION OF THE INTERTIE,and all maintenance costs as provided for in Article 12,MAINTENANCE OF THE INTERTIE FACILITIES,and including any replacements in the ordinary course of operations, plus any applicable taxes,but excluding uninsured losses or liability resulting from deductible or self-insured retention provisions of property or liability insurance policies,respectively. 7.1.1.2 "Extraordinary Maintenance and Replacement Costs” are uninsured losses or liabilities resulting from deductible or self- insured retention provisions of property or liability insurance policies,costs of facility maintenance,renewals,and replacements. 7.1.1.3 "Annual Debt Service Cost”is interest on,and amortization sufficient to retire over their term,any bonds or other debt issued by AEA for construction,renewals,replacement, repairs or Improvements of the Intertie facilities,plus the debt service coverage or other financial performance factors determined by AEA to be necessary for the marketability of bonds issued by it and as provided in any bond covenants,resolutions or similar obligations. 7.1.1.4 "Reserve Fund”is the amount necessary,as determined by the IMC,to provide a prudent level of reserves to fund the operation and maintenance of the Intertie and the Intertie Costs specified in this Section 7.1,Intertie Costs.The Reserve Fund shall be maintained as a separate and distinct fund to be held, managed,invested,disbursed and administered by AEA in accordance with criteria approved by the affirmative vote of a Page 21 of 53 -Amended and Restated Alaska Intertie Agreement minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA.All money deposited in the Fund shall be used solely for the purposes set forth in this Agreement.AEA shall keep and maintain records pertaining to the Reserve Fund,and all disbursements therefrom,in accordance with its general practices and procedures in effect from time to time and in compliance with GAAP. TALS Station service costs. 7.1.1.6 "Cost of Improvements”those costs determined in accordance with Section 6.4.3,Responsibility for Cost of Improvements. 7.1.2 Annual Budget and Fiscal Year.The IMC will estimate and budget Intertie Costs annually for the ensuing fiscal year,July 1 to June 30,subject to AEA's review and approval.The IMC shall develop annually a preliminary operating budget from:the Intertie maintenance budget;the Intertie operating budget; the Annual Debt Service costs;and,AEA's administrative expense associated with the Intertie.Unless otherwise agreed in writing by the Participants,the preliminary Intertie budget shall be provided to the Participants and made available to the public for their review at least thirty (30)days before the IMC meeting where the budget will be approved.Written comments shall be submitted to AEA and the IMC by the date established by the IMC.The Participants shall be provided no less than thirty (30)days to comment.Based on the preliminary Intertie budget and the comments from the Participants,the IMC shall annually establish the Intertie operating budget and submit it to the AEA for review and approval. Section 7.2 Calculation of Intertie Costs and Rates 7.2.1 Participant and User Estimates,Participant Historical Data.The IMC shall establish a schedule and format that the Participants and Users with valid contracts for service on the Intertie shall use to submit their projected usage of the Intertie for the upcoming fiscal year.Unless directed to do otherwise by the IMC,Participants and Users shall also submit,at the same time,their three most recent Annual System Demands for the calculation of MITCR under Section 6.2,Determination of MITCR,or as required by the IMC for the allocation of Intertie Capacity. 7.2.2 IMC Estimates.The IMC shall prepare a preliminary Intertie annual usage estimate in kilowatt hours ("kWh”)and provide the same to the Participants and Users no later than the date the preliminary Intertie budget is submitted to the Participants for comment.The preliminary Intertie annual usage estimate provided under this Section with the use of projected or other relevant Page 22 of 53 --Amended and Restated Alaska Intertie Agreement 7.2.3 7.2.4 7.2.5 7.2.6 Section 7.3 7.3.1 information shall in no event be less than the amount equal to 30 percent of the kWhs that could be transferred by continuous operation of the Intertie at the maximum rated fiscal-year transfer Capacity (as currently established under Section 6.3,Maximum Intertie Transfer Capability).The projected usage shall not exceed the total projected usage of the Participants and Users so long as their combined usage is in excess of the 30 percent as provided in this Section 7.2.2. Comments.Participants and Users may provide comments to the IMC on the preliminary Intertie annual usage estimate,which shall be considered by the IMC in making its final estimate for the following fiscal year. IMC Determination of Estimated Intertie Usage.Based upon the Participants' and Users'preliminary Intertie annual usage estimates and comments received,the IMC shall establish the estimated annual Intertie usage in kWhs for the following fiscal year. Energy Rate.The "Intertie Energy Rate”for the following fiscal year, expressed in dollars per kWh,shall be calculated by dividing 83.5 percent of the total budgeted Intertie Costs as determined in the Intertie budget under Section 7.1,Intertie Costs,by the annual Intertie usage as established under Section 7.2.4,IMC Determination of Estimated Intertie Usage. Capacity Rate.The "Intertie Capacity Rate”for the following fiscal year. expressed in dollars per kW,shall be calculated by dividing 16.5 percent of the total budgeted Intertie Costs as determined in the Intertie budget established under Section 7.1,Intertie Costs,by the sum of the Participant's or User's Intertie Capacity rights allocations. Allocation of Intertie Costs Participant and User Payments.Each Participant and User shall be obligated to pay to AEA,for the account of the IMC,monthly the sum of the following: 73.1.1 The Participant's or User's scheduled use of the Intertie for the month multiplied by the Intertie Energy Rate in effect for the fiscal year;plus, 7.3.1.2 The Participant's Intertie Capacity rights allocation, determined in accordance with this Agreement,multiplied by one- twelfth of the Intertie Capacity Rate in effect for the fiscal year or the Participant's obligation as calculated pursuant to Section 6.2.3, Right to Contractually Transfer MITCR,if applicable;plus, Page 23 of 53 -Amended and Restated Alaska Intertie Agreement 7.3.2 7.3.3 7.3.4 7.3.5 Section 8.1 7.3.1.3.Each User's Intertie Capacity rights allocation, determined in accordance with this Agreement,multiplied by the monthly Intertie Capacity Rate in effect for that period multiplied by the number of months of the fiscal year that the User has a contract for the use of Intertie Capacity or as determined pursuant to Section 7.3.1.2. Annual Payment of Intertie Costs.The IMC shall have the authority to convert the Participants'and Users'payment obligation,or any portion thereof,to one annual payment,which shall be due and payable at the beginning of the fiscal year.Any such annual payment shall be based on each Participant's or User's projected use of the Intertie to the extent usage has not been scheduled. Monthly Use.For billing purposes only,the scheduled use of the Intertie in any month shall be the greater of the actual energy transferred or the product of the scheduled Intertie transfer at the Intertie Point of Interconnection and the number of hours each schedule was in effect during that calendar month. Excess Revenues.Should the annual revenues received from all sources under Section 7.3.1,Participant_and User Payments,exceed actual annual Intertie Costs,the revenues in excess of the Intertie Costs shall be allocated to the contributing Participants and Users in proportion to the total dollar amount paid by all parties for use of the Intertie in the fiscal year,or portion thereof, in which the revenues were accrued.The IMC shall authorize AEA to refund the Participants and Users their proportionate share of this excess. Revenue Deficiencies.Should the revenues received under Section 7.3.1, Participant_and User Payments,be less than the actual Intertie Costs,the revenue deficiency shall be allocated between the Participants and Users in the same proportional manner as revenues are re-allocated between the Participants and Users under Section 7.3.4,Excess Revenues,of this Section. The IMC shall authorize AEA to bill the Participants and Users their proportionate share of this deficiency. Article 8. INTERTIE MANAGEMENT COMMITTEE Establishment of the Intertie Management Committee,Right to Vote AEA and the Participants hereby establish an Intertie Management Committee.The IMC shall be the governing body with the authority to control,operate,maintain,repair,and perform Improvements of the Intertie in accordance with the terms of this Agreement.The IMC shall consist of the representative appointed by AEA and the representatives appointed by each of the Participants,which shall be either their Chief Executive Officer,General Manager,or Executive Director.Each Participant shall be entitled to only one representative,appointed pursuant to Page 24 of 53 -Amended and Restated Alaska Intertie Agreement Section 4.3,Membership in IMC,and one vote on the IMC.AEA shall also be entitled to only one representative and one vote on the IMC.Under no circumstances shall AEA or a Participant have,or have the right to control,more than one vote on the IMC or have more than one voting representative,directly or indirectly,through another organization with which it is an affiliate or has an agency relationship.Each IMC member entitled to vote may name one representative to serve on the IMC and one designated alternate for that representative.A representative or designated alternate may be an employee of a Designated Contractor of the IMC Member.Each IMC member shall notify all other IMC members in writing of the names,addresses,and telephone numbers of its representative and designated alternate.After it is established,the IMC shall meet at least twice each year.Meetings of the IMC and any committees of the IMC shall, to the extent practicable,be open to the public. 8.1.1 Eligibility to Vote.Participants that are not current on their financial obligations for Intertie Costs or any other costs or assessments approved by the IMC shall not be eligible to vote on matters before the IMC and shall not be considered a member of the IMC for purposes of voting,or for calculating the Annual System Demand of Participants or Users for purposes of allocating Intertie Capacity. 8.1.2 Miénutes.Written minutes shall be kept for all meetings of the IMC,and all decisions or agreements made by the IMC shall be reduced to writing, including all matters voted upon and each member's vote on those matters. Section 8.2 Adoption of Procedural Rules or Bylaws The IMC shall adopt and maintain rules and procedures governing the operation of the IMC ("IMC Bylaws”).The IMC Bylaws shall require the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA,to be effective.The IMC Bylaws shall address,among other matters,procedures for the selection of IMC officers,the conduct of IMC meetings,the approval or possible pre-approval of consultants, the modification of the IMC's procedural rules,and to the extent not otherwise specified in this Agreement,the specific voting requirements for approval of matters to be decided by the IMC. Section 8.3 Effect of Abstention.For purposes of voting on any matter before the IMC, each abstaining Participant or AEA Representative shall not be counted towards any voting requirement.The minimum percentage required to transact business shall be determined from the total number of IMC Members not abstaining. Section 8.4 Meetings by Electronic Communication.The IMC may elect to meet by electronic communication so long as all members can be heard and hear all of the proceedings. Section 8.5 IMC Responsibilities 8.5.1 IMC Responsibilities and AEA Duties.AEA,as the legal owner of the Intertie,a potential issuer of debt related to the Intertie,and the agency Page 25 of 53 -Amended and Restated Alaska Intertie Agreement 8.5.2 Section 8.6 charged by statute with various duties affecting or affected by the Intertie,has or may have assigned to it,certain rights,duties,and responsibilities with respect to the Intertie.For example,AS 44.83.396(e)imposes on AEA the duty to (a)review and approve the annual budget for the operation and maintenance of the project,and (b)assure that the project is being operated efficiently and in a manner that is consistent with national standards for the industry and agreements with any bondholders.(See also,Section 8.8,AEA's Ability to Perform Required Work.)Subject only to such AEA rights,duties, and responsibilities,the IMC shall be responsible for the management, operation,maintenance,and improvement of the Intertie.The IMC members, Participants,and Users are the beneficiaries of the prudent management of the Intertie and shall bear their respective share of Intertie Costs in accordance with the terms of this Agreement.All Users have a shared and substantial long-term financial interest in the Intertie facilities.The IMC shall undertake responsibility for the prudent management and reliable operation of the Intertie on behalf of AEA,for the benefit of the Participants and Users. IMC Approvals.IMC approval of the sufficiency of the annual budget,rates, and the allocation of Intertie Capacity,shall require the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC, including the affirmative vote of AEA. IMC Actions The IMC shall have the authority to take the actions set forth in this section,subject only to the provisions of any applicable bond resolutions,federal and state law,the requirements of licensing and regulatory agencies,and the rights of AEA,the Participants,and Users under other provisions of this Agreement. 8.6.1 8.6.2 8.6.3 Intertie Operation.Develop,adopt,and enforce operating policies and procedures and Reliability Standards applicable to the Intertie.See Section 3.1,Adoption of Operating Policies and Procedures,and_Reliability Standards. Intertie User Agreements.Adopt standard terms and conditions for User Agreements for Intertie Transactions in accordance with this Agreement and incorporating Open Access principles.Adopt a three (3)month termination provision in certain User Agreements in accordance with Section 5.2, Substitution of HEA and MEA,and Admission of City of Seward and the United States Army,and Section 16.3.5,Federal Acquisition Regulations. Non-Compliance Appeals.Provide procedures for Users to appeal:(i) Operating policies and procedures;ii)Reliability Standards non-compliance determinations;or iii)sanctions imposed for non-compliance with Reliability Standards. Page 26 of 53 -Amended and Restated Alaska Intertie Agreement 8.6.4 O&M and Scheduling.Arrange for the operation and maintenance of the Intertie and the scheduling of power transfers on the Intertie. 8.6.5 Budget.Adopt,and revise if prudent to do so,each fiscal year a budget of Intertie Costs for that fiscal year.The adopted or revised budget shall be reasonably estimated by the IMC to be sufficient to pay all Intertie Costs and shall be made available to the public at the time it is distributed to Participants.The IMC shall establish the fiscal year budget in accordance with Article 7,COSTS FOR INTERTIE TRANSFER RIGHTS,and a schedule established by the IMC. 8.6.6 Cost Allocation and Payment Schedule.Establish for each fiscal year the estimated annual allocation of Intertie Costs for each Participant and User together with a schedule for each Participant's and Users'required monthly payments during that fiscal year,pursuant to Sections 7.2,Calculation of Intertie Costs and Rates,and 7.3,Allocation of Intertie Costs.The payment schedule shall be designed to recover the Participant's or User's share of the estimated annual Intertie Costs during the fiscal year and as revised during such Year to reflect any approved changes to the budget of annual Intertie Costs for that fiscal year.The IMC also shall determine the costs to be collected from Users for Intertie Transactions.Such costs shall be determined and applied based upon just,fair,reasonable,and not unduly discriminatory principles and in compliance with Article 16,OPEN ACCESS PRINCIPLES. The approval of the allocation of Intertie Costs,payment schedule,and the costs to be collected for Intertie Transactions shall require the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA. 8.6.7 Maximum Capability and Capacity Allocation.Establish the maximum Intertie transfer capability in accordance with Section 6.3,Maximum Intertie Transfer Capability.Determine each Participant's and User's rights to Intertie Capacity pursuant to any methodology adopted under Article 6,MINIMUM RIGHTS OF THE PARTICIPANTS AND USERS TO USE INTERTIE FACILITIES.The IMC shall consider the Participant's or User's reserve obligations and equitably preserve any Participant's and User's Intertie operational rights existing as of the Effective Date that are valid and effective at the time of the IMC's determination.The IMC shall have the right to consider the cause or need for such operational rights when making its determination. 8.6.8 Determination of Actual Payment Obligation.Determine after the conclusion of each fiscal year the actual annual Intertie Costs for that fiscal year,the actual annual Payment Obligation of each Participant or User for that fiscal year,and the amount of any additional payment required from or the amount Page 27 of 53 -Amended and Restated Alaska Intertie Agreement of any refund to each Participant or User to ensure that the total of all payments received from each Participant or User for each fiscal year is equal to that Participant's or User's actual annual Payment Obligation for the fiscal year,pursuant to Sections 7.3.3,Excess Revenues,and 7.3.4,Revenue Deficiencies. 8.6.9 Funding Methods.Evaluate and select methods of carrying out and funding Improvements,whether by recommending AEA's issuance of bonds or otherwise. 8.6.10 Improvements.Evaluate and approve Improvements and determine the required level of funding for approved Improvements under Sections 6.4.2, Requests for Improvements,6.4.3,Responsibility for Cost of Improvements, 6.4.4,Right to Make Improvements -Required Work,or as otherwise provided in this Agreement. 8.6.11 Maintenance.Adopt maintenance schedules for the Intertie that do not unreasonably interfere with the operations of the Participants. 8.6.12 Creation of Reserve Fund.Establish and maintain a Reserve Fund,which meets the requirements set forth in Section 7.1.1.4. 8.6.13 Procurement of Services.Procure services the IMC requires so long as sufficient budgeted funds are available for those services and the procedures for such procurements are in compliance with the IMC's Bylaws and any applicable Alaska law or regulation. 8.6.14 Miscellaneous.Provide for all things necessary to carry out the responsibilities and obligations set forth in this Agreement and in the IMC Bylaws. Section 8.7.Payment Obligation Unimpaired Notwithstanding any action or inaction by AEA or the IMC under this Agreement,each Participant's or User's obligation to make payments necessary to pay their allocated percentage share of Intertie Costs under Section 7.3,Allocation of Intertie Costs,of this Agreement and all other amounts to be paid under this Agreement ("Payment Obligation”)shall be absolute and unimpaired.Each Participant and User shall make all payments as required as a result of action taken by the IMC under this Agreement or an action taken by AEA pursuant to Section 6.4.4, Right to Make Improvements -Required Work,or Section 8.8,AEA's Ability to Perform Required Work. Section 8.8 AEA's Ability to Perform Required Work In the event the IMC fails to take any of the actions set forth in this Agreement in a timely fashion or fails to take any other action which the AEA believes to be a required action with Page 28 of 53 -Amended and Restated Alaska Intertie Agreement respect to the management,operation,maintenance or improvement of the Intertie,and as a result the AEA determines that it will be unable to meet any of its obligations imposed by bond resolutions,by this Agreement,by any licensing or regulatory agency,or by statute,or as otherwise is necessary to keep the Intertie in good and efficient operating condition,consistent with (1)prudent economics for the Intertie and the Participants and Users,and (2)national standards for the industry ("Required Work'')then the AEA may:(a)adopt a budget of Annual Intertie Costs;(b)estimate the Payment Obligation of each Participant in accordance with the methodology set forth in this Agreement;(c)require each Participant to make payments on the basis of such estimated Payment Obligation;or (d)cause the Required Work to be performed; and (e)take such other action as the AEA deems reasonably necessary to meet such obligations. All actions and determinations under this Section 8.8 shall be taken in accordance with Prudent Utility Practice.The comments of the IMC regarding Required Work related to Improvements shall be given great weight and incorporated into the design of the Improvements as they relate to the operation and reliability of the Intertie. Section 8.9 Payment Obligation and Rights of Review Making a payment as required under this Agreement shall not constitute a waiver of any of the Participant's or User's rights under this Agreement.Any Participant or User may seek review of actions by the IMC by means of the procedures in Article 19,REVIEW OF DECISION. Section 8.10 AEA Authority to Collect Payments and Disburse Funds The IMC hereby delegates to AEA the authority to invoice and collect from Participants or Users any Payment Obligations due and owing under this Agreement and to make payments on behalf of the IMC for Intertie operations,maintenance or other Intertie related expenses arising under this Agreement.AEA shall hold funds collected in one or more separate accounts designated for Alaska Intertie purposes until such funds are obligated for Intertie operations or maintenance and used to pay Intertie Costs.Interest and/or investment income earned on invested funds shall be credited to the IMC.The IMC shall have the right to audit all funds held by AEA on behalf of the IMC as well as the transactions associated therewith. Article 9. OPERATING COMMITTEE Section 9.1 Establishment of the Operating Committee 9.1.1.Establishment.The IMC shall establish a committee for the purpose of recommending operating policies and procedures under the direction of the IMC and assisting in the implementation of any policies and procedures approved by the IMC (the "Operating Committee”). 9.1.2 Representatives.Each Participant may,but is not required to,designate a representative to act on its behalf,which shall be done in writing ("Representative”).Such Representatives shall meet the requirements of Section 3.5,Operating Committee.Each Participant may also designate an Page 29 of 53 -Amended and Restated Alaska Intertie Agreement Section 9.2 9.2.1 9.2.2 9.2.3 9.2.4 9.2.5 Section 9.3 alternate who may act in the stead of its Representative at the option of that Participant.A Participant may at any time change,remove or designate its representative or alternate,and shall promptly notify in writing the other Participants of any change in such designation.The members of The Operating Committee shall designate a member to be Chairman. Recommendations and decisions of the Operating Committee shall be adopted if approved by at least a majority of the Representatives appointed under this Section,unless otherwise provided in the bylaws of the committee.The AEA may designate a Representative to the committee who may vote on any matters. Meetings of the Operating Committee Meetings.The Operating Committee shall meet at least once each year and at such other times as deemed necessary by its Chairman or the IMC and shall to the extent practicable,be open to the public. Voting.The Operating Committee may determine the manner of voting on matters that come before it.All decisions of the Operating Committee affecting the Participants,the Intertie,or its Users shall be subject to the review and approval of the IMC. Minutes.Written minutes shall be kept for all meetings of the Operating Committee,and all decisions or agreements made by the Operating Committee shall be reduced to writing including all matters voted upon and each member's vote on those matters. Expenses.The Operating Committee shall prepare and submit an expense budget to the IMC under Section 10.3,Budget for Operation of the Intertie, annually to provide for Operating Committee expenses other than the expenses of each Operating Committee Representative,which shall be borne by the Operating Committee Representative. Meetings by Electronic Communication.The Operating Committee may elect to meet by electronic communication so long as all members can be heard and hear all of the proceedings. Operating Procedures The Operating Committee shall recommend operating policies and procedures and standard practices to the IMC for the guidance of dispatchers and other employees and shall recommend arrangements for metering,communications,and other services and facilities.All such operating policies and procedures and standard practices shall be subject to the approval of the IMC pursuant to Section 3.1,Adoption of Operating Policies and Procedures,and_Reliability Standards,and shall conform with any Reliability Standards adopted by the IMC.The Operating Page 30 of 53 -Amended and Restated Alaska Intertie Agreement Committee has no authority to modify any of the provisions of this Agreement or to modify or set rates for Intertie services. Section 10.1 10.1.1 10.1.2 10.1.3 Article 10. OPERATION OF THE INTERTIE Responsibility for Operation of the Intertie Responsible Participants.AML&P and GVEA are hereby delegated the responsibility for the operation of the Intertie on behalf of the IMC.The operation of the Intertie shall be in compliance with the guidelines of this Agreement,the operating policies and procedures established by the IMC,and in compliance with any applicable Reliability Standards.The IMC may at any time designate another Participant to assume such responsibility from GVEA or AML&P with the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA.Upon such designation by the IMC,the name of the new operator(s) shall be deemed substituted for the name of the old operator(s)in this Article 10,OPERATION OF THE INTERTIE,as appropriate. AML&P and MEA Responsibilities.AML&P shall be responsible for the operation of the southern assets of the Intertie including,but not limited to, coordination with other utilities,the terminal facilities,communication facilities,the Intertie transmission line,and other facilities south of the Douglas Substation (more specifically illustrated and defined in the Intertie Facilities Diagram in Exhibit E of this Agreement).The Douglas Substation Intertie facilities shall be managed by AML&P and shall be deemed to be the point of demarcation between the Intertie Operators. 10.1.2.1 AEA has contracted with MEA under the 1984 Joint Use Agreement for use of approximately five and one-half (5.5) miles of MEA's right-of-way and constructed transmission facilities that are a part of the Intertie to the Teeland Substation. This being presently a part of the Intertie,the IMC delegates to AML&P,and AML&P assumes the responsibility for operation of this portion of the transmission facilities.AEA delegates to MEA and MEA assumes responsibility for maintenance of this portion of the transmission facilities.Nothing contained in this Agreement shall be deemed to modify any portion of the 1984 Joint Use Agreement. GVEA Responsibilities.GVEA shall be responsible for the operation of the northern assets of the Intertie,including but not limited to,coordination with other utilities,the terminal facilities,communication facilities,the Intertie transmission line,and other facilities north of the Douglas Substation (as more Page 31 of 53 -Amended and Restated Alaska Intertie Agreement specifically illustrated and defined in the Intertie Facilities Diagram in Exhibit E of this Agreement).The Douglas Substation Intertie facilities shall be managed by AML&P and deemed to be the point of demarcation between Operators. 10.1.4 Joint Responsibilities.AML&P and GVEA acting in concert shall: 10.1.4.1 Coordinate all the activities and transactions involving the Intertie operation; 10.1.4.2.Coordinate Intertie Transactions to ensure that at all times,to the extent possible,the Intertie System is operated to: provide reliable and economical service;optimize the availability of the Intertie within practical operational and cost constraints; and;ensure the Intertie is fully subscribed; 10.1.4.3 Comply with,monitor compliance with,and enforce the operating policies and procedures and Reliability Standards; 10.1.4.4 Coordinate the scheduling of all Intertie Transactions by the Participants in the Northern and Southern Groups in accordance with the provisions of this Agreement,and inform all Participants of the scheduled transactions; 10.1.4.5 Develop procedures for restoration of service on the Intertie for interruptions due to either Scheduled or Forced Outages,and have personnel trained to carry out such operational procedures to ensure Intertie reliability; 10.1.4.6 Maintain communications with each other and the other Participants using prudent methods of data acquisition sufficient for reliable system control of the operation of the Intertie; 10.1.4.7 Maintain complete and accurate hourly records of all operations,Intertie Transactions,and activities involving the Intertie,and promptly publish and distribute such records to all Participants at regular intervals as established by the Operating Committee (any Participants who desire it shall be provided,at their own expense,direct access to all telemetry gathered from the Intertie); 10.1.4.8 Coordinate the responsibilities delegated to them in this Agreement to minimize duplication and ensure efficient operation of the Intertie; Page 32 of 53 --Amended and Restated Alaska Intertie Agreement 10.1.4.9 Abide by the terms and conditions of other contracts or agreements involving the operation of the Intertie,so long as they do not conflict with this Agreement; 10.1.4.10 Operate the Intertie in a safe,reliable,and responsible manner consistent with Prudent Utility Practices,the directives and instructions of the Operating Committee,and any applicable Reliability Standards. 10.1.5 Contracting.The IMC may,to the extent permitted by law,contract with other Participants and qualified contractors to maintain transmission facilities under IMC control. 10.1.6 Load Balancing.The Operating Committee shall recommend operating policies and procedures and standard practices to the IMC to guide load balancing responsibilities performed by the Intertie Operators and any Control Area operators interconnected with the Intertie. Section 10.2 Suspension of Work in Performance of Operational Duties The AEA or IMC may order AML&P and/or GVEA,or any other entity responsible for operation of the Intertie,in writing to suspend,delay,or interrupt all or any part of the work involved in operation of the Intertie for such period of time as AEA or the IMC determines to be appropriate for the convenience of,and in the best interest of,the operation of the Intertie. Section 10.3 Budget for Operation of the Intertie 10.3.1.Budget Process.For purposes of calculation of unit Intertie Costs pursuant to Section 7.2,Calculation of Intertie Costs and Rates,of this Agreement, AML&P and GVEA may develop and submit to the IMC a suggested scope of operations and a budget for operation of the Intertie upon thirty (30)days written notice to the IMC.The budget developed by the Intertie Operators may include all direct expenses and an allocated portion of such other expenses as interest,depreciation and margin requirements,among others. All costs allocated to the Intertie Operator budget shall be consistent with AML&P's and GVEA's respective utility system operations and generally accepted utility accounting principles.Unless otherwise agreed upon,the IMC shall provide AML&P and GVEA submittals to the Participants for their review and comments prior to the inclusion of such costs in Intertie Costs. The Participants shall be provided no less than thirty (30)days to comment. 10.3.2 Participant Comments.Participants may provide written comments on the preliminary scope of operations and related budget requirements to the IMC pursuant to a schedule adopted by the IMC.The Participants shall be provided no less than thirty (30)days to comment. Page 33 of 53 -Amended and Restated Alaska Intertie Agreement 10.3.3 10.3.4 10.3.5 IMC Establishes Budget.Based on the preliminary scope of operations and budget and the comments received,the IMC shall establish the final Intertie operating budget under the schedule established in Section 8.6.5,Budget. IMC Determinations and Payment of AML&P and GVEA.If AML&P and GVEA submit a budget under Section 10.3.1,Budget Process,the IMC shall determine the final scope of operations and related budget requirements that will be deemed to be the fixed cost fee for operation of the Intertie for the ensuing fiscal year.Unless otherwise agreed,the IMC shall pay each of AML&P and GVEA pursuant to Section 10.6,Payment of Operators. Payment if IMC Unable to Determine Fixed Cost Fee.If the IMC is unable to determine the fixed cost fee for operation of the Intertie,then AML&P and GVEA may each determine,using records and accounts maintained under Section 10.4,Accounting and Records,the cost to their respective systems to provide operation of the Intertie in accordance with this Agreement and shall bill the IMC monthly for these services.The IMC will then reimburse AML&P and GVEA under Section 10.6,Payment of Operators. Section 10.4 Accounting and Records In maintaining accounts for operation of the Intertie,AML&P and GVEA will follow the system of accounts prescribed for public utilities and licensees by the Federal Energy Regulatory Commission,conform to Section 12.2.2,Cost Records,and GAAP.AML&P and GVEA will furnish the IMC such operating and financial statements relating to operation of the Intertie as may be reasonably requested by AEA or the IMC.If receipt of such operating and financial statements is unduly delayed,the IMC may,with its own staff,perform all work necessary to collect such data as reasonably necessary.Such work shall be performed at a time and in a manner to prevent unreasonable interference with AML&P and GVEA operations. Section 10.5 Audits 10.5.1 Request for Audit.At the discretion of AEA or the IMC or by request of a majority of the Participants,an audit shall be conducted with respect to the matters provided for in this Agreement by independent auditors according to such programs and procedures as agreed to by the Participants,and all Participants shall be furnished copies of the report.The cost of performing such audits shall be shared by the Participants in the same proportion as their MITCR or share of Intertie Capacity share during the period covered by the audit or as determined by the IMC.The Participants,their agents,and any other party involved with the operation of the Intertie,shall provide and/or make available the information and records required for the audit.The cost of any audit required by a Participant that is beyond the above scope deemed necessary by the IMC shall be borne by such Participant. Page 34 of 53 -Amended and Restated Alaska Intertie Agreement 10.5.2 State Audit.AML&P and GVEA shall allow their books of accounts to be audited with respect to matters provided for in this Agreement by such state officials or agencies as may be authorized and directed by law to make those audits.To the extent permitted by law,Participants shall have the same authority to audit the books of accounts of the IMC and AEA with respect to the operation of the Intertie. Section 10.6 Payment of Operators If a fixed cost fee for operation of the Intertie is established under Section 10.3.4 of this Article, then within thirty (30)days of the end of each month the IMC shall pay to AML&P and GVEA one-twelfth of their respective yearly fixed cost fees for operation of the Intertie.If the Participants have not agreed upon a fixed cost fee for operation of the Intertie under Section 10.3.4 of this Article,then the IMC shall reimburse AML&P and GVEA within thirty (30)days of the receipt of their invoices.At all times,however,such reimbursement is subject to adjustment in the event of errors,the resolution of disputes,or as the result of audit findings. Section 10.7 Change in Ownership or Control If there is any change in the ownership,ownership structure,control of,or right to control an entity delegated responsibility for the operation of the Intertie on behalf of the IMC,or any such change regarding an entity delegated any other responsibility related to the operation or maintenance of any portion of the Intertie facilities,then the IMC may designate another Participant,or such other entity as it deems appropriate,to assume those responsibilities.The IMC's designation shall be accomplished in the same manner as set forth in Section 10.1.1, Responsible Participants. Section 10.8 Critical Repairs and Maintenance In the event that immediate action is required to preserve the reliability or safe operation of the Intertie,the operators shall have the right to engage qualified contractors or qualified members of their own staff to effect such repairs as are reasonably necessary pursuant to Prudent Utility Practices.The costs for such repairs shall be Intertie Costs.In the event an Operator has not performed,or cannot perform,repairs or maintenance on Intertie facilities for which it is responsible,and such delay or failure jeopardizes the immediate safety,reliability,or operation of the Intertie pursuant to Prudent Utility Practices,the affected Participants shall have the same right to effect such repairs or maintenance.The costs for such repairs or maintenance shall be Intertie Costs. Article 11. SCHEDULING OF CAPACITY AND ENERGY ON THE INTERTIE Section 11.1.Scheduling Responsibility 11.1.1 Southern Group.AML&P shall have the responsibility for scheduling transfers on the Intertie for the Participants and Users of the Southern Group Page 35 of 53 -Amended and Restated Alaska Intertie Agreement 11.1.2 11.1.3 and coordinating them with GVEA under:(i)the provisions of this Agreement;(ii)any operating policies and procedures or Reliability Standards;and (111)the procedures adopted by the IMC. Northern Group.GVEA shall have the responsibility for scheduling transfers on the Intertie for the Participants and Users of the Northern Group and coordinating them with AML&P under:(i)the provisions of this Agreement; (ii)any operating policies and procedures or Reliability Standards;and (iii) the procedures adopted by the IMC. Coordination.AML&P and GVEA shall each have the responsibility for coordinating schedules within their respective Groups. Section 11.2.Capacity and Energy Schedules 11.2.1 11.2.2 11.2.3 11.2.4 11.2.5 Section 11.3 Participant Hourly Schedules.The amount of electric Capacity used and Energy to be transferred on the Intertie under this Agreement will be based upon hourly schedules provided by the Participants and Users. Advanced Scheduling.Capacity and Energy shall be scheduled on an hourly basis and the schedules may be made for the next hour(s),day(s),week(s),or month(s)in advance if allowed by the operating policies and procedures. Procedure.Schedules for all transfers on the Intertie shall be furnished to the respective Intertie Operators before 3:00 P.M.prevailing local time each day for Capacity used and Energy to be delivered across the Intertie for each clock hour of the following 24-hour period.If the IMC determines that it is prudent to do so,this schedule shall be updated each day and an additional six-day schedule will be furnished to provide a continuing seven-day schedule. Short-term Scheduling.Short-term schedules of transfers on the Intertie may not be made or changed on an hour-by-hour basis unless coordinated in advance with the Intertie Operators.Operators will use their best efforts to accommodate changes. Modification of Scheduling Procedures.Modifications to scheduling procedures shall be required to be adopted by the IMC before implementation to be effective. Intertie Schedule Limitations The maximum schedule of Capacity and Energy of any Participant or User on the Intertie shall be limited to their individual Intertie Capacity rights as allocated under this Agreement,either by the MITCR methodology or the methodology adopted by the IMC under Section 6.2.4,IMC Authority to Change Capacity Allocation Methodology. Page 36 of 53 -Amended and Restated Alaska Intertie Agreement Section 11.4 Transmission Service to Access the Intertie Each Participant and User shall have the sole responsibility for scheduling any service(s) required,on the intervening transmission systems for transfers of Energy or Capacity to and from the Alaska Intertie,in compliance with the applicable tariff schedules of the Participants or utilities involved. Article 12. MAINTENANCE OF THE INTERTIE FACILITIES Section 12.1.Maintenance Responsibility 12.1.1 Responsibility for Maintenance Practices.The IMC shall maintain the Intertie facilities that AEA owns or for which AEA has contracted use arrangements. The IMC shall provide for the maintenance of the Intertie facilities by contracting with qualified parties to perform maintenance on its behalf. Maintenance shall be scheduled,coordinated,and accomplished in accordance with Prudent Utility Practices so as to minimize disturbances on the Intertie that would impair service on the Participants'systems. 12.1.2 Availability.The Intertie shall be maintained in good working condition, optimizing the availability of the Intertie within practical operational and cost constraints.After a failure on the Intertie,the Intertie shall be returned to service in the shortest possible time within the constraints of practical maintenance procedures and Prudent Utility Practices. Section 12.2.Maintenance Budget and Costs 12.2.1.Development _of Budget.The IMC shall develop an annual maintenance budget and a schedule for the maintenance on the Intertie each year based on the budgets developed by the contractors providing Intertie maintenance.This budget will be reviewed with the Participants and Users sufficiently in advance of the commencement of the fiscal year covered so that each Participant or User will be able to submit its comments for consideration prior to finalization of the budget.Budgets for more than one year will be required for the Participants'and Users'long range fiscal planning requirements.The IMC will prepare and furnish the Participants and Users a copy of the long range fiscal requirements for the Intertie,or a forecast of such requirements. 12.2.2 Cost Records.AEA,in cooperation with the IMC,shall maintain complete and accurate records of costs associated with maintenance of the Intertie. Costs associated with maintenance of the Intertie will be recorded using the system of accounts prescribed for public utilities and licensees by the Federal Energy Regulatory Commission. Page 37 of 53 -Amended and Restated Alaska Intertie Agreement Article 13. MEASUREMENT OF ELECTRIC POWER AND ENERGY Section 13.1 Required Metering Facilities The electric power delivered through interconnection facilities of the Intertie shall be measured by nonreversible watt-hour meters and 15-minute interval demand meters. Section 13.2 Access to Metering Facilities and Data The IMC is responsible for the operation and maintenance of the facilities necessary to interface with points of interconnection.The equipment at these points of interconnection is necessary to provide for Intertie operation only.The IMC shall provide for the use of available metered Intertie data output for Participants or Users for the purpose of providing data necessary for their operations. Section 13.3 Installation and Maintenance The IMC shall agree upon the specifications for Intertie-related metering equipment before its installation.Each Participant hereby grants to all other Participants the right to install and maintain at the installing Participants'cost,Intertie-related equipment in other Participants' substations.Each Participant has the right to install and maintain,at its cost,equipment in another Participant's substation only if the equipment is necessary to perform Intertie functions under this Agreement.The installation and maintenance shall be coordinated with staff of the Participant owning and operating the facilities on which the meters are to be installed.Ingress and egress shall be granted to the other Participants to install,remove,or maintain such equipment.Participants shall coordinate such activities. Section 13.4.Testing of Metering Equipment. Participants,Users,and AEA,shall each,at its cost,have the right to require testing of metering equipment for accurate registration by a qualified third party.Such testing shall be coordinated with the Participant owning and operating the facilities on which the meters are installed.The IMC shall be responsible for taking appropriate action to resolve any inaccurate registration,plus or minus,that is not within tolerances approved by the IMC pursuant to Section 9.3,Operating Procedures. Article 14. TRANSMISSION LOSSES Section 14.1.Intertie Transmission and Transmission Service Losses 14.1.1 Method of Determination of Losses.Losses in the Intertie System created by Intertie transfers shall be determined by the Intertie Operators through engineering studies,calculation,and power flow programs,and procedures as established by the Operating Committee. Page 38 of 53 -Amended and Restated Alaska Intertie Agreement 14.1.2 |Compensation for Losses.The Participant or User supplying Capacity and Energy shall also provide power to compensate for losses which occur from the transfer.Such compensating power shall be provided at the time of the transfer unless otherwise agreed by the affected Participants or Users. 14.1.3 Schedules.Transfer schedules shall include losses associated with such transfers.When transfers reduce losses in a Participant's system which is not a part of the Intertie,the losses in that system caused by the transfer shall be considered zero. Section 14.2 Intertie Transmission Loss Compensation Losses occurring due to Energy transfers shall be made up by in-kind deliveries of Energy and scheduled accordingly.All Energy usage that occurs in Intertie facilities within a Control Area will be allocated and charged to the operation of the Intertie in that Control Area.In each month, entities utilizing the Intertie will be allocated losses based on their percentage share of the Energy transferred in their respective Control Area.If no Energy is transferred,losses will be allocated according to MITCR shares. Article 15. RIGHTS OF USERS The rights and responsibilities of a User shall be set out in a User Agreement adopted by the IMC pursuant to Section 8.6.2,Intertie User Agreements.Non-Participant Users shall not be directly responsible for the management,operation,maintenance or improvement of the Intertie, but shall have the same rights,obligations,and responsibilities as a Participant with respect to compliance with operating policies and procedures,any applicable Reliability Standards and the provisions of Section 8.7,Payment Obligation Unimpaired and Article 20,INDEMNITY. Article 16. OPEN ACCESS PRINCIPLES Section 16.1 Definition "Open Access”means that all potential Users of the Alaska Intertie shall be provided access to transmission service on the Alaska Intertie under common terms and conditions that are just and reasonable and not unjustly discriminatory,subject to a priority reservation of Capacity for power supply contracts with AEA projects,and equal access to Intertie system information the IMC has deemed critical for all potential Users. Section 16.2.Purpose The policies and procedures for the operation of the Intertie shall make use of Open Access principles where practicable. Page 39 of 53 -Amended and Restated Alaska Intertie Agreement Section 16.3 Implementation of Capacity Allocation Methodology The IMC shall use the process and principles in this Section 16.3 as guidance when developing a proposed allocation methodology for Intertie Capacity. 16.3.1 16.3.2 16.3.3 16.3.4 New Methodology.The IMC shall develop and implement a methodology for the allocation of Intertie Capacity,approved by AEA pursuant to Sections 6.2.4 IMC Authority to Change Capacity Allocation Methodology,and 8.6.7 Maximum Capability and Capacity Allocation,before July 1,2013.The methodology shall use and incorporate Open Access and other principles set forth in this Article. Statutory Conditions.The allocation of Intertie Capacity shall comply with statutory conditions,including that the allocation provide a method by which municipal electric,rural electric,cooperative electric,or private electric and regional electric authorities,or other persons authorized by law to engage in the distribution of electricity may secure a reasonable share of available Intertie Capacity (i.e.,United States Army). Priority for AEA Contracts.Participants or Users with contracts for power from a facility owned by AEA shall have a priority capacity reservation on the Intertie sufficient to accommodate the transfer of that contracted power throughout the term of the power supply contract with AEA.This priority shall be subject to rights of Participants and Users with firm contracts so long as the Participant or User materially satisfies its related obligations. Continued service under firm contracts will be guaranteed irrespective of whether another AEA-owned project is developed or additional transmission capacity is made available by AEA or another entity.In the event that additional transmission capacity is made available,however,the IMC shall have the right to supply transmission service to those Participants or Users by means of transmission paths other than the currently-existing Intertie so long as there is no degradation in the quality or amount of transmission capacity provided. Alternative Allocation of Intertie Capacity.If the IMC has not developed and implemented a new methodology for the allocation of Intertie Capacity, approved by AEA,on or before July 1,2013,then the MITCR allocation processes under Article 6 shall continue but in an expanded format.Absent an approved new methodology,after July 1,2013,and notwithstanding the requirements of Section 4.2,New Participant,any User or potential User shall be entitled to become a "Participant”under and for purposes of Article 6 by (a)giving twenty-four (24)months written notice to AEA and the Participants of its intention to become a Participant under Article 6,and (b)executing a User Agreement,if one has not already been executed.Upon becoming a Participant under this section (referred to as a "Section 16.3.4 Participant)the entity shall obtain full rights to MITCR allocations under Article 6, Page 40 of 53 -Amended and Restated Alaska Intertie Agreement MINIMUM RIGHTS OF THE PARTICIPANTS AND USERS TO USE INTERTIE FACILITIES. 16.3.4.1 For purposes of calculating MITCR allocations under Section 16.3.4 and Article 6 for a User eligible to become a Participant only under Section 16.3.4 and that sells wholesale power to an electric utility,the number of "kilowatts-hours in any clock hour,attributable to Energy required during such hour for supply of Energy to a system's consumers,”as that phrase is used in the definition of "System Demand,”shall include wholesale power sold to an electric utility,unless otherwise agreed in writing by the "Section 16.3.4 Participant.”Wholesale power sold to a Participant and included in the calculation of a "Section 16.3.4 Participant's”MITCR may not be included in the calculation of the receiving Participant's MITCR. 16.3.5 Federal Acquisition Regulations.A User Agreement with an organization that is required to follow the Federal Acquisition Regulations (FAR),may differ from the standard User Agreement in order to accommodate obligations to follow the FAR so long as the entity required to follow the FAR has provided the IMC with reasonable assurance that its financial obligations have been or will be satisfied. Section 16.4 Public Process The IMC shall publish its initial proposed allocation methodology for Intertie Capacity and request public comment no later than eighteen (18)months after the Effective Date of this Agreement.The IMC shall consider the public comments before finalizing an Intertie Capacity allocation methodology. Section 16.5 Availability of Information The IMC shall use a transparent approach to:(i)making Intertie system information available to all Users;(ii)allocating Capacity on the Intertie;(iii)planning for Improvements,planned outages,or increases in Intertie Capacity;(iv)developing the types of transmission service and the setting of the appropriate rate for each type (including ancillary services should it deem the provision of ancillary services appropriate);and (v)budgeting. Section 16.6 Review of Methodology The IMC shall request comments on the Capacity allocation methodology in effect once every three years following implementation of the new allocation methodology developed pursuant to Section 16.3,Implementation of Capacity Allocation Methodology. Page 41 of 53 -Amended and Restated Alaska Intertie Agreement Article 17. BILLING AND PAYMENTS Section 17.1 _Billing Participants and User shall be invoiced monthly for their respective share of Intertie Costs, normally not later than fifteen (15)days after the end of the calendar month to which the bills apply.Bills shall be due and payable within fifteen (15)days from the date the bills are postmarked or hand-delivered.Interest on any unpaid amount from the date due until the date payment is received shall accrue at the annual legal rate under Alaska law for post-judgment interest,or pro rata fraction thereof.Interest collected pursuant to this section shall be credited to the IMC. Section 17.2 _Billing Disputes If a Participant or User disputes the charges on an invoice,the Participant or User shall nevertheless pay the full amount when due and payable and give notification in writing,within ninety (90)days of the date the bill is rendered,to the AEA and IMC stating the grounds on which charges are disputed and the amount in dispute.If settlement of the dispute results in a refund,the refund shall include interest at the annual legal rate under Alaska law for post- judgment interest,or pro rata fraction thereof,from the date of overpayment to the date of refund. Section 17.3 Payment of Sanctions Any payments related to sanctions shall be administered as provided in any Reliability Standards adopted by the IMC. Article 18. INSURANCE AND LIABILITY Section 18.1.Insurance During the term of this Agreement,each Participant shall purchase and maintain liability insurance with a carrier or carriers satisfactory to AEA and the IMC covering injury to persons or property suffered by any Participant or a third party as a result of errors,omissions,or operations which arise both out of and during the course of this Agreement by the Participant or by any of its subcontractors,including injuries to all employees of the Participant and the employees of any of its subcontractors engaged in work under this Agreement.If approved by the IMC and AEA,a Participant that is legally eligible to do so may self-insure for the Workers' Compensation Insurance and other types of insurance required by this Article.An insurance certificate in a reasonably satisfactory form or a copy of the insurance policies along with any undertaking to self-insure,shall be furnished to the Operating Committee,AEA and the IMC before beginning operations under this Agreement. Page 42 of 53 -Amended and Restated Alaska Intertie Agreement Section 18.2 Types of Insurance The Intertie insurance coverage and limits shall be reviewed by the IMC yearly and may be adjusted with the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA.The agreed coverage must be provided by each Participant to cover those operations of the Participant performed under this Agreement.The Alaska State Risk Management department may also review the coverage and limits,and any required changes to established coverage and limits shall be adopted. 18.2.1 18.2.2 Workers'Compensation Insurance.Each Participant shall provide and maintain,for all employees of the Participant engaged in work under this Agreement,workers'compensation insurance as required by AS 23.30.045,as it may be amended or replaced,or other Alaska or federal statue or regulation. The Participant is responsible for ensuring that any of its subcontractors who directly or indirectly provide services under this Agreement maintain workers' compensation insurance to the extent required by law.The workers' compensation insurance policy shall contain a waiver of subrogation in favor of the other Participants.Any Participant who is self-insured hereby waives subrogation in favor of the other Participants. Comprehensive General Liability Insurance.Each Participant shall purchase and maintain comprehensive general liability insurance in an amount not less than the limits approved by the IMC.The other Participants shall be included as additional insureds on insurance required in this Agreement and shall not by their inclusion be responsible to the insurance carrier for payment of premiums therefor.These insurance policies must also contain a cross liability or severability of interest endorsement. Section 18.3.Other Insurance Coverage Requirements 18.3.1 18.3.2 18.3.3 Participants”Cost Responsibility.Each Participant will bear the cost of the required insurance.Insurance required to be maintained under this Agreement may be maintained as part of any other policy or policies of the Participant so long as the coverage of such policy or policies is substantially the same as if such coverage were maintained under a separate policy. Users'Insurance Requirements.The IMC may set minimum requirements for Users to be included in any User Agreement for Intertie service. Coverage and Certificates.These policies must provide that any cancellation, non-renewal,or material change be upon not less than thirty (30)days notice to all named insureds.Each Participant must provide the AEA and IMC with evidence of insurance.Insurance companies or self-insurers shown on the certificate of insurance must have financial ratings acceptable to the AEA. Page 43 of 53 Amended and Restated Alaska Intertie Agreement Failure to furnish satisfactory evidence of insurance or lapse of the policy is a material breach of this Agreement. Article 19. REVIEW OF DECISION Section 19.1 Review of IMC Decision Participants and Users may seek review of an IMC decision in the manner provided in this Article if they are directly affected by such decision.For review of IMC determinations of compliance or non-compliance with any operating policies and procedures or other IMC adopted standards,a Participant or User first must complete any review process specifically provided for in such policies,procedures,or standards.This Article shall not apply to AEA without AEA's written consent. Section 19.2 Initiation of Review Any review process under this Article 19 must be initiated within fifteen (15)days after receipt of written notification of the disputed decision. Section 19.3.Review Process 19.3.1 Settlement_Conference.Within twenty (20)calendar days after the written request of any disputing party,or such longer time as mutually agreed upon, representatives of the IMC and the disputing parties'senior management with direct authority to enter into a settlement agreement shall meet and make a good faith effort to resolve any dispute.In the event the representatives are unable to achieve a resolution,then the dispute shall be subject to mediation pursuant to this Section 19.3.Completion of the settlement conference procedure set out in this paragraph shall be a condition precedent to mediation under this Section unless one or more of the disputing parties refuses to attend the settlement conference as requested. 19.3.2 Disposition of Dispute.Any dispute(s)not resolved by the settlement conference convened pursuant to Section 19.3.1 above,shall be subject to mediation unless otherwise mutually agreed upon in writing.Within twenty (20)calendar days after receipt of a written notice of demand for mediation,or such longer time as mutually agreed upon,the IMC and disputing parties shall jointly select a single,neutral mediator and thereafter shall participate in the mediation in a good faith effort to resolve the dispute(s).If the parties are unable to mutually agree upon a mediator within 20 calendar days after receipt of the written demand for mediation,the mediator shall be selected by the presiding judge of the Superior Court for the Third Judicial District at Anchorage,Alaska,unless mutually agreed otherwise.Any mediator selected must have experience in the subject matter of the dispute.If the IMC and the disputing parties have not reached a settlement of the dispute(s)within an Page 44 of 53 -Amended and Restated Alaska Intertie Agreement Section 20.1 20.1.1 20.1.2 20.1.3 20.1.4 Section 20.2 additional thirty (30)days after appointment of the mediator,or such longer period as they may agree,then they may file an action in a court of competent jurisdiction or pursue such other remedies as they may have. Article 20. INDEMNITY Responsibility;Cost of Indemnity Costs of Indemnity.Each Participant shall be responsible for the costs and liability arising out of,or in any way connected with,the acts or omissions of the Participant,its agents (excluding other Participants),employees,or officers taken pursuant to or under color of this Agreement. Participant Indemnity.Each Participant shall defend and indemnify the other Participants from and against any claim or liability,including any related loss or cost,caused by or resulting from the design,construction,installation, operation,or maintenance of any of the electric facilities owned,operated,or maintained by the indemnifying Participant or by reason of the acts or omissions of its agents,contractors,servants,or employees in connection therewith. IMC Indemnity.To the fullest extent permitted by law,the IMC shall indemnify and hold its members,authorized agents,and officers harmless against all claims and liabilities which they or any of them incur as a party defendant to any proceeding,except one filed by or in the right of the IMC, based on any authorized action of any such person as a member of the IMC, an authorized agent of the IMC,or as an officer of the IMC within the scope of the member's office. User Agreements.The IMC shall include provisions in any agreements with Users that provide equivalent indemnity rights and responsibilities for such Users as those provided for and required of Participants in this Article provided,however,that this Section may not apply to AEA or other state entities. Comparative Negligence Any liability,including costs of defense and attorney fees,for claims arising from the concurrent negligence of two or more Participants and/or Users will be apportioned according to the respective percentage of fault attributable to each Participant and/or User as determined by agreement or by the trier of fact. Page 45 of 53 -Amended and Restated Alaska Intertie Agreement Article 21. WARRANTY DENIAL AND EXCLUSIVITY OF CONTRACT Section 21.1 AEA Denial of Warranty AEA does not warrant the Intertie facilities it owns as fit for their intended use or the reliability or availability of the Intertie for intended operations covered by this Agreement. Section 21.2 Exclusivity of Contract The terms of this Agreement and any provisions adopted by reference or otherwise incorporated into this Agreement set forth the full intent and agreement of AEA and the Participants regarding the matters covered by this Agreement.However,this Agreement does not supersede related written agreements,such as the Intertie maintenance agreements between AEA and GVEA or AML&P,but is to be interpreted consistently with them. Article 22. UNCONTROLLABLE FORCES Section 22.1.Limited Excuse of Performance. A Participant will not be in default in performance of any obligation hereunder,other than the obligation to make payments as provided in this Agreement,if failure of performance is due to uncontrollable forces and without the fault or negligence of that Participant.Strikes,lockouts, and other labor disturbances are considered uncontrollable forces and nothing in this Agreement will require a Participant to settle a labor dispute against its better judgment. Section 22.2 Suspension of Performance. If a Participant,by reason of an uncontrollable force,is rendered unable,wholly or in part,to perform its obligations under this Agreement (other than its obligations to pay money),then upon that Participant giving notice and the particulars of the uncontrollable force,its obligation to perform will be suspended during the continuance of,but only to the extent of,any inability so caused,but for no longer period thereof,and the effects of such cause shall,so far as possible,be remedied with all reasonable dispatch;provided,however,that the settlement of labor disputes shall be considered wholly within the discretion of the Participant involved.The affected Participant will not be responsible for its delay in performance under this Agreement to the extent caused by an uncontrollable force,nor will such uncontrollable force give rise to claim for damages or constitute default. Article 23. WAIVERS Any waiver at any time by a Participant or the IMC of its rights with respect to a default under this Agreement,or with respect to any other matter arising in connection with this Agreement, shall not be deemed a waiver with respect to any subsequent default or matter.Any delay short Page 46 of 53 -Amended and Restated Alaska Intertie Agreement of the statutory period of limitations in asserting or enforcing any right shall not be deemed a waiver of such right. Article 24. SUCCESSORS AND ASSIGNS;NO THIRD PARTY BENEFICIARIES Section 24.1 Successors and Assigns This Agreement shall be binding upon and inure to the benefit of the successors,legal representatives,or assigns of the respective Participants.However,no Participant shall assign this Agreement nor any part hereof without the express written consent of the IMC,which consent shall not be unreasonably withheld or delayed.Nor shall a Participant be relieved of its obligations hereunder by an assignment of less than all of the benefits and burdens hereunder or impose additional obligations or burdens on the other Participants by an assignment of this Agreement or any part hereof.The consent of the IMC under this section shall require at least the affirmative vote of a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA Section 24.2.No Third-Party Beneficiaries The provisions of this Agreement shall not create any rights in favor of any person,corporation, or association not a Participant in this Agreement,except as provided herein for Users,and the obligations herein assumed are solely for the use and benefit of the Participants to this Agreement. Article 25. GOVERNING LAW This Agreement is made subject to,and shall be governed by and construed in accordance with, the laws of the State of Alaska and the authority granted to the individual Participants thereunder. Article 26. CAPTIONS,MERGER OF ADDENDA AND EXHIBITS Section 26.1 Captions Captions of the various articles herein are intended for convenience of reference only and shall not define or limit any terms or provisions. Section 26.2.Merger The following addendum and exhibits as attached hereto are hereby merged into this Agreement: Exhibit A -Former AS 44.83.380 Exhibit B -Definitions Page 47 of 53 -Amended and Restated Alaska Intertie Agreement Exhibit C -Form of New Participant Addendum Exhibit D -Former AS 44.83.398(f)Exhibit E -Intertie Facilities Diagram Exhibit E -Intertie Facilities Diagram Exhibit F -Form of User Agreement Exhibit G -Sample MITCR Calculation Exhibit H -Reserve Capacity and Operating Reserve Responsibility Agreement Subsequent Entering Participant addenda also shall be merged into this Agreement upon their execution by AEA and the Participants. Article 27. NOTICES Section 27.1 Notices 27.1.1.Address.Any notice or demand under this Agreement is properly given if sent by registered or certified mail and addressed to the following: General Manager Municipality of Anchorage,Alaska Municipal Light and Power 1200 East First Avenue Anchorage,Alaska 99501 Executive Director Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage,Alaska 99503 President Alaska Electric Generation and Transmission Cooperative,Inc. 3977 Lake Street Homer,Alaska 99603 Chief Executive Officer Chugach Electric Association,Inc. Pouch 6300 Anchorage,Alaska 99503 or 5601 Electron Drive Anchorage,Alaska 99502 President and CEO Golden Valley Electric Association,Inc. P.O.Box 71249 Page 48 of 53 -Amended and Restated Alaska Intertie Agreement Fairbanks,Alaska 99707 or 758 Illinois Street Fairbanks,Alaska 99701 with a copy to: Kirk H.Gibson McDowell Rackner &Gibson PC 419 SW 11"Ave.,Suite 400 Portland,Oregon 97205 The foregoing designations of the name or address to which notices or demands are to be directed may be changed at any time by written notice given by any Participant to all others. 27.1.2 Means of Notice.Any notice or request of a routine character in connection with the use of Capacity or delivery of Energy,or in connection with the operation of facilities,shall be given in the manner so designated by the Operating Committee,or the IMC. Article 28. AMENDMENTS Except as expressly provided for in this Agreement,neither this Agreement nor any part hereof may be terminated,amended,supplemented,waived,or modified except by a written instrument signed by a minimum of 75 percent of the members of the IMC constituting greater than 66 percent of the total Annual System Demand of all members of the IMC,including the affirmative vote of AEA. Article 29. MUTUAL RIGHT OF ENTRY Each Participant and AEA hereby grants a license and permit to the operators of the Intertie, including the operators'employees or contractors,to enter upon its rights-of-way and to make use of its easements (or similar right to use or enter upon property)to perform work related to the repair,operation or maintenance of Intertie facilities located thereon.Any such entry shall comply with the requirements and restrictions of the right-of-way or easement.Notice of entry and the purpose(s)for it shall be provided to the owner or holder in as timely a manner as is practicable under the then-existing circumstances. Article 30. AGENTS Each Participant shall provide notice to the IMC and the operators of the Intertie of that Participant's appointment of an agent,or Designated Contractor.The Participant shall remain fully responsible under this Agreement for all acts or failures to act of its agents or Designated Page 49 of 53 --Amended and Restated Alaska Intertie Agreement Contractors.Appointment of an agent or Designated Contractor shall not relieve a Participant of any of its responsibilities or obligations under this Agreement.The appointment of an agent or Designated Contractor shall not be used to have,or have the right to control more than one vote or have more than one voting representative on the IMC.See Section 8.1,Establishment of the Intertie Management Committee,Right to Vote.An agent or Designated Contractor must meet the requirements of this Agreement to become a Participant. Article 31. AGREEMENT APPROVAL AND TRANSMITTAL By signing this Agreement,a Participant does not subject itself to rate regulation by the Regulatory Commission of Alaska (RCA).AEA will transmit this Agreement to the RCA for informational purposes only. [The remainder of this page intentionally left blank] Page 50 of 53 -Amended and Restated Alaska Intertie Agreement Article 32. CONSTRUCTION OF AGREEMENT Each Participant agrees that it has participated as fully as it deemed prudent in the drafting and negotiation of this Agreement.Accordingly,the Agreement will not be construed against any particular Participant,or Participants,as the drafter. IN WITNESS WHEREOF,the Participants have caused this Agreement to be executed by their duly authorized officers or representatives as of the day and year first above written. This Agreement may be executed in counterparts each of which shall be an original,and all of which shall be merged into this Agreement. ALASKA ENERGY AUTHORITY By: Title: SUBSCRIBED AND SWORN TO before me on the day of ,2011. Notary Public,State of Alaska My Commission Expires: MUNICIPALITY OF ANCHORAGE,ALASKA d.b.a.MUNICIPAL LIGHT AND POWER By: Title: SUBSCRIBED AND SWORN TO before me on the day of ,2011. Notary Public,State of Alaska My Commission Expires: Page 51 of 53 --Amended and Restated Alaska Intertie Agreement CHUGACH ELECTRIC ASSOCIATION,INC. By: Title: SUBSCRIBED AND SWORN TO before me on the day of ,2011. Notary Public,State of Alaska My Commission Expires: GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. By: Title: SUBSCRIBED AND SWORN TO before me on the day of ,2011. Notary Public,State of Alaska My Commission Expires: Page 52 of 53 -Amended and Restated Alaska Intertie Agreement ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE,INC. By: Title: SUBSCRIBED AND SWORN TO before me on the day of ,2011. Notary Public,State of Alaska My Commission Expires: Page 53 of 53 -Amended and Restated Alaska Intertie Agreement Exhibit Al-2 EXHIBIT A TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT TEXT OF FORMER AS 44.83.380 EXHIBIT A TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT TEXT OF FORMER AS 44.83.380 c.44,83.380.Program established (a)The energy program for Alaska is established.The program shall be administered by the Alaska Power Authority. (b)The energy program for Alaska is a program by which the authority may acquire or construct power projects with money appropriated by the legislature to the power development fund established in AS 44.83.382.A power project may be acquired or constructed as part of the energy program for Alaska only if the project is submitted to and approved by the legislature in accordance with procedures set out in AS 44.83.177 -44.83.187. (c)The provisions of AS 36.10.010 -36.10.125 apply to power projects constructed by the authority under AS 44.83.380 -44.83.425. (Section 1,chapter 118 SLA,1981) * Page 1 of 1 --Exhibit A to Amended and Restated Alaska Intertie Agreement EXHIBIT B TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT DEFINITIONS EXHIBIT B TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT DEFINITIONS ABBREVIATIONS 1.AML&P Municipal Light and Power,a department of the Municipality of Anchorage,Alaska. 2.AEA Alaska Energy Authority. 3.AEG&T Alaska Electric Generation and Transmission Cooperative, Inc.,of which Homer Electric Association,Inc.and Matanuska Electric Association,Inc.are members. 4.APA Alaska Power Authority (predecessor agency to AEA). 5.CEA Chugach Electric Association,Inc. 6.GVEA Golden Valley Electric Association,Inc. 7,HEA Homer Electric Association,Inc. 8 MEA Matanuska Electric Association,Inc. DEFINITIONS 1.Aceredited Capability of a Participant -shall mean:(a)the net generating capability of a Participant;plus (b)the value in kilowatts assigned to that Participant's purchases and/or firm commitments for power from electric suppliers under contracts now existing or hereafter created;minus (c)the value in kilowatts assigned to any commitment of that Participant to deliver power to any electric supplier or suppliers pursuant to any valid order or under separate contract or contracts now existing or hereafter created.The Accredited Capability of a Participant may be determined and assigned by the Operating Committee in accordance with the provisions of the Agreement. 2.Affiliate(s)-shall mean any subsidiary or other entity which is associated with or has a legal relationship with a Party to the Agreement,or a successor agreement, or any related agreements.Such association shall be considered the ownership of a Page 1 of 7 -Exhibit B to Amended and Restated Alaska Intertie Agreement controlling interest or other right to control,either directly or indirectly,the affairs of the affiliated entity. 3.Agreement -shall have the meaning as provided in the preamble of the Agreement. 4.Annual Debt Service Cost -shall have the meaning provided in Section 7.1.1.3, 5.Annual System Demand -shall mean the highest hourly System Demand occurring during the 12-month period ending with the current month and that is used in the MITCR calculations. 6.Available Accredited Capability of a Participant.-shall mean the Accredited Capability adjusted for generating capacity out of service for maintenance or repair. 7,Capacity -shall mean the time rate of generating,transferring or using electric Energy,usually expressed in kilowatts. 8.Capacity Rate (or Intertie Capacity Rate)-shall have the meaning provided in Section 7.2.6,Capacity Rate. 9,Control Area -shall mean an interconnected system of one or more utilities which manually or automatically controls all generation to meet the total load, plus or minus the power it is delivering or receiving from neighboring systems by exercising operating control of the resources necessary to meet the loads within the Control Area on an instantaneous and continuous basis,The Participant exercising operating control for a Control Area provides the following services: a.regulate generating facilities and other power resources to effect instantaneous and continuous supply of the power requirements of the loads within the Control Area; b.regulate generating facilities to assist in the control of frequency and time correction;and C.monitor continuously the power flows between the Control Area and the Control Area(s)with which it is interconnected. 10.Cost of Improvements -shall have the meaning provided in Section 7.1.1.6. 11.Declared Capability -shall mean the current capability of a generating unit which is not greater than the published capability of the unit. 12.Decremental Cost -shall mean the cost of fuel,operating labor and maintenance which would have been incurred to provide the Operating Reserves at any time and which are avoided by the other Participant,including the cost of avoiding the starting and operating of a generating unit or units and a proportional amount of the annual debt service on the capital investment of the highest cost (per kw)generating unit Page 2 of 7 -Exhibit B to Amended and Restated Alaska Intertie Agreement on the receiving Participant's system.The decremental cost of Operating Reserves shall be the total of such avoided costs to the receiving Participant.In situations where a Participant would have incurred replacement fuel costs which are higher than the cost of existing fuel supply,replacement costs shall be utilized. 13.Designated Contractor -shall mean the contractor designated by the United States Army from time to time as provided in Article 30,AGENTS,to operate the utility systems on the United States Army's bases. 14.Effective Date -shall have the meaning provided in the preamble of the Agreement. 15.Emergency Outage (Forced Outage)-shall mean any unanticipated, unscheduled outage of generating or transmission facilities for other reasons than planned maintenance.Such outage classification shall not exceed a period of four hours. 16.Energy -shall mean as commonly used in the electric utility industry, electric energy means kilowatt hours (kWh). 17,Energy Rate -shall have the meaning provided in Section 7.2.5,Energy Rate,, 18.Extraordinary Maintenance and Replacements Costs -shall have the meaning provided in Section 7.1.1.2. 19.GVEA Control Area -shall have the meaning as provided in Section 10.1.3,GVEA Responsibilities, 20.Improvement -shall have the meaning provided in Section 6.4.1, Development of Improvements. 21.IMC -shall mean the Intertie Management Committee.The criteria for membership in the IMC is provided in Section 4.3,Membership In IMC,and its establishment,authority and duties are set out in Article 8,INTERTIE MANAGEMENT COMMITTEE. 22,IMC Bylaws -shall have the meaning provided in Section 8.2,Adoption of Procedural Rules or Bylaws. 23.Incremental Cost shall mean the cost of fuel,operating labor, maintenance and a proportional amount of the annual debt service on the capital investment of the next generating unit that would be used to provide the required capability and Energy.It shall include the cost of starting and operating any generating 'unit required to provide such Energy.The incremental cost of supplying Operating Reserve shall be the total of such costs for the period of time involved.In situations where a Participant will incur replacement fuel costs which are higher than the cost of the existing fuel supply,replacement costs shall be used. 24.Incremental Energy Cost -shall mean the cost of fuel,operating labor and maintenance to generate the next unit of Energy required at any time,including the cost of starting and operating any generating unit which must be started as a result of Page 3 of 7 -Exhibit B to Amended and Restated Alaska Intertie Agreement supplying such Energy.The incremental cost per kilowatt hour for any particular transaction shall be the total of such costs divided by the kilowatt hours scheduled for delivery to the receiving Participant.In situations where a Participant will incur replacement fuel costs which are higher than the cost of existing fuel supply,replacement costs shall be used. 25.Interruptible Transmission Service -shall mean a service providing for transmission of electric Energy in bulk from one utility system through the utility's transmission system providing the transmission service to another utility,This service is made available with the understanding that it can be curtailed or interrupted at any time with little or no notice at the discretion of the supplier. 26.Intertie --shall mean the electrical transmission facilities constructed by APA or AEA to interconnect the Participants in North-Central Alaska with the Participants in South-Central Alaska and facilities under contract to AEA that are part of the interconnected Intertie system. 27.Intertie Costs -shall have the meaning provided in Section 7.1,Intertie Costs. 28. Intertie Point of Interconnection -shall mean the AEA-owned facilities in the Douglas Substation,which is also the point of interconnection between AML&P's and GVEA's Control Areas. 29. Intertie Operators -shall mean the operators at the control centers of AML&P and GVEA,the utilities that have operational responsibility for the Intertie under Article 10,OPERATION OF THE INTERTIE, 30. Intertie System -shall mean the Participants of the Alaska Intertie Agreement functioning as an interconnected electrical system. 31.Intertie Transaction -shall mean transfer of electric energy on the Intertie or a commitment to provide reserve capacity between Participants and/or Users. 32. Intertie User Agreement or User Agreement -shall mean an agreement adopted by the IMC pursuant to the requirements of.:Section 8.6.2,Intertie User Agreements,which provides common terms and conditions for Capacity and Energy transactions on the Intertie by Participants and Users.The initial form of the User Agreement is Exhibit F to the Agreement 33.Maximum Intertie Transfer Capability -shall mean,for purposes of this Agreement,the maximum Intertie transfer capability is 78 MW,net of losses,as provided in Section 6.3,Maximum Intertie_Transfer Capability,unless changed by the IMC pursuant to Section 6.2.4,IMC Authority to Change Capacity Allocation Methodology. 34.MITCR-shall mean the Minimum Intertie Transfer Capability Rights as discussed in Article 6,MINIMUM RIGHTS OF THE PARTICIPANTS AND USERS TO USE INTERTIE FACILITIES.A sample MITCR calculation is included at Exhibit G. Page 4 of 7 -Exhibit B to Amended and Restated Alaska Intertie Agreement 35.New Participant Addendum -shall mean the agreement required by Section 4.2,New Participant,as part of the requirements for the addition of a new Participant. 36.Non-Spinning Reserve -shall mean all unloaded generating capability not meeting the Spinning Reserve criteria that can be made fully effective in 45 minutes. 37.Northern Group -Shall initially mean GVEA. 38.Open Access -shall have the meaning provided in Section 16.1, Definition, 39.Operating Committee -shall mean the committee established by Section 9.1,Establishment of the Operating Committee. 40.Operating Reserve -shall mean the sum of Spinning and Non-Spinning Reserves, 41.Operating Reserve Obligation -shall mean that amount of Spinning Reserve and Non-Spinning Reserve which a Participant is obligated under the terms of this Agreement to provide for the purpose of maintaining continuity of service. 42,Operation and Maintenance Costs -shall have the meaning provided in Section 7.1.1.1. 43.Original Agreement -shall mean the Alaska Intertie Agreement dated December 23,1985. 44.Participant -shall have the meaning provided in the preamble to the Agreement and Article 4,PARTICIPANT. 45.Payment Obligation -shall have the meaning provided in Section 8.7, Payment Obligation Unimpaired. 46.Prudent Utility Practices -shall]mean Prudent Utility Practices at a particular time means any of the practices,methods and acts which,in the exercise of reasonable judgment 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 reliability,safety and expedition,including but not limited to the practices,methods and acts engaged in or approved by a significant portion of the electrical utility industry prior thereto.In applying the standard of Prudent Utility Practices to any matter under the Agreement,equitable consideration should be given to the circumstances,requirements and obligations of each of the Participants,and the fact that the Participants are cooperatives,public corporations,or political subdivisions of the State of Alaska with prescribed statutory powers,duties and responsibilities.It is recognized that Prudent Utility Practice are not intended to be limited to the optimum practices,methods or acts to the exclusion of all others,but rather is a spectrum of possible practices,methods or acts which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability,safety and Page 5 of 7 -Exhibit B to Amended and Restated Alaska Intertie Agreement expedition.Prudent Utility Practices include due regard for manufacturers'warranties and the requirements of governmental authorities having jurisdiction. 47.Railbelt -shall mean,in reference to a utility or Participant,those electrically connected electric utilities situated along the Alaska Railroad from Fairbanks to Seward,Alaska. 48.Reliability Standards -shall mean those standards having to do with promoting the reliable operation of the Intertie developed,adopted and enforced by the IMC in compliance with the requirements of Article 3,OPERATING AND RELIABILITY STANDARDS AND ENFORCEMENT.The Reserve Capacity and Operating Reserve Responsibility agreement,which is Exhibit H to the Agreement,will constitute the Reliability Standards until such time as the IMC adopts and implements additional standards. 49._Reliability Standards Implementation Agreement -shall mean that contractual agreement between the IMC and the Participants and Users for the implementation of IMC-approved reliability standards. 50.Representative -shall have the meaning provided in Section 9.1.2, Representatives. 51.Required Work -shall have the meaning as provided in Section 8.8, AEA's_Ability to Perform Required Work,and Section 6.4.4,Right to Make Improvements -Required Work. §2.Reserve Capacity -shall mean the excess in kilowatts of a system's Net Generating Capability over its maximum System Demand for any period. 53.Reserve Capacity Obligation -shall mean the capacity which a Participant is obligated to reserve and use for the purpose of maintaining continuity of service. 54.|Reserve Fund -shall mean the fund established to provide for repairs to and replacements of Intertie Facilities pursuant to Section 7.1.1.4,and Section 8.6.12, Creation of Reserve Fund,consistent with Prudent Utility Practice and in compliance with applicable law and regulations,or as required by any bond or other borrowing covenants. 55.Scheduled Outage -shall mean any outage of generating or transmission facilities which is scheduled in advance to be out of service. 56.Southern Group -shall initially mean AML&P,CEA,AEG&T,MEA, and HEA. 57.Spinning Reserve -shall mean the amount of unloaded generating capability of a Participant connected to and synchronized with the interconnected system of the Participants and ready to take load.Spinning Reserve allocation to any generator shall not exceed the amount of generation increase that can be realized immediately from normal governor control. Page 6 of 7 -Exhibit B to Amended and Restated Alaska Intertie Agreement 58.|System Demand -shall mean that number of kilowatts which is equal to the kilowatt-hours required in any clock hour,attributable to Energy required during such hour for supply of Energy to a system's consumers,including system losses,and also including any wheeling losses occurring on other systems and supplied for transmission of such Energy,but excluding generating station uses and excluding wheeling losses supplied by another system. 59.Total Operating Reserve Obligation -shall mean that amount of Spinning Reserve and Non-Spinning Reserve of the Participants collectively required to maintain continuity of service. 60.Transmission Service -shall mean service provided by the use of the transmission system of a Participant directly connected to the Intertie for wheeling of power and energy through its system for another Participant. 61.|Transmission Service Facilities -shall mean the integrated transmission facilities of the transmitting utility,excluding power plant step-up transformation and radial lines to loads or generators. 62.User -shall mean any entity actually using the Intertie that has executed a User Agreement,including a Participant that has executed a User Agreement. 63.|User Agreement or Intertie User Agreement-shall mean an agreement adopted by the IMC pursuant to the requirements of Section 8.6.2,Intertie User Agreement,that provides common terms and conditions for Capacity and Energy transaction on the intertie by Participants and Users.The initial form of the User Agreement is Exhibit F to the Agreement. *we e &k & Page 7 of 7 -Exhibit B to Amended and Restated Alaska Intertie Agreement EXHIBIT C TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT NEW PARTICIPANT ADDENDUM NEW PARTICIPANT ADDENDUM TO THE AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT This New Participant Addendum to the Amended and Restated Alaska Intertie Agreement ("Addendum”)is made by and between ("New Participant”),and the Intertie Management Committee ("IMC”)on ,20 in order to comply with the terms and conditions for the admission of new Participants as set forth in the Amended and Restated Intertie Agreement dated November___,2011,("Intertie Agreement”). THEREFORE,in consideration of the mutual covenants in this Addendum,the New Participant and the IMC agree as follows: Article I. DEFINITIONS Except:as specifically set forth in this Addendum,definitions for capitalized terms are as specified in Exhibit B to the Intertie Agreement and are incorporated herein by this reference. Exhibit B to the Intertie Agreement may be amended from time to time in the manner provided in Article 28,AMENDMENTS,of the Intertie Agreement. Article 2. TERM AND EFFECTIVE DATE Section 2.1.Effective Date of the Addendum This Addendum shall be effective and the New Participant shall be a Participant with the same rights and obligations as the other Participants under the Intertie Agreement upon the date of last to occur of:a)the execution of this Addendum by the IMC;b)the IMC's determination pursuant to Section 4.2,New Participant of the Intertie Agreement,if required,or,if applicable,the New Participant's compliance with Article 5,WITHDRAWAL OF AEG&T AND OTHER PARTICIPANT AND USER STATUS of the Intertie Agreement ("Effective Date”). Article 3. COMPLIANCE WITH INTERTIE AGREEMENT AND STANDARDS Section 3.1 Compliance With Intertie Agreement,Operating and Reliability Standards 3.1.1 Compliance With Intertie Agreement.The New Participant agrees to comply with the provisions of the Intertie Agreement and to fully and faithfully perform the duties and responsibilities of a Participant as provided in the Intertie Agreement in the same manner and effect as if New Participant was a signatory to the Intertie Agreement.New Participant hereby acknowledges Page 1 of 4 -Exhibit C to Amended and Restated Alaska Intertie Agreement that it has received a current copy of the Intertie Agreement and that it is aware that the Intertie Agreement may be amended from time to time. 3.1.2 Compliance ith Standar Upon and after the Effective Date of this Addendum,the New Participant agrees to execute any necessary agreements and take such reasonable actions as may be required by the IMC in order to implement any operating standards or Reliability Standards approved by the IMC.The New Participant agrees to comply with any operating standards and Reliability Standards in force on the effective date of this Addendum or subsequently adopted by the IMC and,in the event of failure to comply, agrees to be subject to any sanctions applicable to such failure,all as provided in the Intertie Agreement. 3.1.3 Required Data Submissions.Upon and after the Effective Date of this 'Addendum,the New Participant or its designated agent or Designated Contractor shall submit all data as reasonably requested by the IMC,whether related to any operating standards,Reliability Standards,or otherwise.The New Participant shall notify the IMC of its designation of an agent or Designated Contractor prior to having that agent or Designated Contractor submit any data on behalf of the New Participant. Article 4. NOTICES Any notice or demand under this Agreement is properly given if sent by registered or certified mail and addressed to the following:' New Participant: with a copy to: Page 2 of 4 -Exhibit C to Amended and Restated Alaska Intertie Agreement IMC: with a copy to: Kirk H.Gibson McDowell Rackner &Gibson PC 419 SW 11"Avenue,Suite 400 Portland,OR 97205 Article 5, WAIVERS Any waiver at any time by the New Participant or the IMC of its rights with respect to a default under this Addendum,or with respect to any other matter arising in connection with this Addendum,shall not be deemed a waiver with respect to any subsequent default or matter.Any delay short of the statutory period of limitations in asserting or enforcing any right shall not be deemed a waiver of such right. Article 6. SUCCESSORS AND ASSIGNS;NO THIRD PARTY BENEFICIARIES Section 6.1 Successors in Interest No signatory hereto may assign this Addendum or any part hereof for any reason and any attempt to do so shall be void. Section 6.2 No Third-Party Beneficiaries The provisions of this Addendum shall not create any rights in favor of any person,corporation, or association not a signatory to this Addendum or the Intertie Agreement,and the obligations herein assumed are solely for the use and benefit of the signatories to this Addendum and the Agreement. Article 7. GOVERNING LAW This Addendum is made subject to,and shall be governed by and construed in accordance with, the laws of the State of Alaska and the authority granted to the individual Participants thereunder. Page 3 of 4 -Exhibit C to Amended and Restated Alaska Intertie Agreement Article 8. CAPTIONS Captions of the various articles herein are intended for convenience of reference only and shall not define or limit any terms or provisions. Article 9. AMENDMENTS Neither this Addendum nor any part hereof may be terminated,amended,supplemented,waived, or modified except by an instrument in writing signed by the IMC,and the New Participant. Article 10. CONSTRUCTION OF AGREEMENT Each signatory to this Addendum agrees that it has had its legal advisers review this Addendum. Accordingly,the Addendum will not be construed against any particular party as the drafter. IN WITNESS WHEREOF,the IMC,and New Participant have caused this Addendum to be executed by their duly authorized officers or representatives as of the day and year first above written. NEW PARTICIPANT By: Title: SUBSCRIBED AND SWORN TO before me on the day of ,2011, Notary Public,State of Alaska My Commission Expires: INTERTIE MANAGEMENT COMMITTEE By: Title: SUBSCRIBED AND SWORN TO before me on the day of ,2011, Notary Public,State of Alaska My Commission Expires: Page 4 of 4 -Exhibit C to Amended and Restated Alaska Intertie Agreement EXHIBIT D TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT TEXT OF FORMER AS 44.83.398(f) EXHIBIT D TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT TEXT OF FORMER AS 44.83.398(f) (f)The provisions of (b)of this section do not apply to an intertie that is authorized as a separate project under former AS 44,83.380.The authority shall establish and maintain separate power rate schedules applicable to each intertie that has acquired or constructed as a separate power project under the energy program for Alaska.The power rate schedules shall produce sufficient 'revenue from utilities connected by the intertie to pay (1)operation,maintenance,and equipment replacement costs of the intertie;(2)debt service of the intertie;and (3)safety inspections investigations of the intertie by the authority. If the authority determines that intertie has ceased to function as a separate project and has become a part of one or more other power projects as a transmission line,the power rate schedules established under this subsection shall be terminated and a wholesale power rate applicable to the former intertie shall be calculated under (b)of this section for the project or projects of which it has become a part. Page 1 of 1 -Exhibit D to Amended and Restated Alaska Intertie Agreement EXHIBIT E TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT INTERTIE FACILITIES DIAGRAM EXHIBIT E AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT -lh pene PITTI 1 aI2s3aKy: I FRANOFER wea :'::H :DOME : :.H LEGEND |ester x g:---BOUNDARYOFAEAINTERTIE FACILMES 1 3 g tewauUNE ssn BOUNDARYOFFACILITIESOWNED!ae eee le 7SVEAUINE goKVTO MUSK OX BY PARTICIPATING COMPANIES e eect +AEALINE!::g 3 GVEALINE{|1 enieS a SRVKTRO.2 |Yo zeHHDER wm GVEALINE i t hd 3 OVEALINE SUDSTATION ane MEA1.-Lenelel i SBKVCKTNO.1I,-1-,|:}1 8v8 |':t |anes ||: | 1 : rn renee.AEA JQVEAce. i GOLDHILL {J+NEHANAi WILSON deseeeevaneverees FES TH |4Ciemmeeekeweowoeeeeeet4Lies.. bor eeventesnecee tunvwdeatveovvecveee Corevecesnreviessovess®tial r A:ry p---4 Fp enee : i fe 1 Svs ||*FREOER1 fo arse3i6eehawanteassanseesaservsese7.l FEEDER 2.|:E :ri , :|PeROERS |:;i _t +FEEDER ae :FEEQERNO.1:l 0 1: :FEEDER NO.2:aba ¥8 AEA ::24aexy : &3 7 ot 2 'TRANSFER::genegaron bo,ti :is 20MVA :CANTWELL : 2 cep 24.9KV MAIN BUS |:78 ¢{28K BMVAR START-UP :ig>ez AW SHUNT REACTOR TRANSFORMER $igRODETORROONEDPEDTTEDHCULORASPESSAEDESRODEEOOERSEDESORONDOLEMIDPOINTOFINTERTIE-_HEALY i ecru eveseene rere Ane @evekese Daw ee crc ececevase : ANDERSONMCRAE EARNING :STEVENS/MEA seeuevens pee cee cence >LOAD CONTROL"7 :BOUNDARY 1 RR baseeeeees .FEEDERNO,1 $ FEEDER NO.2 : |FEEDER HO.3 ¢ i FUTURE :z 1 TASK 3 TEELAND AEA]MEA ses saeeenes sesasenes seas! TO PT.MACKENZIE DOUGLA EXHIRITB-10F1 OrDrefag Facies Page 1 of 1 -Exhibit E to Amended and Restated Alaska Intertie Agreement EXHIBIT F TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT FORM OF USER AGREEMENT EXHIBIT F TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT FORM OF USER AGREEMENT _This Intertie User Agreement ("User Agreement”),is made and entered into this _-day of ,20_,between the Intertie Management Committee,("IMC”);and, ("User”)to set forth the basic terms and conditions of User's right to use the Alaska Intertie ("Intertie”).The rights and responsibilities of all Intertie users,as well as the manner and means of operating the Intertie,are as set forth in the Amended and Restated Alaska Intertie Agreement ("Intertie Agreement”)which is attached as Exhibit 1.The IMC and User shail be referred to individually as "Party”and collectively as "Parties.”, The Parties hereby agree: 1.TERM,TERMINATION,AND CONSTRUCTION. 11 Term, This User Agreement shall become effective upon its execution by the Parties and shall expire on the earlier of:(a)its termination as set forth in Section 1.2,Termination,of this User Agreement; (b)the expiration of the power supply contract User has with an AEA project;or (c)at 24:00 hours Alaska Standard Time on 1.22.Termination. This User Agreement may be terminated by: a.The mutual agreement of both Parties for termination evidenced by a writing executed by the authorized representatives of both Parties. b.Either Party,upon thirty (30)days written notice. C.The IMC for cause,in the event of User's material breach of this User Agreement.| d.The IMC for Cause,if User's non-compliance with the Intertie operating policies and procedures or Reliability Standards results in or contributes to sanctions against another party,and User has not reimbursed such other party Page 1 of 9 -Exhibit F to Amended and Restated Alaska Intertie Agreement for the full cost of any such non-compliance or sanctions within thirty (30)days of notice from the IMC. €.The IMC For Cause,upon User's failure to timely pay any Intertie related charge,cost,or sanction that is due and owing within thirty G0)days notice of such failure from the IMC. 1.3 Construction Unless specifically provided otherwise in this User Agreement,all capitalized terms shall have the meanings set out in Exhibit B of the Intertie Agreement. 2.COMPLIANCE WITH IMC REQUIREMENTS. The User shall comply with the requirements of all scheduling and other operating policies and procedures and any Reliability Standards established by the IMC and the Agreement.The User may be required to supply reserves and/or execute an agreement evidencing the User's obligation to supply reserves.In the event of failure to comply with any requirements of the IMC,User agrees to be subject to any sanctions applicable to such failure.User shall be entitled to all of the rights and privileges and be subject to all of the obligations of a Participant or User,as applicable,under the Intertie Agreement.The failure of the User to comply with the requirements of this section shall provide the IMC the right to terminate this User Agreement under Section 1.2(c),Termination. 3.RATES AND CHARGES The rates and charges for use of the Intertie,including for any ancillary services,shall be as established by the IMC from time to time pursuant to the requirements of the Intertie Agreement. 4,ANCILLARY SERVICES AND RESERVES. The User shall accept,and pay the IMC-approved charges for,any ancillary services required by the IMC related to User's use of the Intertie.The IMC at any time during the term of this agreement may require the User to execute an agreement to provide reserves to support its use of the Intertie,The failure of the User to comply with the requirements of this section shall provide the IMC with the right to terminate this User Agreement under Section 1.2(c),Termination, 5.PATH AND CAPACITY ALLOCATION. The User shall have the right to use the Intertie at the points of receipt and delivery specified in Exhibit B to this User Agreement.Any additional,or required,facilities shall be as specified in the Intertie operating policies and procedures,Reliability Standards,or other requirements adopted by the IMC pursuant to the Intertie Agreement.Exhibit B shall also set out the amount of User's Intertie capacity allocation. Page 2 of 9 -Exhibit F to Amended and Restated Alaska Intertie Agreement 6.INTERTIE OPERATORS RIGHTS. Nothing in this User Agreement shal!affect the rights and obligations of the Intertie Operators to maintain the reliability of the Intertie,including disconnection or curtailment of service to the User.User shall cooperate with the Intertie Operators at all times. 7.CREDIT SUPPORT. The User shall be subject to any credit support requirements adopted by the IMC to secure User's obligations under this User Agreement.Such credit support requirements may include providing a letter of credit,posting a bond,or other reasonable credit review procedures in accordance with standard commercial practices.The IMC may periodically review User's creditworthiness and increase,reduce,or eliminate the required support or payment security. User shall have the right to request such a review no more than twice each calendar year. 8.PROHIBITION ON ASSIGNMENT This User Agreement may not be assigned by either Party without the consent of the other Party, which consent shall not be unreasonably withheld or delayed.Notwithstanding the foregoing, each Party shall have the right to assign its rights under this User Agreement for security purposes to a lender or guarantor in connection with loans to that Party.This right of assignment is subject to the following:(a)neither a secured lender nor guarantor exercising any rights, power or privileges with respect to this User Agreement under any mortgage,deed of trust or other security instrument shall be entitled to exercise the rights of the Party under this User Agreement unless the obligations of such Party hereunder shall have been performed;(b)an assignment shall not in any way relieve such Party of any obligations hereunder;and,(c)an assignment shall not be permitted hereunder if such assignment would adversely affect the tax exemption of interest on any Intertie bonds or financing that was issued on a tax-exempt basis. 9.TRANSFER OF CONTROL OR SALE OF GENERATION FACILITIES. In any sale or transfer of control of any generation facilities owned or controlled by User for any Intertie Transactions subject to this User Agreement,User shall as a condition of such sale or transfer require the acquiring party or transferee,with respect to the transferred facilities,either to assume the obligations of the User with respect to this User Agreement or to enter into an agreement with the IMC imposing on the acquiring party or transferee the same obligations applicable to User pursuant to this User Agreement. 10.AMENDMENT No amendment to this User Agreement shall be valid unless it is in writing and signed by both Parties hereto.The terms and conditions to this User Agreement shall remain in effect throughout the term and shall not be subject to change through application to a regulatory or other governmental body or authority by one Party absent the written agreement of the other Party. Page 3 of 9 -Exhibit F to Amended and Restated Alaska Intertie Agreement 11.NOTICES Any notice,demand or request required or authorized by this User Agreement to be given in- writing to a Party shall be delivered by hand,courier or overnight delivery service,mailed by certified mail (return receipt requested)postage prepaid,faxed,or delivered by mutually agreed electronic means and followed in writing to such Party at the following address: User: Email: Fax: IMC: Email: Fax: The designation of such person and/or address may be changed at any time by either Party upon written notice to the other.Notice served by mail shall be effective upon receipt.Notice transmitted by electronic means (such as facsimile or,email)shall be effective upon receipt if received prior to 5:00 p.m.on any week day,and if not received prior to 5:00 p.m.on a week day,receipt shall be effective on the next week day,or as otherwise agree in writing by the Parties,so long as the notice transmitted by electronic means is followed in writing as set forth in this Article 11. 12,WAIVERS Any waiver at any time by a Participant or the IMC of its rights with respect to a default under this Agreement,or with respect to any other matter arising in connection with this Agreement, shall not be deemed a waiver with respect to any subsequent default or matter.Any delay short of the statutory period of limitations in asserting or enforcing any right shall not be deemed a waiver of such right. 13,INTERPRETATION Interpretation and performance of this User Agreement shall be in accordance with,and shall be controlled by,the laws of the State of Alaska.Article and section headings are for Page 4 of 9 -Exhibit F to Amended and Restated Alaska Intertie Agreement convenience only and shall not affect the interpretation of this User Agreement.References to articles,sections and appendices are,unless the context otherwise requires,references to articles,sections and appendices of this User Agreement. 14.INDEMNITY 14.1 Responsibility for Indemnity a.Costs of Indemnity.Each Party shall be responsible for the costs and liability arising out of,or in any way connected with,the acts or omissions of the Party, its agents,employees,or officers taken pursuant to or under color of this User Agreement. b.Indemnity.Each Party shall defend and indemnify the other from and against any claim or liability,including any related loss or cost,caused by or resulting from the design,construction,installation,operation,or maintenance of any of the electric facilities owned,operated,or maintained by the indemnifying party or by reason of the acts or omissions of its agents,contractors,servants,or employees in connection therewith. 14.2 Comparative Negligence Any liability,including costs of defense and attorney fees,for claims arising from the concurrent negligence of the Parties will be apportioned according to the respective percentage of fault attributable to each as determined by agreement or by the trier of fact. Page 5 of 9 -Exhibit F to Amended and Restated Alaska Intertie Agreement 18.SEVERABILITY If one or more provisions herein shall be determined by a court of competent jurisdiction to be invalid,illegal or unenforceable in any respect,it shall be given effect to the extent permitted by applicable law,and such invalidity,illegality or unenforceability shall not affect the validity of the other provisions of this User Agreement. 16.COUNTERPARTS This User Agreement may be executed in counterparts and each shall be merged and have the same force and effect as an original. IN WITNESS WHEREOF,the IMC and the User have each caused this Intertie User Agreement to be executed by their duly authorized representatives as of the date first above written, USER INTERTIE MANAGEMENT COMMITTEE By: Its: Page 6 of 9 -Exhibit F to Amended and Restated Alaska Intertie Agreement EXHIBIT A TO FORM OF USER AGREEMENT Copy of AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT Page 7 of 9 -Exhibit F to Amended and Restated Alaska Intertie Agreement EXHIBIT B TO FORM OF USER AGREEMENT DELIVERY/RECEIPT POINTS AND CAPACITY ALLOCATION Page 8 of 9 Exhibit F to Amended and Restated Alaska Intertie Agreement EXHIBIT B TO INTERTIE USER AGREEMENT DELIVERY/RECEIPT POINTS: CAPACITY ALLOCATION: Page 9 of 9 -Exhibit F to Amended and Restated Alaska Intertie Agreement EXHIBIT G TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT SAMPLE MITCR CALCULATION MINIMUM INTERTIE TRANSFER CABABILITY RIGHTS (MITCR DETERMINATION) FOR FISCAL YEAR 2012 Annual System Demand 08 09 09 10 1014 3 YR AVG. SOUTHE TICIPANTS (MW AML&P 186.0 175.0 177.0 179.3 MW CEA 258.4 233.3 242.2 244.6 MW MEA 444.2 132.0 137.2 137.8 MW ARMY S 0.0 0.0 10.0 3.3 MW TOTAL 565.0 MW NORTHERN PARTICIPANTS (MW) ARMY N 0.0 0.0 22.0 7.3 MW GVEA 223.1 220.5 211.5 218.4 MW TOTAL 225.7 MW MITCR DETERMINATION FY 12 MEA 24.39%19.02 MW ML&P 31.73%24.75 MW CEA 43.29%33.77 MW ARMY S 0.58%0.45 MW ARMY N 3.20%2.50 MW GVEA 96.80%75.50 MW 155.99 MW Intertie Capability N 78.00 Intertie Capability S 78.00 Page 1 of 1 -Exhibit G to Amended and Restated Alaska Intertie Agreement EXHIBIT H TO AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT RESERVE CAPACITY AND OPERATING RESERVE RESPONSIBILITY AGREEMENT EXHIBIT H AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT RESERVE CAPACITY AND OPERATING RESERVE RESPONSIBILITY AGREEMENT This Addendum No.1 is made this 3rd day of Popes Bor ap SES4884;by the Utility Participants,tHe MUEMUNICIPALI N ,ALASKA,d.b.a.MUNICIPAL LIGHT &POWER;CHUGACH ELECTRIC ASSOCIATION,INC,;THE CITY OF FAIRBANKS,ALASKA,MUNICIPAL UTILITIES SYSTEM;GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.; and ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE, INC.,signatories to the Alaska Intertie Agreement,datedDecerafe.,1985,hereinafter referred to as "Agreement”,Thesignatorypartiesarehereinafterreferredtoas"UtilityParticipants", WITNESSETH WHEREAS THE MUNICIPALITY OF ANCHORAGE,ALASKA,d.b.a.MUNICIPAL LIGHT &POWER;CHUGACH ELECTRIC ASSOCIATION,INC,;THE CITY OF FAIRBANKS,ALASKA,MUNICIPAL UTILITIES SYSTEM;GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.s;and ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE,INC.are all Utility Participants andsignatoriestotheAlaskaIntertieAgreementsand WHEREAS the ALASKA POWER AUTHORITY is a Participant and signatorytotheAlaskaIntertieAgreement;and : WHEREAS the signatories to the Alaska Intertie Agreement desiretohaveaseparateagreementinvolvingonlyUtilityParticipantswithreserverequirementresponsibilityontheinterconnected system;. NOW THEREFORE,the Utility Participants agree as follows: ARTICLE A Reserve Capacity Section A-1,1 A-1.1.1 ach Utility Participant expects and is expectedtomaintainutilityresponsibilityforitsownloadand,as a part of such responsibility,.shallmaintainorotherwiseprovideforannually,Accredited Capability in an amount equal to orgreaterthanitsmaximumSystemDemandforsuchyearplussuchUtilityParticipant's ReserveCapacityObligation,as set forth in SubsectionA-1,1,.2 of this Section, A-1.1.2 The Reserve Capacity Obligation of a UtilityParticipant,for any year,shall initially be Addendum No,1 -1 of 8 Page 1 of 8 --Exhibit H to Amended and Restated Alaska Intertie Agreement equal to thirty (30)percent of the projectedAnnualSystemDemandofthatUtilityParticipant,The Reserve Capacity Obligation of theParticipantsmaybeadjustedfromtimetotimebytheOperatingCommittee. A-1,1,3 The Operating Committee may determine the annualAccreditedCapabilityforeachUtilityParticipant. ARTICLE B Responsibility for Operating Reserve Section B-2.]Operating Reserve B-2.1].1 Each Utility Participant shall provide SpinningReserveandNon-Spinning Reserve as required bySectionB-2.2 of this Article equal to or greaterthantheOperatingReserveObligationoftheParticipant,As soon as practicable,but not toexceedfourhours,after the occurrence of anincidentwhichusesOperatingReserves,eachUtilityParticipantshallrestoreitsOperatingReserveObligationbytheproceduresdeterminedbytheOperatingCommittee,° B-2,1,2 The Operating Reserves,Operating ReserveObligationandUtilityParticipant's AllocationmaybemodifiedoradjustedfromtimetotimebytheOperatingCommittee. Section B-2,2 Total Operating Reserve Obligation B-2,2.1 The Total Operating Reserve Obligation at any timeshallinitiallybeanamountequalto150percentofthecapabilityofthelargestgeneratingunitcontingencyinoperationontheinterconnectedsystemsoftheUtilityParticipants, B-2,2.1.1 The Spinning Reserve portion of thetotalGntertieSystemshallnotbelessthananamountequivalentto100percentoftheDeclaredCapabilityofthelargestgeneratingunitcontingencyinoperationontheinterconnectedsystemaoftheUtilityParticipants.TheDeclaredCapabilitywillbeasdeterminedbytheUtilityParticipant. B-2,2.1,2 The balance of the Total OperatingReserveObligationshallbemaintainedwithNon-Spinning Reserve. Addendum No,1 -2 of 8 Page 2 of 8 --Exhibit H to Amended and Restated Alaska Intertie Agreement B-2.2.Z2 Generating unit capability for Operating Reservesshallbedeterminedbythefollowingcriteria: a.It shall not be less than the load on the machine at any particular time nor greaterthan(b)below, b,It shall not exceed that maximum amount of load (MW)that the unit is capable ofcontinuouslysupplyingforatwo-hour period,or immediately eupplying through action ofautomaticgovernorcontrols, B-2.2.3 The criteria specified in this section may bemodifiedorchangedbytheOperatingCommittee. Section B-2.3 Utility Participant's Allocation of OperatingReserves B-2.3.1 The Operating Reserve Obligation of a UtilityParticipantshallbethatpercentageoftheTotalOperatingReserveObligationdeterminedbytheOperatingCommitteeinaccordancewiththefollowingformulabasedonthecapabilityoflargestgeneratingunitcontingencyinoperationateachUtilityParticipant. B-2,3.1.1 Individual Utility Participant ReserveAllocationFormula TOR =TOR x Us/Ut IOR =Individual Utility ParticipantOperatingReserveRequirement TOR =Total Operating Reserve Requirement Us =A Utility Participant largeston-line generation unit capability Ut =Sum of each Utility Participant's Us Section B-2,4 Operating Reserve Calculation B 2.4,1 System Spinning Reserve shall be calculated at anygiveninstantasthedifferencebetweenthesumofthenetcapabilityofa11generatingunitsonlineintherespectivesystemandtheintegratedSystemsDemandofthesysteminvolved. Addendum No,1 -3 of 8 Page 3 of 8 --Exhibit H to Amended and Restated Alaska Intertie Agreement B+2.4.2 A Utdlity Participant's Spinning Reserve may besatisfiedbyanautomaticallycontrolledloadsheddingprogram.The load shedding program shallassurethatcontrolledloadcanbedroppedtomeettherequirementsofSpinningReserveandinsuchamannerastomaintainsystemstabilityandnotcauseobjectionablesystemconditionsorcascadingeffectsinotherUtilityParticipants'systems, The Operating Committee shall review and approvetheUtilityParticipant's load shedding programthatwillbeusedtosatisfyitsSpinningReserverequirements, B-2.4.3 The Operating Committee may establish procedurestoassurethattheOperatingReserveisavailableonthesystemsoftheParticipantsatalltimes.Whenever a Participant is unable to meet iteOperatingReserveObligation,that UtilityParticipantwillimmediately,within two hours,advise all other Utility Participants and makearrangementstorestoreitsOperatingReserveObligation: B 2.4,4 Prudent Utility Practices shall be followed indistributingOperatingReserve,.taking intoaccounteffectiveutilizationofcapacityinanemergency,time required to be effective,transmission limitations and local area requirements.. B-2.4,5 A Participant may arrange for one or more otherUtilityParticipantstosupplypartorallofitsOperatingReserverequirement, B-2.4.6 In an emergency,any Utility Participant,uponrequestbyanotherUtilityParticipant,shall>supply to such requesting Utility Participant partorallofitsOperatingReserveuptothefullamountofitsAvailableAccreditedCapability.A Utility Participant experiencing an emergency isnotrequiredtomaintainiteOperatingReserveObligation.There shall be no obligation of aUtilityParticipanttosupplyOperatingReserveiftherequestingUtilityParticipantisnotmakingfulluseofitsAvailableAccreditedCapability. B-2.4,7 Except as otherwise agreed,a Utility ParticipantsupplyingaportionorallofanotherUtilitParticipant's Operating Reserve during any montshallbepaidbythepurchasingUtilityParticipantanamountequaltowhicheverisgreaterofthefollowing: Addendum No.1 -4 of 8 Page 4 of 8 --Exhibit H to Amended and Restated Alaska Intertie Agreement Be2.4,7,1 110 percent of the Incremental Cost of supplying such service;or B-2.4.7,2 The Incremental Cost of supplying suchserviceplusone-half of the overallsavingsinvolvedinsuchtransaction,which overall savings shall be equal tothedifferencebetweentheIncremental Cost of the selling Utility ParticipantandtheDecrementalCostofthe purchasing Utility Participant. B-2.4.8 If a Utility Participant fails to provide adequateOperatingReserve,other than because of a forcedoutage,during any such period the deficientParticipantshallpaytotheotherUtilityParticipantsanamountequivalenttotwotimesthecostavoidedbythedeficientUtilityParticipantfornotstartingand/or operating any generatingunitorunitswhichwouldordinarilybeusedtoprovideadequateOperatingReserve,Should theUtilityParticipantnothaveadequateAccreditedCapabilitytoprovidetheOperatingReserves,itshallpaytheotherUtilityParticipantstwotimesthecostforstartingandoperatingthehighestcostgeneratingunitonthedeficientUtilityParticipant's system.This payment shall besharedbytheotherUtilityParticipantsinthesameproportionthattheirindividualAnnualSystemDemandistothenon-deficient UtilityParticipants'total Annual System Demand,Payments under this section B-2,4.8 of thisArticleBshallbewaivedforthefirstyearof operation of the Intertie. IN WITNESS WHEREOF,the Utility Participants have executed thisAddendumNo.1 to the Alaska Intertie Agreement in quintuplet bytheirauthorizedofficersorrepresentativesasofthedayandyearfirstabovewritten. MUNICIPALITY OF ANCHORAGE, ALASKA dba MUNICIPAL LIGHT & POWER _ --nlumienpe |,lame ga by SUBSCRIBED AND SWORN TO before me on the ARI dayof¢OE By: ,1985, Addendum No.1 -5 of 8 Page 5 of 8 --Exhibit H to Amended and Restated Alaska Intertie Agreement y 4 M Commission Expires:Stk GD CHUGACH ELECTRIC ASSOCIATION, INC, General Manager” ¢Latent RD $ND SWORN 10 before me on the JPA aay°o ,1985, ,ip Lehnborr! otary Public,State of AlaskMyCommissionExpires:f- L=KE CHUGACH ELECTRIC ASSOCIATION, INC. By: A President of the Boardwy)pUBSCRIBED AND SWORN T0 before me on the /7 YA_day[+]: .1985, 'i4 'Notary Public,State of AlaskaMyCommissionExpires:1//- CHUGACH ELECTRIC ASSOCIATION, INC, By:y z i ee, &Vice-President of the Board . Addendum No,1 -6 of 8 Page 6 of 8 --Exhibit H to Amended and Restated Alaska intertie Agreement P SUBSCRIBED AND SWORN TO before me on the /7 4.dayfe)Lumber »1985. My Commission'Expires://-f-55_ By:'VA[erry MANAGER '(Title) P Soee ES AND SWORN TO before me on the _/f2Z@%day°985 G ry Pu tdta o askaMyCommission'Expires:sg-/7-27 GOLDEN VALLEY ELECTRIC And,INC,By:MA.M,G-¢%si MasYsitle}J raat siNP SWORN TO before me on the [err _dayofDecember A ty uth, otary State Of,Alaeka ExplranMyCommisaionExpires:Jenvary i).1987 Addendum No,1 -7 of 8 Page 7 of 8 --Exhibit H to Amended and Restated Alaska Intertie Agreement ALASKA ELECTRIC GENERATION and TRANSMISSION CO@PERATIVE,INC, DA"(Title) * D pUBSCRIBED AND SWORN TO before me on the //%4 __dayce,1985, /Publis, My Commissic Addendum No.1 -8 of 8 Page 8 of 8 --Exhibit H to Amended and Restated Alaska Intertie Agreement Exhibit BL-1 33 FERC (62,4995 UNITED STATES OF AMERICA FEDERAL ENERGY PEGULATORY COMMISSION Alaska Power Authority )Project No.8221-000 ORDER ISSUING LICENSF (MAJOR) (Issued DECEMBER 31,1985) On April 4,1984,the Alaska Power Authority (Applicant)filed an application for a license under Part I of the Federal Power Act (Act)to construct,operate,and maintain the Bradley Lake Hydroelectric Project No.8221.The project would be located on the Bradley River in Kenai Peninsula Rorough,Alaska,partially on lands of the United States administered by the Bureau of Land Management. Notice of the application has been published and comments have been received from interested Federal,state,and local agencies.None of the agencies objected to issuance of the license.The National Marine Fisheries Service (NMFS)was grantedintervention.The significant concerns of the intervenor and the' commenting agencies are discussed below. The Commission staff has prepared a Final Supplemental Environmental Impact Statement (FSFIS).This FSEIS supplements the Final Environmental Impact Statement prepared by the Department of the Army,Alaska District,Corps of Engineers (Corps),in August 1982,for a similar project proposed by the Corps at the same Location,but was later de-authorized.The environmental impacts associated with construction,operation,and maintenance of the project have been fully considered,based upon the FSEIS and all other relevant materials in the record.The significant issues raised with respect to the FSEIS are discussed below. Taking into account the anticipated environmental impacts of the project,the staff has concluded that issuance of this license is in the public interest. PROJECT DESCRIPTION The proposed project would consist of a 20-foot-high diversion dam on the Middle Fork Bradley River diverting flow through an undergound pipe to Marmot Creek,a tributary of Bradley Lake,a low diversion dike on the upper Nuka River immediately below the Nuka Glacier,diverting flow from the glacier pool into the upper Bradley River,a 12S-foot-high dam that would raise by 100 feet the existing Bradley Lake,an 18,61N-foot-lonq power tunnel,a -2- powerhouse near Kachemak Bay containing two 45-MW generatingunits,a 20-mile-long double circuit transmission line,and access facilities,as more fully described in ordering paragraph (B) below.The estimated project cost as of July 1983 is $300,000,000. OPERATION The primary function of the Bradley Lake Reservoir would be to requlate streamflow to provide for carryover storage for producing energy,in a peaking mode,throughout the year.The project would have a hydraulic capacity of 1,300 cubic feet per second (cfs)at a net head of 1,120 feet and would generate anestimated369.2 GWh of energy annually.4/As discussed in moredetailbelow,provision for minimum instream flow releases will be made. ENVIRONMENTAL CONSIDERATIONS Final Design Changes On November 4,1985,the Applicant filed with the Commissionj?a description of modifications to the proposed Bradley Lake Project, made as a result of final design planning.These changes include: (1)elimination of the 1.5-mile-long barge access channel to the proposed docking facility;(2)realignment of the access road to the Martin River borrow site;(3)inclusion of an instream flow diversion pipe in the construction diversion tunnel for the Bradley Lake dam;and (4)conversion of the previously proposed,44-acre freshwater waterfowl mitigative area to a 33-acre,brackish-water mitigative area.All Federal and state agencies and other interested parties were notified of these proposed changes by letter dated November 13,1985,from the Acting Director of the Office of Rydropower Licensing,and were given 30 days in which to comment. The Applicant proposes to eliminate the barge access channel, as a result of geotechnical investigations that revealed unstable sand formations along the route of the proposed channel.These unstable sands would require continuous dredging of the channel, producing a much greater volume of spoil than anticipated.Thus the Applicant proposes to use smaller barges and to eliminate the access channel and the associated dredging of an estimated 475,000 cubic yards of material.An estimated 10,000 to 50,000 cubic yards of material would still be dredged in the immediate vicinity of the barge dock.Commenting agencies are in agreement with this proposal. Realignment of the access road and inclusion of a flow diversion pipe in the Bradley Lake dam are design changes that the Applicant proposes in order to lessen the impacts of the proposed project. ly The estimated generation is equivalent to the electric energythatcouldbeproducedfrom171,000 tons of coal or 606,000 barrels of oil annually. -3- The road would be realigned to bypass a bald eagle nesting site, and the diversion pipe would be installed so that instream flowscouldbereleasedtotheBradleyRiveratthelowestoperational levels of Bradley Lake.These changes were made in response to concerns of the consulted fish and wildlife agencies. The proposed feduction in the size of the waterfowl mitigative area from 44 to 33 acres is a direct result of the proposed reduc- tion in the amount of dredge spoil from the access facilities.The Applicant previously proposed to establish the waterfowl mitigative area on the spoil disposal site after completion of dredging. Since the impacts on tidal wetlands would be greatly reduced as a result of the elimination of the barge channel,and less spoil would be generated by the remaining access facilities,the size of the spoil disposal site and the size of the waterfowl mitigative area can be reduced.The change from a freshwater to a brackishwater nesting area is required because of a predicted lack of freshwater inflow to the mitigative area.Commenting agencies accept these changes in the mitigative plan. The proposed changes in project facilities and mitigative measures will reduce the overall impacts of the project.Eliminat-ing the barge access channel will significantly reduce impacts to over 40 acres of upper Kachemak Bay.Realigning the access road and including a flow bypass pipe in Bradley Lake dam will have obvious benefits to bald eagles and aquatic resources in the lower Bradley River.Reducing the size of the spoil disposal site and the size of the waterfowl mitigative area will reduce the impacts to the existing tidal wetlands,but will still provide significant benefits for nesting waterfowl and other area shorebirds. Project Mitigative Plan On November 22,1985,the Applicant filed a mitiqative plan for the construction and operation of the proposed project.This plan updates the Applicant's draft mitigative plan filed in January 1985,and reflects resource agency comments on the draft plan,the license application,various other project documents,and the Commission staff's (Staff)Draft Supplemental Environmental Impact Statement,issued March 1,1985.The Applicant has continued to consult with the resource agencies throughout the pendency of its license application,and these consultations are reflected in the mitigative plan.The plan includes proposed mitigative measures for all resources that would be impacted by the construc- tion and operation of the project and specific measures for each project feature.The plan also contains a project monitoring program,which details the monitoring studies and activities proposed by the Applicant for both the construction and operational periods. The proposed mitigative plan will generally provide for ade- quate mitigation of major project impacts,and is herein approved. Issues that require additional discussion or license conditions are discussed below. Subsistence Use of Project Area Upper Kachemak Bay and the surrounding area are used by local residents for subsistence hunting and fishing activities.In the project area,both the Martin River and Bradley River drainages Support subsistence hunting for moose,bear,and waterfowl,and the tidal flats near the project support limited hunting for marine mammals. Construction and oneration of the project will result in both short-term adverse impacts and long-term beneficial impacts upon subsistence activities.Construction activities will disrupt normal wildlife and marine mammal use of the area,which,in turn,will interrupt subsistence hunting.When construction is finished, however,wildlife use of portions of the area will likely increase, because of mitigative measures provided by the Applicant (e.g., waterfowl mitigative area).In addition,the project access . roads will provide easier access-into the interior areas for subsistence hunters. The State of Alaska,in commenting on the Staff's FSEIS issued on September 27,1985,agrees that the project will not significantly restrict subsistence use of the project area. Mitigative measures provided for fish and wildlife resources will provide sufficient protection for subsistence use of those resources, Water Quality Operation of the proposed project likely will result in water temperature changes in the lower Bradley River and in possible production of hydrogen sulfide and increased concentrations of heavy metals in Rradley Lake.Significant water temperature changes and high levels of hydrogen sulfide and heavy metals are not expected to occur,however,although these impacts can only be verified during operation of the project.Thus,monitoring programs will be required,with a contingency to implement appropriate mitiqative measures if significant impacts are identified. In its mitigative plan,the Applicant proposes to conduct monitoring programs,both before and after the start of project operation,Water temperature data for preproject conditions has already been collected,and additional temperature data will be collected during fisheries studies that will be conducted during the project construction period.A continuously recording tempera- ture monitor will also be installed in conjunction with a stream gage to be located on the lower Bradley River,with a telemetriclinktothepowerhouse.This monitor will provide a continuous -5- record of both surface and intragravel water temperatures during the operation of the project. The Applicant proposes to collect water quality data in Bradley Lake one year before reservoir filling,during reservoir filling,and for one year during the operational period of the project.The Applicant further proposes in regard to water quality to "implement mitigation options,if possible by identifi- cation of appropriate methods through further sampling." The Applicant's proposal to monitor water temperatures and water quality,with the option of later implementing mitigative measures,is an acceptable approach given the minor level of impacts expected.To ensure that appropriate measures are implemented if significant impacts are later detected,however, Article 33 requires the Licensee to conduct a monitoring program, to file the results with the Commission,and to file for Commission approval measures required to mitigate any impacts that may be detected by the monitoring studies.weFish Resources As previously stated,project operation will likely produce water temperature changes in the lower Bradley River.This,in turn, has the potential to alter the timing of egg incubation and hatching for species of salmon that spawn in the lower Bradley River.Pink salmon is the major species of concern,since it is numerically the dominant species of salmon in the river,and since it spawns in areas most likely to be affected by temperature changes.Significant changes in the timing of pink salmon egg incubation and hatching are not expected,but these predictions can only be verified after project operations beaqin. Another impact on salmon resources that probably will occur is the attraction of adult salmon,bound for the Bradley River,into the powerhouse tailrace.The powerhouse will discharge flows ranging from 439 to 1,250 cubic feet per second (cfs),with an average discharge of 497 cfs.This compares to a flow of 100 cfs that will occur in the lower Bradley River during the salmon migration period. It is,therefore,highly probable that at least some salmon will be attracted into the tailrace,which will not contain suitable habitat for successful spawning.Such attraction will delay spawning migrations into the Bradley River. The Applicant's mitigative plan describes a program for monitor- ing fish resources.The program will include studies to determine the timing of salmon fry emergence and out-migration in the lower Bradley River,the enumeration of adult salmon escapement to theriver,and the extent and duration of adult salmon attraction to 6- the powerhouse tailrace.The Applicant also describes options thatcouldbetakentomitigateanysignificantimpactsthatarediscovered, but makes mo commitment to any option.To ensure that appropriate mitiaqative measures are implemented,if significant impacts are detected,Article 34 requires the Licensee to conduct fisherymonitoringstudies,to file the results with the Commission,and to file for Commission approval measures to mitigate any significant impacts. tIntervenor NMFS requests that this license require implementation of the proposed monitoring and mitigation programs and creation of a monitoring team,and that it be a party to any determinations reqarding fishery impact monitoring and mitigation.Approval herein of the Applicant's mitigqative plan,along with Articles 33 through 35,which direct consultation with NMFS,among other agencies,will satisfy those requests. Frosion,Sedimentation,and Slope Stability Control Construction activities such as dredging,excavating soil and rock,and disposing of spoil will disturb soils and other consolidateddepositsandwillcauseerosionandsedimentation.Minor,localized unstable conditions will occur on oversteepened excavated slopes, primarily along access roads in areas of steep terrain.Project operation will cause minor localized erosion and instability along the reservoir shoreline and some minor erosion and redistribution of sediment below the tailrace. The Applicant,in the project mitigative plan,proposes to follow the general techniques and practices in the erosion and sedimentation control section of its Best Management Practices Manuals (RMPM's)filed with the Commission on May 6,1985.The Applicant also proposes other mitigative measures for specific project features in its mitigative plan.The RDepartment of the Tnterior recommends that the license require compliance with the provisions of the Applicant's mitigative plan and of the BMPM's. Approval of the mitigative plan as a condition of this license will require the Licensee to comply with the mitigative plan and with the BMPM''s.Article 35 also requires the Applicant to consult with appropriate resource agencies during the preparation and implementation of a detailed erosion,sedimentation,and slope stability plan for the project. Recreation and Land Use The Applicant's proposals for recreational development at the project,as refined by the mitigqative plan approved herein,ade- quately address public use concerns at the project at this time.Thepublicwillbeallowedtousetheairfieldandbargelandingatitsownrisk,since the facilities will not be maintained for intensive recreaticnal use.The project roads will be open to the public for pedestrian use only. The Applicant proposes to construct and maintain three campsites and a latrine near the barge dock,and similar facilities in the Bradley Lake Basin.The facilities will be located and developed in cooperation with the Alaska Nivision of Parks (ADP). The Applicant has not determined the exact location of the recreational facilities nor proposed a method for monitoring public use,which would determine the need for any future recreational development at the project.Article 36 is included to require the Licensee to consult with ADP concerning a monitoring program and to specify the location of the recreational facilities. The Alaska Department of Natural Resources (DNR)states that the proposed transmission line alignment may conflict with the use of state-managed public interest lands,but DNR agrees to resolve any potential conflicts during further discussions with the Licensee. Article 37 requires the Licensee to file a report on its consulta- tions with DNR and an application for amendment of the license if the resolution of any potential conflicts require a significant change in the transmission line alignment. Cultural Resources weTwo historic sites (historic fox-fur farms)eligible for inclusion in the National Register of Historic Places have been inventoried in the vicinity of the project.No other sites are known in the area.The two historic sites would not be affected by project construction or operation,but could be affected by acts of vandalism,the potential for which would increase with the influx of construction personnel in the area. The Applicant,after consulting with the Alaska State Historic Preservaticn Office,prepared a cultural resources management plan that would avoid impacts to the historic sites and would also protect any archeological or historic sites that may be discovered during construction.Article 38 requires the Licensee to implement this plan. Visual Resources The Applicant says that the anticipated visual effects of the project will be insignificant,but includes the following measures in the mitigative plan:(1)rehabilitating the construction camp, the haul roads,the borrow pits,the dredge spoil-disposal area, and other areas affected by project construction;9(2)blending proposed permanent residences into the surrounding area and setting them back from the tidal flats;and (3)reducing the contrasts between project facilities and existing visual resources by using appropriate building materials and colors to make the bunkhouse, warehouse,and machine shops blend with the surrounding area.These mitigative measures are adequate for the proposed project facilities and are approved as part of the mitigative plan. Ro» The Applicant also states that the contrast between existing visual resources and most project features,including the powerhouse and related facilities,the airstrip,the barge basin,the dam and intake structure,and the reservoir drawdown zone,cannot be feasibly improved.- Although mitigation of all visual impacts is not possible,the Licensee should consider modifications to the design and location of those project features that permit flexibility.For instance, the powerhouse and related facilities can be made architecturallyattractive,even though these facilities will not blend completelywiththevisualcharacterofthearea.Using accepted landscape architectual design principals,to include the use of appropriate colors,materials,and site-engineering techniques,the Applicant can make project facilities aesthetically pleasing.Therefore Article 39 requires the Licensee to use up-to-date architectural and engineering techniques,colors,and building materials to ensure that the project facilities maintain the visual quality of the area as much as reasonably possible. ° LdVisualimpactsofthetransmissionlinecorridorwillbe most visible from aircraft flying over the area.Article 40,there- fore,requires the Licensee to determine:(1)if there is enough air traffic in the area of the proposed transmission line corridor to warrant further analysis and mitigation;(2)if pipelines,transmission lines,roads and other linear corridors are present that could be viewed at the same time as the proposed Bradley Lake transmission line corridor;and (3)the degree to which views from the air of the project's impacts to visual quality should be mitigated along the transmission line corridor. Recommendations for any mitigation by the Licensee and by appropriate resource agencies shall be filed with the Commission within one year from issuance of this license.This analysis shall be coordinated with that done pursuant to Article 37. Waterfowl Nesting Area The Applicant's final mitigative plan,includes the creation of a 33-acre,nontidal,brackishwater marsh (wetland)that will be connected to Kachemak Bay through a series of intake and overflow culverts.A key limiting factor to successful waterfowl and shore- bird nesting in the area is the scarcity of nontidal wetlands. Thus,the proposed development of a nontidal marsh is a significant measure to mitigate the wide variety of project-related environmental impacts to area wetlands and wetland wildlife. The Applicant says that DNR's Plant Materials Center has plant species available for successful marsh establishment,and that the Applicant will develop a detailed monitoring program to determine the success of revegetative efforts. -9- Because Of the importance of the waterfowl nesting area for the mitigation of a wide variety of project-related wildlife impacts,the Licensee should monitor the development of this site and,in the event of failure to establish marsh vegetation, should consult with the resource agencies to develop alternative mitigative measures for Commission approval.Article 41 requires the Licensee to monitor the development of the waterfowl nesting area and to develop alternative mitigation if the nesting area cannot be successfully established. Other Wildlife Mitigation The Applicant's mitigative plan for wildlife would minimize or compensate for the adverse effects of the project on a wide range of wildlife species and wildlife-habitat cover types. Agency consultation is important to ensure that this plan is based on the best information available.Article 42 requires the Licensee to continue to consult with the resource agencies on all major aspects of the wildlife mitigative plan. Other Environmental Concerns H Water quality certification,as required by Section 401 of the Clean Water Act,was waived for the proposed project by the Alaska Department of Environmental Conservation on November 18,1985. No Federally listed threatened or endangered species or critical habitat or sites listed on or eligible for listing on the National Register of.Historic Places will be affected by the project. SUMMARY OF ENVIRONMENTAL IMPACTS Construction and operation of the proposed Bradley Lake Project will result in short-term and long-term impacts to the environmental resources in the project area.Short-term impacts will be those associated with project construction and will include: (1)disruption of a relatively pristine viewscape by large-scale construction activities;and (2)disturbance of mountain goat movement and moose migration in the vicinity of Bradley Lake and disturbance of the use by wildlife of the affected portions of the tidal wetlands,forested areas,and other upland areas. Long-term impacts will occur as a result of the presence and operation of the project,and will include: (1)transformation of the existing unspoiled area into one with obvious signs of man's activities; -10- (2)permanent removal of about 3,200 acres of existing vegetation,including inundation of 2,578 acres of terrestrial and wetland habitat by the enlarged Bradley Lake; (3)long-term alteration of the flow regime of the lower Bradley River by reducing peak summertime flows and stabilizing winter low flows; (4)alteration of the pattern of freshwater inflow to the Bradley River-Sheep Creek estuary and upper Kachemak Bay, with possible disruption of salmon migration patterns within the estuary;and (5)enhancement of public access to the Bradley River Basin, subjecting the fish and wildlife resources of the basin to long-term,increased harvesting pressures. A final environmental impact statement (FEIS)was prepared by the Department of the Army,Alaska District Corps of Engineers . (Corps)in August 1982,for a proposed hydroelectric project at ' Bradley Lake,which was of similar design and almost identical location to that proposed by the Applicant.De-authorization of the Corps project by Congress allowed the Applicant to adopt the Corps' basic design and to apply for a license.The Staff,in turn,adopted the Corps'FEIS and prepared the draft and final supplemental environmental impact statements for the Applicant's proposed project. These supplemental statements update the assessment of impacts as a result of the Applicant's changes in project design from the Corps' proposed design and treat environmental issues where new information has come to light or where further resolution of issues is required. ENGINEERING CONSIDERATIONS Safety and Adequacy AS presently designed,the Bradley Lake spillway will be capable of passing the Probable Maximum Flood (PMF).The Middle Fork Diversion spillway will be capable of passing fifty percent of the PMF.Preliminary analysis supplied by the Applicant for the Bradley Lake Dam and Spillway and the Middle Fork Diversion Dam shows that the project would be safe under normal,PMF, earthquake,and ice loadings. Economic Feasibility The proposed project is economically feasible when compared with the cost of providing equivalent generation from a 200-MW combined-cycle (natural gas)generation project or a 200-MWcoal-fired generation project,used in conjunction with a 70-MW gas turbine facility that would be brought on line to meet loadspriortothein-service date for a coal plant.The Bradley LakeProjectismoreeconomicalthantheleast-cost,non-hydro- electric-generation alternative at real discount rates ranging from 2.9%to 6.2%. -ll- OTHER ASPECTS OF COMPREHENSIVE DEVELOPMENT The Applicant would use the energy developed by the proposed project to serve the needs of customers within the "Railbelt" region,the area of south-central Alaska served by the Alaska Railway.Load resource comparisons based on Railbelt loadprojectionspreparedbytheApplicantandbytheCommission staff show a need for the Bradley Lake Project or some other resource by 1988. The project will make good use of the flow and fall of the Bradley River,is not in conflict with any existing or planned development,and will be best adapted to the comprehensive develop-ment of the basin for beneficial public uses upon compliance with the terms and conditions of this license. The Director of the Office of Hydropower Licensing,or the Director's designee,under 18 C.F.R.§375.314,orders: (A)This license is issued to the Alaska Power Authority(Licensee),of Anchorage,Alaska,under Part I of the Federal Power Act (Act),for a period of 50 years,effective the first H day of the month in which this order is issued,for the construction, operation,and maintenance of the Bradley Lake HydroelectricProjectNo.8221,located in Kenai Peninsula Borough,Alaska,on the Bradley River,utilizing flows of the Bradley River,the Middle Fork Bradley River,and the Nuka Glacier pool,and occupying lands of the United States adminstered by the Bureau of Land Management.This license is subject to the terms and conditions of the Act,which is incorporated by reference as part of this license,and subject to the regulations the Commission issues under the provisions of the Act. (B)The Bradley Lake Project No.8221 consists of: (1)All lands,to the extent to the Licensee's interests in those lands,constituting the project area and enclosed by the project boundary.The project area and boundary are shown and described by a certain exhibit that forms part of the application for license and that is designated and described as: FERC DRAWING EXHIBIT G-NO.3221-SHOWING 1 20 Project Boundary Key Map 2 21 Transmission Line 3 22 Lower Project Works"4 23 Access Roads 5 24 Access Roads 6 25 Lower Bradley Lake Area 7 26 Upper Bradley Lake Area -12- (2)Project works consisting of:(a)a low diversion dike at che outlet of the Nuka Glacier pool into the upper Nuka River and a rock cut,diverting flow into the upper Bradley River:(b)a 20-foot-high diversion dam with spillway crest elevation 2,204 feet on the Middle Fork Bradley Piver diverting flow through a 1,900-£oot-long,6-foot-diameter underground pipe to Marmot Creek,a tributary of Bradley Lake2/;(c)a 125-foot-high concrete-facedrock£ill dam with crest elevation 1,190 feet and a 4-foot-high parapet wall on the crest;(d)an ungated ogee spillway located on a saddle feature 150 feet east of the dam with crest elevation 1,180 feet;(e)the existing Bradley Lake,which would be raised 100 feet to have a usable storage capacity of 315,500 acre-feet and a surface area of 3,820 acres at maximum operating water surface elevation 1,180 feet;(f)a 470-foot-long,18-foot-nominal diameter horseshoe-shaped tunnel through the east abutment for construction diversion and then for instream flow releases;(g)a 360-foot-long intake channel;(h)a 42-foot-long intake structure with removable trash racks;(i)an ll-foot-diameter,concrete lined power tunnel consisting of a 950-foot long horizontal section with dual gates 800 feet downstream of the intake operatedthroughaverticalgateshaft,an 810-foot-long inclined section,;and a 16,850-foot-long main section with steel Lining on the downstream 2,400 feet:(j)a steel penstock consisting of a 9- foot-diameter roll-out section and a manifold section with three 5-foot-diameter outlets,one capped and two with 30 to 40-foot-long branches;(k)a 138-foot-long,66-foot-wide,112-foot-high reinforced concrete powerhouse at elevation 40 feet containing two 45-MW generating units;(1)the 13.8-kV generator leads;(m) a 13.8/115-kV transformer:(n)a tailrace channel with a bottom width of 67 feet discharging into Kachemek Bay;(0)a 20-mile-long, 115<kvV,double circuit transmission line from the substation adjacent to the powerhouse to a proposed Homer Electric Association line between Fritz Creek and Soldotna:(p)access facilities including a barge basin and ramp,an airstrip and project roads connecting the airstrip,powerhouse,lower and upper construction camps,and the dam;(q)recreation facilities consisting of camp sites near the barge basin dock and near Bradley Lake;and (r) appurtenant facilities. The location,nature,and character of these project works are generally shown and described by the exhibit cited above and more specifically shown and described by certain other exhibits that also forma part of the application for license and that are designated and described as: 2/All elevations refer to project datum.Project datum equalsmeansealevelminus4.02 feet. -l3- Exhibit A Section 1.3.2,titled Basic Data Section 3.0,titled Turbines and Generators Section 4.0,titled Substation and Transmission Section 5.0,titled Miscellaneous Mechanical and Electrical Equipment FERC Drawing Exhibit F-No.8221-Showing 1 l General Plan 2 2 General Arrangement -Dam Spillway and Flow Structures 3 3 Concrete Faced Rockfill Dam Sections and Detail 4 4 Spillway Elevations and Sections 5 5 Power Conduit Profile and Details 6 6.Intake Channel and Gate Shaft Sections and Details 7 7 90-MW Pelton Powerhouse Plans and Sections 8 8 90-MW Pelton Powerhouse Plans and Sections 9 9 90-MW Pelton Powerhouse Plans and Sections 10 10 Construction Diversion Sections and Details ll ll Middle Fork Diversion Plan and Profile 12 12 Middle Fork Diversion Elevation and Details we -l14- FERC Drawing Exhibit F-No.8221-Showing 13 13 Access Facilities 14 ) 14 Access Channel and Barge Basin 15 15 Dock Structure Details 16 16 Powerhouse Substation and Bradley Junction (3)All of the structures,fixtures,equipment,or facilities used or useful in the operation or maintenance of the project and located within the project boundary,all portable property that may be employed in connection with the project,located within or outside the project boundary,as approved by the Commission,and all riparian or other rights that are necessary or appropriate in the operation or maintenance of the project.ze(C)Exhibits A,F,and G,designated in ordering paragraph (B)above,are approved and made part of this license only to the extent that they show the general location,description,and nature of the project works.: (D)The Applicant's mitigative plan for the proposed project, filed on November 22,1985,is approved and made a condition of this license. (E)This license is also subject to the terms and conditionssetforthinFERCFormL-2 (revised Cctober 1975)entitled "Terms and Conditions of License for Unconstructed Major Project Affecting Lands of the United States,”designated as Articles 1}through 32 and subject to the following additional articles: Article 33.Licensee,after consultation with the Alaska Department of Fish and Game,Alaska Department of Environmental Conservation,the U.S.Fish and Wildlife Service,the National Marine Fisheries Service,and the Fnvironmental Protection Agency, shall prepare plans and implementation schedules for pre=-and post- operational studies to monitor water temperatures in the lower Bradley River,and water quality in Bradley Lake.Within 6 months from the date of issuance of this license,Licensee shall file the study plan with the Commission,with copies to the agencies consulted. The Commission reserves the right to require modifications to the Study plan.Licensee shall conduct the monitoring studies and submit progress reports annually to the Commission and agencies consulted. Within 6 months after completing the post-operational studies, Licensee shall file a final report on the studies,and for Commission approval,with copies to the agencies consulted,Licensee's recom-mendations for changes in project operations or facilities that are -15- necessary to ensure maintenance of the State of Alaska's water quality standards for temperature in the lower Bradley River,andforhydrogensulfideandheavymetalsconcentrationsinBradley Lake.Documentation of agency consultation on the recommendations shall be included in the filing. Article 34.Licensee,after consultation with the AlaskaDepartmentofFishandGame,the U.S.Fish and Wildlife Service, and the National Marine Fisheries Service,shall prepare plans and implementation schedules for pre-and post-operational studies to monitor fish populations in the lower Bradley River.Within 6 months from the date of issuance of this license,Licensee shall file the study plan with the Commission,with copies to the agenciesconsulted.The Commission reserves the right to require modifications to the study plan.Licensee shall conduct the monitoring studies and submit progress reports annually to the Commission and agencies consulted.Within 6 months after completing the post-operational studies,Licensee shall file a final report on the studies,and shall file for Commission approval,with copies to the agencies consulted,Licensee's recommendations for changes in project opera- tions or facilities that are necessary to protect and maintain the fish resources of the lower Bradley River.Documentation of agencconsultationontherecommendationsshallbeincludedinthefiling. Article 35.Licensee,after consultation with the Depart-ment of the Army,Alaska District Corps of Engineers,the U.S.Fish and Wildlife Service,the National Marine Fisheries Service,the Environmental Protection Agency,the Alaska Department of Environ- mental Conservation,and the Alaska Department of Fish and Game, shall prepare and shall file with the Commission,within 6 months. from the date of issuance of this license,a plan to control erosion, sedimentation,and slope stability at the project and at any areas that would be directly or indirectly affected by the project, including any project-related pre-construction,construction,and post-construction activities. The plan shall include functional design drawings and maplocationsofcontrolmeasures;an implementation schedule;monitoring and maintenance programs for project construction and operation; and provisions for periodic review of the plan and for making any necessary revisions to the plan.Documentation of agency consultation on the plan and copies of any agency comments or recommendations shall be included in the filing. In the event that the Licensee does not concur with any agency recommendations,Licensee shall provide a discussion of the reasons for not concurring,based on actual site geological,soil,and groundwater conditions.The Commission reserves the right to require changes to the plan.Unless the Director,Office ofHydropowerLicensing,directs otherwise,the Licensee may commencegrounddisturbingorspoil-producing activities at the project 90 days after filing the above plan. -16- Article 36.Licensee,after consultation with the Alaska Division of Parks (ADP),shall develop a program to ensure the ongoing monitoring of public use at the project,to include periodic review of the information to determine the need for future recrea-tional development at the project.Within 2 years from the date of issuance of this license,Licensee shall file with the Commission a report on the program and a drawing that indicates the location of the initial recreational facilities and the location of any lands designated for future recreational development.The drawing also shall indicate the location of the project boundary and the project features,including the airfield,barge facilities,and roads.ADP''s comments on the report and the drawing shall be included in the filing. Article 37.Licensee,after consultation with the Alaska Department of Natural Resources (DNR),shall determine the need, if any,to change the transmission line alignment to avoid conflicts with existing or proposed land use.Within one year from the date of issuance of this license,Licensee shall file with the Commission a report on the consultations and shall file for Commission : approval,an application for amendment of the license that details any proposed changes in the transmission line alignment.The comments of DNR on the report shall be included in the filing. Article 38.Licensee shall implement its cultural resources Management plan to avoid impacts to the historic Hilmer Olsen Fox Farm site and to the Jansen-Zanitowski Fox Parm site,as described in the Licensee's mitigation plan filed with the Commission on November 22,1985.Within 1 year of the date of issuance of this license,and prior to any construction in the vicinity of these historic sites,Licensee shall file with the Commission a copy of a letter from the Alaska State Historic Preservation Officer (SHPO) indicating that the procedures for implementation of the plan will protect the sites,or if such a letter is not provided,a copy of a letter to the SHPO indicating that the SHPO has been afforded 60 days to respond.The Commission reserves the right to direct changes to the plan.Unless the Director,Office of Hydropower Licensing instructs otherwise,Licensee may commence ground disturbing or spoil disposal activities in the vicinity 60 days after the filing date of the letter.Licensee shall make available funds in a reasonable amount for any such work as required.If any previously unrecorded archeological or historical sites are discovered during the course of construction or development of any project works or other facilities at the project,construction activity in the vicinity shall be halted,a qualified archeologist shall be consulted to determine the significance of the sites,and Licensee shall consult with the SHPO to develop a mitigative plan for the protection of siqnificant archeological or historical resources.If Licensee and the SHPO cannot agree on the amount of money to be expended on archeological or historical work related to the project,the Commission reserves the right to require Licensee to conduct,at its own expense,any such work found necessary. l7- Article 39.licensee,after consultation with the Department of the Interior and the Alaska Department of Natural Resources, shall develop a plan to:avoid or to minimize any disturbance to the quality of the existing visual resources of the project area caused by the construction and maintenance of project works;make the project works blend into the existing landscape character; and landscape any new construction areas and areas adjacent to the project site that were disturbed by the construction of staging areas,the temporary housing facilities,temporary access roads,and any area disturbed by erosion or slides.This rehabili- tation shall include,but not necessarily be limited to,grading and planting grasses,repairing slopes damaged by erosion,and preventing future erosion,in accordance with provisions of Article 35. The plan also shall include the treatment of those project facilities that,because of their size or function,will not readily blend into the visual character of the surrounding area and that must enhance or maintain the existing visual quality of the area, by using up-to-date architectural design and materials,contemporary site-engineering and construction techniques,and colors compatible with the surrounding area. Licensee,within 6 months from the date of issuance of this license and before beginning any construction or maintenance activities of a land-disturbing nature,shall file this plan with the Commission.The Commission reserves the right to reguire modification to the plan.Unless the Director,Office of Hydropower Licensing,instructs otherwise,Licensee may commence land-disturbing activities 90 days after the filing date of the plan. Article 40.Licensee shall determine the impacts of thetransmissionLinecorridoronviewsfromairtrafficinthearea, including:(1)an analysis of the existing air traffic,including the volume and the routes of air traffic in the vicinity of the project facilities;(2)a discussion of pipelines,transmission lines,roads,and other linear corridors,which,together with the Bradley f.ake transmission line corridor,would affect visual resources when seen from the air;and (3)the degree to which the transmission line corridor should be mitigated.The results of the analysis shall include any mitigative measures recommended by the Licensee,and the comments and recommendations on the analysis by the Department of the Interior and the Alaska Department of Natural Resources,and shall be coordinated with the analysis conducted under Article 37. The Licensee,within 1 year from the date of issuance of this license and before beginning any transmission line construction or maintenance activities of a land-disturbing nature,shall file the results of the analysis with the Commission.Unless the Director, Office of Hydropower Licensing,instructs otherwise,Licensee may commence land-disturbing activities 90 days after the filing date of the report. -1g8- Article 41.Licensee shall monitor the development of thewaterfowlnestingareaintheBradleyLakeprojectarea.In the event that Licensee cannot successfully establish wetland plant species and provide available nesting habitat for wetland avian species within 5 years from the beginning of project operation, Licensee shall consult with the Alaska Department of Natural Resources and the 0.S.Fish and Wildlife Service and shall develop an alternative plan for the mitigation of project-related adverse impacts to wetland wildlife.Any alternative plan devel- oped shall be submitted to the Commission for approval,along with letters of comment from the consulted resource agencies, before implementation. Article 42.Licensee shall continue to consult with the Alaska Department of Fish and Game and the U.S.Fish and Wildlife Service on all major aspects of the approved wildlife mitigative plan, including but not limited to the:scheduling of aircraft flights, blasting,and other construction to minimize disturbance to wildlife;monitoring of harbor seals during construction,dredging, filling,and shipping activities;clearing of vegetation;revegeta- tion of areas disturbed during construction;and implementation of the environmental program for project field supervisors and P construction personnel.' Article 43.The Licensee shall commence construction of project works within two years from the issuance date of the license and shall complete construction of the project within four years from the issuance date of the license. Article 44,The Licensee shall file revised Exhibit F drawings showing the final design of project structures for approval of the Director,Office of Hydropower Licensing.The revised Exhibit F drawings shall be accompanied by a supporting design report and the Licensee shall not commence construction of any project structure until the corresponding revised Exhibit F drawing has been approved. Article 45.The Licensee shall submit to the Commission's Regional Pirector one copy and the Director,Division of Inspections two copies of the final contract drawings and specifications for pertinent features of the project,such as water retention structures, powerhouse,and water conveyance structures,at least 60 days prior to start of construction.The Director,Division of Inspections, may require changes in the plans and specifications to assure a safe and adequate project. Article 46.The Licensee shall review and approve the design of contractor-designed cofferdams and deep excavations prior to the start of construction and shall ensure that construction of cofferdams and deep excavations is consistent with the approved design.At least 30 days prior to start of construction of the cofferdam,the Licensee shall submit to the Commission's Regional Director and the Director,Division of Inspections,one copy of the -19- approved cofferdam construction drawings and specifications and a copy of the letter(s)of approval. Article 47.The Licensee shall within 90 days of completion of construction file with the Commission for approval by the Director,Division of Project Management revised Exhibits A,F, and G to describe and show the project as-built. Article 48.The Licensee shall retain a Board of three or more qualified,independent,engineering consultants to review the design,specifications,and construction of the project for safety and adequacy.The names and qualifications of the Board members shall be submitted to the Director,Office of Hydropower Licensing,for approval,with a copy to the Commission's Regional Director.Among other things,the Board shall assess the geologyoftheprojectsiteandsurroundings;the design,specifications, and construction of the dikes,dams,spillways,powerhouse, electrical and mechanical equipment,and emergency power supply; instrumentation;the filling schedule for the reservoir and plans for surveillance during the initial filling;and constructionproceduresandprogress.The Licensee shall furnish to the Board,with a copy to the Regional Director and two copies to the Director,Office of Hydropower Licensing,prior to each meeting, allowing sufficient time for review,documentation showing details and analyses of design and construction features to be discussed, significant events in design and construction that have occurred since the last Board of Consultants'meeting,drawings,questions to be asked,a list of items for discussion,an agenda,and a statement indicating the specific level of review to be performed by the Board.Within 30 days after each Board of Consultants' meeting,the Licensee shall file with the Commission copies of the Board's report and a statement of intent to comply with the Board's recommendations,or a statement identifying a plan to resolve the issue(s). e ° In the event of noncompliance,the Licensee shall provide detailed reasons for not doing so.The Board's review comments for each portion of the project shall be submitted prior to or simultaneously with the submission of the corresponding Exhibit F final design drawings and design memoranda.The Licensee shall also submit a final report of the Board upon completion of the project.The final report shall contain a statement indicating the Board's opinion with respect to the construction,safety,and adequacy of the project structures. Article 49.The Licensee shall pay the United States the following annual charges,effective the first day of the month in which this license is issued: (a)For the purpose of reimbursing the United States for the cost of administration of Part I of the Act,a reasonableamountasdeterminedinaccordancetheprovisionsoftheCommission's -20- regulations in effect from time to time.The authorized installed capacity for that purpose is 120,000 horsepower. (b)For the purpose of recompensing the United States for the use,occupancy,and enjoyment of 6,655 acres of its lands other than for transmission line right-of-way,a reasonable amount as determined in accordance with the provisions of the Commission's regulations in effect from time to time. (c)For the purpose of recompensing the United States for the use,occupancy,and enjoyment of 131 acres of its lands for transmission line right-of-way,a reasonable amount as determined in accordance with the provisions of the Commission's regulations in effect from time to time. Article 50.(a)In accordance with the provisions of thisarticle,the Licensee shall have the authority to grant permission for certain types of use and occupancy of project lands and waters and to convey certain interests in project lands and waters for certain other types of use and occupancy,without prior Commission approval.The Licensee may exercise the authority only if the proposed use and occupancy is consistent with the :purposes of protecting and enhancing the scenic,recreational, and other environmental values of the project.For those purposes, the Licensee shall also have continuing responsibility to supervise and control the uses and occupancies for which it grants permission, and to monitor the use of,and ensure compliance with the covenants of the instrument of conveyance for,any interests that it has conveyed,under this article.If a permitted use and occupancy violates any condition of this article or any other condition imposed by the Licensee for protection and enhancement of the project's scenic,recreational,or other environmental values,or if a covenant of a conveyance made under the authority of this article is violated,the Licensee shall take any lawful action necessary to correct the violation.For a permitted use or occupancy,that action includes,if necessary,cancelling the permission to use and occupy the project lands and waters and requiring the removal of any non-complying structures and facilities. (b)The types of use and occupancy of project lands and waters for which the Licensee may grant permission without prior Commission approval are:(1)landscape plantings;(2)noncommercial piers,landings,boat docks,or similar structures and facilities that can accommodate no more than 10 watercraft at a time and where said facility is intended to serve single family type dwellings;and (3)embankments,bulkheads,retaining walls,or similar structures for erosion control to protect the existing shoreline.To the extent feasible and desirable to protect and enhance the project's scenic,recreational,and other environmental values,the Licensee shall require multiple use and occupancy of -2l- facilities for access to project lands or waters.The Licensee shall also ensure,to the satisfaction of the Commission's authorized representative,that the uses and occupancies for which it grants permission are maintained in good repair and comply with applicableStateandlocalhealthandsafetyrequirements.Before granting permission for construction of bulkheads or retaining walls,the Licensee shall:(1)inspect the site of the proposed construction, (2)consider whether the planting of vegetation or the use of riprap would be adequate to control erosion at the site,and (3)determine that the proposed construction is needed and would not change the basic contour of the reservoir shoreline.To implement this paragraph (b),the Licensee may,among other things,establish a program for issuing permits for the specified types of use and occupancy of project lands and waters,which may be subject to the payment of a reasonable fee to cover the Licensee's costs of administering the permit program.The Commission reserves the right to require the Licensee to file a description of its standards,guidelines,and procedures for implementing this Paragraph (b)and to require modification of those standards, guidelines,or procedures. (c)The Licensee may convey easements or rights-of-wayacross,or leases of,project lands for:(1)replacement,expansion,realignment,or maintenance of bridges and roads for which all necessary State and Federal approvals have been obtained; (2)storm drains and water mains;(3)sewers that do not discharge into project waters;(4)minor access roads;(5)telephone,gas, and electric utility distribution lines;(6)non-project overhead electric transmission lines that do not require erection of support structures within the project boundary;(7)submarine, overhead,or underground major telephone distribution cables or major electric distribution lines (69-kV or less);and (8)water intake or pumping facilities that do not extract more than one million gallons per day from a project reservoir.No later than January 31 of each year,the Licensee shall file three copies of a report briefly describing for each conveyance made under this paragraph (c)during the prior calendar year,the type of interest conveyed,the location of the lands subject to the conveyance, and the nature of the use for which the interest was conveyed. (d)The Licensee may convey fee title to,easements or rights-of-way across,or leases of project lands for:(1)con- struction of new bridges or roads for which all necessary State and Federal approvals have been obtained;(2)sewer or effluent lines that discharge into project waters,for which all necessary Federal and State water quality certificates or permits have been obtained;(3)other pipelines that cross project lands or waters but do not discharge into project waters;(4)non-project overhead electric transmission lines that require erection of support structures within the project boundary,for which all necessary Federal and State approvals have been obtained;(5)private or -22- public marinas that can accommodate no more than 10 watercraft at:a time and are located at least one-half mile from any other private or public marina;(6)recreational development consistent with an approved Exhibit R or approved report on recreational resources of an Exhibit E;and (7)other uses,if:(i)the amount of land conveyed for a particular use is five acres or less;(ii)all of the land conveyed is located at least 75 feet, measured horizontally,from the edge of the project reservoir at normal maximum surface elevation;and (iii)no more than 50 total acres of project lands for each project development are conveyed under this clause (d)(7)in any calendar year.At least 45 days before conveying any interest in project lands under this paragraph (d),the Licensee must file a letter to the Director,Office of Hydropower Licensing,stating its intent to convey the interest and briefly describing the type of interest and location of the lands to be conveyed (a marked Exhibit G or K map may be used), the nature of the proposed use,the identity of any Federal or State agency official consulted,and any Federal or State approvals required for the proposed use.Unless the Director,within 45 days from the filing date,requires the Licensee to file an application for prior approval,the Licensee may convey the H intended interest at the end of that period. (e)The following additional conditions apply to any intended conveyance under paragraphs (c)or (d)of this article: (1)Before conveying the interest,the Licensee shall consult with Federal and State fish and wildlife or recreation agencies,as appropriate,and the State Historic Preservation Officer. (2)Before conveying the interest,the Licensee shall determine that the proposed use of the lands to be conveyed is not inconsistent with any approved Exhibit R or approvedreportonrecreationalresourcesofanExhibitE;or,if the project does not have an approved Exhibit R or approved report on recreational resources,that the lands to be conveyed do not have recreational value. (3)The instrument of conveyance must include covenants running with the land adequate to ensure that:(i)the use of the lands conveyed shall not endanger health,create a nuisance, or otherwise be incompatible with overall project recreational use;and (ii)the grantee shall take all reasonable precautions to ensure that the construction,operation,and maintenance of structures or facilities on the conveyed lands will occur in a Manner that will protect the scenic,recreational,and environ- mental values of the project. -23- (4)The Commission reserves the right to require the Licensee to take reasonable remedial action to correct any violation of the terms and conditions of this article,for the protection and enhancement of the project's scenic,recreational, and other environmental values. (f£)The conveyance of an interest in project lands under this article does not in itself change the project boundaries.The project boundaries may be changed to exclude land conveyed under this article only upon approval of revised Exhibit G or K drawings (project boundary maps)reflecting exclusion of that land.Landsconveyedunderthisarticlewillbeexcludedfromtheprojectonly upon a determination that the lands are not necessary for projectpurposes,such as operation and maintenance,flowage,recreation, public access,protection of environmental resources,and shoreline control,including shoreline aesthetic values.Absent extraordinary circumstances,proposals to exclude lands conveyed under this article from the project shall be consolidated for consideration when revised Exhibit G or K drawings would be filed for approval for other purposes. .(F)This orderis final unless appealed to the Commissionbyanypartywithin30daysfromtheissuancedateofthisorder under 18 C.F.R.385.1902 (1985).In acknowlegment of acceptance of this license and its terms and conditions,it shall be signed for the Licensee and returned to the Commission within 60 days from the date of this order. LUTDefela Kenneth M.Pusateri Acting Director,Office of Hydropower Licensing Project No.8221-000 IN TESTIMONY of its acknowledgment of acceptance of all of the terms and conditions of this order,Alaska Power Authority this 27.day of _January ,19 86,has caused its corporate name to be signed hereto by __LEE R.NUNN ' its Riek mim,and its corporate seal to be affixed hereto and attested by ROBERTL.HEATH its Secretary,pursuant to a resolution of its Board of Directors duly adopted on the 24 day of January .19 86 ,a certified copy of the record of which is attached hereto.[Y ?By :A, .I CHAIRMAN Attest: Secretary (Executed in quadruplicate) Porm i-2 (Revised Ccteser,1975) FEDERAL ENERGY REGULATORY COMMISSION TERMS AND CONDITIONS OF LICENSE FOR UNCONSTROCTED MAJOR PROJECT AFFECTING LANDS OF THE UNITED STATES Article 1.The entire project,as described in thisorderoftheCommission,shall be subject to all of the provisions,terms,and conditions of the license. Article 2.No substantial change shall be made in.the maps,plans,specifications,and statements describedanddesignatedasexhibitsandapprovedbytheCommissioninitsorderasapartofthelicenseuntilsuchchange shall have been approved by the Commission:Provided,however,That if the Licensee or the Commission deens ie necessary or desirable that said approved exhibits, or any of them,be changed,there shall be submittedtotheCommissionforapprovalarevised,or additionalexhibitorexhibitscoveringtheproposedchangeswhich,upon approval by the Commission,shall become a part of the license and shall supersede,in whole or in part,such exhibit or exhibits theretofore made a part of the license as may be specified by the Commission. Article 3.The project works shall be constructedinsubstantialconformitywiththeapprovedexhibitsreferredtoinArticle2hereinoragchangedinaccerd- ance with the provisions of said article.Except when emergency shall require for the protection of navigation, lite,health,or property,there shall net be made withoutsriorapprovaloftheCoamissionanysubstantialalterationozadditionnotinconformitywiththeapprovedpianstoany@ar.or other project works under the license or any sub-Stantial use of project lands and waters not authorized herein;and any emergency alteration,addition,or usesomadeshallthereafterbesubjecttosuchmodification and change as the Cogmission may direct.Minor changes in projectworks,or in uses of project lands and waters,or divergencefromsuchapprovedexhibitsmaybemadeifsuchchangeswillnetresultinadecreaseinefficiency,in a material increase incost,in an adverse environmental impact,or in impairment ofthegeneralschemeofdevelopmant;but any of such minor changesnadewithoutthepriorapprovaloftheCemaission,which in itsJudgmenthaveproducedorwillpreduceanyofsuchresults,aha {be subject to such alteration as the Commission mayirect.we Cpon tke completion of the procsect,or az such other time as the Commission may direct,the Licensee shall submiztotheCommissionforapprovalrevisedexhibitsinsofarasnecessarytoshowanydivergencefromorvariationsinthe project area and project boundary as finally located or intheprojectworksasactuallyconstructedwhencomparedwiththeareaandboundaryshownandtheworksdescribedinthe license ocr in the exhibits approved by the Commission,together with a statement in writing setting foreh the reasons whichintheopinionoftheLicenseenecessitatedorjustifiedvariationinordivergencefromtheapprovedexhibits.Such revised exhibits shall,if and when approved by the Commission,be made a part of the license under the provisions of Article 2 hereof. Article 4.The construction,operation,and mainetenanceoftheprojectandanyworkincidentaltoaddi- eions or alterations shall be subject to the inspection and supervision of the Regional Engineer,Federal PowerCommission,in the region wherein the project is located,or of such other officer or agent as the Commission maydesignate,who shall be the authorized representative of theCommissionforsuchpurpeses.The Licensee shall cooperate fully with said representative and shall furnish him adetailedprogramofinspectionbytheLicenseethatwillprovideforanadequateandqualifiedinspectionforce for construction of the project and for any subsequent alterations to the project.Construction of the projectworksoranyfeaturecralterationthereofshallnotbeinieiateduntiltheprogramofinspectionfortheproject works or any such feature thereof has been approved by said representative.The Licensee shall alse furnish to said representative such further information as he may raquire concerning the construction,operation,andmaintenanceoftheproject,and of any alteration thereof,and shall notify him of the date upon which work willbegin,as far in advance thereof as said representative may reasonably specify,and shall notify him promptlyinwritingofanysuspensionofworkforaperiodofmorethancneweek,and of its reswmption and completion. The Licensee shall allow said representative and ctherofficersoremployeesoftheUnitedStates,showing propercredentials,free and unrestricted access to,through,and across the project lands and project works in the performanceoftheirofficialduties.The Licensee shall comply withsuchrulesandregulationsofgeneralorspecialapplicabilityastheCommissionmayprescribefromtimetotimefortheprotectionoflife,health,or property.°we -=j- Arzicle $.The Licensee,within five years from tre dateofissuanceofthelicense,shall acquire title in fee or th right to use in perpetuity all lands,other than lands of theUnitedStates,necessary or appropriate for the construction,Maintenance,and cperation of the project.The Licensee or itsuccessorsandassignsshall,during the pericd of the license,retain che possession of all project propersy covered Sy thlicenseasissuedoraslateramended,including the project area,the project works,and all franchises,easements,waterrights,and rights of occupancy and use;and none of suchpropertiesshallbevoluntarilysold,leased,transferred, abandoned,or otherwise disposed of without the prior writtenapprovaloftheCommission,except that the Licensee may leaseozotherwisedisposeofinterestsinprojectlandsorpropertywitheutspecificwrittenapprovaloftheCommissionpursuanttothethencurrentregulationsoftheCommission.The provisions of this article are not intended to prevent theabandonmentortheretirementfromserviceofstructures, equipment,or other project works in connection with replace- ments therecf when they become obsolete,inadequate,orinefficientforfurtherserviceduetowearandtear;and mortgage or trust deeds or judicial sales made thereunder,or tax sales,shall not be deemed voluntary transfers withinthemeaningofthisarticle. Article 6.In the event the project is taken coverbytheUnitedStatesupontheterminationofthelicenseasprovidedinSection14oftheFederalPowerAct,or is transferred to a new licensee or to a non-power LicenseeundertheprovisionsofSection15ofsaidAct,the Licensee,its successors and assigns shall be responsible for,and shallmakegoodanydefectoftitleto,or of right of occupancyanduseis,any of such project property that is necessaryorappropriateorvaluableandserviceableinthemaintenance and cperation of the project,and shall pay and discharge,orshallassumeresponsibilityforpaymentanddischargeof,allliensorencumbrancesupontheprojectorprojectpropertycreatedbytheLicenseeorcreatedorincurredaftertheissuanceofthelicense:Provided,That the provisions ofthisarticleareactintendedtorequiretheLicensee,forthepurposeoftransferringtheprojecttotheUnitedStatesoftoanewlicensee,to acquire any different title to,orsightofcccupancyandusein,any of such project propertyeswasnecessarytoacquireforitsownpurposesasthecensee. e 4ée Article 7.'The actual legitimate original cost of the project,and of any addition thereto or bettermentthereof,shall be determined by the Commission in accordancewiththePederalPowerActandtheCommission's Rules and Regulations thereunder. Article 8.The Licensee shall install and thereafter maintain gages and stream-gaging stations for the purposeofdeterminingthestageandflowofthestreamorstreams on which the project is located,the amount of water held ia and withdrawn from storage,and the effective head ontheturbines;shall provide for the required reading of |such gages and for the adequate rating of such stations;and shall install and maintain standard meters adequate for the determination of the amount of electric energy generatedbytheprojectworks.The number,character,and location of gages,meters,or other measuring devices,and themethodofcperationthereof,shall at all times be satis- factory to the Commission or its authorized representative.The Commission reserves the right,after notice and opper-tunity for hearing,to require suck alterations in the number,character,and location of gages,meters,oFothermeasuringdevices,and the method of operation thereof, as are necessary to secure adequate determinations.Theinstallationofgages,the rating of said stream or streams,and the determination of the flow thereof,shall be under the supervision of,or in cocperation with,the District Engineer of the United States Geological Survey having charge ofstream-gaging operations in the region of the project,andtheLicenseeshalladvancetotheCnitedStatesGeological Survey the amount of funds estimated to be necessary for such supervision,or cooperation for such periods as may be mutually agreed upon.The Licensee shall keep accurate and sufficientrecorcsoftheforegoingdeterminationstothesatisfaction-O£f the Commission,and shall make return of such records annually at such time and in such form as the Commission may prescribe. Article 9.The Licensee shall,after notice andopportunityforhearing,install additional capacity or make other changes in the project as directed by the Commission, to the extent that it is economically sound and in the public interest to do so. Agticle 10.'The Licensee shall,after notice andopportunityforhearing,coordinate the operation of theproject,electrically and hydraulically,with such otherprojectsorpowersystemsandinsuchmannerastheCommissionmaydirectintheinterestofpowerandotherbeneficialpublicusesofwaterresources,and on such conditions concerning the equitable sharing of benefitsbytheLicenseeastheCommissionmayorder. Article 11.Whenever the Licensee is directlybenefitedbytheconstructionworkofanotherlicensee,a permittee,or the United States on a storage reservoirorotherheadwaterimprovement,the Licensee shall reimburse the owner of the Readwater improvement for such part of the annual charges for interest,maintenance,and depreciation therecf as the Commission shall determine to be equitable,and shall pay to the United States the cost of making suchdeterminationasfixedbytheCommission.Por benefits provided by a stcrage reservoir or other headwater improve- ment of the United States,the Licensee shall pay to theCommissiontheamountsforwhichicisbilledfromtime to time for such headwater benefits and for the cost of making the determinations pursuant to the then currentregulationsoftheCommissionunderthePederalPower Act. Article 12.The operations of the Licensee,so far astheyazfecttheuse,storage and discharge from storage ofwatersaffectedbythelicense,shall at all times becontrolledbysuchreasonablerulesandraguiationsastheCommissionmayprescribefortheprotactionoflife,health,and property,and in the interest of the fullesepracticableconservationandutilizationofsuckwaters for power purposes and for other beneficial public uses,including recreational purposes,and the Licensee shallveleasewaterfromtheprojectreservoiratsuchrateincubiccSeetpersecond,or such volume in acre-feet perspecifiedpericdoftime,as the Commission may prescribeforthepurposeshereinbeforementioned. e 13.On the application of any person,associa o Corporation,Federal agency,State ormunicipality,the Licensee shall permit such reasonableuseofitsreservoirorotherprojectproperties,includingworks,lands and water rights,or parts thereof,as maybeorderedbytheCommission,after notice and opportunity we for hearing,in the interests of comprehensive development of the waterway or waterways involved and the conservationandutilizationofthewaterresourcesoftheregionfor water supply or for the purposes of steam-electric,; ierigation,industrial,municipal or similar uses.TheLicenseeshallreceivereasonablecompensationforuse of ies reservoir or ceher project properties or partsehereofforsuchpurposes,to include at least full reimbursement for any damages or expenses which thejoineusecausestheLicenseetoincur.Any such compensation shall be fixed sy the Commission eitherbyapprovalofanagreementbetweentheLicenseeandthepartyorpartiesbenefitingorafternoticeandopportunityforhearing.Applications shall containinformationinsufficientdetailtoaffordafull understanding of the proposed use,including satisfactory evidence that the applicant possesses necessary waterrightspursuanttoapplicableStatelaw,or a showingofcausewhysuchevidencecannotconcurrentlybesubmitted, and a statement as to the relationship of the proposed use to any State or municipal plans or orders which mayhavebeenadoptedwithrespecttotheuseofsuchwatars. Article 14.In the construction or maintenance of theprojectworks,the Licensee shall place and maintain suitablestructuresanddevicestoreducetoareasonabledegreetheliabilityofcontactbetweenitstransmissionlinesand telegraph,telephone and other signal wires or power trans-mission lines constructed prior to its transmission lines and not owned by the Licensee,and shall also place andmaintainsuitablestructuresanddevicestoreducetoa reasonable degree the liability of any structures or wiresSallingorobstructingtrafficorendangeringlife.Noneoftheprovisionsofthisarticleareintendedtorelieve the Licensee from any responsibility or requirement whichmaybeimposedbyanyotherlawfulauthorityforavoidingoreliminatinginductiveinterference. Article 153.The Licensee shall,for the conservationanddevelopmentoffishandwildliferesources,construct, maintain,and operate,cr arrange for the construction,maintenance,and operation of suck reasonable facilities, and comply with such reasonable nodifications of the- project structures and operation,as may be ordered bytheCommissionuponitsownmotionorupontherecommendationoftheSecretaryoftheInteriororthefishandwildliteagencyoragenciesofanyStateinwhichtheprojectorapartthereofislocated,after sotice and opportunity -or hearing.we '-=7- Article 16.Whenever the United States shall desire, in conmection with the project,to construct fish andwildlifefacilitiesortoimprovetheexistingfishand wildlife facilities at its own expense,the Licensee shall permit the United States or its designated agency to use,free of cost,suck of the Licensee's lands and interests in lands,reservoirs,waterways and project works as may bereasonablyrequiredtocompletesuchfacilitiesorsuchimprovementsthereof.In addition,after notice andopportunityforhearing,the Licensee shall modify theprojectoperationasmaybereasonablyprescribedbytheCommissioninordertopermitthemaintenanceandoperation of the fish and wildlife facilities constructed cr improved by the United States under the provisions of this article.This article shall not be interpreted to place any obligaticn on the United States to construct or improve fish and wild=life facilities or to relieve the Licensee of any obligation under this license. tele 17.The Licensee shall construct,maintain, and operate,or shall arrange for the construction,main-tenance,and cperation of such reasonable recreational facilities,including modifications thereto,such asaccessroads,wharves,launching ramps,beaches,picnicandcampingareas,sanitary facilities,and utilities,giving consideration to the needs of the physicallyhandicapped,and shall comply with such reasonable modi- fications of the project,as may be prescribed here-after by the Commission during the term of this licenseuponitscwnmotionorupontherecommendationoftheSecretaryoftheInteriororotherinterestedFederal oz State agencies,after notice and opportunity for hearing. Article 18.So far as is consistent with properoperationoftheproject,the Licensee shall allowthepublicfreeaccess,to a reasonable extent,to project waters and adjacent project lands owned by theLicenseeforthepurposeoffullpublicutilizationof such lands and waters for navigation and for outdoorrecreationalpurposes,including fishing and hunting: Provided,That the Licensee may reserve from publicaccesssuchportionsoftheprojectwaters,adjacentlands,and project facilities as may be necessary fortheprotectionoflife,health,and property. Article 19.fn she construcsion,taintenance,oroperationoftheproject,the Licensee shall be responsiblefor,and shall take reasonable measures to prevent,soilerosiononlandsadjacenttostreamsorotherwaters,;seream sedimentation,and any form of water or air pollution.The Commission,upon request ocr upon its own motion,mayordertheLicenseetotakesuchmeasuresastheCommissicn finds to be necessary for these purposes,after notice and opportunity for hearing. Article 20.The Licensee shall consult with the appropriate state and Federal agencies and,within oneyearofthedateofissuanceofthislicense,shall sub- mit for Commission approval a plan for clearing the reser-voir area.Further,the Licensee shall clear and keep cleartoanadequatewidthlandsalengopenconduitsandshalldisposeofalltemporarystructures,unused timber,brush,refuse,or other material unnecessary for the purposes of thsprojectwhichresultsfromtheclearingoflandsorfromthemaintenanceoralterationoftheprojectworks.In addition,all trees along the periphery of project reservoirs which maydieduringoperationsoftheprojectshallberemoved.CponapprovaloftheclearingplanallclearingofthelandsandGisposaloftheunnecessarymaterialshallbedonewithdue diligence and to the satisfaction of the authorized represen-tative of the Commission and in accordance with appropriatePederal,State,and local statutes and regulations. Article 21.Timber on lands of the United States cut,used,or destroyed in the construction and maintenance of the projece works,or in the clearing of said lands,shallbepaidfor,and the resulting slash and debris disposedof,in accordance with the requirements of the agency of the United States having jurisdiction over said lands.Payment for merchantable timber shall be at current seump-age rates,and payment for young growth timber belowmerchantablesizeshallbeatcurrentdamageappraisalvalues.However,the agency of the United States havingjurisdictionmaysellordisposeofthemerchantabletimbertoothersthantheLicensee:Provided,That timbersosoldordisposedofshallbecutandremovedfromtheareapriceto,or withaut undue interference with,clearing-operations of the Licensee and in coordination with theLicensee's project construction schedules.Such sale ordisposaltocthersshallnotrelievetheLicenseeof responsibility for the clearing and disposal of allslasaanddebrisfromprojectlands. -9- Article 22.The Licensee shall do everything rea-sonably within its power,and shall require its employees,contractors,and employees of contractors to do every-thing reasonably within their power,both independentlyandupontherequestofofficersoftheagencyconcerned, eo prevent,to make advance preparations for suppression of,and to suppress fires on the lands to be cccupied or usedunderthelicense.The Licensee shall be Liable for and shall pay the costs incurred by the Cnited States in suppressingfirescausedfromtheconstruction,operation,or main-tenance of the project works or of the works appurtenant Or accesscery thereto under the license. Article 23.The Licensee shall interpose no ob-jection to,and shall in no way prevent,the use by theagencyoftheUnitedStateshavingjurisdictionoverthelandsoftheUnitedStatesaffected,or by persons orcorporationsoccupyinglandsoftheUnitedStatesunder permit,of water for fire suppression from any stream,conduit,or bedy of water,natural or artificial,used by the Licensee in the operation of the project workscoveredbythelicense,or the use by said parties ofwaterforsanitaryanddomesticpurposesfromanystream,conduit,or body of water,natural or artificial,used by the Licensee in the cperation of the projectworkscoveredbythelicense. Arsicie 24.The Licensee shall be liable for injury to,or des oa of,any buildings,bridges,roads,trails,lands,or other property of the United States,occasioned by the construction,maintenance,or operation of theprojectworksoroftheworksappurtenantoraccessory thereto under the license.Arrangements to meet suchliability,either by compensation for such injury ordestruction,or by reconstruction or repair of damagedproperty,or otherwise,shall be made with the appropriatedepartmentoragencyoftheCUnitedStates. Areisie2;:The Licensee shall allow any agency ofthe©.tates,without charge,to construct or permit to be constructed on,through,and across those projectlandswhicharelandsoftheUnitedStatessuchconduits, chutes,ditches,railroads,roads,trails,telephone andpowerlines,and other routes or means of transportationandcommunicationasarenotinconsistentwiththeenjoyment e e -10- of said lands by the Licensee for the purposes of the license. This license shall not be construed as conferring upontheLicenseeanyrightofuse,cccupancy,or enjoymentofthelandsoftheUnitedStatesotherthanforthe construction,Cperation,and maintenance of the projectasstatedinschelicense. Article 26.tn the construction and maintenance oftheproject,the location and standards of reads andtrailsonlandsoftheUnitedStatesandctheruses of lands of the Onited States,including the locationandconditionofquarries,borrow pits,and spoil dis-posal areas,shall be subject to the approval of the .department or agency of the United States having supervisionoverthelandsinvolved. Agicie 27.The Licensee shall make provision,orshall@reasonablecost,as determined by theagencyoftheUnitedStatesaffected,of making provisionforavoidinginductiveinterferencebetweenanyprojectexvansmissionlineorotherprojectfacilityconstructed,operated,or maintained under the license,and any radioinstallation,telephone line,or other communication facility installed or constructed before or after con-struction of such project transmission line or other projece facility and owned,cperated,or used by suchagencyoftheUnitedStatesinadministeringthelands.under its jurisdiction. Article 28.The Licensee shall make use of the Commissior'”sguidelinesotherrecognizedguidelinesfortreatmentof transmission line rights-of-way,and shall clear such portionsoftransmiagsionlinerights-of-way across lands of the UnitedStatesasaredesignatedbytheofficeroftheCUnitedStatesinchargeofthelands;shall keep the areas so designatedclearofnewgrowth,all refuse,and inflammable materialtothesatisfactionofsuchofficer;shall trim all branches of trees in contact with or liable to contace the trans- mission lines;shall cut and remove all dead or leaningtreeswhichmightfallincontacewiththetransmission lines;and shall take such other precautions againstfireasmayberequiredBysuchofficer.No fires foreheburningofwastematerialshallbesetexceptwith the prior written consent of the officer of the United States in charge of the lands as to time and place.we ad 'Li ed article 29.The Licensee shall cooperate with theOnitedstatesinthedisposalbytheUnitedStates,undereheActofJuly31,1947,61 Stat.681,as amended (30 0.S.C.sec.601,et oe of mineral and vegetative materials from,lands of the United states cecupied by the project or anypartthereof:Provided,That such disposal has beenauthorizedby-Se Commission and that it does notunreasonablyinterferewiththeoccupancyofsuch landsbytheLicenseeforthepurposesofthelicense:Providedfurther,That in the event of disagreement,any question of unreasonable interference shall be determined by the Commission after notice and opportunity for heariag. Article 30.If the Licensee shall cause or sufferessentialprojectpropertytoberemovedordestroyedortobecomeunfitforuse,without adequate replacement,or shall abandon or discontinue good faith eperation of the project or refuse or neglect to comply with thetermsofthelicenseandthelawfulordersofthe Commission mailed to the record address of the Licensee or its agent,the Commission will deem it to be the intent of the Licensee to surrender the license.The Commission,after notice and opportunity fer hearing,may require the Licensee to remove any or all structures, equipment and power lines within the project boundary and to take any such other action necessary to restoretheprojectwaters,lands,and facilities remainingwithintheprojectboundarytoaconditionsatisfactoryeotheCnitedStatesagencyhavingjurisdictionoverieslandsortheCommission's authorized representative, as appropriate,or to provide for the continued operation and maintenance of nonpower facilities and fulfill suchotherobligationsunderthelicenseastheCommission may prescribe.In addition,the Commission in its diseretion,after notice and opportunity for hearing, may alse agree to the surrender of the license when theCommission,for the reasons recited herein,deems it to be the intent of the Licensee to surrender the license. Article 31.The right of the cicensee and of itssuccessorsandassignstouseoroccupywatersoverwhichtheUnitedStateshasjurisdiction,or lands of the Onited States under the license,for the purpose of maintaining the project works or otherwise,shall absolutely cease at the end of the license period,unless the Licensee has cbtained a new license pursuant eo the then existing laws and regulations,of an annual..cense onder the terms and conditions of this license. Article 32.The terms and conditions expresslysetfoisthelicenseshallnotbeconstruedas impairing any terms and conditions of the Federal PowerActwhicharenetexpresslysetforthherein. ALASKA POWER AUTHORITY Resolution 1986-02 Resolution of the Alaska Power Authority Accepting Federal Energy RegulatoryCommission(FERC)License for the Bradley Lake Hydroelectric Project. WHEREAS,the Alaska Power Authority filed an application on April 4,1984 for a license under Part I of the Federal Power Act to construct,operate,andmaintaintheBradleyLakeHydroelectricProject,and WHEREAS,the FERC concluded that the issuance of this license is in the public interest and thereby issued the license on December 31,1985. NOW,THEREFORE,BE IT RESOLVED by the Authority:."e e That the Alaska Power Authority Board 'of Ofrectors hereby accepts the FERClicenseandthetermsandconditionsascontainedtherein. That the Chairman of the Board {is authorized to sign and accept the license onbehalfoftheAlaskaPowerAuthority. .The resolution having been submitted to a vote,the vote thereon was asfollows:thn,tom T .YEAS:: NAYS: ABSENT:Ihr.And the resolution was declared adopted on this the Z4 day ofnity»1986,°ALASKA POWER AUTHORITY .waiting,O)Nass.ecretary NOTARY FOR STATE,OF:.pe Ay ee *, . 2552/528/2 Exhibit BL-2 EXECUTIVE DIRECTOR'S CERTIFICATE I,ROBERT E.LeRESCHE,Executive Director of the Alaska Energy Authority (the "Authority"),HEREBY CERTIFY that attached hereto is a true and correct copy of a resolution entitled:"Alaska Energy Authority Power Revenue Bond Resolution",adopted by the Authority on September 7,1989,and that said document,with subsequent amendments duly approved by me pursuant to Section 1005 thereof,has not been further amended or repealed,but is in full force and effect. IN WITNESS WHEREOF,I have hereunto set my hand and the seal of the Authority this 5th day of October 1989. LhRecelaROBERTE.LeRESCHE Executive Director [SEA ]j A16429CM Exhibit A ALASKA ENERGY AUTHORITY POWER REVENUE BOND RESOLUTION Adopted:September 7,1989 Exhibit A ALASKA ENERGY AUTHORITY POWER REVENUE BOND RESOLUTION Table of Contents* Page ARTICLE I Definitions and Statutory Authority 101.Definitions.......emer rere reer cent eee eee neces 1 102.Interpretation............0.06.acerenaee ere eee 13 103.Authority for this Resolution.........--cceeeceees 14 104.Resolution to Constitute Contract........sae eee 14 105.Obligation of Bonds.........ccc nec c enc ancecusenecs 15 ARTICLE II Authorization and Issuance of Bonds 201.Authorization of BondS.........ccc wee cee ee ee eee eee 15 202.General Provisions for Issuance of Bonds.......aoe 16 203.Project Issue........ee ee cece ee eee en emcee r recs cons 18 204.Additional BondsS........ccc w crn w enn enna nssccnenns 19 205.Refunding BondsS.......cece ere cece ccc ee cere re enaces 19 ARTICLE III General Terms and Provisions of Bonds 301.Medium of Payment;Form and Date;Letters and Numbers.....ceceecavres eee meer ratte wens 20 302.Legends...cc eee e cence cere seen e eter creamer ne enes 21 303.Execution and Authentication.........rr rrr 21 304.Exchange of BondsS.......cece esc cee r rent aneween 22 305.Negotiability,Transfer and Registry......cece ones 22 306.Regulations With Respect to Exchanges and i a eSok_)og «re 25 307.Bonds Mutilated,Destroyed,Stolen or Lost........25 308.Temporary BondsS........eceseeceeee eee meeeeenwees 25 *The Table of Contents is not part of this Resolution. Exhibit A ARTICLE IV Redemption of Bonds Page 401.Privilege of Redemption and Redemption Price......26 402.Redemption at the Election or Direction of the Buthority...ccc cece cece cece te ere eee e etc ee scene 26403.Redemption Otherwise Than at the Authority'8ElectionorDirection......ee menaeraces eee ceeee .27 404.Selection of Bonds to be Redeemed..............27 405.Notice of Redemption......vee meee ee emcee eee enee 27 406.Payment of Redeemed Bonds...........406 ence e ae eeee .28 ARTICLE V Establishment of Funds and Application Thereof 501.Pledge of Revenues and Other Funds............sees 284502.Establishment of Funds and Accounts.....cee acer ees 30 503.Construction Fund........rr cece ete ewes 30 504.Revenues and Revenue Fund........rr 36 505.Operating Fund............eee meee eee w eee eee eans 36506.Payments Into Certain Funds.ra 36 507.Debt Service Fund.............eee et heme ear cee eee .39 508.Capital Reserve Fund.....ce cece ence n vec cencves cee 40509.Renewal and Contingency Reserve Fund.ea arran 41 510.Excess Investment Earnings Fund........cccccccvens 42 511.Cancellation and Destruction of Bonds.....nee eaee 42 ARTICLE VI Depositories of Moneys,Security for Deposits and Investment of Funds 601.Depositories.........bee ences see ence cece eee .42 602.Deposits...crv sevcccncscesereecracscresevens ovens 43603.Investment of Certain Funds ws ceee een ccanes wee eee 44 604.Valuation and Sale of Investments..............eee 44 ARTICLE VII Particular Covenants of the Authority 701.Payment of Bonds.........2ceceeeeeoee eee wean eee ee 45702.Extension of Payment of Bonds cece rete eeee eee e nee 45 703.Offices for Servicing BondS.....scrcccncvcerccsnns 46 TABLE OF CONTENTS Page 2 A16355CM Exhibit A 70¢Further ASBULFANCE...cece eee eee ree reer een et neunees 46 705.Power to Issue Bonds and Pledge Revenues and Other Funds...ccc ecw cence ccc n cer suse verve rseves 46706.Power to Fix and Collect Rates,Fees and Charges.47707.Creation of Liens;Sale and Lease of Property.....47 708.Consulting Engineer.....eeee cece ee eeeee eeeeneeas 48709.Amnual Budget....cc cccenveerevvervcvescvaces eres 48 710.Limitations on Operating Expenses and Other Costs...ccc cc cnn ncvcacnanan a rr 49711.Acquisition and Construction of Project andItsOperationandMaintenance............4.cee eee 49 712.Rates,Fees and Charges.....cccceeewereereees 50 713.Power Sales Agreement.....cc cc ccce enn n ness secnnce 51 714.Insurance.......see e ee enee vee c eee ee neem cence 52715.Reconstruction:Application.of Insurance PYOCEEYKS.oo cece cw ewe eww eww eee nace cea c teen ee nanse 54 716.Maintenance of Capital Reserve Fund.........c.ece00.55 717.Accounts and Reports....ccc ee ere ncccrnervvecresene 56 718.Tax Covenants....ccc ccc e ccc c we rece w mew eee e eww:58719.Payment of Taxes and Charges........-..-c-ceeseveee 59 720.Pledge of the State...............doce were reer veee 59 721.Waiver of Laws.........irre 60 722.Special Provisions Relating to BIG............008-60 723.General...crc ccs ccc c errr rc cnc e none nrc cse nee nsccene 61 ARTICLE VIII Remedies of Bondholders 8Ol.Events of Default...ccc ccc ccc cece er ccc cccccenaces 62 802.Account and Examination of Records After Default.ccrceccansceencccccae seem neerscece 63803.Application of Revenues and Other MoneysAfterDefault...ccc cee ee eee eee reece eee sees 63804.Appointment of Receiver eee re eee eee eee een ete .65 805.Proceedings Brought by Trustee.........-ceeceseces 65806.Restriction on Bondholder's Action..........cece0-66 807.Remedies Not Exclusive.............,occ ce rr nces o.66 808.Effect of Waiver and Other Circumstances..........67 809.Notice of Default........ee ewe eet eee twee eee 67 ARTICLE IX Concerning the Fiduciaries 901.Trustee;Appointment and Acceptance of Duties.....67 902.Paying Agents;Appointment and Acceptance of Duties...cccccccccae Cece eww eee ee tees e et eceene 67 903.Responsibilities of Fiduciaries...........weeeee 68 TABLE OF CONTENTS Page 3 A16355CM Exhibit A 904.Evidence on Which Fiduciaries May Act.........0....68 905.Compensation.....cscesreves sce m ern ceeee ee eee eee ees 69 906.Certain Permitted ActsS....ccc cree ceceenecennens 69907.Resignation of Trustee........eee rec ewe tee wwe eee 69 908.Removal of Trustee.........ccc eee ees cee eer aee 70 909.Appointment of Successor Trustee;Financial Qualifications of Trustee and Successor M hp og 8 C3 ot |-rar 70910.Transfer of Rights and Property to Successor Trustee.........ceca ee neene seer eee ewer eerste reese 71 911.Merger or Consolidation.....2.2...2.eee wees 71912.Adoption of Authentication............006.eee eeeas 72 913.'Resignation or Removal of Paying Agent and Appointment of Successor......cee eee reer ee eeeens 72 ARTICLE X Supplemental Resolutions 1001.Supplemental Resolutions Effective Upon Filing With the Trustee......cee cece eee eee eee ee eens 72 1002.Supplemental Resolutions Effective Upon Consent Of Trustee....ccc ccc cc eee nent wens 74 1003.Supplemental Resolutions Effective With Consent Of Bondholders......cc ewer cece cere renee nee nee 74 1004.General Provisions........cece cw ere ee tet reeane 74 1005.Amendments Prior to Delivery of Bonds.............75 ARTICLE XI 1101.Mailing......ccc w ee cece ee ee eee eae eceeee 76 1102.Powers of Amendment.........sseeeee0.rrr 76 1103.Consent of Bondholders.............sec eee ee cece .77 1104.Modification by Unanimous Consent..............065 78 1105.Exclusion of BondB......cen ener rene secre nee aneaee 79 1106.Notation on Bonds...........ceeeewennese scee eee eee 79 ARTICLE XII Miscellaneous 1201.Defeasance.........ee meee ee eee eee tteeeee eae 791202.Evidence of Signatures of Bondholders and Ownership of BondS......cee een cern eacnce ee eee een 82 1203.Moneys Held for Particular Bonds........voce ne neas 82 1204.Preservation and Inspection of Documents..........83 1205.No Recourse on the Bonds........eeeereeee een aeee o.83 TABLE OF CONTENTS Page 4 A16355CM Exhibit A 1206.Severability of Invalid Provisions......see e eee eae 83 1207.Holidays.......see eueeee cheewceet reentereewean 831208.Notices...cece wre reece ner erect cece neteene wean 83 ARTICLE XIII Bond Form and Effective Date 1301.Form of Bonds and Trustee's Certificate of Authentication.....cc ewer reece reser ere vr sccerrens B84 1302.Effective Date...........secre e reer ten vone cece one 89 TABLE OF CONTENTS Page 5 A16355CM Exhibit A ALASKA ENERGY AUTHORITY POWER REVENUE BOND RESOLUTION BE IT RESOLVED by the Board of Directors of the Alaska Energy Authority,as follows: ARTICLE I Definitions and Statutory Authority 101.Definitions.The following terms shall,for all purposes of this Resolution,have the following meanings: "Accountant's Certificate"shall mean a certificate signed by a firm of independent certified public accountants of recognized national standing,selected by the Authority,which may be the firm of accountants which regularly audits the books of the Authority. "Act"shall mean Title 44,Chapter 83 of the Alaska Statutes (AS 44.83)as the same may be amended or supplemented from time to time. "Additional Bonds"shall mean Bonds authenticated and delivered pursuant to Section 204. "Aggregate Debt Service”for any period shall mean,as of any date of calculation,the sum of the amounts of Debt Service for such period with respect to all Series. "Annual Budget"shall mean the annual budget,as amended or supplemented,adopted or in effect for a particular Fiscal Year as provided in Section 709. "Annual Project Costs"shall have the meaning given it in Section 8 of the Power Sales Agreement. "Authority"shall mean the Alaska Energy Authority organized and existing under the Act. "Authorized Officer of the Authority”shall mean the Chairman of the Board of Directors,Vice Chairman of the Board of Directors,Executive Director,Secretary or Treasurer or any officer or employee of the Authority authorized to performspecificactsordutiesbyresolutiondulyadoptedbytheBoard BOND RESOLUTION Page 1 Ai6355CM Exhibit A of Directors.Whenever chief financial officer is used in this Resolution it shall mean a person designated as such by the Executive Director. "BIG"shall mean Bond Investors Guaranty Insurance Company and its successors. "Board of Directors"shall mean the Board of Directors of the Authority. "Bond”or "Bonds"shall mean any bond or bonds,note or notes,or evidence of indebtedness or evidences of indebted- ness,as the case may be,authenticated and delivered under and pursuant to,and entitled to the benefit and security of,this Resolution. "Bond Depository”means a Bondholder acting as a central securities depository as provided in Section 305. "Bondholder"or "Holder of Bonds"shall mean any person who shall be the registered owner of any Bond or Bonds. "Bond Registrar"shall mean the Trustee or any other bank or trust company organized under the laws of any state of the United States of America or any national banking association appointed by the Authority to perform the duties of Bond Regis- trar enumerated in Section 703. "Bond Year”shall mean each period of 12 calendar months ending on each July 1. "Capital Improvements"shall mean (a)repairs, maintenance,renewals,replacements,improvements or betterments required by federal or state law,a licensing or regulatory agency with jurisdiction over the Project,or the Power SalesAgreement,or otherwise necessary to keep the Project in good and efficient operating condition,consistent with (1)sound economics for the Project and the Purchasers and (2)national standards for the industry,which Capital Improvements consti- tute Required Project Work under the Power Sales Agreement;or (b)repairs,renewals and replacements,improvements,better- ments,additions or expansions which Capital Improvements do not constitute Required Project Work,but which in each case are approved by the Committee as Optional Project Work pursuant to the Power Sales Agreement.For purposes of this Resolution, "national standards for the industry”shall mean Prudent Utility Practice. "Capital Reserve Fund"shall mean the Capital Reserve Fund established in Section 502. BOND RESOLUTION Page 2 A16355CM Exhibit A "Capital Reserve Requirement"shall mean (i)an amount equal to the lesser of Maximum Aggregate Debt Service or ten per cent of the proceeds of Bonds;or (ii)such other lesser amount as is required in order to maintain the tax-exempt status of the Bonds. "Code"shall mean the Internal Revenue Code of 1986, as amended, "Committee”shall mean the Project Management Commit- tee established in the Power Sales Agreement. "Construction Engineer"means an independent engineer or engineering firm or corporation having a nationwide and favorable reputation and demonstrated experience in the field of construction engineering and construction management at the time retained by the Authority to perform the acts and carry out the duties provided for such Construction Engineer in this Resolu- tion, "Construction Fund"shall mean the Construction Fund established in Section 502. "Consulting Engineer"means an independent engineer or engineering firm or corporation having a nationwide and favorable reputation and demonstrated experience in the field of consulting engineering for power systems at the time retained by the Authority pursuant to Section 708 to perform the acts and carry out the duties provided for such Consulting Engineer in this Resolution. "Cost of Acquisition and Construction”shall mean all costs and expenses of planning,designing,acquiring,con- structing,installing and financing the Project or a Capital Improvement,placing the Project or a Capital Improvement in operation,and obtaining governmental approvals,certificates, permits and licenses with respect thereto,heretofore or hereaf- ter paid or incurred by or on behalf of the Authority or by any Purchaser which has heretofore entered into a contract or con- tracts with the Authority with respect to construction or acqui- sition of the Project or a Capital Improvement.Such costs shall include amounts required to be paid to any other party which are applied or are to be applied under agreement to the payment of items of Cost of Acquisition and Construction.The Cost of Acquisition and Construction shall include,but shall not be limited to: (1)Costs of preliminary investigation and develop-ment,the performance or acquisition of feasibility and planning studies,the securing of regulatory approvals,as well as costs for land and land rights,water and water rights,engineering, BOND RESOLUTION Page 3 A16355CM ExhibitA contractors'fees,labor,materials,equipment,utility services and supplies,accounting,legal and financing fees and expenses; (2)Working capital and reserves in such amounts as shall be required during construction of the Project or a Capi- tal Improvement and to place the Project or a Capital Improve- ment in operation and such additional amounts of working capital and reserves as are required by this Resolution; (3)Interest accruing in whole or in part on Bonds prior to and during construction and for such additional period as the Authority may reasonably determine to be necessary for the placing of the Project or a Capital Improvement or any facility thereof in operation in accordance with the provisions of this Resolution; (4)Amounts,if any,required by this Resolution or a Supplemental Resolution to be paid from the proceeds of Bonds issued to finance the Cost of Acquisition and Construction into any Funds or Accounts established pursuant to this Resolution; (5)The payment of principal,premium,if any,and interest when due (whether at the maturity of principal or at the due date of interest or upon redemption)on any bond antici- pation note or other note or evidence of indebtedness issued in anticipation of Bonds for the purpose of financing the Cost of Acquisition and Construction of the Project or a Capital Im- provement,including,without limitation,the Variable Rate Demand Bonds; (6)Training and testing costs incurred by the Authority which are properly allocable to acquisition and con- atruction; (7)All costs of insurance applicable to the period of construction; (8)The cost of restoring and repairing in accordance with Prudent Utility Practice all public or private property damaged or destroyed in the construction of the Project or a Capital Improvement,or the amount required by law to be paid by the Authority as adequate compensation for such damages,oramountsrequiredbylaworPrudentUtilityPracticetobepaid with respect to the restoration,relocation,removal,recon-struction or duplication of property made necessary or caused by the construction and installation of such Project or a Capital Improvement to the extent such costs are not otherwise paid out of the proceeds of insurance; BOND RESOLUTION Page 4 A16355CM ExhibitA (9)Legally required or permitted federal,state and local taxes and payments in lieu of taxes applicable to the period of construction; (10)All other costs incurred by or on behalf of theAuthorityandproperlyallocabletotheacquisitionandcon- struction of the Project or a Capital Improvement;and (11)Coste of Issuance. "Costs of Issuance”shall mean any item of expense payable or reimbursable,directly or indirectly,by the Authori- ty and related to the authorization,offering,sale,issuance and delivery of Bonds,including,but not limited to,printing costs,costs of preparation and reproduction of documents,fil- ing and recording fees,initial fees and charges of any Fiduci- ary,legal fees and disbursements,fees and disbursements of the Consulting Engineer,fees and disbursements of other consultants and professionals,costs of credit ratings,fees and charges for preparation,execution,transportation and safekeeping of Bonds, application fees and premiums on municipal bond insurance, credit facility charges and costs and expenses relating to the refunding of Bonds or other obligations issued to finance or refinance the Project or a Capital Improvement,including,but not limited to,the refunding of the Variable Rate Demand Bonds and any obligations of the Authority outstanding at the time of adoption of this Resolution,the proceeds of which were applied to pay the Cost of Acquisition and Construction of the Project. "Counsel's Opinion"or "Opinion of Counsel"shall mean an opinion of counsel of nationwide recognized standing in the field of municipal bonds,selected by the Authority and not objected to by the Trustee in writing within 5 days after written notice of selection. "Date of Commercial Operation”shall have the meaning ascribed thereto in the Power Sales Agreement. "Debt Service”for any period shall mean,as of any date of calculation and with respect to any Series,an amount equal to the sum of (i)interest accruing during such period on Bonds of such Series,except to the extent that such interest is to be paid from deposits in the Interest Account in the Debt Service Fund made from Bond proceeds and (ii)that portion of each Principal Installment for such Series which would accrue during such period if such Principal Installment were deemed to accrue daily in equal amounts from the next preceding Principal Installment due date for such Series (or,if there shall be no such preceding Principal Installment due date,from a date one year preceding the due date of such Principal Installment orfromthedateofissuanceoftheBondsofsuchSeries,whichever BOND RESOLUTION Page 5 A16355CM ExhibitA date is later).Such interest and Principal Installments for such Series shall be calculated on the assumption that no Bonds of such Series Outstanding at the date of calculation will cease to be Outstanding except by reason of the payment of each Principal Installment on the due date thereof.For purposes of this definition (x)interest and Principal Installments with respect to interest accreting on compound interest or zero coupon or like interest paying Bonds shall be deemed to accrue in the 12 months immediately prior to the final maturity of such Bonds;and (y)the Authority may determine that interest will accrue on variable rate Bonds at a rate equal to the actual rate during a prior period. "Debt Service Fund"shall mean the Debt Service Fund established in Section 502. "Depository"shall mean any bank or trust company organized under the laws of any state of the United States of America or any national banking association selected by the Authority and approved in writing by the Trustee as a depository of moneys and securities held under the provisions of this Resolution,and may include the Trustee;provided that,if the Trustee shall fail to so approve,it shall deliver to the Authority a statement of its reasons for such failure. "Event of Default"shall have the meaning given to such term in Section 801. "Excess Investment Earnings”shall mean that amount determined by the Authority to be required to be rebated to theUnitedStatesGovernmentpursuanttotheCode. "Excess Investment Earnings Fund"shall mean the Excess Investment Earnings Fund established in Section 502. "Federal Obligation"shall mean any direct obligation of,or any obligation the full and timely payment of principal of and interest on which is guaranteed by,the United States of America. "Fiduciary”or "Fiduciaries"shall mean the Trustee, the Bond Registrar,the Paying Agents,or any or all of them,as may be appropriate. "Fiscal Year"shall mean the twelve-month period commencing on July 1 of each year and including June 30 of the succeeding calendar year. "Fund"or "Funds"shall mean,as the case may be,each or all of the Funds established in Section 502. BOND RESOLUTION Page 6 A16355CM Exhibit A "Insurance Trustee"shall mean Bankers Trust Company. "Insured Bonds"shall mean the Bonds insured by theMunicipalBondInsurancePolicy. "Interest Account”shall mean the Interest Account in the Debt Service Fund established in Section 502. "Investment Securities"shall mean and include any of the following securities,if and to the extent the same are at the time legal for investment of the Authority's funds: (i)Federal Obligations; (11)obligations of the Government National Mortgage Association,the Federal National Mortgage Asso- ciation to the extent that such obligations are guaranteed by the Government National Mortgage Association,the Federal Financing Bank,the Federal Intermediate Credit Banks,Federal Banks for Cooperatives,Federal Land Banks, Federal Home Loan Banks,Farmers Home Administration and Federal Home Loan Mortgage Association; (iii)new housing authority bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States of America;or project notes issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America; (iv)direct and general obligations of any state of the United States of America,to the payment of the principal of and interest on which the full faith and credit of such state is pledged,provided that at the time of their purchase under this Resolution such obligations are rated not less than Aa or AA or their equivalents byMoody's Investors Service,Inc.and Standard &Poor's Corporation,or their successors; (v)certificates of deposit,whether negotiable or nonnegotiable,issued by any bank or trust company organized under the laws of any state of the United States of America or any national banking association (including any Fiduciary),provided that such certificates of deposit shall be purchased directly from such a bank,trust company or national banking association and shall be either (1) BOND RESOLUTION Page 7 A16355CM Exhibit A continuously and fully insured by the Federal Deposit Insurance Corporation,or (2)continuously and fully secured by Qualified Collateral,which shall have a market value (exclusive of accrued interest)at all times at least egual to 100%of the principal amount of such certificates of deposit and shall be lodged with the trust department of the Trustee or with a Federal Reserve Bank or branch,as custodian,by the bank,trust company or national banking association issuing each such certificate of deposit required to be so secured; (vi)repurchase agreements with banks which are members of the Federal Reserve System or with government bond dealers recognized as primary dealers by the Federal Reserve Bank of New York that are secured by Federal Obligations or the obligations referred to in paragraph(ii)(herein called "Other Obligations"),having a current market value at least equal to 100%of the amount of the repurchase agreement,marked to market weekly,and which Federal Obligations or Other Obligations shall have been deposited in trust by such bank or dealer with the trust department of the Trustee or with a Federal Reserve Bank or branch,or with another third party custodian approved bytheTrustee,by such bank or dealer and by the Authority,as collateral security for such repurchase agreements; (vii)"commercial paper"rated either A-1 or P-1l, or corporate bonds or notes,in each case issued by a United States corporation,rated in one of the two highest rating categories by Standard &Poor's Corporation andMoody's Investors Service Inc. (viii)investment agreements with any corporation, including banking or financial institutions,the corporate debt of which is rated,at the time of investment,"Aa"or better by Moody's Investors Service,Inc.and "AA"or better by Standard &Poor's Corporation or secured in the same Manner as repurchase agreements in paragraph (vi); (ix)guaranteed investment contracts or similar funding agreements issued by insurance companies,the corporate debt of which,at the time of investment,is rated "Aa"or better by Moody's Investors Service,Inc.and"AA"or better by Standard &Poor's Corporation,or Bests and the contract is pari passu with senior debt,or the contract is rated in one of the two highest ratingcategoriesbyStandard&Poor's Corporation and Moody's Investors Service,Inc.or Bests;and (x)units of a taxable government money market fund consisting of obligations guaranteed by the full faith and BOND RESOLUTION Page 8 A16355CM Exhibit A credit of the United States of America and repurchase agreements secured as provided in paragraph (vi). "Maximum Aggregate Debt Service”shall mean,as of any date of calculation,the greatest amount of Aggregate Debt Service payable in any unexpired Bond Year. "Municipal Bond Insurance Policy”shall mean the municipal bond insurance policy issued by BIG simultaneously with the delivery of Insured Bonds,insuring the payment of the principal of and interest on all of the Insured Bonds in accordance with the terms thereof. "Operating Expenses”shall mean (i)the Authority's operation,maintenance,administrative and general expenses of the Project,and shall include,without limiting the generality of the foregoing,costs of investigations,insurance,ordinary repairs of the Project which do not entail the acquisition and installation of a unit of property (as generally prescribed by the Federal Energy Regulatory Commission),fuel costs,rents, engineering expenses,legal and financial advisory expenses, Committee expenses,refunds for overpayments by Purchasers, salaries and required Project employee costs,any taxes or payments in lieu of taxes pursuant to the Act or otherwise pursuant to law,(ii)any other current expenses or obligations required to be paid by the Authority under the provisions of this Resolution or by law,all to the extent properly allocable to the Project,or required to be incurred under or in connec- tion with the performance of the Power Sales Agreement,and (iii)the fees and expenses of the Fiduciaries.Operating Expenses includes all the items listed in Section 8(a)of the Power Sales Agreement under the definition of Annual Project Costs except the items listed under Section 8(a)(i),(ii)and (iv).Operating Expenses shall not include any costs or expens- es for new construction or any allowance for depreciation. "Operating Fund"shall mean the Operating Fund estab- lished in Section 502. "Operating Reserve Account"shall mean the Operating Reserve Account established in Section 502. "Operating Reserve Account Requirement"shall mean zero until the earlier of the Date of Commercial Operation or the date of retirement of all of the Variable Rate Demand Bonds and thereafter shall mean an amount equal to 20 %of the Operating Expense component of the Annual Budget as calculated annually,or such other amount as may be determined pursuant to the Power Sales Agreement. BOND RESOLUTION Page 9 A16355CM Exhibit A "Optional Project Work"shall have the meaning given it in Section 1 of the Power Sales Agreement. "Outstanding”,when used with reference to Bonds, shall mean,as of any date,Bonds theretofore or thereupon being authenticated and delivered under this Resolution except: (i)Bonds cancelled by the Trustee at or prior to such date; (ii)Bonds (or portions of Bonds)for the payment or redemption of which moneys equal to the principal amount or Redemption Price thereof,as the case may be,with interest to the date of maturity or redemption date,shall be held in trust under this Resolution and set aside for such payment or redemption (whether at or prior to the maturity or redemption date),provided that if such Bonds (or portions of Bonds)are to be redeemed,notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice; (iii)Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and deliv- ered pursuant to Article III or Section 406 or Section 1106;and (iv)Bonds deemed to have been paid as provided in subsection 2 of Section 1201., "Paying Agent"shall mean any bank or trust company organized under the laws of any state of the United States of America or any national banking association designated as paying agent for the Bonds of any Series,and its successor or successors hereafter appointed in the manner provided in this Resolution. "Power Sales Agreement”shall mean the Power Sales Agreement for the purchase and sale of Project capacity (togeth- er with associated energy)dated as of December 8,1987 between the Authority and the Purchasers as the same may be amended. "Principal Account"shall mean the Principal Account in the Debt Service Fund established in Section 502. "Principal Installment”shall mean,as of any date of calculation and with respect to any Series,so long as any Bonds thereof are Outstanding,(i)the principal amount of Bonds of such Series due on a certain future date for which no Sinking Fund Installments have been established,or (ii)the unsatisfied balance of any Sinking Fund Installments due on a certain future BOND RESOLUTION Page 10 A16355CM ExhibitA date for Bonds of such Series,plus the amount of the sinking fund redemption premiums,if any,which would be applicable upon redemption of such Bonds on such future date in a principal amount equal to said unsatisfied balance of such Sinking Fund Installments,or (iii)if such future dates coincide as to @Gifferent Bonds of such Series,the sum of such principal amount of Bonds and of such unsatisfied balance of Sinking Fund In- stallments due on such future date plus such applicable redemp- tion premiums,if any. "Project"shall mean the Bradley Lake Hydroelectric Project,as the same is described on Exhibit C to the Power Sales Agreement. "Project Capacity"means the amount of electric capacity capable of being produced by the Project (including capacity attributable to Required or Optional Project Work)at any and all times from the Date of Commercial Operation until the termination of the Power Sales Agreement (or any renewal or replacement thereof)under the operating conditions that exist during such times,including periods when the Project may be not operating or inoperable or the operation thereof is suspended, interrupted,interfered with,reduced,or curtailed,in each case in whole or in part for any reason whatsoever,after corrections for station and Project use,and depletions required under any federal license for the Project. "Prudent Utility Practice"shall mean at a particular time any of the practices,methods and acts,engaged in or approved by a significant portion of the electric utility indus- try at such time,or which,in the exercise of reasonable judg- ment in the light of the facts known at such time,could have been expected to accomplish the desired result at the lowest reasonable cost consistent with good business practices,reli- ability,safety and reasonable expedition.Prudent Utility Practice is not required to be the optimum practice,method or act to the exclusion of all others,but rather to be a spectrum of possible practices,methods or acts which could have been expected to accomplish the desired result at the lowest reason- able cost consistent with reliability,safety and expedition.Prudent Utility Practice includes due regard for manufacturers' warranties and requirements of governmental agencies of compe- tent jurisdiction and shall apply not only to functional parts of the Project,but also to appropriate structures,landscaping, painting,signs,lighting and other facilities.In evaluating whether any matter conforms to Prudent Utility Practice,thereshallbetakenintoaccount(i)the nature of the Authority and Purchasers under the laws of the State of Alaska and their statutory duties and responsibilities and (ii)the objective of integrating the Project with the generating resources of the Purchasers,including resources available under contract,to BOND RESOLUTION Page 11 A1635S5CM ExhibitA achieve optimum utilization of the resources and efficient andeconomicaloperationofeachPurchaser's electrical system.For purposes of this Resolution,"national standards for the indus- try"shall mean Prudent Utility Practice. "Purchasers"shall mean the entities defined as Purchasers in the Power Sales Agreement. "Qualified Collateral"shall mean: (1)Obligations described under items (i),(ii) and (iii)of the definition of Investment Securities; (ii)direct and general obligations of any state of the United States of America which are rated not less than AA or Aa or their equivalents by Standard &Poor's Corporation and Moody's Investors Service,Inc., respectively,or their successors. "Redemption Price”shall mean,with respect to any Bond,the principal amount thereof plus the applicable premium, if any,payable upon redemption thereof pursuant to such Bond or this Resolution. "Refunding Bonds*™shall mean all Bonds,whether issued in one or more Series,authenticated and delivered on original issuance pursuant to Section 205,and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to Article III or Section 406 or Section 1106. "Renewal and Contingency Reserve Fund”shall mean the Renewal and Contingency Reserve Fund established in Section 502. "Renewal and Contingency Reserve Requirement"shall mean zero until the earlier of the Date of Commercial Operation or the date of retirement of all of the Variable Rate Demand Bonds,and thereafter shall mean an amount equal to $5,000,000. "Required Project Work"shall have the meaning given it in Section 1 of the Power Sales Agreement. "Resolution"shall mean this Resolution as from time to time amended or supplemented by Supplemental Resolutions in accordance with the terms hereof. "Revenue Fund"shall mean the Revenue Fund established in Section 502. "Revenues"shall mean (i)all revenues,income,rents and receipts,derived or to be derived by the Authority from,or BOND RESOLUTION Page 12 A16355CM Exhibit A attributable to the ownership and operation of,the Project, including all revenues attributable to the Project or to payment of the costs thereof including,without limitation,all revenues received or to be received by the Authority under the Power Sales Agreement or under any other contract for the sale of power,energy,transmission or other service from the Project or any part thereof or any contractual arrangement with respect to the use of the Project or any portion thereof or the services, output or capacity thereof,and (ii)interest received or to be received on any moneys or securities (other than in the Con- struction Fund or in the Excess Investment Earnings Fund)held pursuant to this Resolution and required to be paid into the Revenue Fund. "Series"shall mean all of the Bonds authenticated and delivered on original issuance and identified pursuant to this Resolution or a Supplemental Resolution authorizing such Bonds as a separate Series of Bonds,and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to Article III or Section 406 or Section 1106,regardless of variations in maturity,interest rate, Sinking Fund Installments,or other provisions. "Sinking Fund Installment"means,as of any particular date of determination and with respect to the Outstanding Bonds of any Series,the amount required by a Supplemental Resolution to be paid in any event by the Authority on a single future date for the retirement of Bonds of such Series which mature after said future date,but does not include any amount payable by the Authority by reason only of the maturity of a Bond. "Supplemental Resolution"shall mean any resolutionsupplementaltooramendatoryofthisResolution,adopted by the Authority in accordance with Article xX. "Trustee"shall mean the trustee appointed pursuant to Article IX,and its successor or successors and any other corporation or association which may at any time be substituted in its place pursuant to this Resolution. "Variable Rate Demand Bonds"shall mean the $267,500,000 Alaska Power Authority Variable Rate Demand Bonds (Bradley Lake Hydroelectric Project)dated November 20,1985. 102.Interpretation.In this Resolution,unless the context otherwise requires: (i)The terms "hereby,""hereof,""hereto,”"hereunder,""herein"and any similar terms used herein refer to this Resolution,and the term "hereafter"shall BOND RESOLUTION Page 13 A16355CM Exhibit A mean after,and the term "heretofore"shall mean before, the date of adoption of this Resolution; (i1)Words of the masculine gender shall mean and include correlative words of the feminine and neuter genders and words importing the singular number shall mean and include the plural number and vice versa; (iii)Words importing persons shall include firms, associations,partnerships (including limited partnerships),trusts,corporations and other legal enti- ties,including public bodies,as well as natural persons; (iv)Words importing the redemption or redeeming of a Bond or the calling of a Bond for redemption do not include or connote the payment of such Bond at its stated maturity or the purchase of such Bond; (v)Any percentage of Bonds,for purposes of this Resolution,shall be computed on the basis of the unpaid principal amount of Bonds Outstanding at the time the computation is made or is required to be made hereun- der; (vi)Any headings preceding the text of the several Articles and Sections of this Resolution,and any table of contents or marginal notes appended to copies hereof,shall be solely for convenience of reference and shall not constitute a part of this Resolution,nor shall they affect its meaning,construction or effect; (vii)Articles and Sections mentioned by number only are the respective Articles and Sections of this Resolution so numbered;and (viii)The term "principal”when used in connec- tion with compound interest or zero coupon or like paying Bonds shall mean the initial principal amount of such Bonds as at their date of issuance plus interest accreted thereon to the date of calculation. 103.Authority for this Resolution.This Resolution is adopted pursuant to the provisions of the Act.The Board of Directors has ascertained and hereby determines and declares that adoption of this Resolution is necessary to carry out the powers and duties expressly provided by the Act,that each andeveryact,matter,thing or course of conduct as to whichprovisionismadeinthisResolutionisnecessaryorconvenientinordertocarryoutandeffectuatethepurposesoftheAuthor-ity in accordance with the Act and to carry out powers expressly given in the Act,and that each and every covenant or agreement BOND RESOLUTION Page 14 A16355CM Exhibit A herein contained and made is necessary,useful or convenient in order to better secure the Bonds and are contracts or agreements necessary,useful and convenient to carry out and effectuate the corporate purposes of the Authority under the Act. 104.Resolution to Constitute Contract.In consid- eration of the purchase and acceptance of any and all of the Bonds authorized to be issued hereunder by those who shall hold the same from time to time,this Resolution shall be deemed to be and shall constitute a contract between the Authority,the Trustee,and the holders from time to time of the Bonds,a trust agreement under the Act and a security agreement under the Alaska Uniform Commercial Code.The pledge and assignment made in this Resolution and the covenants and agreements herein set forth to be performed on behalf of the Authority shall be for the equal benefit,protection and security of the holders of any and all of the Bonds,all of which,regardless of the time or times of their authentication and delivery or maturity,shall be of equal rank without preference,priority or distinction of any of the Bonds over any other thereof except as expressly provided in or permitted by this Resolution. 105.Obligation of Bonds.The Bonds shall be direct and general obligations of the Authority,and the full faith and credit of the Authority are hereby pledged to the payment of the principal of and interest on the Bonds in accordance with their terme.All Bonds shall be entitled to the benefit of the continuing pledge and lien created by this Resolution to secure the full and final payment of the principal and Redemption Price of and interest on all of the Bonds. ARTICLE II Authorization and Issuance of Bonds 201.Authorization of Bonds.1.The Resolution provides for the authorization of Bonds of the Authority to bedesignatedas"Power Revenue Bonds"for the purpose of providing funds for the financing or refinancing of the Project and Capital Improvements.The aggregate principal amount of theBondswhichmaybeexecuted,authenticated and delivered under this Resolution is not limited except as may hereafter be provided in this Resolution,or as may be limited by the Power Sales Agreement or by law. 2.The Bonds may,if and when authorized by the Authority pursuant to one or more Supplemental Resolutions,beissuedinoneormoreSeries,and the designation thereof,in addition to the name "Power Revenue Bonds",shall include such further appropriate particular designation added to or BOND RESOLUTION Page 15 A16355CM Exhibit A incorporated in such title for the Bonds of any particular Series as the Authority may determine.Each Bond shall bear upon ites face the designation so determined for the Series to which it belongs. 3.Nothing contained in this Resolution shall be deemed to preclude or restrict the consolidation pursuant to a Supplemental Resolution of any Bonds of two or more separate Series authorized pursuant to such Supplemental Resolution to be issued pursuant to any of the provisions of Sections 203,204 and 205 into a single Series cof Bonds for purposes of sale and issuance;provided that each of the tests,conditions and other requirements contained in Sections 203,204 and 205 as applica- ble to each such separate Series shall be met and complied with. Except as otherwise provided in this subsection or in such Supplemental Resolution,such a consolidated Series shall be treated as a single Series for all purposes of this Resolution. 202.General Provisions for Issuance of Bonds.1. All (but not less than all)the Bonds of each Series shall be executed by the Authority for issuance under this Resolution and delivered to the Trustee and thereupon shall be authenticated by the Trustee and by it delivered to the Authority or upon its order,but only upon the receipt by the Trustee of: (a)A Counsel's Opinion to the effect that (i)the Authority has the right and power under the Act as amended to the date of such Opinion to adopt this Resolu- tion,and this Resolution has been duly and lawfully adopted by the Authority,is in full force and effect and is valid and binding upon the Authority in accordance with its terms,and no other authorization for this Resolution is required;(ii)the Authority has the right and power under the Act as so amended to enter into the Power Sales Agreement and the Power Sales Agreement is valid and binding upon the Authority in accordance with its terms, and no other authorization for the Power Sales Agreement is required;(iii)this Resolution creates the valid pledge and assignment which it purports to create of the Revenues, moneys,securities and funds held or set aside under this Resolution subject only to the provisions of this Resolution permitting the application thereof for the purposes and on the terms and the conditions set forth in this Resolution;and (iv)the Bonds of such Series are valid and binding general obligations of the Authority for the payment of which the full faith and credit of theAuthorityarepledgedasprovidedinthisResolution,andentitledtothebenefitsofthisResolutionandoftheAct as amended to the date of such Opinion,and such Bonds have been duly and validly authorized and issued in accordancewithlaw,including the Act as amended to the date of such BOND RESOLUTION Page 16 A16355CM Exhibit A Opinion,and in accordance with this Resolution;provided, that such Opinion may take exception for limitations imposed by or resulting from bankruptcy,insolvency, moratorium,reorganization or other laws affecting creditors'rights generally; (b)A written order as to authentication and Gelivery of such Bonds,signed by an Authorized Officer of the Authority; (c)A copy of the Supplemental Resolution authorizing such Bonds,certified by an Authorized Officer of the Authority,which shall,to the extent necessary and not already fixed by the Resolution,among other provi- sions,specify:(1)the authorized principal amount, designation and Series of such Bonds;(ii)the purposes for which such Series of Bonds is being issued,which shall be {A}the purpose specified in Section 203,(B)one of the purposes specified in Section 204,or (C)the refunding of Bonds as provided in Section 205;(111)the date,and the maturity date or dates,of the Bonds of such Series;(iv) the interest rate or rates or the maximum rate of interest of the Bonds of such Series or the method of calculating the interest rate,which interest rate may be determinable at one or more specified times or periodically by reference to an index or other reference point,an interest accreting or compound interest,zero coupon,or like method of intereet rate or yield calculation and the interest payment dates therefor,provided that the interest rate shall be identical for all such Bonds of like maturity;(v)the denominations of,and the manner of dating,numbering and lettering,the Bonds of such Series;(vi)the Paying Agent or Paying Agents and the place or places of payment of the principal and Redemption Price,if any,of,and interest on,the Bonds of such Series;(vii)the Redemption Price or Prices,if any,and subject to Article IV,the redemption terms for the Bonds of such Series;(viii)the amount and due date of each Sinking Fund Installment,if any,forBondsoflikematurityofsuchSeries;(ix)if so deter- mined by the Authority,provisions for the sale of the Bonds of such Series;(x)the amount (or the method of determining the amount),if any,to be deposited from the proceeds of such Series of Bonds in the Debt Service Fund and provisions for the application thereof to the paymentofalloraportionoftheinterestonsuchSeriesofBonds or any other Series of Bonds;(xi)whether the Series of Bonds is to be issued pursuant to paragraphs 3 -8 of Section 305;(xv)the amount to be deposited from the pro- ceeds of such Series of Bonds in the account in the Construction Fund established for the Project or the undertaking of Capital Improvements for which such Bonds BOND RESOLUTION Page 17 A16355CM ExhibitA are authorized to be issued;and (xii)such other matters as shall be necessary or appropriate so as to comply with the provisions of this Resolution or to provide for the issuance and delivery of the Bonds; (d)Except in the case of Refunding Bonds,a certificate of an Authorized Officer of the Authority stating that the Authority is not in default in the per- formance of any of the covenants,conditions,agreements or provisions contained in this Resolution; (e)A certificate from the Committee stating that the Supplemental Resolution authorizing such Bonds has been adopted in accordance with Section 11 of the Power Sales Agreement,provided that,a Supplemental Resolution adopted pursuant to Section 12 of the Power Sales Agreement does not require such a certificate;and (f)Such further documents as are required by the provisions of Section 203,204 or 205 or Article XK or any Supplemental Resolution adopted pursuant to Article X. 2.After the original issuance of Bonds of any Series,no Bonds of such Series shall be issued except in lieu of or in substitution for other Bonds of such Series pursuant to Article III or Section 406 or Section 1106. 3.The Supplemental Resolution authorizing the initial Series of Bonds for the Project shall establish Princi- pal Installments for such Series. 203.Project Issue.1.There is hereby authorized an issue of Bonds under this Resolution which shall be designated "Power Revenue Bonds”and which shall be issued pursuant to one or more Supplemental Resolutions establishing the terms of the Series from time to time,for the purpose of paying all or a portion of the Cost of Acquisition and Construction of the Project,including,without limitation,the refunding of a portion of the Variable Rate Demand Bonds. 2.The proceeds of each Series of Power Revenue Bonds,including accrued interest shall be paid to the Trustee and deposited by the Trustee,as follows: (a)The amount,if any,necessary so that theamountintheRenewalandContingencyReserveFundisequal to the Renewal and Contingency Reserve Fund Requirement, shall be deposited in the Renewal and Contingency Reserve Fund; BOND RESOLUTION Page 18 A16355CM Exhibit A .(b)The amount,if any,necessary so that the amount in the Capital Reserve Fund is equal to the Capital Reserve Fund Requirement shall be deposited in the Capital Reserve Fund; (c)The amount,if any,necessary so that the amount in the Operating Reserve Account is equal to the Operating Reserve Requirement,or such greater amount as the Authority directs,shall be transferred to the Authority and deposited in the Operating Reserve Account; and ({d)After any further deposits directed by Supplemental Resolution,the balance of the proceeds shall be deposited into the Construction Fund. 204.Additional Bonds.1.One or more Series of Additional Bonds may be authenticated and delivered upon origi- mal issuance for the purpose of paying all or a portion of the Cost of Acquisition and Construction of any Capital Improve- ments,upon compliance with the terms and conditions set forth in Section 202,and upon receipt by the Trustee of (1)evidence that such Capital Improvements have been approved by the Commit- tee in accordance with the Power Sales Agreement,and (ii)a written Opinion of the Consulting Engineer that neither the issuance of the Additional Bonds nor the payment of the Cost of Acquisition and Construction of the Capital Improvements will impair the ability of the Authority to pay Debt Service through collection of Revenues under the Power Sales Agreement. 2.The proceeds,including accrued interest,of the Additional Bonds of each Series shall be applied simultaneously with the delivery of such Bonds,as provided in the Supplemental Resolution authorizing such Series. 205.Refunding Bonds.1.One or more Series of ;Refunding Bonds may be authenticated and delivered upon original issuance to refund any Outstanding Bond or Bonds.Refunding Bonds shall be issued in a principal amount sufficient,together with other moneys available therefor,to accomplish such refund- ing and to make the deposits in the Funds and Accounts under this Resolution required by the provisions of the Supplemental Resolution authorizing such Bonds.Bonds issued to retire the Variable Rate Demand Bonds are not subject to the requirements of this section for Refunding Bonds. 2.Refunding Bonds of each Series shall be authen- ticated and delivered by the Trustee only upon receipt by theTrustee(in addition to the documents required by Section 202) of: BOND RESOLUTION Page 19 A16355CM Exhibit A (a)Irrevocable instructions to the Trustee, Satisfactory to it,to give due notice of redemption,ona redemption date or dates specified in such instructions,of any of the refunded Bonds to be redeemed; (b)Irrevocable instructions to the Trustee, satisfactory to it,to give due notice provided for in Section 1201 to the Holders of the Bonds being refunded; and (c)Either (i)moneys (including moneys with- drawn and deposited pursuant to subsection 4 of Section 507)in an amount sufficient to effect payment at the applicable Redemption Price of the refunded Bonds to be redeemed and of the principal amount of the refunded Bonds not to be redeemed,together with accrued interest on such Bonds to the redemption date or maturity date,as the case may be,which moneys shall be held by the Trustee in a separate account irrevocably in trust for and assigned to the respective Holders of the Bonds to be refunded,or (11) Federal Obligations in such principal amounts,of such maturities,bearing such interest,and otherwise having such terms and qualifications,and any moneys,as shall be necessary to comply with the provisions of subsection 2 of Section 1201,which Federal Obligations and moneys shall be held in trust by the Trustee and used only as provided in said subsection 2. 3.The proceeds,including accrued interest,of the Refunding Bonds of each Series shall be applied simultaneously with the delivery of such Bonds for the purposes of making deposits in such Funds and Accounts under this Resolution as shall be provided by the Supplemental Resolution authorizing such Series of Refunding Bonds and shall be applied to the refunding purposes thereof in the manner provided in said Sup- plemental Resolution. 4,The Supplemental Resolution authorizing a Series of Refunding Bonds may establish such funds and accounts in addition to the Funds and Accounts established herein as are necessary to provide for such refunding. ARTICLE III General Terms and Provisions of Bonds 301.Medium of Payment;Form _and Date;Letters and Numbers.1.The Bonds shall be payable,with respect to interest,principal and Redemption Price,in any coin or curren- cy of the United States of America which at the time of payment is legal tender for the payment of public and private debts. BOND RESOLUTION Page 20 A16355CM Exhibit A 2.The Bonds of each Series shall be negotiable instruments issued in the form of fully registered Bonds.If and to the extent it is hereafter judicially determined or determined by enactment of law that coupon bonds may be issued with interest exempt from federal income taxation or if the Authority determines to issue Bonds the interest on which is not exempt from taxation,the Authority may provide for the issu- ance,execution,authorization,exchange and other details of coupon bonds by Supplemental Resolution. 3.Each Bond shall be lettered and numbered as provided in this Resolution or the Supplemental Resolution authorizing the Series of which such Bond is a part and so as to be distinguished from every other Bond. 4.Bonds of each Series shall be dated as provided in the Supplemental Resolution authorizing such Series. 5.The principal and Redemption Price of the Bonds shall be payable upon presentation and surrender at the princi- pal corporate trust office of any Paying Agent or as may be provided by Supplemental Resolution.Interest on Bonds shall be paid by the Trustee by check or draft mailed by first class mail to the registered owners of record as of the 15th day of the month preceding each interest payment date at the addresses of such owners appearing on the registration books maintained by the Authority for such purpose at the principal corporate trust office of the Bond Registrar or as may be provided by Supplemental Resolution. 302.Legends.The Bonds of each Series may contain or have endorsed thereon such provisions,specifications and descriptive words not inconsistent with the provisions of this Resolution as may be necessary or desirable to comply with custom,the rules of any securities exchange or commission or brokerage board,or otherwise,as may be determined by the Authority prior to the authentication and delivery thereof. 303.Execution and Authentication.1.The Bonds shall be executed in the name of the Authority by the manual or facsimile signature of its Chairman or its Vice Chairman,and its corporate seal (or a facsimile thereof)shall be impressed,imprinted,engraved or otherwise reproduced thereon and attested by the manual or facsimile signature of the Secretary or an Assistant Secretary of the Authority,or in such other manner asmayberequiredorpermittedbylaw.In case any one or more of the officers who shall have signed or sealed any of the Bonds shall cease to be such officer before the Bonds so signed and sealed shall have been authenticated and delivered by the Trustee,such Bonds may,nevertheless,be authenticated anddeliveredashereinprovided,and may be issued as if the BOND RESOLUTION Page 21 A16355CM Exhibit A persons who signed or sealed such Bonds had not ceased to hold such offices.Any Bond of a Series may be signed and sealed on behalf of the Authority by such persons as at the time of the execution of such Bonds shall be duly authorized to hold the proper office in the Authority,although at the date borne by the Bonds of such Series such person may not have been so au- thorized or have held such office. Zz.The Bonds of each Series shall bear thereon a certificate of authentication,in the form set forth in Section 1301 and any Supplemental Resolution authorizing such Bonds, executed manually by the Trustee.Only such Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or benefit under this Resolution and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Trustee. Such certificate of the Trustee upon any Bond executed on behalf of the Authority shall be conclusive evidence that the Bond so authenticated has been duly authenticated and delivered under this Resolution and that the Holder thereof is entitled to the benefits of this Resolution. 304.Exchange of Bonds.Bonds,upon surrender thereof at the principal corporate trust office of the Bond Registrar with a written instrument of transfer satisfactory to the Bond Registrar,duly executed by the registered owner or his duly authorized attorney,may,at the option of the registered owner thereof,and upon payment by such registered owner of any charges which the Bond Registrar may make as provided in Section 306,be exchanged for an equal aggregate principal amount of Bonds of the same Series and maturity of any other authorized denominations. 305.Negotiability,Transfer and Registry;Bond Depository.1.Bonds shall be transferable only upon the books of the Authority,which shall be kept for such purposes at the principal corporate trust office of the Bond Registrar,by the registered owner thereof in person or by his attorney duly authorized in writing,upon surrender thereof together with a written instrument of transfer satisfactory to the Bond Registrar duly executed by the registered owner or his duly authorized attorney.Upon transfer of any such Bond,the Authority shall issue in the name of the transferee a new BondorBondsofthesameaggregateprincipalamountandSeriesand maturity as the surrendered Bond. 2.The Authority and each Fiduciary may deem and treat the person in whose name any Bond shall be registered uponthebooksoftheAuthorityastheabsoluteownerofsuchBond, whether such Bond shall be overdue or not,for the purpose of receiving payment of,or on account of,the principal and BOND RESOLUTION Page 22 A16355CM Exhibit A Redemption Price,if any,of and interest on such Bond and for all other purposes,and all such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid,and neither the Authority nor any Fiduciary shall be affected by any notice to the contrary. The Authority agrees to indemnify and save each Fiduciary harmless from and against any and all loss,cost,charge, expense,judgment or liability incurred by it,acting in good faith and without negligence under this Resolution,in so treat- ing such registered owner. 3.A Supplemental Resolution may provide that (i)the Bonds may be initially issued in the form of a separate single authenticated fully registered bond in the amount of each separate stated maturity of the Bonds and (ii)upon initial issuance,the ownership of such Bond may be registered in the registry books kept by the Trustee in the name of the nominee of a Bond Depositary or in the name of the Bond Depository.With respect to Bonds registered in the registry books kept by the Trustee in the name of a nominee of a Bond Depository or in the name of the Bond Depository,the Authority and the Trustee shall have no responsibility or obligation with respect to (1)the accuracy of the records of the Bond Depository,its nominee or any participant with respect to any ownership interest in the Bonds,(ii)the delivery to any participant,any beneficial owner or any other person,other than the nominee or Bond Depository,of any notice with respect to the Bonds,including any notice of redemption,or (iii)the payment to any participant,any beneficial owner or any other person,other than the nominee or Bond Depository,of any amounts with respect to the principal of or premium,if any,or interest on the Bonds.The Authority and the Trustee may treat as and deem the nominee or Bond Depository to be the absolute owner of each Bond for the purpose of payment of the principal of or premium,if any,and interest on such Bond,for the purpose of giving notices of redemption and other matters with respect to such Bond,for the purpose of registering transfers with respect to such Bond,and for all other purposes whatsoever.The Trustee shall pay all principal of or premium,if any,and interest on the Bonds only to or upon the order of the nominee or Bond Depository,and all such payments shall be valid and effectivetofullysatisfyanddischargetheAuthority's obligation with respect to the principal of and premium,if any,and interest on the Bonds to the extent of the sum or sums so paid.No person other than the nominee or Bond Depository shall receive an authenticated Bond evidencing the obligation of the Authority to make payments of principal and premium,if any,and interestpursuanttothisResolution.Upon delivery by the nominee or Bond Depository to the Trustee of written notice to the effect that the Bond Depository has determined to substitute a new BOND RESOLUTION Page 23 A16355CM Exhibit A nominee in place of the existing nominee,the Trustee shall issue a new registered bond to the new nominee in exchange for each bond surrendered which was registered in the name of the old nominee to such new nominee of the Bond Depository. 4.Upon receipt by the Authority and the Trustee of written notice from the Bond Depository to the effect that the Bond Depository is unable or unwilling to discharge its responsibilities and no substitute depository willing to undertake the functions of the Bond Depository hereunder can be found which is willing and able to undertake such functions upon reasonable and customary terms,then the Bonds shall no longer be restricted to being registered in the registry books of the Authority kept by the Trustee in the name of the nominee of the Bond Depository,but may be registered in whatever name or names the beneficial owners transferring or exchanging Bonds shall designate,in accordance with the provisions of this Resolution. 5.In the event the Authority determines that it is in the best interests of the beneficial owners that they be able to obtain Bond certificates,the Authority may notify the Bond Depository and the Trustee,whereupon the nominee or Bond Depository will notify the participants,of the availability through the nominee or Bond Depository of Bond certificates.In such event,the Trustee shall issue,transfer and exchange Bond certificates as requested to the Bond Depository and any other Bondholders in appropriate amounts,and whenever the Bond Depository requests the Authority and the Trustee to do so,the Trustee and the Authority will cooperate with the Bond Depository by taking appropriate action after reasonable written notice (1)to make available one or more separate certificates evidencing the Bonds to any nominee or participant having Bonds credited to its Bond Depository account or (ii)to arrange for another securities depository to maintain custody of certificates evidencing the Bonds. 6.So long as any Bond is registered in the name of a nominee of the Bond Depository,all payments with respect to the principal of and premium,if any,and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively,to the nominee or Bond Depository. 7.$%In connection with any notice or other communication to be provided to Bondholders pursuant to this Resolution by the Authority or the Trustee with respect to any consent or other action to be taken by Bondholders,the Authority or the Trustee,as the case may be,shall establish arecorddateforsuchconsentorotheractionandgivethe nominee or Bond Depository notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. BOND RESOLUTION Page 24 A16355CM Exhibit A 8.As used in this section "participant”means any person or other entity for whom the Bond Depository holds Bonds under this section. 306.Regulations With Respect to Exchanges and Transfers.In all cases in which the privilege of exchanging or transferring Bonds is exercised,the Authority shall execute and the Trustee shall authenticate and deliver Bonds in accordance with the provisions of this Resolution.All Bonds surrendered in any such exchanges or transfer shall forthwith be delivered to the Trustee and cancelled by the Trustee.For every such exchange or transfer of Bonds,whether temporary or definitive, the Authority or the Bond Registrar may make a charge sufficient to reimburse it for any tax,fee or other governmental charge required to be paid with respect to such exchange or transfer. Neither the Authority nor the Bond Registrar shall be required (a)to transfer or exchange Bonds of a Series which could be redeemed for a period of 15 days next preceding any selection of such Bonds to be so redeemed or thereafter until after the first mailing of any notice of redemption;or (b)to transfer or exchange any Bonds called for redemption. 307.Bonds Mutilated,Destroyed,Stolen or Lost.If any Bond becomes mutilated or is lost,stolen or destroyed,the Authority may execute and the Trustee shall authenticate and deliver a new Bond of like date of issue,maturity date,princi- pal amount and interest rate per annum as the Bond so mutilated, lost,stolen or destroyed,provided that (i)in the case of such mutilated Bond,such Bond is first surrendered to the Trustee , (ii)in the case of any such lost,stolen or destroyed Bond there is first furnished evidence of such loss,theft or de- struction satisfactory to the Authority and Trustee together with indemnity satisfactory to the Authority and Trustee,(iii) all other reasonable requirements of the Authority are complied with,and (iv)expenses in connection with such transaction arepaidbytheHolder.Any Bonds surrendered for exchange shall be cancelled.Any such new Bonds issued pursuant to this Section in substitution for Bonds alleged to be destroyed,stolen or lost shall constitute original additional contractual obliga- tions on the part of the Authority,whether or not the Bonds so alleged to be destroyed,stolen or lost be at any time enforce- able by anyone,and shall be equally secured by and entitled to equal and proportionate benefits with all other Bonds issuedunderthisResolutioninanymoneysorsecuritiesheldbythe Authority or any Fiduciary for the benefit of the Bondholders. 308.Temporary Bonds.1.Until the definitive Bonds of any Series are prepared,the Authority may execute,in thesamemannerasisprovidedinSection303,and upon the requestoftheAuthority,the Trustee shall authenticate and deliver,in lieu of definitive Bonds,but subject to the same provisions, BOND _RESOLUTIONPage25 A16355CM Exhibit A limitations and conditions as the definitive Bonds except as to the denomination thereof,one or more temporary Bonds substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued,in denominations authorized by the Authority,and with such omissions,insertions and variations as may be appropriate to temporary Bonds.The Authority at its own expense shall prepare and execute,and, upon surrender of such temporary Bonds for exchange and the cancellation of such surrendered temporary Bonds,the Trustee shall authenticate and without charge to the Holder thereof deliver in exchange therefor,definitive Bonds,if any,of the game aggregate principal amount and Series and maturity as the temporary Bonds surrendered.Until so exchanged,the temporary Bonds shall in all respects be entitled to the same benefits and security as definitive Bonds authenticated and issued pursuant to this Resolution. 2.I£the Authority shall authorize the issuance of temporary Bonds in more than one denomination,the Holder of any temporary Bond or Bonds may,at his option,surrender the same to the Trustee in exchange for another temporary Bond or Bonds of like aggregate principal amount and Series and maturity of any other authorized denomination or denominations,and there- upon the Authority shall execute and the Trustee shall authenti- cate and,in exchange for the temporary Bond or Bonds so surren- dered and upon payment of the taxes,fees and charges provided for in Section 306,shall deliver a temporary Bond or Bonds of like aggregate principal amount,Series and maturity in such other authorized denomination or denominations as shall be requested by such Holder. 3.All temporary Bonds surrendered in exchange either for another temporary Bond or Bonds or for a definitive Bond or Bonds shall be forthwith cancelled by the Trustee. ARTICLE IV Redemption of Bonds 401.Privilege of Redemption and Redemption Price. Bonds subject to redemption prior to maturity pursuant to thisResolutionoraSupplementalResolutionshallberedeemable, upon notice as provided in this Article IV,at such times,at such Redemption Prices and upon such terms in addition to thetermscontainedinthisArticleIVasmaybespecifiedinthis Resolution or in the Supplemental Resolution authorizing such Series. 402.Redemption at the Election or Direction of the Authority.In the case of any redemption of Bonds at the BOND RESOLUTION : Page 26 A16355CM ExhibitA election or direction of the Authority,the Authority shall give written notice to the Trustee of its election or direction so to redeem,of the redemption date,of the Series,and of the principal amounts of the Bonds of each maturity of such Series to be redeemed (which Series,maturities and principal amounts thereof to be redeemed shall be determined by the Authority in its sole discretion,subject to any limitations with respect thereto contained in this Resolution and the Supplemental Resolution with respect to such Series).Such notice shall be given at least 45 days prior to the redemption date or such shorter period as shall be acceptable to the Trustee.In the event notice of redemption shall have been given as in Section 405 provided,there shall be paid prior to the redemption date to the appropriate Paying Agents an amount in cash which,in addition to other moneys,if any,available therefor held by such Paying Agents,will be sufficient to redeem on the redemp- tion date at the Redemption Price thereof,plus interest accrued and unpaid to the redemption date,all of the Bonds to be redeemed.The Authority shall promptly notify the Trustee in writing of all such payments by it to a Paying Agent. 403.Redemption Otherwise Than at the Authority's Election or Direction.Whenever by the terms of this Resolution the Trustee is required or authorized to redeem Bonds otherwise than at the election or direction of the Authority,the Trustee shall select the Bonds to be redeemed,give the notice of redemption and pay out of moneys available therefor the Redemp- tion Price thereof,plus interest accrued and unpaid to the redemption date,to the appropriate Paying Agents in accordance with the terms of this Article IV and,to the extent applicable, Section 507. 404.Selection of Bonds to be Redeemed.If less than all of the Bonds of like maturity of any Series shall be called for prior redemption,the particular Bonds or portions of Bonds to be redeemed shall be selected by lot by the Trustee in such manner as the Trustee in its discretion may deem fair and appropriate. 405.Notice of Redemption.When the Trustee shall receive notice from the Authority of its election or direction to redeem Bonds pursuant to Section 402,and when redemption of Bonds is authorized or required pursuant to Section 403,the Trustee shall give notice,in the name of the Authority,of the redemption of such Bonds,which notice shall specify the Series and maturities of the Bonds to be redeemed,the redemption date and the place or places where amounts due upon such redemptionwillbepayableand,if less than all of the Bonds of any likeSeriesandmaturityaretoberedeemed,the letters and numbers or other distinguishing marks of such Bonds so to be redeemed, and,in the case of Bonds to be redeemed in part only,such BOND RESOLUTION Page 27 A16355CM ExhibitA notice shall also specify the respective portions of the princi- pal amount thereof to be redeemed.Such notice shall further state that on such date there shall become due and payable upon each Bond to be redeemed the Redemption Price thereof,or the Redemption Price of the specified portions of the principal thereof in the case of Bonds to be redeemed in part only,to- gether with interest accrued to the redemption date,and that from and after such date interest thereon shall cease to accrue and be payable.Such notice shall be given by mailing such notice,first class mail,postage prepaid,not less than 30 or more than 60 days before the redemption date,to the registered owners of any Bonds or portions of Bonds which are to be redeemed,at their last addresses,if any,appearing upon the registry books. 406.Payment of Redeemed Bonds.Notice having been given in the manner provided in Section 405,the Bonds or portions thereof so called for redemption shall become due and payable on the redemption date so designated at the Redemption Price,plus interest accrued and unpaid to the redemption date, and,upon presentation and surrender thereof at the office specified in such notice,such Bonds,or portions thereof,shall be paid at the Redemption Price,plus interest accrued and unpaid to the redemption date.If there shall be selected for redemption less than all of a Bond,the Authority shall execute and the Trustee shall authenticate and the Paying Agent shall deliver,upon the surrender of such Bond,without charge to the owner thereof,for the unredeemed balance of the principal amount of the Bond so surrendered,at the option of the owner thereof,Bonds of like Series and maturity in any of the author- ized denominations.If,on the redemption date,moneys for the redemption of all the Bonds or portions thereof of any like Series and maturity to be redeemed,together with interest to the redemption date,shall be held by the Paying Agents so as to be available therefor on said date and if notice of redemption shall have been mailed as aforesaid (and notwithstanding any defect therein or the lack of actual receipt thereof by any Bondholder),then,from and after the redemption date interest on the Bonds or portions thereof of such Series and maturity socalledforredemptionshallceasetoaccrueandbecomepayable.If said moneys shall not be so available on the redemption date,such Bonds or portions thereof shall continue to bear interestuntilpaidatthesamerateastheywouldhavebornehadthey not been called for redemption. BOND RESOLUTION Page 28 A16355CM ExhibitA ARTICLE V Establishment of Funds and Application Thereof 501.Pledge of Revenues and Other Funds.1.A pledge of the Revenues,and of all moneys,securities and funds,except the Excess Investment Earnings Fund,held or set aside or to be held or set aside by the Authority or any Fiduciary under this Resolution,is hereby made,and the same are hereby pledged and assigned to secure the payment of the principal and Redemption Price of and interest on the Bonds and any Sinking Fund Installments for the retirement thereof,subject only to the provisions of this Resolution permitting the payment,setting apart or appropriation thereof for or to the purposes and on the terms,conditions,priorities and order set forth in or provided under this Resolution.This pledge shall be valid and binding from the time when it is made;the Revenues so pledged and then or thereafter received by the Authority shall immediately be subject to the lien of such pledge without any physical delivery or further act;and the lien of such pledge and the obligation to perform the contractual provisions hereby made shall be valid and binding as against all parties having claims of any kind in tort,contract or otherwise against the Authority,irrespective of whether such parties have notice thereof. 2.The Bonds shall be direct and general obligations of the Authority for the payment of which the full faith and credit of the Authority are pledged and neither the State of Alaska nor any political subdivision (other than the Authority) nor any Purchaser shall be obligated to pay the principal or Redemption Price thereof or interest thereon and neither the faith and credit nor the taxing power of the State of Alaska or any political subdivision thereof (other than the Authority)or of any Purchaser is pledged to the payment of the principal orRedemptionPriceof,or intereston,the Bonds.The AuthoritymaynotpledgethefullfaithandcreditoftheStateofAlaska or any political subdivision thereof,except the Authority,to the payment of the Bonds and the issuance of the Bonds by the Authority may not directly or indirectly or contingently obli- gate the State of Alaska or a political subdivision of the State of Alaska to apply money from,or levy or pledge any form of taxation whatever to the payment of the Bonds.Nothing contained in this Section shall be construed to affect any obligation of a Purchaser under the Power Sales Agreement. 3.Nothing contained in this Resolution shall be construed to prevent the Authority from acquiring,constructing or financing through the issuance of its bonds,notes or other evidences of indebtedness any facilities which do not constitute a part of the Project for the purposes of this Resolution or from securing such bonds,notes or other evidences of BOND RESOLUTION Page 29 A1l6355CM ExhibitA indebtedness by a mortgage of the facilities so financed or by a pledge of,or other security interest in,the revenues therefrom or any lease or other agreement with respect thereto or any revenues derived from such lease or other agreement;provided that such bonds,notes or other evidences of indebtedness shall not be payable out of or secured by the Revenues or any Fund held under this Resolution and neither the cost of such facili- ties nor any expenditure in connection therewith or with the financing thereof shall be payable from the Revenues or from any such Fund. 502.Establishment of Funds and Accounts.1.The following Funds and Accounts,each to be held by the Trustee, are hereby established: (1)Construction Fund, (2)Debt Service Fund,which shall consist of an Interest Account and a Principal Account, (3)Capital Reserve Fund, (4)Renewal and Contingency Reserve Fund,and (5)Excess Investment Earnings Fund. 2.The following funds,each to be held by the Authority,are hereby established: (1)Revenue Fund,and (2)Operating Fund,which shall include therein an Operating Reserve Account. 503.Construction Fund.1.There shall be paid intotheConstructionFundtheamountsrequiredtobesopaidbythe provisions of this Resolution and any Supplemental Resolution, and there may be paid into the Construction Fund,at the option of the Authority,any moneys received for or in connection with the Project by the Authority from any other source,unless required to be otherwise applied as provided by this Resolution. Amounts in the Construction Fund shall be applied to the Cost of Acquisition and Construction in the manner provided in thisSection503,and until so applied are pledged for the security of and the payment to Bondholders of the principal or RedemptionPriceofandinterestontheBondsandshallatalltimesbe subject to the lien of such pledge. 2.There shall be established within the Construc- tion Fund separate accounts for the Project and for each BOND RESOLUTION Page 30 A16355CM ExhibitA undertaking of Capital Improvements for which Bonds are author- ized to be issued. 3.The proceeds of insurance,including the proceeds of any self-insurance fund,maintained pursuant to this Resolution against physical loss of or damage to the Project orCapitalImprovements,or of contractor's performance bonds or other assurances of completion with respect thereto,pertaining to the period of construction thereof,shall be paid into the appropriate separate account in the Construction Fund. 4.The Trustee shall,during and upon completion of the Project or Capital Improvements,make payments from the Construction Fund in the amounts,at the times,in the manner and on the other terms and conditions set forth in this para- graph and in paragraph 5 of this Section 503.Before any such payment shall be made,the Authority shall file with the Trust- ee: (a)its requisition therefor,stating in respect of each payment to be made (1)the name of the person,firm or corporation to whom payment is due,(2)the amount to be paid,and (3)in reasonable detail the purpose for which the obligation was incurred;and {b)its certificate signed by the chief finan- cial officer of the Authority attached to the requisition certifying (1)that obligations in the stated amounts have been properly incurred by the Authority in or for the construction or acquisition of the Project or Capital Improvements,and that each item thereof is a proper charge against the Construction Fund and is a proper Cost of Construction and Acquisition of the Project or Capital Improvements and has not been paid,(2)that there has not been filed with or served upon the Authority notice of any lien,right to lien,or attachment upon,or claim affecting the right to receive payment of,any of the moneys payable under such requisition to any of the persons,firms or corporations named in such requisition,or if any such lien,attachment or claim has been filed with or served upon the Authority,that such lien,attachment or claim has been released or discharged in the amount in which such lien,right to lien,attachment or claim is stated in said notice,or if no amount is so stated the amount stated by the Construction Engineer as his opinion of the amount thereof,and (3)that such requisition contains no item representing payment on account of any retained percentages which the Authority is at the date of such certificate entitled to retain. BOND _RESOLUTION Page 31 A16355CM Exhibit A Upon receipt of each such requisition and accompanying certifi- cates,the Trustee shall pay each such obligation or,if so requested by the Authority,shall transfer from the Construction Fund to the credit of a special account in the name of the Authority an amount equal to the total of the amounts to be paid as set forth in such requisition but not more than the excess of such amounts over the amount stated of any lien,right to lien, attachment or claim referred to above in subparagraph (b),the amounts in such special account to be held solely for the pay- ment of the obligations set forth in such requisition.In making such transfer,the Trustee may rely upon such requisition and accompanying certificates. S.If any requisition filed with the Trustee in accordance with paragraph 4 of this Section 503 contains any item for the payment of the cost and expense of acquisition of any lands,easements,or rights or interests in or relating to lands,there shall be attached to such requisition,before any transfer or payment with respect to such item shall be made,in addition to the certificates mentioned in said paragraph 4: (a)a certificate of an Authorized Officer to the effect that such lands,easements,rights or interests have been or are being acquired and are necessary for the Project or CapitalImprovements;and (b)a Counsel's Opinion stating,in the opinion of the signer,that the Authority has authority to acquire such lands,easements,rights or interests,and that the Authority will have upon the payment of such item title in fee simple to,or perpetual easements for the purposes of the Authority over and through,such lands subject to no lien, charge or encumbrance thereon or affecting the title thereto except such as will not under any circumstances cause the possession and use of the property by the Authority for its purposes to be disturbed,or,if such payment be a payment for an option to purchase or a quitclaim deed or a lease or a release or on a contract to purchase or be a payment to the United States of America or the State of Alaska or any political subdivision,or to a public utility,for the acquisition of a right or interest in lands less than a fee simple or a perpetual easement,or if such payment be a part payment for any suchpurpose,the written approval,by the signer of such Counsel's Opinion,of such payment as proper,and of the acquisition of such lesser right or interest as sufficient,for the purposes of the Authority.<A requisition directing application of amounts in the Construction Fund to purchase or redeem bonds or notes issued to pay the Cost of Acquisition or Construction of the Project or any Capital Improvement need only recite that fact and the principal amount of bonds or notes to be purchased or redeemed. 6.As soon as practicable after the date as of which the Construction Engineer shall determine that (i)the Project BOND RESOLUTION Page 32 A1l6355CM ExhibitA or Capital Improvements conforms to the plans and specifications thereof as may be modified from time to time and is ready for normal continuous operation;(ii)acquisition,construction and installation of the Project or Capital Improvements has been completed in every material respect;and (iii)costs (including contingencies),as estimated by the Construction Engineer,of all work remaining to be done in order to complete such acquisition,construction and installation will not exceed 2%of the Cost of Acquisition and Construction of the Project or Capital Improvements,the Authority shall cause the Construction Engineer to file a report to that effect with the Authority and the Trustee. 7.As soon as practicable after the date referred to in paragraph 6 of this Section 503,or the Date of Commercial Operation of the Project or Capital Improvements,whichever is the later,the Authority shall cause the Construction Engineer to file with the Authority and the Trustee a report setting forth,as of such later date,the following in reasonable detail with respect to the Project or Capital Improvements:(a)the total Cost of Acquisition and Construction exclusive of claims of contractors and others which are the subject of actual or prospective dispute or controversy and exclusive of the cost (including contingencies),as estimated by the Construction Engineer,of the remaining work:(b)the portion of the total Cost of Acquisition and Construction specified pursuant to clause (a)of this paragraph which has been paid in full; {c)the portion of the total Cost of Construction and Acquisi- tion specified pursuant to said clause (a)which remains to be paid,including all amounts which are not the subject of a dispute or controversy but are dependent upon the satisfaction of any agreements or conditions precedent to such payment; (d)the aggregated amount of the claims of contractors and others which are the subject of a dispute or controversy; (e)the cost (including contingencies),as estimated by the Construction Engineer and as approved by the Authority,of the remaining work;and (f)such amount,if any,as the Construction Engineer shall determine is necessary or desirable to be set aside in the Construction Fund for contingencies. 8.The Trustee shall at any time or from time to time after the filing with the Trustee of the report of the Construction Engineer as provided in paragraph 7 of this Sec- tion 503,withdraw from the Construction Fund the balance in the Construction Fund,or any part thereof,in the amounts,at the times,in the manner and on the other terms and conditions set forth in this paragraph.Before any such withdrawal shall be made,the Authority shall file with the Trustee: (a)its requisition therefor,stating the amount of such withdrawal; BOND RESOLUTION Page 33 A16355CM ExhibitA (b)a certificate of the chief financial officer of the Authority attached to the requisition certifying (1)that the Project or Capital Improvements has been completed,and (2)that a sum (which shall not be less that the amount stated in the report of the Construction Engineer filed with the Trustee pursuant to paragraph 7 of this Section 503)stated in the certificate is sufficient to pay,and is required to be reserved in the Construction Fund to pay,all items of Cost of Acquisition and Construc- tion of the Project or Capital Improvements then remaining unpaid,including the estimated amount of any such items the amount of which is not finally determined and all claims against the Authority arising out of the Project or Capital Improvements;and (c)A Counsel's Opinion stating,in the opinion of the signer,that the Authority has acquired title to all property constituting a part of the Project or Capital Improvements and all property incidental thereto sufficient for the purposes of the Authority,free from all liens, charges,conditions or encumbrances except such as will not under any circumstances cause the possession and use of the property by the Authority for its purposes to be disturbed, and that,as to such parts of the Project or Capital Improvements as constitute real property acquired, constructed or installed under a right or interest less than a fee simple or perpetual easement,the right or interest is sufficient for the purposes of the Authority,and that there are no uncanceled mechanics',laborers', contractors'or materialmen's liens on any such property or any funds of the Authority or on file in any public office where the same should be filed in order to be valid liens against any fund of the Authority or any part of such property or of the Project or Capital Improvements,andthat,in the opinion of the signer of such Counsel's Opinion,the time within which such liens can be filed has expired. Upon filing of such certificates and Counsel's Opinion,the balance in the separate account in the Construction Fund estab- lished therefor in excess of the amount,if any,stated in such certificate shall be transferred to the Capital Reserve Fund,if and to the extent necessary to make the amount of such Fund equal to the Capital Reserve Requirement,and any balance shall be paid over or transferred to the Authority for deposit to theRevenueFundandapplied,if and to the extent a Counsel's Opinion states that such application is necessary to preserve the tax-exempt status of interest on the Bonds,to the retirement of Bonds by purchase or redemption.If the Cost of Acquisition and Construction of the Project exceeds $350,000,000,the balance in the Construction Fund for the BOND RESOLUTION Page 34 A16355CM Exhibit A Project instead of being paid over to the Revenue Fund shall be paid to the State of Alaska.If subsequent to the filing of such certificate it shall be determined that any amounts specified in such certificate as being required for the payment of any remaining part of the Cost of Acquisition and Construction are no longer so required,such fact shall be evidenced by a certificate or certificates of an Authorized Officer of the Authority which shall be filed with the Trustee stating such fact and any amount shown therein as no longer being required shall be transferred to the Capital Reserve Fund, if and to the extent necessary to make the amount of such Fund equal to the Capital Reserve Requirement,and any balance shall be applied to the extent stated in such Counsel's Opinion.If the Cost of Acquisition and Construction of the Project exceeds $350,000,000,the balance shall be paid over to the State of Alaska.If the Cost of Acquisition and Construction of the Project is less than $350,000,000,Bonds issued pursuant to Section 203,as shall be determined by Supplemental Resolution, in the amount equal to one half of the difference between $350,000,000 and the Cost of Acquisition and Construction of the Project shall be retired by purchase or redemption from money in the Construction Fund or from other available sources,including funds made available by the State of Alaska,to the extent provided by the Supplemental Resolution authorizing the Series of Bonds and the terms of the Series of Bonds.Any balance remaining in the Construction Fund after such retirement shall then be paid to the State of Alaska. 3.The Trustee shall during the construction of the Project or Capital Improvements,pay from the appropriate . separate account in the Construction Fund to the Authority,upon ites requisitions therefor signed by an Authorized Officer of the Authority,at one time or from time to time,a sum or sums not more than §250,000,such sums to be used by the Authority as a revolving fund for the purpose of paying such items of the Cost of Acquisition and Construction thereof as cannot conveniently be paid as in this Section otherwise provided.So long as the amount in such revolving fund shall at any time be less than $250,000,such revolving fund shall be reimbursed by the Trustee from time to time for such expenses so paid,by payments from the Construction Fund upon requisitions and certificates signed by an Authorized Officer and filed with the Trustee specifyingthepayeeandtheamountandparticularpurposeofsuchpaymentfromsuchrevolvingfundforwhichsuchreimbursementisre- quired and certifying that each such amount so paid was neces- sary for the payment of an item of the Cost of Acquisition and Construction of the Project or Capital Improvements and that such expense could not conveniently be paid except from such revolving fund.In making such reimbursement the Trustee may rely upon such requisitions and accompanying certificates. BOND RESOLUTION Page 35 A16355CM ExhibitA 10.Notwithstanding any of the other provisions of this Section,to the extent that other moneys are not available therefor,amounts in the Construction Fund shall be applied to the payment of principal of and interest on Bonds when due. 504.Revenues and Revenue Fund.All Revenues shall be promptly deposited by the Authority and the Trustee,as the case may be,upon receipt thereof to the credit of the Revenue Fund. 505.Operating Fund.1.As soon as practicable after deposit of Revenues in the Revenue Fund and in any case no later than the last business day of each month after the deposit,the Authority shall withdraw from the Revenue Fund and pay to the Operating Fund a sum which,together with any amount therein not set aside in the Operating Reserve Account or as a reserve for working capital,is equal to one-twelfth (or such other fraction as may be appropriate if the period with respect to which such amount is withdrawn is other than monthly)of the total moneys appropriated for Operating Expenses in the Annual Budget for the then current Fiscal Year.If and to the extent provided in a Supplemental Resolution authorizing Bonds of a Series,amounts from the proceeds of such Bonds may be deposited in the Operat- ing Fund and set aside therein as a reserve for working capital. The Authority shall establish an Operating Reserve Account within the Operating Fund.The Operating Reserve Account shall be established and maintained at all times in an amount not less than the Operating Reserve Account Requirement.Amounts in the Operating Reserve Account may be expended for Operating Expenses to the extent other amounts in the Operating Fund are not available. 2.Amounts in the Operating Fund shall be paid out from time to time by the Authority for reasonable and necessary Operating Expenses.Any amounts budgeted by the Committee in the Annual Budget for Annual Project Costs constituting costs oftheCommitteeshallbepaidoutfromtimetotimetotheCommit- tee by the Authority. 506.Payments Into Certain Funds.1.As soon as practicable after the deposit of Revenues into the Revenue Fund and after the payment has been made to the Operating Fund pursuant to Section 505,and with at least the frequency stated below,the Authority shall apply moneys from the Revenue Fund and deposit said amounts with the Trustee on the dates set forth below and the Trustee shall deposit said amounts in the follow- ing order in the amounts and in the Funds set forth below. (1).Except as provided in Section 506(2)in the Debt Service Fund (i)semi-annually on June 1 and December 1,for credit to the Interest Account,unless the sum on deposit therein equals or exceeds the interest due on all Bonds on the BOND RESOLUTION Page 36 A16355CM Exhibit A next succeeding interest payment date,an amount equal to the interest due on such interest payment date less the interest to be paid on such interest payment date from Bond proceeds held in said Account for such purpose;provided,however,that for the purposes of computing the amount on deposit in said Account, there shall be excluded the amount,if any,set aside in said Account for the payment of interest due after the next succeeding interest payment date;(11)annually on December 1, for credit to the Principal Account,unless the sum on deposit therein equals or exceeds all Principal Installments due on the next succeeding July 1,an amount equal to one-half of such Principal Installments;and (iii)annually on June 1,for credit to the Principal Account,the amount,if any,necessary to cause the sum on deposit therein to equal all Principal Installments due on the next succeeding July 1;provided that the Authority May establish by Supplemental Resolution payments into the Debt Service Fund at different times and in different amounts as necessary for interest paid other than semi-annually and in fixed amounts. (2).In the Capital Reserve Fund,the amount,if any, required so that the balance in the Fund equals the Capital Reserve Requirement. (3).Semi-annually on June 1 and December 1,transfer to the Authority for deposit in the Operating Reserve Account, the amount,if any,required so that the balance in the Account equals the Operating Reserve Account Requirement., (4).In the Renewal and Contingency Reserve Fund,the©amount,if any,required so that the balance in the Fund,within a period no greater than four (4)years from the initial deposit and thereafter from the most recent withdrawal therefrom,shall equal the Renewal and Contingency Reserve Requirement or such larger amount as may be determined from time to time by the Committee to be included in the calculation of Annual Project Costs pursuant to Section 8(a)(v)of the Power Sales Agreement. (5).Annually on a date or dates to be determined by Supplemental Resolution to the credit of the Excess Investment Earnings Fund in such amount as is necessary to cause the amount on deposit in the Excess Investment Earnings Fund (after a deposit therein,if any,from the Construction Fund)to be equaltotheAuthority's estimate of Excess Investment Earnings for the Bond Year from amounts in the Revenue Fund or from amounts transferred from the Construction Fund. 2.So long as the Municipal Bond Insurance Policy shall be in full force and effect,the Authority and the Trustee hereby agree to comply with the following provisions: BOND RESOLUTION Page 37 A16355CM Exhibit A (a)The amount to be deposited to the Debt Service Fund to pay principal and/or interest on the Insured Bonds on any payment date shall be on deposit at least five (5)Business Days prior to such payment date; (b)If,on the fifth day (or if the fifth day is not a Business Day,then on the Business Day next preceding the fifth day)prior to a payment date the Trustee determines that there will be insufficient funds in the funds and accounts available to pay the principal of or interest on the Insured Bonds on such payment date,the Trustee shall immediately notify BIG.Such notice shall be by telephone,promptly confirmed in writing,and shall specify the amount of the anticipated deficiency,the Bonds to which such deficiency will be applicable and whether payment due on such Insured Bonds will be deficient as to principal or interest,or both; (¢c)The Trustee shall,after giving notice to BIG as provided in (b)above,make available to BIG and Bankers Trust Company as insurance trustee for the Insurance Trustee,the registration books of the Authority maintained by the Trustee, and all records relating to the funds and accounts established under the Resolution; (ad)The Trustee shall provide BIG and the Insurance Trustee with a list of the names and addresses of registered Bondowners entitied to receive principal or interest payments from BIG under the terms of the Municipal Bond Insurance Policy, and shall make arrangements with the Insurance Trustee (i)to mail checks or drafts to the registered Bondowners entitled to receive full or partial interest payments from BIG,and (ii)to pay principal due on the Bonds once such Bonds are surrendered to the Insurance Trustee by the registered Bondowners entitled to receive full or partial principal payments from BIG;and (e)The Trustee shall,at the time it provides notice to BIG pursuant to (b)above,notify registered Bondowners entitled to receive principal or interest payments from BIG (i) as to the fact of such entitlement,(ii)that BIG will remit all or a portion of the interest payments next coming due,(iii) that if entitled to receive full payment of principal from BIG such registered owners must tender their Bonds (together with a form of transfer of title thereto)for payment to the Insurance Trustee and not to the Trustee,and (iv)that,if entitled to receive partial payment of principal from BIG,such registered owners must tender their Bonds for payment thereof first to the Trustee,who shall note on such Bonds the portion of the principal paid by the Trustee,and thereafter,together with a form of transfer of title thereto,to the Insurance Trustee. After such bonds and instruments transferring title thereto have BOND RESOLUTION Page 38 A16355CM Exhibit A been tendered to the Insurance Trustee,BIG will pay the unpaid portion of principal then due. (f)For purposes of this Section 506,"Business Day” shall mean any day other than a Saturday,Sunday or a day of which the Insurance Trustee is authorized by law to remain closed. 507.Debt Service Fund.1.The Trustee shall pay out of the Debt Service Fund to the respective Paying Agents (i)out of the Interest Account,on or before each interest payment date for any of the Bonds the amount required for the interest payable on such date;(ii)out of the Principal Account,on or before each Principal Installment due date,the amount required for the Principal Installment payable on such due date;and (iii)out of the Interest Account,on or before any redemption date for the Bonds,the amount required for the payment of interest on the Bonds then to be redeemed.Such amounts shall be applied by the Paying Agents on and after the due dates thereof.The Trustee shall also pay out of the Interest Account the accrued interest included in the purchase price of Bonds purchased for retirement. 2.Amounts accumulated in the Principal Account with respect to any Sinking Fund Installment (together with amounts accumulated in the Interest Account with respect to interest on the Bonds for which such Sinking Fund Installment was established)may,and if so directed by the Authority,shall,be applied by the Trustee,on or prior to the 60th day preceding the due date of such Sinking Fund Installment,to (i)the purchase of the Bonds of the Series and maturity for which such Sinking Fund Installment was established,or (ii)the redemption at the applicable sinking fund Redemption Price of such Bonds. After the 60th day but on or prior to the 45th day preceding the due date of such Sinking Fund Installment,any amounts then on deposit in the Principal Account may,and if so directed by the Authority,shall,be applied by the Trustee to the purchase of Bonds of the Series and maturity for which such Sinking Fund Installment was established in an amount not exceeding that necessary to complete the retirement of the unsatisfied balance of such Sinking Fund Installment.All purchases of any Bonds pursuant to this subsection 2 shall be made at prices notexceedingtheapplicablesinkingfundRedemptionPriceof such Bonds plus accrued interest,and such purchases shall be made by the Trustee as directed by the Authority.The applicable sinking fund Redemption Price of any Bonds so purchased or redeemed shall be deemed to constitute part of the Principal Account,until such Sinking Fund Installment date,for the purpose of calculating the amount of such Account.As soon as practicable after the 45th day preceding the due date of anysuchSinkingFundInstallment,the Trustee shall proceed to call BOND RESOLUTION Page 39 A16355CM Exhibit A for redemption,by giving notice as provided in Section 405,on such due date Bonds of the Series and maturity for which such Sinking Fund Installment was established in such amount as shall be necessary to complete the retirement of the unsatisfied balance of such Sinking Fund Installment.The Trustee shall pay out of the Principal Account to the appropriate Paying Agents, on or before such redemption date,the amount required for the redemption of the Bonds so called for redemption,and such amount shall be applied by such Paying Agents to such redemption.All expenses in connection with the purchase or redemption of Bonds shall be paid from the Operating Fund. 3.The amount,if any,deposited in the Interest Account from the proceeds of each Series of Bonds shall be set aside in such Account and applied to the payment of interest on Bonds as provided in the Supplemental Resolution relating to the issuance of such Serles of Bonds. 4.In the event of the refunding of one or more Series of Bonds,the Trustee shall,upon the direction of the Authority,withdraw from the Debt Service Fund amounts accumu- lated therein with respect to Debt Service on the Bonds being refunded and deposit such amounts with itself as Trustee to be held for payment of the principal or Redemption Price,if applicable,and interest on the Series of Bonds being refunded; provided that such withdrawal shall not be made unless (a) immediately thereafter the Series of Bonds being refunded shall be deemed to have been paid pursuant to subsection 2 of Section 1201,and (b)the amount remaining in the Debt Service Fund after such withdrawal shall not be less than the requirement of such Fund pursuant to paragraph (2)of Section 506. 508.Capital Reserve Fund.1.If five business days prior to any date on which a Principal Installment or interest is due the amount in the Debt Service Fund shall be less than the amount required to be in such Fund to pay said Principal Installment or interest,the Trustee shall apply amounts from the Capital Reserve Fund to the extent necessary to make good the deficiency. 2.Whenever the moneys on deposit in the Capital Reserve Fund shall exceed the Capital Reserve Requirement,until the Date of Commercial Operation of the Project,such excess shall be deposited into the Construction Fund and thereafter such excess shall,on the request of the Authority,be trans- ferred to the Authority for deposit in the Revenue Fund at leastannuallyandshallbedeemed"other available funds"within themeaningofSection712tobeusedforthepaymentofamounts required to be paid therein or for the purpose of refunds to thePurchaserspursuanttoSection13ofthePowerSalesAgreement. BOND RESOLUTION Page 40 A16355CM Exhibit A 3.Whenever the amount in the Capital Reserve Fund, together with the amount in the Debt Service Fund,is sufficient to pay in full all Outstanding Bonds in accordance with their terms (including principal or applicable sinking fund Redemption Price and interest thereon),the funds on deposit in the Capital Reserve Fund shall be transferred to the Debt Service Fund. Prior to said transfer;all investments held in the Debt Service Fund shall be liquidated to the extent necessary in order to provide for the timely payment of principal and interest (or Redemption Price)on Bonds. 4.In the event of the refunding of one or more Series of Bonds or one or more maturities within a Series of Bonds,the Trustee shall,upon the direction of the Authority, withdraw from the Capital Reserve Fund amounts accumulated therein with respect to the Bonds being refunded and deposit such amounts with itself as Trustee to be held for the payment of the principal or Redemption Price,if applicable,and inter- est on the Series or maturities within a Series of Bonds being refunded;provided that such withdrawal shall not be made unless (a)immediately thereafter the Series or maturities within a Series of Bonds being refunded shall be deemed to have been paid pursuant to subsection 2 of Section 1201 and (b)the amount remaining in the Capital Reserve Fund after such withdrawal shall not be less than the Capital Reserve Requirement. 509.Renewal and Contingency Reserve Fund. 1.Amounts in the Renewal and Contingency Reserve Fund shall be applied to the costs of Capital Improvements,the payment of extraordinary operation and maintenance costs,and contingen- cies,including payments with respect to the prevention or correction of any unusual loss or damage in connection with the Project or to prevent a loss of Revenues therefrom,all to the extent not provided for in the then current Annual Budget or by reserves in the Operating Fund or from the proceeds of Bonds pursuant to a requisition of the Authority. 2.No payments shall be made from the Renewal and Contingency Reserve Fund if and to the extent that the proceeds of insurance,including the proceeds of any self-insurance fund, or other moneys recoverable as the result of damage,if any,are available to pay the costs otherwise payable from such Fund. 3.Any balance of moneys and securities in the Renewal and Contingency Reserve Fund in excess of an amount which,within a period no greater than four (4)years from the initial deposit and thereafter no greater than four (4)yearsfromthemostrecentwithdrawaltherefrom,shall equal the Renewal and Contingency Reserve Requirement or such larger amount as may be determined from time to time by the.Committee to be included in the calculation of Annual Project Costs BOND RESOLUTION Page 41 A16355CM Exhibit A pursuant to Section 8(a)(v)of the Power Sales Agreement,shall be transferred to the Revenue Fund at least annually. 510.Excess Investment Earnings Fund. 1.The Trustee shall establish within the Excess Investment Earnings Fund a separate account for each Series of Bonds.Within 30 days after the end of each Bond Year the Authority shall determine the Excess Investment Earnings with respect to each Series of Bonds for such Bond Year and the Trustee,at the direction of the Authority,shall transfer from the Construction Fund or the Authority shall transfer from the Revenue Fund,such amount as shall be necessary to cause the amount held in such account to equal the Excess Investment Earnings for such Series of Bonds accrued as of the end of such Bond Year and not previously paid to the United States of America. 2.Moneys in the Excess Investment Earnings Fund shall be applied by the Trustee to pay rebate amounts due the United States,as provided in Section 148(f)of the Code and the applicable Income Tax Regulations.All moneys in the Excess Investment Earnings Fund shall be held by the Trustee free and clear of the lien of this Resolution.If at any time,the amount held in any account in the Excess Investment Earnings Fund exceeds the accrued and unpaid Excess Investment Earnings attributable to the Series of Bonds for which such account is maintained;then the Trustee,at the direction of the Authority, shall transfer such excess to the Authority for deposit to the Revenue Fund. 3.If and to the extent necessary the Authority shall take all action required to cause amounts to equal Excess Investment Earnings to be included as Operating Expenses and therefore as Annual Project Costs. 511.Cancellation and Destruction of Bonds.All Bonds paid or redeemed,either at or before maturity,shall be delivered to the Trustee when such payment or redemption is made,and such Bonds,together with all Bonds purchased by the Trustee,shall thereupon be promptly cancelled and destroyed. ARTICLE VI Depositories of Moneys,Security for Deposits and Investment of Funds 601.Depositories.1.All moneys held by the Trustee under the provisions of this Resolution shall be deposited with the Trustee and the Trustee shall,if directed by the Authority, BOND RESOLUTION Page 42 A16355CM Exhibit A deposit such moneys with one or more Depositories in trust for the Trustee.All moneys held by the Authority under this Resolution shall be deposited in one or more Depositories in trust for the Authority.All moneys deposited under the provi- sions of this Resolution with the Trustee or any Depository shall be held in trust and applied only in accordance with theprovisionsofthisResolution,and each of the Funds established by this Resolution shall be a trust fund for the purposes there- of. 2.Each Depository shall be a bank or trust company organized under the laws of any state of the United States of America or a national banking association and willing and able to accept the office on reasonable and customary terms and authorized by law to act in accordance with the provisions of this Resolution. 602.Deposits.1.All Revenues and other moneys held by any Depository under this Resolution may be placed on demand or time deposit,if and as directed by the Authority,provided that such deposits shall permit the moneys held to be available for use at the time when needed.The Authority shall not be liable for any loss or depreciation in value resulting from any investment made pursuant to this Resolution.Any such deposit may be made in the commercial banking department of any Fiduci- ary which may honor checks and drafts on such deposit with the same force and effect as if it were not such Fiduciary.All moneys held by any Fiduciary,as such,may be deposited by such Fiduciary in its banking department on demand or,if and to the extent directed by the Authority and acceptable to such Fiduci- ary,on time deposit,provided that such moneys on deposit be available for use at the time when needed.Such Fiduciary shall allow and credit on such moneys such interest,if any,as it customarily allows upon similar funds of similar size and under similar conditions or as required by law. 2.All moneys held under this Resolution by the Trustee or any Depository shall be (a)either (1)continuously and fully insured by the Federal Deposit Insurance Corporation, or (2)continuously and fully secured by lodging with the Trust- ee,any Federal Reserve Bank or branch,or another third partycustodianapprovedbytheTrusteeandtheAuthority,QualifiedCollateralhavingamarketvalue(exclusive of accrued interest) not less than 100%of the amount of such moneys,or (b)held insuchothermannerasmaythenberequiredbyapplicablefederalorStateofAlaskalawsandregulationsandapplicablestatelawsandregulationsofthestateinwhichtheTrusteeorsuchDepository(as the case may be)is located,regarding securityfor,or granting a preference in the case of,the deposit oftrustfunds;provided,however,that it shall not be necessary for the Fiduciaries to give security under this subsection 2 for BOND _RESOLUTION Page 43 A16355CM Exhibit A the deposit of any moneys with them held in trust and set aside by them for the payment of the principal or Redemption Price of or interest on any Bonds,or for the Trustee or any Depository to give security for any moneys which shall be represented by obligations or certificates of deposit purchased as an invest- ment of such moneys. 3.All moneys deposited with the Trustee and each Depository shall be credited to the particular Fund or Account to which such moneys belong. 4.The Trustee may,and upon the written request of the Authority shall,commingle any of the funds or accounts established pursuant to this Resolution into a separate fund or funds,provided,however,that all Funds or Accounts held by the Trustee hereunder shall be accounted for and credited to the correct Fund or Account notwithstanding such commingling. 603.Investment of Certain Funds.Moneys held in any Fund or Account shall be invested and reinvested by the Trustee to the fullest extent practicable in Investment Securities which mature not later than such times as shall be necessary to provide moneys when needed for payments to be made from such Funds and Accounts in accordance with instructions received from any Authorized Officer of the Authority.Amounts in the Debt Service Fund derived from proceeds of the First Series Bonds shall be invested in Federal Obligations maturing at such timea and in such amounts as are necessary to match the interest and principal payments for which the amounts are expected to be expended. Any amount in any Fund in excess of amounts required to be on deposit therein,shall be paid to the Authority for deposit to the Revenue Fund,provided,however,that any such amount shall be paid into the Construction Fund to the extent the amount is realized prior to the Date of Commercial Operation of the Project.Interest earned on any moneys or investments in a separate account in the Construction Fund shall be held in such account for the purposes thereof.Interest earned on amounte in the Interest Account shall be held in such Account for the purposes thereof. Nothing in this Resolution shall prevent any Invest- ment Securities acquired as investments of funds held under this Resolution from being issued or held in book-entry form on the books of the Department of Treasury of the United States of America. 604.Valuation and Sale of Investments.Obligations purchased as an investment of moneys in any Fund created under the provisions of this Resolution shall be deemed at all times BOND RESOLUTION Page 44 A16355CM ExhibitA to be part of such Fund and any profit realized from the liqui- dation of such investment shall be credited to such Fund and any loss resulting from the liquidation of such investment shall be charged to the respective Fund. In computing the amount in any Fund created under the provisions of this Resolution for any purpose provided in this Resolution or Sec.44,.83.110(e)of the Act,obligations pur- chased as an investment of moneys therein shall be valued at the market value thereof exclusive of accrued interest,or otherwise as may then be required by the Code.Such computations shall be determined not less frequently than quarterly in each year. Except as otherwise provided in this Resolution,the Trustee shall sell at the best price obtainable,or present for redemption,any obligation so purchased as an investment whenev- er it shall be requested in writing by an Authorized Officer of the Authority so to do or whenever it shall be necessary in order to provide moneys to meet any payment or transfer from any Fund held by it.The Trustee shall not be liable or responsible for making any such investment in the manner provided above or for any loss resulting from any such investment. ARTICLE VII Particular Covenants of the Authority 701.Payment of Bonds.The Authority shail duly and punctually pay or cause to be paid,the principal or Redemption Price,1f any,of every Bond and the interest thereon,at the dates and places and in the manner mentioned in the Bonds according to the true intent and meaning thereof. 702.Extension of Payment of Bonds.The Authority shall not directly or indirectly extend or assent to the exten- sion of the maturity of any of the Bonds or the time of payment of claims for interest,by the purchase or funding of such Bonds or claims for interest or by any other arrangement,and in case the maturity of any of the Bonds or the time for payment of any such claims for interest shall be extended,such Bonds or claims for interest shall not be entitled,in case of any default under this Resolution,to the benefit of this Resolution or to any payment out of Revenues or Funds established by this Resolution, including the investments,if any,thereof,pledged under this Resolution or the moneys (except moneys held in trust for the payment of particular Bonds or claims for interest pursuant to this Resolution)held by the Fiduciaries,except subject to the prior payment of the principal of all Bonds Outstanding the maturity of which has not been extended and of such portion of the accrued interest on the Bonds as shall not be represented by BOND RESOLUTION Page 45 A16355CM Exhibit A such extended claims for interest.Nothing herein shall be deemed to limit the right of the Authority to issue Refunding Bonds and such issuance shall not be deemed to constitute an extension of maturity of Bonds. 703.Offices for Servicing Bonds.The Authority shall at all times maintain one or more agencies as may be provided by Supplemental Resolution where Bonds may be presented for payment and shall at all times maintain one or more agencies where Bonds may be presented for registration,transfer for registration,transfer or exchange,and where notices,demands and other documents may be served upon the Authority in respect of the Bonds or of this Resolution.The Authority hereby appoints the Trustee as Bond Registrar to maintain an agency for the registration,transfer or exchange of Bonds,and for the service upon the Authority of such notices,demands and other documents and the Trustee shall continuously maintain or make arrangements to provide such services.The Authority hereby appoints the Paying Agent or Agents in such city as its respec- tive agents to maintain such agencies for the payment or redemp- tion of Bonds. 704.Further Assurance.At any and all times the Authority shall,as far as it may be authorized by law,comply with any reasonable request of the Trustee to pass,make,do, execute,acknowledge and deliver,all and every such further resolutions,acts,deeds,conveyances,assignments,transfers and assurances as may be necessary or desirable for the better assuring,conveying,granting,pleading,assigning and confirm- ing all and singular the rights,Revenues and other moneys, securities and funds hereby pledged or assigned,or intended so to be,or which the Authority may become bound to pledge or assign. 705.Power to Issue Bonds and Pledge Revenues andOtherFunds.The Authority is duly authorized under the Act and all other applicable laws to create and issue the Bonds and to adopt this Resolution and to pledge and assign the Revenues and other moneys,securities and funds purported to be subject to the lien of this Resolution in the manner and to the extent provided in this Resolution.Except to the extent otherwise provided in this Resolution,the Revenues,and other moneys, securities and funds so pledged are and will be free and clear of any pledge,lien,charge or encumbrance thereon or withrespecttheretopriorto,or of equal rank with,the pledge and assignment created by this Resolution,and all corporate or other action on the part of the Authority to that end has been and will be duly and validly taken.The Bonds and the provi- sions of this Resolution are and will be valid and legally en- forceable obligations of the Authority in accordance with their terms and the terms of the Act and this Resolution.The BOND RESOLUTION Page 46 A16355CM ExhibitA Authority shall at all times,to the extent permitted by law, defend,preserve and protect the pledge and assignment of the Revenues and other moneys,securities and funds pledged under this Resolution and all the rights of the Bondholders under this Resolution against all claims and demands of all persons whom- ever. 706.Power to Fix and Collect Rates,Fees and Charges.The Authority has,and will have as long as any Bonds are Outstanding,good right and lawful power-to establish and collect rates and charges with respect to the use of the capa- bility of the Project and the sale of the capacity,output or service thereof,subject to the terms of the Power Sales Agree- ment and other contracts relating thereto. 707.Creation of Liens;Sale and Lease of Property. 1.The Authority shall not issue any bonds,notes or other evidences of indebtedness,other than the Bonds,secured by a pledge of or other lien or charge on the Revenues (including amounts which the Authority may thereafter be entitled to expend for Operating Expenses)and shall not create or cause to be created any lien or charge on such Revenues or on any amounts held by any Fiduciary under this Resolution;provided,however, that neither this Section nor any other provision of this Resolution shall prevent the Authority from issuing bonds or notes or other obligations for the purposes of the Authority payable out of,or secured by a pledge of,Revenues to be de- rived on and after such date as the pledge of the Revenues provided in this Resolution shall be discharged and satisfied as provided in Section 1201,or from issuing bonds or notes or other obligations for the purposes of the Authority which are secured by a pledge of amounts which is and shall be in all respects subordinate to the provisions of this Resolution and the Lien and pledge created by this Resolution and shall not be accelerated in the event of default. 2.No part of the Project shall be sold,leased, mortgaged or otherwise disposed of,except as follows: (a)The Authority may sell or exchange at any time and from time to time any property or facilities constituting part of the Project only in accordance with,and in a manner that will not impair the Authority's obligations under,the provisions of the Power Sales Agreement and if (i)it shall determine that such property or facilities are not useful in the operation of the Project,or (ii)the proceeds of such sale are less than 2%of the prior Bond Year's Debt Service,or it shall file with the Trustee an opinion of the Consulting Engineer stating that the fair market value of the property or facilities exchanged are less than 2%of the prior Bond BOND RESOLUTION Page 47 A16355CM Exhibit A Year's Debt Service or (iii)if such proceeds or fairmarketvalueexceeds2%of the prior Bond Year's Debt Service it shall file with the Trustee an opinion of the Consulting Engineer stating that the sale or exchange of such property or facilities will not impair the ability of the Authority to comply during the current or any future Fiscal Year with the provisions of Section 712.The proceeds of any such sale or exchange not used to acquire other property necessary or desirable for the safe or efficient operation of the Project shall forthwith be deposited in the Renewal and Contingency Fund;and (b)In addition to the Power Sales Agreement, the Authority may lease or make contracts or grant licenses for the operation cf,or make arrangements for the use of, or grant easements or other rights with respect to,any part of the Project,provided that any such lease, contract,license,arrangement,easement or right (i)does not impede the operation by the Authority or its agent of the Project and (ii)does not in any manner impair or adversely affect the rights or security of the Bondholders under this Resolution,and (iii)does not adversely affect the exemption from federal income taxation of the interest on the Bonds:and provided,further,that if the depreci- ated cost of the property to be covered by any such lease, contract,license,arrangement,easement or other right is in excess of 2%of the prior Bond Year's Debt Service the Authority shall first file with the Trustee an opinion of the Consulting Engineer that such action of the Authority with respect thereto does not impair the ability of the Authority to comply during the current or any further Fiscal Year with the provisions of Section 712.Any payments received by the Authority under or in connection with any such lease,contract,license,arrangement, easement or right in respect of the Project or any partthereofshallconstituteRevenuesandshallbedeposited in the Revenue Fund. 708.Consulting Engineer.The Authority shall,for the purpose of performing and carrying out the duties imposed on the Consulting Engineer by this Resolution,employ an inde- pendent engineer or engineering firm or corporation having anationwideandfavorablereputationanddemonstratedexperience in the field of consulting engineering for power systems. 709.Annual Budget.The Authority,acting in conjunction with the Committee or separately in accordance with Section 13(e)of the Power Sales Agreement,shall adopt an Annual Budget each Fiscal Year pursuant to Section 13 of the Power Sales Agreement and shall adopt and have in effect,and file with the Trustee,said Annual Budget at least 90 days BOND RESOLUTION Page 48 A16355CM Exhibit A prior to such Fiscal Year.Each Annual Budget shall set forth in reasonable detail the estimated Revenues and Operating Expenses including Annual Project Costs for the Fiscal Year, and including provision for the estimated amount to be deposited during such Fiscal Year in each Fund and Account established under this Resolution and the requirements,if any,for the amounts estimated to be expended from each Fund and Account established under this Resolution.Such Annual Budget shall also set forth such detail with respect to such Revenues, Operating Expenses and other expenditures and such deposits,as shall be necessary or appropriate so as to comply with the Power Sales Agreement and the Authority may set forth such additional material as the Authority may determine.Such Annual Budget shall be revised as necessary or prudent during each Fiscal Year to reflect unanticipated changes in actual Revenues,Operating Expenses or other requirements,or if there are at any time during any such Fiscal Year extraordinary receipts or payments of unusual costs,if appropriate,there shall be filed with the Trustee an amended Annual Budget for the remainder of the then current Fiscal Year. 710.Limitations on Operating Expenses and Other Costs.The Authority shall not incur Operating Expenses or other costs payable from the Renewal and Contingency Reserve Fund in any Fiscal Year in excess of the reasonable and neces- sary amount of such expenses or costs,respectively,and shall not expend any amount from the Operating Fund for Operating Expenses or from the Renewal and Contingency Reserve Fund for costs payable therefrom for such Fiscal Year in excess of the respective amounts provided therefor in the Annual Budget as then in effect.Nothing in this Section contained shall limit the amount which the Authority or the Committee may expend for Operating Expenses or other costs payable from the Renewal and Contingency Reserve Fund in any Fiscal Year provided any amounts expended therefor in excess of such Annual Budget shall be received by the Authority or the Committee from some source other than the Revenues,which source shall not be reimbursable out of Revenues. 711.Acquisition and Construction of the Project_and Its Operation and Maintenance.1.The Authority shall use its best efforts to acquire and construct the Project,or cause the same to be acquired and constructed,with due diligence and in a sound and economical manner. 2.The Authority shall at all times use its best efforts to operate or cause the Project to be operated properly and in an efficient and economical manner,consistent with the Power Sales Agreement and Prudent Utility Practice,and shall use its best efforts to maintain,preserve,reconstruct and keep the same or cause the same to be so maintained,preserved, BOND RESOLUTION Page 49 .A16355CM Exhibit A reconstructed and kept,with the appurtenances and every part and parcel thereof,in good repair,working order and good condition,and shall from time to time make,or use its best efforts to cause to be made,all necessary and proper repairs, replacements and renewals so that at all times the operation of the Project may be properly and advantageously conducted. 3.The Authority shall take all necessary steps to comply with applicable federal and state laws and regulations relating to the use and operation of the Project,including the terms of the Federal Energy Regulatory Commission license appli- cable to the Project. 712.Rates,Fees and Charges.1.The Authority, acting in conjunction with the Committee or separately under Section 13(e)of the Power Sales Agreement,shall at all times after the date of Commercial Operation charge and collect,as a wholesale power rate,from each Purchaser pursuant to the Power Sales Agreement that Purchaser's Percentage Share (as defined in the Power Sales Agreement)of Annual Project Costs.The Author- ity,acting in conjunction with the Committee or separately under Section 13(e)of the Power Sales Agreement,shall deter- mine Annual Project Costs in such amounts as shall be required to provide Revenues at least sufficient in each Fiscal Year, together with other available funds,for the payment of the sum of: (a)Operating Expenses during such Fiscal Year; (b)The amount,if any,to be paid during such Fiscal Year into the Operating Reserve Account which shall be the amount,if any,necessary to restore the Operating Reserve Account to the Operating Reserve Account Require- ment; (c)An amount equal to the Aggregate Debt Service during such Fiscal Year; (ad)The amount,if any,to be paid during such Fiscal Year into the Capital Reserve Fund,which shall be the amount,if any,necessary to restore the Capital Reserve Fund to the Capital Reserve Requirement subject to Section 716; (e)The amount to be paid during such Fiscal Year into the Renewal and Contingency Reserve Fund which shall be the amount,if any,necessary to restore the Renewal and Contingency Reserve Fund over a period no greater than four years to the Renewal and Contingency Reserve Fund Requirement or such larger amount as may be determined from time to time by the Committee to be BOND RESOLUTION Page 50 A16355CM Exhibit A included in the calculation of Annual Project Costs pursuant to Section 8(a)(v)of the Power Sales Agreement; and (f)<All other charges or liens whatsoever required to be paid out of Revenues during such Fiscal Year. 2.The Authority will not furnish or supply,or cause to be furnished or supplied,any use,output,capacity or service of the Project,free of charge to any person,firm or corporation,public or private,and the Authority will enforce the payment of any and all amounts owing to the Authority pursuant to the Power Sales Agreement in accordance with its terms. 3.As required by AS 44.83.110,the Authority further will at all times maintain rates,fees or charges,anda contract entered into by it for the sale,transmission or distribution of power shall contain rates,fees or charges, eufficient (i)to pay the costs of operation and maintenance of the Project,and the principal of and interest on the Bonds as the same severally become due and payable,(ii)to provide for debt service coverage as considered necessary by the Authority for the marketing of the Bonds and to provide for renewals, replacements and improvements of the Project,and (iii)to maintain reserves required by the terms of this Resolution. 713.Power Sales Agreement.1.The Authority shall collect and forthwith deposit in the Revenue Fund all amounts payable to it pursuant to the Power Sales Agreement or payable to it pursuant to any other contracts for the use of the capa- bility of the Project or the sale of the output,capacity or service of the Project or any part thereof.The Authority hereby pledges,assigns and transfers to the Trustee,acting on behalf of the Bondholders,all of its rights under the Power Sales Agreement or any other contracts for the use of the capa- bility of the Project or the sale of the output,capacity or service of the Project or any part thereof and the Trustee shall enjoy and hold for the benefit of the Bondholders the rights and privileges so assigned,including,without limiting the forego- ing,the rights of the Authority to receive payments thereunder. The Authority shall enforce the provisions of the Power Sales Agreement and duly perform its covenants and agreements thereun- der.The Authority will not consent or agree to or permit any termination,rescission of or amendment to or otherwise take any action under or in connection with the Power Sales Agreement which will in any manner materially impair or materially ad-versely affect the rights or security of the Bondholders underthisResolution.A copy of the Power Sales Agreement certified by an Authorized Officer of the Authority shall be filed with BOND RESOLUTION Page 51 A16355CM Exhibit A the Trustee,and a copy of any such amendment certified by an Authorized Officer of the Authority shall be filed with the Trustee. 2.The Authority shall perform its obligations under the Power Sales Agreement to delegate to the Committee,consult with the Committee and act through the Committee,with respect to the management,operation,maintenance and improvement of the Project,including its obligation to follow procedures adopted by the Committee with respect to certain actions to be taken by the Authority under this Resolution.The Authority represents that it has the power under Section 13(e)of the Power Sales Agreement,notwithstanding any action or inaction by the Committee,to take such measures as it deems necessary to meet its obligations under this Resolution.The Authority hereby covenants that it will exercise the powers granted pursuant to Section 13(e)of the Power Sales Agreement,if necessary,to carry out actions required to be taken under this Resolution. 714.Insurance.1.The Authority shall keep and maintain the Project at all times insured against such risks and in such amounts,with such deductible provisions,or provide for a source of self insurance,as is customary in connection with the operationof facilities of a type and size comparable to theProjectandasmayreasonablyandeconomicallybeobtainedor secured.The determination of what is "customary™and what may be "reasonably and economically obtained or secured"within the meaning of the prior sentence shall be made by an independent insurance consultant employed by the Authority or by the State division of risk management.Without limiting the foregoing, but only if required under the preceding sentences,the Authority shall carry and maintain,or cause to be carried and maintained,and pay or cause to be paid timely the premiums for, the following insurance with respect to the Project and the Authority: (a)insurance coverage for buildings,works, plants and facilities comprising the Project for all risks of direct physical loss,at all times in an amount not less than an amount necessary giving regard to co-insurance provisions to pay and retire and redeem all the Outstanding Bonds; (b)general public liability insurance (other than as set forth in subsection (c)of this Section)in minimum amounts per occurrence,for annual aggregate claims,and with a deductible amount,to the same extent that other entities comparable to the Authority and owning or operating facilities of the size and type comparable to the Project carry such insurance; BOND RESOLUTION , Page 52 A16355CM ExhibitA (c)comprehensive automobile liability insur- ance; (d)workers'compensation insurance or self- insurance as required by the laws of the State of Alaska; 2.Each insurance policy required by this Section (i)shall be issued or written by a financially responsible insurer (or insurers),or by an insurance fund established by the United States of America or State of Alaska or an agency or instrumentality thereof,(ii)shall be in such form and with such provisions (including,without limitation and where appli- cable,loss payable clauses payable to the Trustee,waiver ofsubrogationclauses,provisions relieving the insurer of liabil- ity to the extent of minor claims and the designation of the named assureds)as are generally considered standard provisions for the type of insurance involved,and (iii)shall prohibit cancellation or substantial modification by the insurer withoutatleastthirtydays'prior written notice to the Trustee and the Authority.Without limiting the generality of the forego- ing,all insurance policies,and other arrangements to the extent feasible,carried pursuant to this Section 714 shall name the Trustee,the Authority and the Purchasers as parties insured thereunder as the respective interest of each of such parties may appear,and loss thereunder shall be made payable and shall be applied as provided in this Resolution. 3,The Authority covenants to review each year the insurance carried by the Authority with respect to the Authority and the Project and,to the extent feasible and economically prudent,will carry insurance insuring against the risks and hazards specified in this Section to the same extent that other entities comparable to the Authority and owning or operatingfacilitiesofthesizeandtypecomparabletotheProject,and taking into account any special circumstances of the Project, carry such insurance.In the event that the Authority deter- mines that the insurance required by this Section is not avail- able to the Authority at reasonable cost,and,in any case, every two years,from and after July 1,1990,the Authority shall employ an independent insurance consultant or the State division of risk management (the "consultant")for the purpose of reviewing the insurance coverage of,and the insurance required for,the Authority and the Project and making recom- mendations respecting the types,amounts and provisions of insurance that should be carried with respect to the Authority and the Project and their operation,maintenance and adminis- tration.A signed copy of the report of the consultant shall be filed with the Trustee and copies thereof shall be sent to the Authority,and the insurance requirements specified hereunder, including any and all of the dollar amounts set forth in this BOND RESOLUTION Page 53 A16355CM ExhibitA Section,shall be deemed modified or superseded as necessary to conform with the recommendations contained in said report. 4.The Authority may establish a fund to provide self-insurance against the risks and hazards relating to the properties of the Project and the interests of the Authority and the Bondholders as described in this Section,and,in connection therewith,may specify and determine the matters and things set forth in paragraph 3 of this Section. 5.Insurance maintained pursuant to this Section may be part of one or more master policies maintained by the State of Alaska so long as the form of such policy and the coverage is the same as if a separate policy was in effect. 6.The Authority shall on or before January 1 of each year,commencing January 1,1990,submit to the Trustee a certificate verifying that all minimum insurance coverages required by this Resolution are in full force and effect as of the date of such Authority certificate. 715.Reconstruction;Application of Insurance Proceeds.1.If any useful portion of the Project shall be damaged or destroyed,the Authority shall,as expeditiously as possible,continuously and diligently prosecute or cause to be prosecuted the reconstruction or replacement thereof,unless the Authority declares the Project ended pursuant to Section 14 ofthePowerSalesAgreement,or unless the Consulting Engineer in an opinion or report filed with the Trustee shall state that such reconstruction and replacement is not consistent with Prudent Utility Practice or is not in the interest of the Purchasers and the Bondholders.The proceeds of any insurance, including the proceeds of any self-insurance fund,paid on account of such damage or destruction shall be held by the Trustee in a special account in the Construction Fund and made available for,and to the extent necessary be applied to,the cost of such reconstruction or replacement.Pending such application,such proceeds may be invested at the direction of the Authority in Investment Securities which mature not later than such time as shall be necessary to provide moneys when needed to pay such costs of reconstruction or replacement.The proceeds of any insurance,including the proceeds of any self-insurance fund,not applied within 36 months after receipt thereof by the Authority to repairing or replacing damaged or destroyed property,or in respect to which notice in writing of intention to apply the same to the work of repairing or replac- ing the property damaged or destroyed shall not have been given to the Trustee by the Authority within such 36 months,or which the Authority shall at any time notify the Trustee are not to be 80 applied,in excess of $5,000,000 shall be used to retire Bonds by purchase or redemption to the extent provided by the BOND RESOLUTION Page 54 A16355CM Exhibit A Supplemental Resolution authorizing the Bonds and the terms of the Bonds.Notwithstanding the foregoing,in the event that payments are made from the Renewal and Contingency Reserve Fund for any such repairing of property damaged or destroyed prior to the availability of insurance proceeds,including the proceeds of any self-insurance fund therefor,such proceeds when received by the Authority shall be deposited in the Renewal and Contingency Reserve Fund to the extent of such payments there- from. 2.If the proceeds of insurance,including the proceeds of any self-insurance fund,authorized by this Section to be applied to the reconstruction or replacement of any por- tion of the Project are insufficient for such purpose,the deficiency may be supplied out of moneys in the Renewal and Contingency Reserve Fund. 3.Alternate methods (if any)of carrying out and funding Required Project Work may be determined as provided in Section 4(c)of the Power Sales Agreement. 716.Maintenance of Capital Reserve Fund.1.The Authority has determined and does hereby determine that establishment of a Capital Reserve Fund will enhance the market- ability of the Bonds.The Authority shall at all times maintain the Capital Reserve Fund with the Trustee created and established by Section 502 and do and perform or cause to be done and performed each and every act and thing with respect to the Capital Reserve Fund provided to be done or performed on behalf of the Authority or the Trustee under the terms and provisions of Article V hereof or of the Act. 2.In order better to secure the Bonds and to make them more marketable and to maintain in the Capital Reserve Fund an amount equal to the Capital Reserve Requirement,the Authori- ty shall,in compliance with the provisions of the Act,cause the Chairman annually,on or before the second day of January of each year and whenever the Trustee transfers funds from the Capital Reserve Fund to pay Principal Installments or interest on the Bonds,to make and deliver to the Governor of the State and the Chairmen of the House and Senate Finance Committees of the Alaska State Legislature his certificate stating the amount, if any,required to restore the Capital Reserve Fund to the Capital Reserve Requirement and requesting such amount.A copy of such certificate shall be promptly delivered to the Trustee. Any such moneys received by the Authority from the State of Alaska in accordance with the provisions of the Act pursuant to any such certification shall be paid to the Trustee for deposit and credit to the Capital Reserve Fund. BOND RESOLUTION Page 55 A16355CM ExhibitA 717.Accounts and Reports.1.The Authority shall keep or cause to be kept proper books of records made of its transactions relating to the Project and each Fund and Account established under this Resolution and relating to its costs and charges under the Power Sales Agreement and which,together with the Power Sales Agreement and all other books and papers of the Authority,including insurance policies,relating to the Project,shall at all times be subject to the inspection of the Trustee and the Holders of an aggregate of not less than 5%in principal amount of the Bonds then Outstanding or their repre- sentatives duly authorized in writing. 2.The Trustee shall advise the Authority promptly after the end of each month in its regular statements of the respective transactions during such month relating to each Fund and Account held by it under this Resolution.The Authority shall have the right upon reasonable notice and during reasonable business hours to audit the books and records of the Trustee with respect to the Funds and Accounts held by the Trustee under this Resolution. 3.The Authority shall annually,within 120 days after the close of each Fiscal Year (the first such report to be filed with respect to the Fiscal Year commencing July 1,1990), file with the Trustee,and otherwise as provided by law,a copy of an annual report for such Fiscal Year,accompanied by anAccountant's Certificate,relating to the Project and including the following statements in reasonable detail:a statement of assets and liabilities as of the end of such Fiscal Year,to the extent relating to the Project;a statement of Revenues and Operating Expenses for such Fiscal Year;and a summary with respect to each Fund and Account established under this Resolu- tion of the receipts therein and disbursements therefrom during such Fiscal Year and the amount held therein at the end of such Fiscal Year.Such Accountant's Certificate shall state whether or not,to the knowledge of the signer,the Authority is in default with respect to any of the covenants,agreements or conditions on its part contained in this Resolution,and if so, the nature of such default. 4,The Authority shall file with the Trustee (a) forthwith upon becoming aware of any Event of Default or default in the performance by the Authority of any covenant,agreement er condition contained in this Resolution,a certificate signed by an Authorized Officer of the Authority and specifying such Event of Default or default and (b)within 120 days after the | end of each Fiscal Year,commencing with the Fiscal Year ending June 30,1991,a certificate signed by an Authorized Officer of the Authority stating that,to the best of his knowledge and belief,the Authority has kept,observed,performed and fulfilled each and every one of its covenants and obligations BOND RESOLUTION Page 56 A16355CM Exhibit A contained in this Resolution and there does not exist at the date of such certificate any default by the Authority under this Resolution or any Event of Default or other event which,with the lapse of time specified in Section 801,would become an Event of Default,or,if any such default or Event of Default or other event shall so exist,specifying the same and the nature and status thereof. 5.With respect to the Project and each Capital Improvement for which a Construction Engineer is retained pursu- ant to paragraph 7 of Section 503,the Authority shall cause such Construction Engineer to (a)prepare and submit to the Authority such drawings,designs,plans,specifications,surveys and reports as are necessary for the proper acquisition and construction of the Project or Capital Improvement,and approve and supervise any necessary modifications in the designs,plans and specifications thereof;(b)prepare and submit to the Authority quarterly reports of progress during the period of construction of the Project or Capital Improvement,including data as to the date of expected completion and the comparison of estimated construction time and the Cost of Acquisition and Construction thereof with the estimates made prior to the issuance and sale of any Bonds,and an estimate of the amounta that will be needed from.time.to time to pay-the-Costof Acqui-sition and Construction thereof and the estimated dates of such payments;(c)continuously supervise and inspect the acquisition and construction of the Project or Capital Improvement in accordance with the usual accepted practices of such inspection and supervision;and (d)upon completion and testing as required by the specifications of the Project or Capital Improvement, certify to the Authority to that effect and to the further effect that the Project (or,with respect to a Capital Improve- ment,the Project with such Capital Improvement)is ready for normal continuous operation.'The Authority shall cause a copy of every report of the Construction Engineer referred to in this paragraph to be filed with the Trustee. 6.The reports,requested statements and other documents required to be furnished to the Trustee pursuant to any provisions of this Resolution shall be available for the inspection of Bondholders at the office of the Trustee and shall be mailed to each Bondholder who shall file a written request therefor with the Authority.The Authority shall request each Purchaser to send a copy of its annual financial statement to the Authority and shall send a copy to each Bondholder which has requested it.The Authority may charge each Bondholder requesting such reports,statements and other documents a reasonable fee to cover reproduction,handling and postage. 7.The Authority agrees to provide to BIG not more than 90 days after the end of each Fiscal Year,a certificate of BOND RESOLUTION Page 57 A16355CM ExhibitA its chief financial officer to the effect that the Authority is in compliance with the terms and conditions of the Resolution or specifying the nature of any noncompliance and the remedial action taken or proposed to be taken to cure such noncompliance. 8.The Authority agrees promptly to provide to BIG (i)all budgets,budget amendments,reports,certificates and financial information required to be filed with the Trustee pursuant to this Resolution or available at the request of Bondowners,(ii)all reports and certificates prepared by the Insurance Consultant,the State division of risk management retained pursuant to Section 714 and Consulting Engineer and Construction Engineer pursuant to this Resolution and (iii) audited financial statements for the most recent Fiscal Year are to be submitted within 120 days of the end of each Fiscal Year. 9.The Authority agrees that immediately,in the case of additional parity indebtedness,and annually,in the case of other indebtedness,it will file or cause to be filed with BIG any official statement issued by,or on behalf of,the Authority in connection with the incurrence by the Authority of any such indebtedness. 10.The Authority agrees promptly to provide or cause to be provided to BIG such financial,statistical and other factual information as BIG shall from time to time reasonably request regarding the Authority. 718.Tax Covenants.1.The Authority shall at all times do and perform all acts and things necessary or desirable including,but not limited to,compliance with provisions of a letter of instructions from Bond Counsel,as the same may be revised from time to time,inorder to assure that interest paid on the Bonds shall,for the purposes of federal income taxation, be excludable from the gross income of the recipients thereof and exempt from such taxation,except in the event that such recipient is a "substantial user"or "related person"within the meaning of Section 147(a)of the Code. 2.The Authority shall not permit at any time or times any of the proceeds of the Bonds,Revenues or any other funds of the Authority to be used directly or indirectly to acquire any securities or obligations the acquisition of which would cause any Bond to be an "arbitrage bond”as defined in Section 148(a)and (e)of the Code. BOND RESOLUTION Page 58 A16355CM ExhibitA 3.The Authority shali not permit at any time or times any proceeds of any Bonds,Revenues or any other funds of the Authority to be used,directly or indirectly,in a manner which would result in the exclusion of any Bond from the treat- ment afforded by subsection (a)of Section 103 of the Code,as from time to time amended,except in the case of Bonds held by a person who,within the meaning of Section 147(a)of the said Code,is a "substantial user"or "related person". 4.This Section shall not apply to any Series of Bonds the interest on which is determined by the Authority not to be exempt from taxation under Section 103 of the Code,pro- vided,that no such Series of Bonds shall be issued unless a Counsel's Opinion is filed with the Trustee stating that the issuance of such Series will not cause the interest on a tax-ex- empt Bond previously issued to be subject to taxation under Sections 103 and 141-150 of the Code. 5.Notwithstanding any other provision of thisResolutiontothecontrary,upon the Authority's failure to observe,or refusal to comply with,the covenants in this Section 718,no person other than the Trustee or the Holders of Bonds of the specific Series affected shall be entitled to exercise any right or remedy provided to the above Holders under this Resolution on the basis of the Authority's failure to observe,or refusal to comply with,the covenant. 719.Payment of Taxes and Charges.The Authority will from time to time duly pay and discharge,or cause to be paid and discharged,all taxes,assessments and other governmen- tal charges,or required payments in lieu thereof,lawfully imposed upon the properties of the Authority or upon the rights, Revenues,income,receipts and other moneys,securities and funds of the Authority when the same shall become due (including all rights,moneys and other property transferred,assigned orpledgedunderthisResolution),and all lawful claims for labor and material and supplies,except those taxes,assessments, charges or claims which the Authority shall in good faith contest by proper legal proceedings,if the Authority shall in all such cases have set aside on its books reserves deemed adequate with respect thereto. 720.Pledge of the State.The State of Alaska pledges to and agrees with the Holders of the Bonds that theStatewillnotlimitoraltertherightsandpowersvestedin the Authority by the Act to fulfill the terms of the contractsmadebytheAuthorityunderthisResolutionwiththeHoldersof Bonds,or in any way impair the rights and remedies of theHoldersofBondsuntiltheBonds,together with the interest on them with interest on unpaid installments of interest,and all costs and expenses in connection with an action or proceeding by BOND RESOLUTION Page 59 A16355CM ExhibitA or on behalf of the Holders of the Bonds,are fully met and Gischarged.This pledge is included in this Resolution under the specific authority of 44.83.1400 of the Act. 721.Waiver of Laws.The Authority shall not at any time insist upon or plead in any manner whatsoever,or claim or take the benefit or advantage of,any stay or extension law now or at any time hereafter in force which may affect the covenants and agreements contained in this Resolution or in the Bonds,and all benefit or advantage of any such law is hereby expressly waived by the Authority. 722.Special Provisions Relatingto BIG.1.Notwithstanding any provision of this Resolution to the contrary,BIG shall at all timed be deemed the exclusive owner of all Insured Bonds for the purposes of all approvals, consents,waivers,institution of any action,and the direction of all remedies.No Event of Default shall be waived,without BIG's consent. 2.To the extent that BIG makes payment of the principal of or interest on the Insured Bonds,it shall become the owner of such Bonds and the right to payment of such principal of or interest on such Bonds and shall be fully subrogated to all of the registered owners'rights thereunder, including the registered owners'rights to payment thereof.To evidence such subrogation (i)in the case of subrogation as toclaimsforpastdueinterest,the Trustee shall note BIG's rights as subrogee on the registration books of the Authority maintained by the Trustee upon receipt of proef from BIG as to payment of interest thereon to the registered owners of the Bonds,and (ii)in the case of subrogation as to claims for pastdueprincipal,the Trustee shall note BIG's rights as subrogee.on the registration books of the Authority maintained by the Trustee upon surrender of the Bonds by the registered owners thereof to the Insurance Trustee. 3.In the event that the principal of and/or interest on the Bonds shall be paid by BIG pursuant to the terms of the Municipal Bond Insurance Policy,(i)such Bonds shall continue to be Outstanding under the Resolution,(ii)the assignment and pledge of the trust estate and all covenants, agreements and other obligations of the Authority to the registered owners shall continue to exist,and BIG shall be fully subrogated to all of the rights of such registered owners in accordance with the terms and conditions of subparagraph (2) above and the Municipal Bond Insurance Policy. 4.BIG shall be notified by the Authority (1)in advance of the adoption of any Supplemental Resolution in the event Bondowner consent is not required,(ii)immediately upon BOND RESOLUTION Page 60 A16355CM ExhibitA the occurrence of any Event of Default under the Resolution or if any event that with notice and/or with the lapse of time could become an event of default under the Resolution,and (111) of any redemption of Insured Bonds at the same time that the owners of the Bonds to be redeemed are notified.In addition, all notices,reports,certificates and opinions to be delivered to or by the Trustee or to the Bondowners or available at the request of the Bondowners pursuant to this Resolution,any Supplemental Resolution shall also be delivered to BIG. 5.In the event that BIG shall make any payments of principal of,and/or interest on,any of the bonds pursuant to the terms of the Municipal Bond Insurance Policy,and the Bonds are accelerated,BIG may,at any time and at its sole option, pay to the owners of the Bonds all or any portion of amounts due under the Bonds prior to the stated maturity dates thereof. 6.The Authority and the Trustee shall also notify BIG (i)immediately,upon the withdrawal of amounts on deposit in the Capital Reserve Fund,other than amounts comprising investment earnings thereon which may be withdrawn in accordance with the terms of the Resolution,upon the determination that deficiency in the Capital Reserve Fund exists or upon the failure to make any required deposit to the Debt Service Fund to pay principal or interest when due;and (ii)immediately upon the resignation or removal of a Trustee or the appointment of a successor Trustee.All notices,reports,certificates and opinions required to be given to BIG shall be in writing and shall be sent by registered or certified mail or by overnight delivery,addressed to Bond Investors Guaranty Insurance Company,70 Pine Street,53rd Floor,New York,New York 10270, Attention:Manager,Portfolio Surveillance Department. 723.General.1.The Authority shall do and perform or cause to be done and performed all acts and things required to be done or performed by or on behalf of the Authority under the provisions of the Act and this Resolution. 2.Upon the date of authentication and delivery of each Series of Bonds,all conditions,acts and things required by law and this Resolution to exist,to have happened and to have been performed precedent to and in the issuance of such Bonds shall exist,have happened and have been performed and the issue of such Bonds,together with all other indebtedness of the Authority,shall comply in all respects with the applicable laws of the State of Alaska including the debt and other limitations prescribed by the Constitution and laws of the State of Alaska. 3.The provisions of this Article are covenants and agreements by the Authority with the Trustee and the Bond- holders. BOND RESOLUTION Page 61 A16355CM Exhibit A ARTICLE VIII Remedies of Bondholders Section 801.Events of Default.The following shall constitute Events of Default: (i)if default shall be made in the due and punctual payment of the principal of or Redemption Price, if any,when and as the same shall become due on or with respect to any Bond,whether at maturity or upon call for redemption or otherwise; (11)if default shall be made in the due and punctual payment of any installment of interest on any Bond or the unsatisfied balance of any Sinking Fund Installment therefor,when and as such interest installment or Sinking Fund Installment shall become due and payable; (iii)if default shall be made by the Authority in the performance or observance of any other of the covenants,agreements or conditions on its part in this Resolution or in the Bonds contained,and such default Bhall continue for a period of 60 days after written notice thereof to the Authority by the Trustee or to the Authority and to the Trustee by the Holders of not less than 25%in principal amount of the Bonds Outstanding; {iv)if there shall occur the dissolution or liquidation of the Authority or the filing by the Authority cf a voluntary petition in bankruptcy,or the commission by the Authority of any act of bankruptcy,or adjudication of the Authority as a bankrupt,or assignment by the Authority for the benefit of its creditors,or the entry by the Authority into an agreement of composition with its creditors,or the approval by a court of competent jurisdiction of a petition applicable to the Authority in any proceeding for its reorganization instituted under the provisions of the federal bankruptcy act,as amended,or under any similar act in any jurisdiction which may now be in effect or hereafter enacted; (v)if an order or decree shall be entered,with the consent or acquiescence of the Authority,appointing a receiver or receivers of the Project,or any part thereof, or of the rents,fees,charges or other Revenues therefrom, or if such order or decree,having been entered without the consent or acquiescence of the Authority,shall not be vacated or discharged or stayed within 90 days after the entry thereof;and BOND RESOLUTION Page 62 A16355CM Exhibit A (vi)if judgment for the payment of money shall be rendered against the Authority as the result of the construction,improvement,ownership,control or operation of the Project,and any such judgment shall not be dis- charged within 90 days after the entry thereof,or an appeal shall not be taken therefrom or from the order, decree or process upon which or pursuant to which such judgment shall have been granted or entered,in such manner as to set aside or stay the execution of or levy under such judgment,or order,decree or process or the enforcement thereof. 802.Account and Examination of Records After Default.1.The Authority covenants that if an Event of Default shall have happened and shall not have been remedied,the books of record and account of the Authority and all other records of the Project at all times shall be subject to the inspection and use of the Trustee and of its agents and attorneys. 2.The Authority covenants that if an Event of Default shall have happened and shall not have been remedied, the Authority upon demand of the Trustee,will account,as if it were the trustee of an express trust,for all Revenues and other moneys,securities and funds pledged or held under this Resolu- tion for such period as shall be stated in such demand. 803.Application of Revenues and Other Moneys After Default.1.The Authority covenants that if an Event of Default shall happen and shall not have been remedied,the Authority upon the demand of the Trustee,shall pay over or cause to be paid over to the Trustee (i)forthwith,all moneys,securities and funds then held by the Authority in any Fund or Account under this Resolution,and (ii)all Revenues as promptly as practicable after receipt thereof. 2.During the continuance of an Event of Default, the Trustee shall apply all moneys,securities,funds and Reve- nues received by the Trustee pursuant to any right given or action taken under the provisions of this Article as follows and in the following order: (i)Expenses of Fiduciaries -to the payment of the reasonable and proper fees,charges,expenses including,but not limited to,fees and expenses of their attorneys,and liabilities of the Fiduciaries; (ii)Operating Expenses -to the payment of the amounts required for reasonable and necessary Operating Expenses.For this purpose the books of record and accounts of the Authority relating to the Project shall at all times be subject to the inspection of the Trustee and BOND RESOLUTION Page 63 A16355CM ExhibitA its representatives and agents during the continuance of such Event of Default; (111i)Principal or Redemption Price and Interest -to the payment of the interest and principal or Redemption Price then due on the Bonds,as follows: First:Interest -To the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments,together with accrued and unpaid interest on the Bonds theretofore called for redemp- tion,and,if the amount available shall not be sufficient to pay in full any installment or install- ments maturing on the same date,then to the payment thereof ratably,according to the amounts due thereon, to the persons entitled thereto,without any Giscrimination or preference;and Second:Principal or Redemption Price -To the payment to the persons entitled thereto of the unpaid principal or Redemption Price of any Bondswhichshallhavebecomedue,whether at maturityor bycallforredemption,in the order of their due dates, and,if the amount available shall not be sufficient to pay in full all the Bonds due on any date,then to the payment thereof ratably,according to the amounts of principal or Redemption Price due on such date,to the persons entitled thereto,without any aGiscrimination or preference. 3.If and whenever all overdue installments of interest on all Bonds,together with the reasonable and proper fees,charges,expenses,including,but not limited to,fees and expenses of its attorneys and liabilities of the Trustee,and all other sums payable by the Authority under this Resolution, including the principal and Redemption Price of and accrued unpaid interest on all Bonds which shall then be payable by declaration or otherwise,shall either be paid by or for the account of the Authority or provision satisfactory to the Trustee and BIG shall be made for such payment,and all defaults under this Resolution or the Bonds shall be made good or secured to the satisfaction of the Trustee and BIG or provision deemed by the Trustee and BIG to be adequate shall be made therefor, and the Trustee shall pay over to the Authority all moneys, securities and funds then remaining unexpended in the hands of the Trustee (except moneys,securities and funds deposited or pledged,or required by the terms of this Resolution to be deposited or pledged,with the Trustee),and thereupon the Authority and the Trustee shall be restored,respectively,to their former positions and rights under this Resolution.No BOND _RESOLUTIOPage64;A16355CM Exhibit A such payment over to the Authority by the Trustee nor such restoration of the Authority and the Trustee to their former positions and rights shall extend to or affect any subsequent Gefault under this Resolution or impair any right consequent thereon. 4.The Trustee shall not take any action which will unreasonably interfere with the performance of the Power Sales Agreement. 804.Appointment of Receiver.The Trustee shall have the right to apply in an appropriate proceeding for the appointment of a receiver of the Project. 805.Proceedings Brought by Trustee.1.If an Event of Default shall happen and shall not have been remedied,then and in every such case,the Trustee,by its agents and attor- neys,may proceed,and upon written request of the Holders of not less than 25%in principal amount of the Bonds Outstanding shall proceed,to protect and enforce its rights and the rights of the Holders of the Bonds under this Resolution forthwith by a suit in equity or at law,whether for the specific performance ef any covenant herein contained,or in aid of the execution of any power herein granted or any remedy granted under the Act,or for an accounting against the Authority as if the Authority were the trustee of an express trust,or in the enforcement of any other legal or equitable right as the Trustee,being advised by counsel,shall deem most effectual to enforce any of its rights or to perform any of its duties under this Resolution. 2.All rights of action under this Resolution may be enforced by the Trustee without the possession of any of the Bonds or the production thereof on the trial or other proceed- ings,and any such suit or proceedings instituted by the Trustee shall be broughtin its name. 3.The Holders of not less than a majority in principal amount of the Bonds at the time Outstanding may direct the time,method and place of conducting any proceeding for any remedy available to the Trustee,or exercising any trust or power conferred upon the Trustee,provided that the Trustee shall have the right to decline to follow any such direction if the Trustee shall be advised by counsel that the action or proceeding so directed may not lawfully be taken,or if the Trustee in good faith shall determine that the action or pro- ceeding so directed would involve the Trustee in personal liability or be unjustly prejudicial to the Bondholders not parties to such direction. 4,Upon commencing a suit in equity or upon other commencement of judicial proceedings by the Trustee to enforce BOND RESOLUTION Page 65 A16355CM ExhibitA any right under this Resolution,the Trustee shall be entitled to exercise any and all rights and powers conferred in this Resolution and provided to be exercised by the Trustee upon the occurrence of any Event of Default. 806.Restriction on Bondholder's Action.1.No Holder of any Bond shall have any right to institute any suit, action or proceeding at law or in equity for the enforcement of any provision of this Resolution or the execution of any trust under this Resolution or for any remedy under this Resolution, unless such Holder shall have previously given to the Trustee written notice of the happening of an Event of Default,as provided in this Article,and the Holders of at least 25%in principal amount of the Bonds then Outstanding shall have filed a written request with the Trustee,and shall have offered it reasonable opportunity either to exercise the powers granted in this Resolution or by the Act or by the laws of the State of Alaska or to institute such action,suit or proceeding in its own name,and unless such Holders shall have offered to the Trustee adequate security and indemnity against the costs, expenses and liabilities to be incurred therein or thereby,and the Trustee shall have refused to comply with such request for a period of 60 days after receipt by it of such notice,request and offer of indemnity,it being understood and intended that no one or more Holders of Bonds shall have any right in any manner whatever by his or their action to affect,disturb or prejudice the pledge created by this Resolution,or to enforce any right under this Resolution,except in the manner therein provided; and that all proceedings at law or in equity to enforce any provision of this Resolution shall be instituted,had and maintained in the manner provided in this Resolution and for the equal benefit of all Holders of the Outstanding Bonds,subject only to the provisions of Section 702. 2.Nothing contained in this Resolutionor in the Bonds shall affect or impair the obligation of the Authority, which is absolute and unconditional,to pay at the respective dates of maturity and places therein expressed the principal of (and premium,if any)and interest on the Bonds to the respec- tive Holders thereof,or affect or impair the right of action, which is also absolute and unconditional,of any Holder to enforce such payment of his Bond. 807.Remedies Not Exclusive.No remedy by the terms of this Resolution conferred upon or reserved to the Trustee or the Bondholders is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Resolution or existing at law,including under the Act,or in equity or by statute on or after the date of adoption of this Resolution. BOND RESOLUTION Page 66 A1l6355CM Exhibit A 808.Effect of Waiver and Other Circumstances.No delay or omission of the Trustee or any Bondholder to exercise any right or power arising upon the happening of an Event of Default shall impair any such right or power or shall be con- strued to be a waiver of any such Event of Default or be an acquiescence therein;and every power and remedy given by this Article to the Trustee or to the Bondholders may be exercised from time to time and as often as may be deemed expedient by the Trustee or by the Bondholders. 809.Notice of Default.The Trustee shall promptly mail written notice of the occurrence of any Event of Default of which it has actual knowledge to each registered owner of Bonds then Outstanding at his address,if any,appearing upon the registry books of the Authority,and to each Purchaser.The Trustee shall be deemed to have actual notice of any default under Section 801(i)and (ii). ARTICLE IX Concerning the Fiduciaries 901.Trustee;Appointment and Acceptance of Duties. The Trustee shall be appointed by a Supplemental Resolution. The Trustee shall signify its acceptance of the duties and obligations imposed upon it by this Resolution by executing anddeliveringtotheAuthorityawrittenacceptancethereof,and by executing such acceptance the Trustee shall be deemed to have accepted such duties and obligations with respect to all the Bonds thereafter to be issued,but only,however,upon the terms and conditions set forth in this Resolution. 902.Paying Agents:Appointment and Acceptance of Duties.1.The Authority shall appoint one or more Paying Agents for the Bonds of each Series,and may at any time or from time to time appoint one or more other Paying Agents having the qualifications set forth in Section 913 for a successor Paying Agent.The Trustee may be appointed a Paying Agent. 2.Each Paying Agent shall signify its acceptance of the duties and obligations imposed upon it by this Resolution by executing and delivering to the Authority and to the Trustee a written acceptance thereof. 3.Unless otherwise provided,the principal corpo- rate trust offices of the Paying Agents are designated as the respective offices or agencies of the Authority for the payment of the interest on and principal or Redemption Price of the Bonds. BOND RESOLUTION Page 67 A1l6355CM ExhibitA 903.Responsibilities of Fiduciaries.1.The recitals of fact herein and in the Bonds contained shall be taken as the statements of the Authority and no Fiduciary as- sumes any responsibility for the correctness of the same.No Fiduciary makes any representations as to the validity or suffi- ciency of this Resolution or of any Bonds issued thereunder or as to the security afforded by this Resolution or the Power Sales Agreement,and no Fiduciary shall incur any liability in respect thereof.The Trustee shall,however,be responsible for its representation contained in its certificate of authentication on the Bonds.No Fiduciary shall be under any responsibility or duty with respect to the application of any moneys paid by such Fiduciary in accordance with the provisions of this Resolution to the Authority or to any other Fiduciary. No Fiduciary shall be under any obligation or duty to perform any act which would involve it in expense or liability or to institute or defend any suit in respect thereof,or to advance any of its own moneys,unless properly indemnified.Subject to the provisions of subsection 2 of this Section 903,no Fiduciary shall be liable in connection with the performance of its duties hereunder except for its own negligence,misconduct or default. 2.The Trustee,priorto the occurrence of any EventofDefaultandafterthecuringofallEventsofDefaultwhich may have occurred,undertakes to perform such duties and only such duties are specifically set forth in this Resolution.In case an Event of Default has occurred (which has not been cured),the Trustee shall exercise such of the rights and powers vested in it by this Resolution,and use the same degree of care and skill in their exercise,as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. Any provision of this Resolution relating to action taken or to be taken by the Trustee or to evidence matters upon which the Trustee may rely shall be subject to the provisions of this Section 903. 904.Evidence on Which Fiduciaries May Act.1.Each Fiduciary,upon receipt of any notice,resolution,request, consent,order,certificate,report,opinion,bond or other paper or document furnished to it pursuant to any provision of this Resolution,shall examine such instrument to determine whether it conforms to the requirements of this Resolution and shall be protected in acting upon any such instrument believed by it to be genuine and to have been signed or presented by the proper party or parties.Each Fiduciary may consult with counsel,who may or may not be of counsel to the Authority,and the opinion of such counsel shall be full and complete author- ization and protection in respect of any action taken or suf- fered by it under this Resolution in good faith and in accor- dance therewith. BOND RESOLUTION Page 68 A16355CM Exhibit A 2.Whenever any Fiduciary shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under this Resolution,such matter (unless other evidence in respect thereof be herein specifically prescribed)may be deemed to be conclusively proved and established by a certificate of an Authorized Officer of the Authority and such certificate shall be full warrant for any action taken or suffered in good faith under the provisions of this Resolution upon the faith thereof;but in its discretion the Fiduciary may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evi- dence as to it may seem reasonable. 3.Except as otherwise expressly provided in this Resolution,any request,order,notice or other direction re- quired or permitted to be furnished pursuant to any provision thereof by the Authority to any Fiduciary shall be sufficiently executed in the name of the Authority by an Authorized Officer of the Authority. 905.Compensation.The Authority shall pay to each Fiduciary from time to time reasonable compensation for all services rendered under this Resolution,and also all reasonable expenses,charges,counsel fees and other disbursements,includ- ing those of its attorneys,agents and employees,incurred in and about the performance of their powers and duties under this Resolution and each Fiduciary shall have a lien therefor on any and all funds at any time held by it under this Resolution. Subject to the provisions of Section 903,the Authority further agrees to indemnify and save each Fiduciary harmless against any loss,expense including attorneys fees and expenses,and liabilities which it may incur in the exercise and performance of its powers and duties hereunder,and which are not due to its negligence,misconduct or default. 906.Certain Permitted Acts.Any Fiduciary may become the owner of any Bonds with the same rights it would have if it were not a Fiduciary.To the extent permitted by law,any Fiduciary may act as depository for,and permit any of its officers or directors to act as a member of,or in any other capacity with respect to,any committee formed to protect the rights of Bondholders or to effect or aid in any reorganization growing out of the enforcement of the Bonds or this Resolution, whether or not any such committee shall represent the Holders of a majority in principal amount of the Bonds then Outstanding. 907.Resignation of Trustee.The Trustee may at any time resign and be discharged of the duties and obligationscreatedbythisResolutionbygivingnotlessthan60days' written notice to the Authority,and mailing notice thereof to each Bondholder,specifying the date when such resignation shall BOND RESOLUTION Page 69 A16355CM Exhibit A take effect,and such resignation shall take effect upon the day specified in such notice,provided a successor shall have been appointed by the Authority or the Bondholders as provided in Section 909,and has accepted the appointment. 908.Removal of Trustee.The Trustee may be removed at any time by an instrument or concurrent instruments in writing,filed with the Trustee,and signed by the Holders of a majority in principal amount of the Bonds then Outstanding or their attorneys-in-fact duly authorized,excluding any Bonds held by or for the account of the Authority.The Authority may remove the Trustee at any time except during the existence of an Event of Default,for such cause as shall be determined in the sole discretion of the Authority,by filing with the Trustee an instrument in writing signed by an Authorized Officer of the Authority. 909.Appointment of Successor Trustee;Financial Qualifications of Trustee and Successor Trustee.1.In case at any time the Trustee shall resign or shall be removed or shall become incapable of acting,or shall be adjudged a bankrupt or insolvent,or if a receiver,liquidator or conservator of the Trustee,or of its property,shall be appointed,or if any public officer shall take charge or control of the Trustee,or of its property or affairs,a successor may be appointed by the Holders of a majority in principal amount of the Bonds then Outstanding,excluding any Bonds held by or for the account of the Authority,by an instrument or concurrent instruments in writing signed and acknowledged by such Bondholders or by their attorneys-in-fact duly authorized and delivered to such succes- sor Trustee,notification thereof being given to the Authority and the predecessor Trustee;provided,nevertheless,that unless a successor Trustee shall have been appointed by the Bondholders as aforesaid,the Authority by a duly executed written instru- ment signed by an Authorized Officer of the Authority shall forthwith appoint a Trustee to fill such vacancy until a succes- sor Trustee shall be appointed by the Bondholders as authorized in this Section 909.The Authority shall mail notice to each Bondholder of any such appointment made by it within 20 days after such appointment.Any successor Trustee appointed by the Authority shall,immediately and without further act,be super- seded by a Trustee appointed by the Bondholders. 2.If in a proper case no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section within 45 days after the Trustee shall have given to the Authority written notice as provided in Section 907 or after a vacancy in the office of the Trustee shall have occurred by reason of its inability to act,removal,or for any reason whatsoever,the Trustee (in the case of its resignation underSection907)or the Holder of any Bond (in any case)may apply BOND RESOLUTION Page 70 A16355CM ExhibitA to any court of competent jurisdiction to appoint a successor Trustee.Said court may thereupon,after such notice,if any, as such may deem proper,appoint a successor Trustee. 3.The Trustee appointed under the provisions of this Article or any successor to the Trustee shall be a bank or trust company or national banking association having capital stock and surplus aggregating at least $200,000,000,if there be such a bank or trust company or national banking association willing and able to accept the office on reasonable and custom- ary terms and authorized by law to perform all the duties im- posed upon it by this Resolution. 910,Transfer of Rights and Property to Successor Trustee.Any successor Trustee appointed under this Resolution shall execute,acknowledge and deliver to its predecessor Trust- ee,and also to the Authority,an instrument accepting such appointment,and thereupon such successor Trustee,without any further act,deed or conveyance,shall become fully vested with all moneys,estates,properties,rights,powers,duties and obligations of such predecessor Trustee,with like effect as if originally named as trustee;but the Trustee ceasing to act shall nevertheless,on the written request of the Authority,orofthesuccessorTrustee,execute,acknowledge and deliver such instrument of conveyance and further assurance and do such other things as may reasonably be required for more fully and certain- ly vesting and confirming in such successor Trustee all the right,title and interest of the predecessor Trustee in and to any property held by it under this Resolution,and shall pay over,assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth.Should any deed,conveyance or instrument in writing from the Authority be required by such successor Trustee for more fully and certainly vesting in and confirming to such successor Trustee any such estates,rights,powers and duties, any and all euch deeds,conveyances and instruments in writing shall,on request,and so far as may be authorized by law,be executed,acknowledged and delivered by the Authority.Any such successor Trustee shall promptly notify the Paying Agents of its appointment as Trustee. 911.Merger or Consolidation.Any company into which any Fiduciary may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which any Fiduciary may sell or transfer all or substantially all of its corporate trust business,provided such company shall be a bank or trust company organized under the laws of any state of the United States of America or a national banking association and shall be authorized by law to perform all the duties imposed upon it by this Reeolution,shall be the BOND RESOLUTION Page 71 A16355CM ExhibitA successor to such Fiduciary without the execution or filing of any paper or the performance of any further act. 912.Adoption of Authentication.In any case any of the Bonds contemplated to be issued under this Resolution shall have been authenticated but not delivered,any successor Trustee may adopt the certification of authentication of any predecessor Trustee so authenticating such Bonds and deliver such Bonds so authenticated;and in case any of the said Bonds shall not have been authenticated,any successor Trustee may authenticate such Bonds in the name of the predecessor Trustee,or in the name of the successor Trustee,and in all cases such certificate shall have the full force which it 1s anywhere in said Bonds or in this Resolution provided that the certificate of the Trustee shall have. 913.Resiqnation or Removal of Paying Agent and Appointment of Successor.1.Any Paying Agent may at any time resign and be discharged of the duties and obligations created by this Resolution by giving at least 60 day's written notice to the Authority,the Trustee and the other Paying Agents.Any Paying Agent may be removed at any time by an instrument filed with such Paying Agent and the Trustee and signed by an Author- ized Officer.Any successor Paying Agent shall be appointed by the Authority with the approval of the Trustee,and shall be a bank or trust company organized under the laws of any state of the United States of America or a national banking association, having capital stock and surplus aggregating at least §25,000,000,and willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by this Resolution. 2.In the event of the resignation or removal of any Paying Agent,such Paying Agent shall pay over,assign and deliver any moneys held by it as Paying Agent to its successor, or if there be no successor,to the Trustee.In the event that for any reason there shall be a vacancy in the office of any Paying Agent,the Trustee shall act as such Paying Agent. ARTICLE X Supplemental Resolutions 1001.Supplemental Resolutions Effective Upon Filing With the Trustee.For any one or more of the following purposesandatanytimeorfromtimetotime,a Supplemental Resolution of the Authority may be adopted,which,upon the filing with theTrusteeof(i)a copy thereof certified by an Authorized OfficeroftheAuthorityand(i1)a certificate of the Committee stating that such Supplemental Resolution has been adopted in accordance BOND RESOLUTION Page 72 A16355CM Exhibit A with Section 11 of the Power Sales Agreement,unless the Supplemental Resolution is adopted pursuant to Section 12 of the Power Sales Agreement shall be fully effective in accordance with its terms: (1)To close this Resolution against,or provide limitations and restrictions in addition to the Limitations and restrictions contained in this Resolution on,the authentication and delivery of Bonds or the issuance of other evidences of indebtedness; (2)To add to the covenants and agreements of the Authority in this Resolution,other covenants and agreements to be observed by the Authority which are not contrary to or inconsistent with this Resolution as theretofore in effect; (3)To add to the limitations and restrictions in this Resolution,other limitations and restrictions to be observed by the Authority which are not contrary to or inconsistent with this Resolution as theretofore in effect; (4)To authorize Bonds of a Series and,in connection therewith,specify and determine the matters and things referred to in Section 202,and also any other matters and things relative to such Bonds which are not contrary to or inconsistent with this Resolution as theretofore in effect,including without limitation the form of coupon bonds as provided in Section 301,or to amend,modify or rescind any such authorization,specifi- cation or determination at any time prior to the first authentication and delivery of such Bonds; (5)To confirm,as further assurance,any pledge or assignment under,and the subjection to any lien,pledge or assignment created or to be created by,this Resolution, of the Revenues or of any other moneys,securities or funds; (6)To modify any of the provisions of this Resolution in any other respect whatever,provided that (i) such modification shall be,and be expressed to be, effective only after all Bonds of each Series Outstanding at the date of the adoption of such Supplemental Resolution shall cease to be Outstanding,and (ii)such Supplemental Resolution shall be specifically referred to in the next text of all Bonds of any Series authenticated and delivered after the date of the adoption of such Supplemental Resolution and of Bonds issued in exchange or in place thereof;and BOND RESOLUTION Page 73 A16355CM ExhibitA (7)To appoint the Trustee. 1002.Supplemental Resolutions Effective Upon Consent of Trustee.For any one or more of the following purposes and at any time from time to time,a Supplemental Resolution may be adopted,which,upon (i)the filing with the Trustee of a copy thereof certified by an Authorized Officer of the Authority, (ii)a certificate of the Committee stating that such Supplemental Resolution has been adopted in accordance with Section 11 of the Power Sales Agreement,and (iii)the filing with the Authority of an instrument in writing made by the Trustee consenting thereto,shall be fully effective in accord- ance with its terms: (1)To cure any ambiguity,supply any omission, or cure or correct any defect or inconsistent provision in this Resolution;or (2)To insert such provisions clarifying matters oer questions arising under this Resolution as are necessary or desirable and are not contrary to or inconsistent with this Resolution as theretofere in effect. (3)To make any changes which do not in the sole opinion of the Trustee,materially and adversely affect the rights of the Bondholders. The Trustee,in determining whether any amendments or supplements to the Resolution may be made without the consent of Bondowners and in determining whether any action should be taken,shall consider the effect of such amendment,supplement or action on the rights of the Bondowners as if the Municipal Bond Insurance Policy were not in effect. 1003.Supplemental Resolutions Effective With Consent of Bondholders.At any time or from time to time,a Supplemental Resolution may be adopted subject to consent by Bondholders in accordance with and subject to the provisions of Article XI,which Supplemental Resolution,upon the filing with the Trustee of (i)a copy thereof certified by an Authorized Officer of the Authority and (11)a certificate of the Committee stating that such Supplemental Resolution has been adopted in accordance with Section 11 of the Power Sales Agreement,and upon compliance with the provisions of said Article XI,shallbecomefullyeffectiveinaccordancewithitstermsasprovided in said Article XI. 1004.General Provisions.1.The Resolution shall not be modified or amended in any respect except as provided in and in accordance with and subject to the provisions of this Article X and Article XI.Nothing in this Article K or Article BOND RESOLUTION Page 74 A16355CM ExhibitA XI contained shall affect or limit the right or obligation of the Authority to adopt,make,do,execute,acknowledge or deliver any resolution,act or other instrument pursuant to the provisions of Section 704 or the right or obligation of the Authority to execute and deliver to any Fiduciary any instrument which elsewhere in this Resolution it is provided shall be delivered to said Fiduciary. 2.Any Supplemental Resolution referred to and permitted or authorized by Section 1001 and 1002 may be adopted by the Authority without the consent of any of the Bondholders, but shall become effective only on the conditions,to the extent and at the time provided in said Sections,respectively.The copy of every Supplemental Resolution when filed with the Trustee shall be accompanied by an Opinion of Counsel stating that such Supplemental Resolution has been duly and lawfully adopted in accordance with the provisions of this Resolution,is authorized or permitted by this Resolution,and is valid and binding upon the Authority and enforceable in accordance with its terms. 3.The Trustee is hereby authorized to accept the delivery of a certified copy of any Supplemental Resolution referred to and permitted or authorized by Sections 1001,1002 or 1003 and to make all further agreements and stipulations which may be therein contained,and the Trustee,in taking such action,shall be fully protected in relying on an Opinion of Counsel that such Supplemental Resolution is authorized or permitted by the provisions of this Resolution. 4.No Supplemental Resolution shall change or modify any of the rights or obligations of any Fiduciary without its written assent thereto. 1005.Amendments Prior to Delivery of Bonds. Amendments to this Resolution and of the First Series Resolution,not substantial in nature but required in the Opinion of Counsel to effectuate delivery of the Bonds in accordance with the Bond Purchase Agreement or the Official Statement issued in connection with the Bonds,may be effected by certificate of the Executive Director filed with the Trustee and BIG prior to the delivery of any Bonds.The certificate shall state the amendment,whether the same is in the nature of a clerical correction or consists of the completion of an omission,or otherwise,and from and after the delivery of the certificate this Resolution or the First Series Resolution,as the case may be,shall be considered as if originally adopted with such change. BOND RESOLUTION Page 75 A16355CM ExhibitA ARTICLE XI Amendments 1101.Mailing.Any provision in this Article for the mailing of a notice or other paper to Bondholders shall be fully complied with if it is mailed postage prepaid only to each registered owner of Bonds then Outstanding at his address,if any,appearing upon the registry books of the Authority and each Fiduciary. 1102.Powers of Amendment.Any modification or amendment of this Resolution and of the rights and obligations of the Authority and of Holders of the Bonds thereunder,in any particular,may be made by a Supplemental Resolution,with the written consent of the Committee and,if required by the terms of a written commitment for Bond insurance,the consent of the Bond insurer,and with the written consent given as provided in Section 1103 of the Holders of at least a majority in principal amount of the Bonds Outstanding at the time such consent is given,and (ii)in case less than all of the several Series of Bonds then Outstanding are affected by the modification oramendment,of the Holders of at leasta majority in principalamountoftheBondsofeachSeriessoaffectedandOutstanding at the time such consent is given,and (iii)in case the modifi- cation or amendment changes the terms of any Sinking Fund Installment,of the Holders of at least a majority in principal amount of the Bonds of the particular Series and maturity entitled to such Sinking Fund Installment and Outstanding at the time such consent is given:provided,however,that if such modification or amendment will,by its terms,not take effect so long as any Bonds of any specified like Series and maturity remain Outstanding the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding Bonds under this Section.No such modifications or amendment shall permit a change in the terms of redemption or maturity of the principal of any Outstanding Bond or any instaliment of interest thereon or a reduction in the principal amount or the Redemption Price thereof or in the rate of interest thereon without the consent of the Holder of such Bond,or shall reduce the percentages or otherwise affect the classes of Bonds the consent of the Holders of which is required to effect any such modification or amendment,or shall change or modify any of the rights or obligations of any Fiduciary without its written assent thereto.For the purposes of this Section,a Series shall be deemed to be affected by a modification or amendment of this Resolution if the same adversely affects or diminishes the rights of the Holders of Bonds of such Series.The Trustee may in its discretion determine whether or not in accordance with the foregoing powers of amendment Bonds of any particular Series BOND RESOLUTION Page 76 A16355CM Exhibit A or maturity would be affected by any modification or amendment of this Resolution and any such determination shall be binding and conclusive on the Authority and all Holders of Bonds. 1103.Consent of Bondholders.The Authority may at any time adopt a Supplemental Resolution making a modification or amendment permitted by the provisions of Section 1102 to take effect when and as provided in this Section,provided that such modification or amendment receives the written consent of the Committee.A copy of such Supplemental Resolution (or brief summary thereof or reference thereto in form provided by the Authority to by the Trustee),together with a request to Bondholders for their consent thereto in form satisfactory to the Trustee,shall be mailed by the Authority to Bondholders (but failure to mail such copy and request shall not affect the validity of the Supplemental Resolution when consented to as in this Section provided).Such Supplemental Resolution shall not be effective until (1)there shall have been filed with the Trustee (a)the written consents of Holders of the percentages of Outstanding Bonds specified in Section 1102 and (b)an Opinion of Counsel stating that such Supplemental Resolution has been duly and lawfully adopted and filed by the Authority in accordance with the provisions of this Resolution,is authorized or permitted by this Resolution,and is valid and binding upon the Authority,the Fiduciaries and the Holders of Bonds and enforceable in accordance with its terms,and (ii)a notice shall have been mailed as hereinafter in this Section 1103 provided.Each such consent shall be effective only if accompa- nied by proof of the holding,at the date of such consent,of the Bonds with respect to which such consent is given,which proof shall be such as is permitted by Section 1202.A certifi- cate or certificates executed by the Trustee and filed with the Authority stating that it has examined such proof and that such proof is sufficient in accordance with Section 1202 shall be conclusive that the consentshavebeen given by the Holders ofBondsdescribedinsuchcertificateorcertificatesofthe Trustee.Any such consent shall be binding upon the Holders of Bonds signing such consent and,anything in Section 1202 to the contrary notwithstanding,upon any subsequent Holder of such Bonds and of any Bonds issued in exchange (whether or not such subsequent Holder has notice thereof)provided however that any consent may be revoked in writing by any Holder of such Bonds by filing with the Trustee,prior to the time when the written statement of the Trustee hereinafter in this Section 1103 provided for is filed,such revocation.The fact that a consent has not been revoked may likewise be proved by a certificate of the Trustee filed with the Authority to the effect that no revocation thereof is on file with the Trustee.At any time after the Holders of the required percentages of Bonds shall have filed their consents to the Supplemental Resolution,the Trustee shall make and file with the Authority a written BOND RESOLUTION Page 77 A16355CM Exhibit A statement that the Holders of such required percentages of Bonds have filed such consents.Such written statements shall be conclusive that such consents have been filed.At any time thereafter,notice stating in substance that the Supplemental Resolution (which may be referred to as a Supplemental Resolution adopted by the Authority on a stated date,a copy of which is on file with the Trustee)has been consented to by the Holders of the required percentages of Bonds,and will be effective as provided in this Section 1103,may be given to Bondholders by the Authority by mailing such notice to Bondhold- ers (but failure to mail such notice shall not prevent such Supplemental Resolution from becoming effective and binding as in this Section 1103 provided).The Authority shall file with the Trustee proof of the mailing of such notice to Bondholders. A record,consisting of the certificates or statements required or permitted by this Section 1103 to be made by the Trustee, shall be proof of the matters therein stated.Such Supplemental Resolution making such amendment or modification shall be deemed conclusively binding upon the Authority,the Fiduciaries and the Holders of all Bonds at the expiration of 40 days after the filing with the Trustee of the proof of the mailing of such last mentioned notice,except in the event of a final decree of a court of competent jurisdiction setting aside such Supplemental Resolution in a legal action or equitable proceeding for such purpose commenced within such 40 day period;provided,however, that any Fiduciary and the Authority during such 40 day period and any such further period during which any such action or pro- ceeding may be pending shall be entitled in their absolute discretion to take such action,or to refrain from taking such action,with respect toe such Supplemental Resolution as they may deem expedient. 1104.Modifications by Unanimous Consent.The Resolution and the rights and obligations of the Authority and of the Holders of Bonds thereunder may be modified or amendedwiththewrittenconsentoftheCommitteeinanyrespectbya Supplemental Resolution effecting such modification or amendment and the consents of the Holders of all the Bonds then Outstand- ing,each such consent to be accompanied by proof of the holding at the date of such consent of the Bonds with respect to which consent is given.Such Supplemental Resolution shall take effect upon the filing (a)with the Trustee of (i)a copy thereof certified by an Authorized Officer of the Authority, (ii)such consents and accompanying proofs and (iii)the Coun- sel's Opinion referred to in Section 1103 and (b)with theAuthorityandtheTrusteeoftheTrustee's written statement that the consents of the Holders of all Outstanding Bonds have been filed with it.No mailing of any Supplemental Resolution (or reference thereto or summary thereof)or of any request or notice shall be required.No such modification or amendment, BOND RESOLUTION Page 78 A16355CM Exhibit A however,shall change or modify any of the rights or obligations of any Fiduciary without its written assent thereto. 1105.Exclusion of Bonds.Bonds owned by or for the account of the Authority shall not be deemed Outstanding for the purpose of consent or other action or any calculation of Out- standing Bonds provided for in this Article XI,and the Authori- ty shall not be entitled with respect to such Bonds to give any consent or take any other action provided for in this Article. At the time of any consent or other action taken under this Article,the Authority shall furnish the Trustee a certificate of an Authorized Officer of the Authority upon which the Trustee may rely,describing all Bonds so to be excluded. 1106.Notation on Bonds.Bonds authenticated and delivered after the effective date of any action taken as in Article X or Article XI provided may,and if the Trustee so determines,shall,bear a notation by endorsement or otherwise in form approved by the Authority and the Trustee as to such action,and in that case upon demand of the Holder of any Bond Outstanding at such effective date and presentation of his Bond for the purpose at the principal corporate trust office of the Trustee or upon any transfer or exchange of any Bond Outstanding at such effective date,suitable notation shall be made on such Bond or upon any Bond issued upon any such transfer or exchange by the Trustee as to any such action.If the Authority or the Trustee shall so determine,new Bonds so modified as in the opinion of the Trustee and the Authority to conform to such action shall be prepared,authenticated and delivered,and upon demand of the Holder any Bond then Outstanding shall be ex- changed,without cost to such Bondholder,for Bonds of the same Series and maturity then Outstanding,upon surrender of such Bonds. ARTICLE XIT Miscellaneous 1201.Defeasance.1.If the Authority shall pay or cause to be paid,or there shall otherwise be paid,to the Holders of all Bonds the principal or Redemption Price,if applicable,and interest due or to become due thereon,at thetimeandinthemannerstipulatedthereinandinthisResolu- tion,then the pledge and assignment of any Revenues and other moneys and securities pledged under this Resolution and all covenants,agreements and other obligations of the Authority to the Bondholders,shall thereupon cease,terminate and become void and be discharged and satisfied.In such event,the Trust- ee shall cause an accounting for such period or periods as shall be requested by the Authority to be prepared and filed with the BOND RESOLUTION Page 79 A16355CM Exhibit A Authority and,upon the request of the Authority shall execute ana deliver to the Authority all such instruments as may be desirable to evidence such discharge and satisfaction,and the Fiduciaries shall pay over or deliver to the Authority all moneys or securities held by them pursuant to this Resolution which are not required for the payment of principal or Redemp- tion Price,if applicable,and interest on Bonds.If the Authority shall pay or cause to be paid or there shall otherwise be paid,to the Holders of all Outstanding Bonds of a particular Series,or of a particular maturity within a Series,the princi- pal or Redemption Price,if applicable,and interest due or to become due thereon,at the times and in the manner stipulated therein and in this Resolution,such Bonds shall cease to be entitled to any lien,benefit or security under this Resolution, and all covenants,agreements and obligations of the Authority to the Holders of such Bonds shall thereupon cease,terminate and become void and be discharged and satisfied. 2.Bonds or interest installments for the payment or redemption of which moneys shall have been set aside and shall be held in trust by the Paying Agents (through deposit by the Authority of funds for such payment or redemption or otherwise) at the maturity or redemption date thereof shall be deemed to have been paid within the meaning and with the effect expressed in subsection 1 of this Section 1201.Prior to the maturity or redemption date thereof,Bonds shall be deemed to have been paid within the meaning and with the effect expressed in subsection 1 of this Section 1201 if (a)in case any of said Bonds are to be redeemed on any date prior to their maturity,the Authority shall have given to the Trustee irrevocable instructions accepted in writing by the Trustee to mail as provided in Article IV notice of redemption of such Bonds on said date,(b) there shall have been deposited with the Trustee either moneys (including moneys withdrawn and deposited pursuant to subsection 4 of Section 507)in an amount which shall be sufficient,or Federal Obligations (including any Federal Obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America)which shall not contain provisions permitting the redemption thereof other than at the option of the holder the principal of and the interest on which when due will provide moneys which,together with the moneys,if any,deposited with the Trustee at the same time, shall be sufficient to pay when due the principal or Redemption Price,if applicable,and interest due and to become due on said Bonds on or prior to the redemption date or maturity date thereof,as the case may be,and (c)the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail,as soon as practicable,a notice to the Holders of such Bonds that the deposit required by (b)above has been made with the Trustee and that said Bonds are deemed to have been paid in accordance with this Section 1201 and stating BOND RESOLUTION Page 80 A16355CM Exhibit A such maturity or redemption date upon which moneys are to be available for the payment of the principal or Redemption Price, if applicable,and interest on said Bonds and BIG shall have received (1)the final official statement delivered in connection with the refunding bonds,if any,issued inconnectionwiththedefeasance,(ii)a copy of the accountants' verification report,(iii)a copy of the escrow deposit agreement under which the Trustee holds the monies or Federal obligations in form and substance acceptable to BIG,and (iv)a copy of an opinion of bond counsel,dated the date of closing and addressed to BIG,to the effect that such Bonds have been paid within the meaning and with the effect expressed in the Resolution,and that the covenants,agreements and other obligations of the Authority to the Holders of such Bonds have been discharged and satisfied.Neither Federal Obligations nor moneys deposited with the Trustee pursuant to this Section 1201 nor principal or interest payments on any such Federal Obliga- tions shall be withdrawn or used for any purpose other than,and shall be held in trust for,the payment of the principal or Redemption Price,if applicable,and interest on said Bonds; provided that any cash received from such principal or interest payments on such Federal Obligations deposited with the Trustee, (A)to the extent such cash will not be requiredat any time forsuchpurpose,after verification by a Certified Public Accountant shall be paid over to the Authority as received by the Trustee,free and clear of any trust,lien,pledge or assignment securing said Bonds or otherwise existing under this Resolution,and (B)to the extent such cash will be required for such purpose at a later date,shall,to the extent practicable, be reinvested in Federal Obligations maturing at times and in amounts sufficient to pay when due the principal or Redemption Price,if applicable,and interest to become due on said Bonds, on or prior to such redemption date or maturity date thereof,as the case may be,and interest earned from such reinvestment shall be paid over to the Authority as received by the Trustee, free and clear of any trust,lien,pledge or assignment securing said Bonds or otherwise existing under this Resolution.For the purposes of this Section 1201,Federal Obligations shall mean and include only such Federal Obligations which shall not be subject to redemption prior to their maturity other than at the option of the holder thereof. 3.Anything in this Resolution to the contrary notwithstanding,any moneys held by a Fiduciary in trust for the payment and discharge of any of the Bonds which remain unclaimed for six years after the date when such Bonds have become due and payable,either at their stated maturity dates or by call for earlier redemption,if such moneys were held by the Fiduciary at such date,or for six years after the date of deposit of such moneys if deposited with the Fiduciary after the said date when such Bonds became due and payable,shall,at the written request BOND RESOLUTION Page 81 A16355CM Exhibit A of the Authority,be repaid by the Fiduciary to the Authority for payment into the Revenue Fund,and shall be deemed "other available funds"within the meaning of Section 712 to be used for the payment of amounts required to be paid therein or for the payment of refunds to the Purchasers pursuant to Section 13 of the Power Sales Agreement,and the Fiduciary shall thereupon be released and discharged with respect thereto and the Bond- holders shall look only to the Authority for the payment of such Bonds. 1202.Evidence of Signatures of Bondholders and Ownership of Bonds.1.Any request,consent,revocation of consent or other instrument which this Resolution may require or permit to be signed and executed by the Bondholders may be in one or more instruments of similar tenor,and shall be signed or executed by such Bondholders in person or by their attorneys appointed in writing.Proof of the execution of any such in- strument,or of any instrument appointing any such attorney, shall be sufficient for any purpose of this Resolution (except as otherwise therein expressly provided)if made in the follow- ing manner,or in any other manner satisfactory to the Trustee, which may nevertheless in its discretion require further and other proof in cases where it deems the same desirable: The fact and date of the execution by any Bondholder or his attorney of such instruments may be proved by a guarantee of the signature thereon by a bank or trust company or by the certificate of any notary public or other officer authorized to take acknowledgements of deeds,that the person signing such request or other instrument acknowledged to him the execution thereof,or by an affidavit of a witness of such execution,duly sworn to before such notary public or other officer.Where such execution is by an officer of a corporation or partnership,such Bignature guarantee,certificate or affidavit shall also consti- tute sufficient proof of his authority. 2.The ownership of Bonds and the amount,numbers and other identification,and date of holding the same shall be proved by the registry books. 3.Any request or consent by the owner of any Bond shall bind all future owners of such Bond in respect of anything done or suffered to be done by the Authority or any Fiduciary in accordance therewith. 1203.Moneys Held for Particular Bonds.The amounts held by any Fiduciary for the payment of the interest,principal or Redemption Price due on any date with respect to particular Bonds shall,on and after such date and pending such payment,be set aside on its books and held in trust by it for the Holders of the Bonds entitled thereto. BOND RESOLUTION Page 82 A16355CM ExhibitA 1204.Preservation and Inspection of Documents.All documents received by a Fiduciary under the provisions of this Resolution shall be retained in its possession and shall be subject at all reasonable times during regular hours with reasonable notice to the inspection of the Authority,any other Fiduciary,and any Bondholder and their agents and their representatives,any of whom may make copies thereof. 1205.No Recourse on the Bonds.No recourse shall be had for the payment of the principal of or interest on the Bonds or for any claim based thereon or on this Resolution against any member of the Board of Directors or officer of the Authority or any person executing the Bonds. 1206.Severability of Invalid Provisions.If any one or more of the covenants provided in this Resolution on the part of the Authority or any Fiduciary to be performed should be contrary to law,then such covenant or covenants or agreement or agreements shall be deemed severable from the remaining cove- nants and agreements,and shall in no way affect the validity of the other provisions of this Resolution. 1207.Holidays.If the date for making any payment or the last date for performance of any act or the exercising of any right,as provided in this Resolution,shall be a legal holiday or a day on which banking institutions in the city in which is located the principal office of the Trustee are author- ized by law to remain closed,such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are not authorized by law to remain closed,with the same force and effect as if done on the nominal date provided in this Resolu- tion. 1208.Notices.It shall be sufficient service of any notice,request,complaint,demand or other paper on the Authority or the Trustee,as the case may be,if the same shall be duly mailed by registered or certified mail and addressed to it at Alaska Energy Authority,F.0.Box 190869,Anchorage, Alaska 99519-0869,Attention:Executive Director,or to such other address as the Authority may from time to time file with the Trustee (in respect of the Authority)or at Security Pacific Bank Washington,N.A.,Corporate Trust Department,P.O.Box 24407,Seattle,Washington 98124-0407,Attention:Diana Woodard T15-1,or at such other address as the Trustee may from time to time file with the Authority (in respect of the Trustee). BOND RESOLUTION Page 83 A16355CM ExhibitA ARTICLE XIII Bond Form and Effective Date 1301.Form of Bonds and Trustee's Certificate of Authentication.Subject to the provisions of this Resolution, the form of the Bonds of each Series and the Trustee's Certifi- cate of Authentication,shall be substantially of the following tenor with such variations,omissions and insertions with respect to capital appreciation bonds and otherwise as are required or permitted by this Resolution and as fixed by or pursuant to Supplemental Resolution. ALASKA ENERGY AUTHORITY Power Revenue Bond,Series () %Due July 1, $No. ALASKA ENERGY AUTHORITY (herein called the "Authori- ty"),a public corporation of the State of Alaska organized and existing under and by virtue cof the laws of the State of Alaska, acknowledges itself indebted to,and for value received hereby promises to pay to er registered assigns,on the first day of July,,the principal sum of Dollars in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts,upon presentation and surrender of this bond at the principal corporate trust office of or (such banks and any successors thereto being referred to herein as the "Paying Agents"),at the option of the registered owner hereof,and to pay to the registered owner the interest on such principal sum in like coin or curren- cy from the date hereof,at the rate per annum specified above, payable on the first days of January and July in each year,until the Authority's obligation with respect to the payment of such principal sum shall be discharged by check or draft mailedtotheregisteredownerofrecordhereofasofthe15thdayof the calendar month next preceding such interest payment date at the address of such owner appearing on the registration books maintained by the Authority for such purpose at the principal corporate trust office of ,in the City of ,a8 bond registrar. BOND RESOLUTION Page 84 A16355CM Exhibit A This bond is one of a duly authorized issue of bonds of the Authority designated as its "Power Revenue Bonds, Series ______™(herein called the "Series Bonds"), in the aggregate principal amount of §issued pursuant to the (herein called the "Act"),and under and pursuant to a resolution of the Authority, adopted ,entitled "Power Revenue Bond Resolution"and a supplemental resolution of the Authority authorizing the Series Bonds (said being herein called the "Resolution"). As provided in the Resolution,the Bonds are direct and general obligations of the Authority for the payment of which the full faith and credit of the Authority is pledged, which are secured as to payment of the principal and redemption price thereof,and interest thereon,in accordance with their terms and the provisions of the Resolution by (i)the proceeds of the sale of the Bonds,(ii)the Revenues (as defined in the Resolution,and (iii)all funds established by the Resolution including the investments,if any,thereof,subject only to the provisions of the Resolution permitting the application thereof for the purposes and on the terms and conditions set forth in the Resolution.Copies of the Resolution are on file at the effice of the Authority and at the principal corporate trust office of ,a8 Trustee under the Resolu- tion,or its successor as Trustee (herein called the "Trustee”), and reference to the Resolution and any and all supplements thereto and modifications and amendments thereof and to the Act is made for a description of the pledge and assignment and covenants securing the Bonds,the nature,extent and manner of enforcement of such pledge and assignment,the rights and remedies of the registered owners of the bonds with respect thereto,the limitations on such rights and remedies and the terms and conditions upon which the Bonds are issued and may be issued thereunder. As provided in the Resolution,Bonds of the Authority may be issued from time to time pursuant to supplemental resolu- tions in one or more series,in various principal amounts,may mature at different times,may bear interest at different rates and may otherwise vary as in the Resolution provided.The aggregate principal amount of Bonds which may be issued under the Resolution is not limited except as provided in the Resolu- tion,and all Bonds issued and to be issued under the Resolution are and will be equally secured by the pledge and assignment and covenants made therein,except as otherwise expressly provided or permitted in the Resolution. To the extent and in the manner permitted by the terms of the Resolution,the provisions of the Resolution,or any BOND RESOLUTION Page 85 A16355CM Exhibit A resolution amendatory thereof or supplemental thereto,may be modified or amended by the Authority,with the written consent of the owners of at least a majority in principal amount of the bonds then outstanding under the Resolution,and,in case less than all of the Series of bonds would be affected thereby,with such consent of at least a majority in principal amount of the bonds of each Series so affected then outstanding under the Resolution,and,in case such modification or amendment would change the terms of any sinking fund installment,with such consent of at least a majority in principal amount of the bonds ef the particular Series and maturity entitled to such sinking fund installment then outstanding;provided,however,that,if such modification or amendment will,by its terms,not take effect so long as any bonds of any specified like Series and maturity remain outstanding under the Resolution,the consent of the owners of such bonds shall not be required and such bonds shall not be deemed to be outstanding for the purpose of the calculation of outstanding bonds.No such modification or amendment shall permit a change in the terms of redemption or maturity of the principal of any outstanding bond or of any installment of interest thereon or a reduction in the principal amount or redemption price thereof or in the rate of interest thereon without the consent of the owner of such bond,or shall reduce the percentages or otherwise affect the classes of bonds the consent of the owners of which is required to effect any such modification or amendment,or shall change or modify any of the rights or obligations of the Trustee or of any Paying Agent without its written assent thereto. This Bond is transferable as provided in the Resolu- tion,only upon the books of the Authority kept for the purpose at the above-mentioned office of the Trustee,by the registered owner hereof in person,or by his duly authorized attorney,upon surrender of this bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the regis- tered owner or his duly authorized attorney,and thereupon a new registered Bond or Bonds,and in the same aggregate principal amounts,shall be issued to the transferee in exchange therefor as provided in the Resolution,and upon payment of the charges therein prescribed.The Authority,the Trustee and any Paying Agent may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment of,or on account of,the principal or redemp- tion price hereof and interest due hereon and for all other purposes. The Bonds of the issue of which this Bond is one are subject to redemption prior to maturity,upon notice as hereinafter provided,(i)by operation of the Principal Account established under the Resolution to satisfy sinking fund installments,on any interest payment date on and after BOND RESOLUTION Page 66 A16355CM Exhibit A at the principal amount thereof together with accrued interest to the redemption date,and (ii) otherwise,as a whole,or in part in maturities,at any time on or after ,at the respective redemption prices (expressed as percentages of the principal amount of the bonds or portions thereof to be redeemed)set forth below,in each case together with accrued interest to the redemption date: Period During Which Redemption (both dates inclusive)Prices If less than all the bonds of like maturity are to be redeemed,the particular bonds to be redeemed shall be selected by lot by the Trustee. (Further Redemption provisions per the Resolution and Supplemental Resolution) The Bonds of the issue of which this bond is one are payable upon redemption at the above-mentioned offices of the Paying Agents.Notice of redemption,setting forth the place of payment,shall be mailed by first class mail to each registered owner not less than 30 days nor more than 60 days prior to the redemption date,all in the manner and upon the terms and conditions set forth in the Resolution.If notice of redemption shall have been given as aforesaid,the Bonds or portions thereof specified in said notice shall become due and payable on the redemption date therein fixed,and if,on the redemption date,moneys for the redemption of all the Bonds and portions thereof to be redeemed,together with interest to the redemption date,shall be available for such payment on said date,then from and after the redemption date interest on such Bonds or portions thereof so called for redemption shall cease to accrue and be payable. Neither the State of Alaska nor any political subdi- vision thereof,other than the Authority,nor any member of the Authority nor any Power Purchaser (as defined in the Resolution) is obligated to pay the principal,premium,if any,or interest on this bond and the issue of which it is one and neither the faith and credit nor the taxing power of the State of Alaska or any political subdivision thereof is pledged to the payment of the principal of,premium,if any,or interest on this bond or the issue of which it is one. It is hereby certified and recited that all condi- tions,acts and things required by law and the Resolution to exist,to have happened and to have been performed precedent to and in the issuance of this bond,exist,have happened and have BOND RESOLUTION Page 87 A16355CM ExhibitA been performed and that the issue of bonds of which this is one, together with all other indebtedness of the Authority,complies in all respects with the applicable laws of the State of Alaska, including,particularly,the Act and is within every debt and other limit prescribed by said laws of the State of Alaska. This bond shall not be entitled to any benefit under the Resolution or be valid or become obligatory for any purpose until this bond shall have been authenticated by the executionbytheTrusteeoftheTrustee's Certificate of Authentication hereon. IN WITNESS WHEREOF,ALASKA ENERGY AUTHORITY has caused this bond to be signed in its name and on its behalf by the facsimile signature of its Chairman or its Vice Chairman,and its corporate seal (or facsimile thereof)to be hereunto af- fixed,imprinted,engraved or otherwise reproduced and attested by the facsimile signature of its Secretary or its Assistant Secretary. DATED: ALASKA ENERGY AUTHORITY By. (Vice)Chairman ATTEST: (Assistant)Secretary BOND RESOLUTION Page 88 A16355CM Exhibit A (FORM OF CERTIFICATE OF AUTHENTICATION ON ALL BONDS] TRUSTEE'S CERTIFICATE OF AUTHENTICATION This bond is one of the Series Bonds delivered pursuant to the within mentioned Resolution. Trustee, By. Authorized Officer 1302.Effective Date.This Power Revenue Bond Resolution shall take affect immediately. Power Revenue Bond Resolution approved and adopted by Alaska Energy Authority on September 7,1989. ALASKA ENERGY AUTHORITY By CKhairman BOND RESOLUTION Page 89 A16355CM ExhibitA Exhibit BL-3 EXECUTIVE DIRECTOR'S CERTIFICATE I,ROBERT E.LeRESCHE,Executive Director of the Alaska Energy Authority (the "Authority"),HEREBY CERTIFY that attached hereto is a true and correct copy of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement"),dated as of December 8,1987,and that said document has not been amended or repealed,but is in full force and effect. IN WITNESS WHEREOF,I have hereunto set my hand and the seal of the Authority this 5th day of October 1989. chs = ROBERT E.LeRESCHE Executive Director [SEAL ] A16434JF Exhibit A COUNTERPART _]of 21 BRADLEY LAKE HYDROELECTRIC PROJECT AGREEMENT FOR THE SALE AND PURCHASE OF ELECTRIC POWER ("POWER SALES AGREEMENT") by and among THE ALASKA POWER AUTHORITY, An Agency Of The State Of Alaska, ("Seller"), and The CHUGACH ELECTRIC ASSOCIATION,INC., The GOLDEN VALLEY ELECTRIC ASSOCIATION,INC., The MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT AND POWER, The CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM, and The ALASKA ELECTRIC GENERATION &TRANSMISSION COOPERATIVE,INC., ("Purchasers") and The HOMER ELECTRIC ASSOCIATION,INC., and The MATANUSKA ELECTRIC ASSOCIATION,INC., (Additional Parties) Exhibit A Index Of Sections Section Recitals ...6 ©©©©©©«©©©ew ew tt tw ht ell 19. 22. Definitions Pr Term Of Agreement ....2.6 «©«©«©ee ©©@ Exhibits .2.2.2 6 2 6 6 ©©©2 6 8 ow ew wt Electric Service To Be Furnished ........ Electric Power Reserves For The Project .... Obligations Under Bond Resolution; Completion Of Project ..2...©©««se « Payment Obligation ....2.«©»«©ee se we Annual Project Costs ..2.2.2.2 ©©ee we we ew Obligations In The Event Of Default ...... Purchasers'Systems ....2.6 6 ©«©«©©©«@ « Bond Resolution ....2.2 2 ©©©©»ew wwe Purchasers'Consent To Supplemental Resolutions To Construct The Project .....«+.©«« Establishment Of The Committee ......e¢e¢.- End Of The Project ...2.2 2 ©©«©©©©©«© Records ...««©6 ©«©«©«©©©©©©ww ew Inspection Of Facilities ...2..«©«©»e ««©@ Covenants To Maintain Integrity Of Agreement .. _Assignment ..2.2 «©©©©©©©©©©©ow Notices,Computation Of Time And Holidays ... Applicable Law e eo e e e e e e e e e e e eo e LJ e Availability Of Information .......... Severability e °e «e e e e e e e e e e e e e e Page Exhibit A Section 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. Remedies Cumulative ........s.-e ce ees Waiver Not Continuing ......2..24e.e.. Section Headings ...2.2.6 2 ©«©©©©we wo Multiple Copies .....++«6 «©«©©«e ee Covenant To Act In Good Faith ......e. No Third Party Beneficiaries ......e.-. Excess Payments ...2.««©«©©«©©©««« Special Arrangements Regarding AEG&T ..... Capitalization Of Certain Costs Of Purchasers Efforts To Obtain Intertie .......«.«e«. Exhibit "A",Bond Resolution Exhibit "B",Delivery Point Exhibit "C",Description Of The Project Page 27 28 28 28 28 28 28 30 31 31 Exhibit "D",Purchasers'Percentage Shares Of Project Capacity And Of Annual Project Costs Exhibit "E",Form Of Certain Supplemental Bond Resolutions Exhibit A POWER SALES AGREEMENT THIS AGREEMENT dated as of December 8,1987,is entered into by and among the ALASKA POWER AUTHORITY (the "Authority")and the CHUGACH ELECTRIC ASSOCIATION,INC.,the GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.,the MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT AND POWER,the CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM,and the ALASKA ELECTRIC GENERA- TION &TRANSMISSION COOPERATIVE,INC.(individually a "Purchas- er,"and collectively the ""Purchasers"),and the HOMER ELECTRIC ASSOCIATION,INC.,and the MATANUSKA ELECTRIC ASSOCIATION,INC. (as additional Parties with some,but not all,of the rights and responsibilities of Purchasers). WITNES SET H: The Authority recites,agrees,represents and cove- nants as follows: (1)The Authority is a public corporation of the State of Alaska duly created,organized and existing pursuant to AS 44.83; (2)The Authority is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and the regulations and by-laws of the Authori- ty,to enter into this Agreement and to comply fully with the terms hereof; (3)The Authority desires to fulfill its legisla- tively established duty of providing residents of the State of Alaska with long-term,stable,and economic sources of power and an adequate,economic,and reliable long-term supply of power;and (4)The Authority's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other resolution,contract,ag- reement,bond,note,mortgage,or other obligation of the Auth- ority,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Authority is subject at the time the Authority executes this Agreement. Each Cooperative Purchaser (as hereinafter defined) and the Homer Electric Association,Inc.("HEA")and the Mata- nuska Electric Assocation,Inc.("MEA")recites,agrees,repre sents and covenants as follows:, (1)The Purchaser is a duly organized and constitut- ed electric cooperative under the laws of the State of AlaskaandiscurrentlyaborrowerfromtheRuralElectrificationAd-ministration,United States Department of Agriculture,under the Rural Electrification Act of 1936 (7 U.S.C.§901 et seq.); BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 1 Exhibit A (2)The Purchaser is authorized,and has taken all steps necessary pursuant to its articles of incorporation and by-laws and applicable laws and regulations,to enter into this Agreement and to comply fully with the terms hereof; (3)The Purchaser performs the functions of a utili- ty and is a wholesale power customer eligible to purchase power produced from a project pursuant to AS 44.83;and (4)The Purchaser's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other resolution,contract,ag- reement,bond,note,mortgage,or other obligation of the Pur- chaser,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Purchaser is subject at the time the Purchaser executes this Agreement. Each Municipal Purchaser (as hereinafter defined)re- cites,agrees,represents and covenants as follows: (1)The Purchaser is a duly organized and constitut- ed municipal corporation under the Constitution and laws of the State of Alaska; (2)The Purchaser is authorized,and has taken all steps necessary pursuant to the Constitution and laws of theStateofAlaskaandotherapplicablelawsandregulations,and pursuant to its charter and ordinances,to enter into this Ag- reement and to comply fully with the terms hereof; (3)The Purchaser performs the functions of a utili- ty and is a wholesale power customer eligible to purchase power produced from a project pursuant to AS 44.83;and (4)The Purchaser's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other charter,ordinance,resolu- tion,contract,agreement,bond,note,mortgage,or other obli- gation of the Purchaser,or with respect to any order,ruling, or decree of any court or regulatory agency to which the Pur- chaser is subject at the time the Purchaser executes this Ag- reement. NOW,THEREFORE,the parties agree as follows: Section 1.Definitions.For the purposes of this Agreement,the following definitions apply: (a)"Act"or references to AS 44.83 mean Title 44,Chapter 83 of the Alaska Statutes (AS 44.83)as thesamemaybeamendedorsupplementedfromtimetotime. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 2 Exhibit A (b)"Agreement"means this Power Sales Agree- ment. (c)"Annual Payment Obligation"means the total amount payable by a Purchaser in or for a Fiscal Year pur- suant to this Agreement. (a)"Annual Project Budget"means the budget for the Project as adopted or in effect for a particular Fiscal Year,and amended or supplemented from time to time,pursuant to Section 13. (e)"Annual Project Costs"shall have the mean- ing given it in Section 8 of this Agreement. (£)"Authority”means the Alaska Power Authori- ty as established by the Act,and any successor agency thereto. (g)"Bond Resolution"means (i)the document attached as Exhibit "A",or a resolution adopted by the Authority substantially in the form of Exhibit "A",as supplemented and amended from time to time in a manner consistent with Section 11 of this Agreement and with the provisions of the Act,or (ii)a further bond resolution, consistent with Section 11,adopted in connection with the issuance of bonds to refund the Bonds. (h)"Bonds"means bonds,notes or other evi- dences of indebtedness (including refunding bonds)issued pursuant to the Bond Resolution,the proceeds of which are used to pay or reimburse Costs of Acquisition and Con- struction and Required or Optional Project Work. (i) "Committee"means the Project Management Committee established pursuant to Section 13, (j)"Consultant”means an independent indivi- dual or firm (i)of nationwide and favorable reputation, having demonstrated expertise in the field or the matterortheitemreferredtoitundervariousspecificpro- visions of this Agreement,and (ii)approved by the Auth- ority and the Committee in accordance with rules of pro- cedure to be adopted by the Committee to govern such ap- proval,which approval shall not be unreasonably withheld. (k)"Cooperative Purchasers"means Chugach Electric Association,Inc.,Golden Valley Electric Associ- ation,Inc.,and Alaska Electric Generation &TransmissionCooperative,Inc.The term "Cooperative Purchasers"in-cludes Homer Electric Association,Inc.,and Matanuska Electric Association,Inc.,only to the extent specified in Section 30 of this Agreement. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Exhivion 3XNIDI (1)"Cost of Acquisition and Contruction"means the Cost of Acquisition and Construction (as defined in Section 101 of the Bond Resolution)of the Project;pro-vided,that for purposes of this Agreement the Cost ofAcquisitionandConstructionoftheProjectshallnotin- clude the Cost of Acquisition and Construction of Capital Improvements (as defined in Section 101 of the Bond Res- olution). (m)"Date of Commercial Operation"means the date on which engineers retained for this purpose by the Authority have reasonably declared that the Project is fully available to be operated at not less than ninety megawatts (90 MW),and its output can be scheduled on a commercial basis. (n)"Debt Service"means amounts that the Auth- ority is required to set aside for the payment of princi- pal of,premium,if any,sinking fund payments,and inter- est on the Bonds,as the same are scheduled to become due under the Bond Resolution,and not by reason of any accel- eration. (o)"Delivery Point"means the Bradley Junction facilities,as identified and further described in Exhibit B. (p)"Electric power"or "power"means electric energy or electric capacity or both.Where the context of this Agreement requires a distinction,electric energy is specified and/or expressed in kilowatthours or megawatt- hours and electric capacity is specified and/or expressed in kilowatts or megawatts. (q)"Excess Payment Amount"means the amounts,if any,computed as provided in Section 29 and included in Annual Project Costs. (cr)"Fiscal Year"means that twelve-month peri- od starting July 1 of a calendar year through and includ-ing June 30 of the succeeding calendar year.The initial Fiscal Year for purposes of this Agreement is that portion of the twelve-month period starting on the Date of Commer- cial Operation through and including the following June30.If the portion of the period is shorter than 90 daysthepartiesshalldeterminetheinitialFiscalYear,whichmustendonaJune30andmaynotbelongerthan456days. The last Fiscal Year for purposes of this Agreement shall be that portion of the twelve-month period between the endofthelastfull(i.e.,twelve month)Fiscal Year and the expiration of this Agreement. (s)"Municipal Purchaser"means the Municipali-ty of Anchorage d/b/a/Municipal Light and Power,and the BRADLEY LAKE PROJECT POWER SALES AGREEMENT E hibte 4XNIDI City of Seward d/b/a Seward Electrical System. (t)"Optional Project Work"means Project re- pairs,renewals and replacements,improvements,better- ments,additions,or expansions that do not constitute Required Project Work. (u)"Percentage Share"means the fraction,ex- pressed as a percent and set forth for each Purchaser in Exhibit D as that Exhibit may be amended from time to time,used to compute the amount of each Purchaser's en- titlement to Project Capacity and obligation to pay Annual Project Costs. (v)"Project"means the Bradley Lake Hydroelec- _tric Project as described in Exhibit C. (w)"Project Capacity"means the amount of electric capacity capable of being produced by the Project (including capacity attributable to Required or Optional Project Work)at any and all times from the Date of Com- mercial Operation until the termination of this Agreement (or any renewal thereof)under the operating conditions that exist during such times,including periods when the Project may be not operating or inoperable or the opera- tion thereof is suspended,interrupted,interfered with, reduced,or curtailed,in each case in whole or in part for any reason whatsoever,after corrections for station and Project use,and depletions required under any federal license for the Project. (x)"Prudent Utility Practice"shall mean at a particular time any of the practices,methods and acts engaged in or approved by a significant portion of the electric utility industry at such time,or which,in the exercise of reasonable judgment in light of facts known at such time,could have been expected to accomplish the de- sired results at the lowest reasonable cost consistent with good business practices,reliability,safety and rea-sonable expedition.Prudent Utility Practice is not re- quired to be the optimum practice,method or act to the exclusion of all others,but rather to be a spectrum of possible practices,methods or acts which could have been expected to accomplish the desired result at the lowestreasonablecostconsistentwithreliability,safety and expedition.Prudent Utility Practice includes due regardformanufacturers'warranties and the requirements of gov- ernmental agencies of competent jurisdiction and shallapplynotonlytofunctionalpartsofaProject,but alsotoappropriatestructures,landscaping,painting,signs,lighting and other facilities.In evaluating whether anymatterconformstoPrudentUtilityPractice,the parties shall take into account (i)the nature of the parties BRADLEY LAKE PROJECT POWER SALES AGREEMENT Exhinice 5XNIDI hereto under the laws of the State of Alaska and their statutory duties and responsibilities,and (ii)the ob- jective of integrating Project Capacity with the generat- ing resources of the Purchasers,including resources available under contract,to achieve optimum utilization of the resources and achieve efficient and economical op- eration of each Purchaser's System.For purposes of thisAgreement,"national standards for the industry"means Prudent Utility Practice. (y)"Purchaser"means,as of any particular time,such of the Municipality of Anchorage d/b/a Munici-pal Light and Power,Chugach Electric Association,Inc., Golden Valley Electric Association,Inc.,the City of Seward as have executed this Agreement,and the Alaska Electric Generation &Transmission Cooperative,Inc. ("AEGET).The term "Purchaser”includes Homer Electric Association,Inc.,and Matanuska Electric Association, Inc.,only to the extent specified in Section 30 of this Agreement. (z)"Purchaser's System"means a Purchaser's electric utility system for the distribution,transmis- sion,and generation of electrical power and which is owned and operated by the Purchaser.If Purchaser's elec- tric utility system is combined with other utilities of the Purchaser,then "Purchaser's System"includes only those facilities,activities,and revenues properly alloc- able to Purchaser's electric utility service."Purchas- er's System"does not include the Project,regardless of whether the Purchaser operates the Project under a separ- ate agreement with the Authority. (aa)"Purchaser's Water Allocation"means the number of acre feet of water from the Project allocated for generation purposes by the Committee to a Purchaser from time to time,based on that Purchaser's Percentage Share. (bb)"Railbelt"™means the geographic area served by the Purchasers.| (cc)"Railbelt Energy Fund"means a fund cre- ated by the legislature,the use of which is intended onlyforapprovedpowersupplyandtransmissionprojectsinthe Railbelt. (dd)"REA"means the Rural Electrification Ad- ministration,an agency of the United States Department of Agriculture. (ee)"Recoverable Construction Cost"means an amount equal to $175,000,000 less one half the amount,if BRADLEY LAKE PROJECT POWER SALES AGREEMENT ExXhibiE®6XNIDI any,by which $350,000,000 exceeds the Cost of AcquisitionandConstruction,plus the principal amount of additional Bonds (if any)issued pursuant to Section 31. (££)"Renewal and Contingency Reserve Funda"means the Renewal and Contingency Reserve Fund established pursuant to Section 502 of the Bond Resolution. (gg)"Required Action"means an action that must be taken in order for the Authority to comply withfederalorstatelaw,the orders of licensing and regula tory agencies,the Bond Resolution,or this Agreement. (hh)"Required Project Work"means repairs,maintenance,renewals,replacements,improvements or bet- terments required by federal or state law,a licensing orregulatoryagencywithjurisdictionovertheProject,orthisAgreement,or otherwise necessary to keep the Projectingoodandefficientoperatingcondition,consistent with (1)sound economics for the Project and the Purchasers, and (2)national standards for the industry. (ii)"Revenue Fund"means the Revenue Fund est- ablished pursuant to Section 502 of the Bond Resolution. (jj)"Trustee"means the trustee appointed pur- suant to Article IX of the Bond Resolution,or that Trust- ee's successor or successors and any other corporationwhichmayatanytimebesubstitutedinthatTrustee's place under the Bond Resolution. Section 2.Term Of Agreement. (a)Effectiveness.This Agreement shall become effective on the first date when (i)the Agreement has been executed and delivered by all Purchasers and by the Authority,and (ii)each Purchaser has obtained all nec- essary approvals of this Agreement and of all transmission and/or services agreements for the transmission of Project power to the Purchasers.An approval shall not be con- sidered "necessary"for purposes of this Section 2(a)un- less,prior to or contemporaneously with delivery of this Agreement,the person or entity from which such approval must be obtained has been identified to the other parties in writing by the Purchaser requiring such approval.It is the intent of each Purchaser to take all steps rea- sonably within its power to obtain all necessary approvals from its governing body no later than December 1,1987. (b)Commencement of payment obligations.The payment obligations of each Purchaser under this Agreement shall commence on the Date of Commercial Operation;pro-vided,that the Purchasers shall be obligated to pay those Committee costs referenced in the last sentence of Section BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 7 ExhibitA 13(a)regardless of whether the Date of Commercial Opera-tion occurs. (c)Termination.This Agreement shall termi- nate (i)50 years after the Date of Commercial Operation,or (ii)when no Bonds are OutstandingundertheBondRes=olution and all payment obligations under this Agreement(other than any payment obligations under Section 29)have been satisfied or provided for,whichever occurs later; provided,that if the Date of Commercial Operation does not occur before January 1,1996,then this AgreementshallterminateonJanuary1,1996.The parties may mu-tually agree to terminate or to renew this Agreement priortotermination,subject,however,to the written approvaloftheAdministratorofREAifsuchwrittenapprovalis then required,and the terms and conditions of covenants and agreements between the Authority and holders of Bonds.If such approval is then required,no amendment of thisAgreementshalltakeeffectwithoutthewrittenapprovaloftheAdministratorofREA. (d)Renewal.Any Purchaser may renew this Ag-reement on the same terms and conditions as provided here- in for successive additional terms (such terms to equal forty (40)years or,if shorter,the remaining useful life of the Project),upon written notice to the Authority bythePurchasergivennolessthansixandnomorethan twenty-four months prior to the end of the term of this Agreement.Purchasers electing to renew this AgreementshallbeentitledtohavetheirPercentageSharesadjusted pro rata,based on their Percentage Shares as set forth in Exhibit D as that Exhibit exists twenty-four months prior to the end of the initial term of this Agreement,so that the adjusted Percentage Shares of the Purchasers renewingthisAgreementtotalonehundredpercent(100%).No re- newing Purchaser shall be required to accept the entirety of the Percentage Share to which that Purchaser becomes entitled,but if the Percentage Shares of all renewing Purchasers do not total one hundred percent,the Authoritymayselltoanyotherutilitythatisaqualifiedpurchas- er of power under the Act any remaining Percentage Share or portion thereof upon the same terms and conditions ap- plicable to the renewing Purchasers,if the Authority rea- sonably determines that such utility is able to carry out the obligations of a Purchaser under this Agreement and that such sale to such utility will not adversely affect the tax exemption of interest on any Bonds Outstanding under the Bond Resolution that originally were issued on a tax-exempt basis.The Authority shall not be obligated to renew this Agreement if,after reasonable notice to the renewing Purchasers,Percentage Shares that total one hun- dred percent have not been sold to such Purchasers or to other qualified utility purchasers. BRADLEY LAKE PROJECT POWER SALES AGREEMENT 7 hikes 8xhibitA Section 3.Exhibits.The following exhibits are incorporated by reference into this Agreement: (a)Exhibit "A",Bond Resolution, (b)Exhibit "B",Delivery Point, (c)Exhibit "C",Description of the Project, (dq)Exhibit "D",Purchasers'Percentage SharesofProjectCapacityandofAnnualProject Costs,and (e)Exhibit "E",Form Of Certain Supplemental Bond Resolutions. 'Section 4.Electric Service To Be Furnished, (a)Sale _and_purchase.The Authority hereby sells,and each Purchaser hereby purchases,that Purchas- er's Percentage Share of Project Capacity (together with associated energy)from the Project in accordance with this Agreement.The actual delivery (if any)of electric capacity and associated energy to Purchasers from the Pro- ject shall be made in accordance with scheduling proce- dures adopted by the Committee. (b)Available Power.The Authority shall at all times,except when prevented by a cause or event not within the control of the Authority,make power available to the Purchasers from the Project in an amount equal to the amount the Purchasers may schedule from the Project, within the limitations imposed by available Project capab- ility,available water,and the scheduling procedures ad- opted by the Committee. (c)Required Project Work.The Authority shall make or cause to be made all Required Project Work,pro- vided that funds are legally available to the Authority for this purpose.The costs of Required Project Work shall be included in Annual Project Costs in the manner set forth in Section 8(a)(iv).The Authority shall give reasonable notification to all Purchasers prior to making or causing to be made any Required Project Work.Alterna- tive methods (if any)of carrying out and funding Required Project Work shall be subject to approval by the CommitteeunderrulesofproceduretobeadoptedpursuanttoSection 13. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 9 ExhibitA (a)Optional Project Work.The Authority shall not make or cause to be made Optional Project Work unlesssuchOptionalProjectWorkisapprovedbytheCommittee. Any Optional Project Work shall be at the expense of the benefitted Purchaser(s),as determined in advance by theCommittee,in proportion to the value of the benefit con- ferred upon each such Purchaser.If such Optional ProjectWorkhasanadverseimpactupontheoperationsorfinances of a Purchaser as determined by the Committee,the bene- fitted Purchaser(s)shall compensate the adversely affect- ed Purchaser(s)for the increased costs and reduced bene- fits resulting from such impact.In the event the Pur- chasers are unable to agree as to how any increased costs or compensation will be apportioned,or as to the amount of any increased costs or appropriate compensation,the parties shall submit the question to dispute resolution in accordance with the dispute resolution procedures adopted by the Committee under Section 13. Section 5.Electric Power Reserves For The Project (a)Need for reserves.The parties recognize that (i)electric power from the Project may be unavail- able periodically because of generation and transmission outages,repairs,maintenance,inspections,testing,and similar events,and (ii)under the Alaska Intertie Agree- ment or otherwise,each Purchaser is responsible for main- taining (or contracting for the use of)generation re- serves in amounts sufficient to protect its own loads in the event that Project power is unavailable. (b)Reserve procedures.Promptly after its establishment,the Committee shall adopt and implement procedures under which,in as cost-effective a manner as possible: (i)the Authority shall have the right to require the operation of specific amounts of generat- ing capacity owned by a Purchaser and made available to the Authority,and to use the power produced by such operation to provide reserves to requesting Pur- chasers for some or all Project power,to the extent such capacity would otherwise be idle or its output would otherwise not be needed by the owner of that capacity to enable that Purchaser to meet its own loads or to make power sales to other utilities; (ii)the additional costs incurred by any Purchaser in making such capacity available to the Authority and in operating the same for the Authority shall be computed equitably and reimbursed promptly to such Purchaser by the Authority;and BRADLEY LAKE PROJECT POWER SALES AGREEMENT c Page 10xhibitA (iii)the costs of so reimbursing any Pur- chaser shall be included in Annual Project Costs. (c)Alternative reserves.Nothing in Section 5(b)shall: (i)relieve any Purchaser of the responsi- bility set forth in Section 5(a)(ii); (ii)require any Purchaser to make reserve capacity available to the Authority under Section 5(b)(i);or (iii)require any Purchaser to avail it- self of reserve power available from the Authority under Section 5(b)(i),or to bear any of the costs of such power if the Purchaser does not avail itself of such power,if the Purchaser chooses and is able to rely upon its own reserves to meet its loads when Project power is unavailable. Section 6.Obligations Under Bond Resolution;Com- pletion of Project. (a)Assignment or payment to Trustee.The par- ties recognize and agree that (i)the Authority may assign its rights to receive payments under this Agreement as security for the payment of the Bonds to the Trustee under the Bond Resolution for the benefit of the holders of the Bonds,and (ii)the Authority may direct that amounts pay- able to it under this Agreement be paid directly to the Trustee. (b)Project funding.The Authority shall issue Bonds,or otherwise obtain funds (including appropria- tions),sufficient to pay or reimburse the Cost of Acqui- sition and Construction.Annual Project Costs shall in- clude Debt Service on Bonds issued to pay the Cost of Ac- quisition and Construction in an aggregate principal amount up to but not exceeding the Recoverable Construc- tion Cost.The Authority may estimate the Recoverable Construction Cost and issue Bonds at any time in amounts up to the amount of such estimate.As soon as practicable after the Date of Commercial Operation,the Authority shall adjust (and re-adjust when necessary)Annual ProjectCoststoreflectactualRecoverableConstructionCost. (c)Covenants of the Authority.The Authority covenants that it will not cause rates for Project Power to increase by reason of any bond resolution,covenant oragreementcontainedinanytrustindentureortrustagree-ment entered into by the Authority in connection with a power project other than the Project,nor on account ofanyinadequacyinitsactualorprojectedaggregate BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 11 ExhibitA revenues,other than revenues from the Project,nor will the Authority include in Annual Project Costs debt service payable on debt incurred for any purpose except in respect of the Project as provided herein. (d)Project completion and operation.The Authority agrees to use its best efforts to complete the Project expeditiously and in accordance with sound engin- eering practice and with the provisions of the Bond Reso- lution.The Authority shall also use its best efforts consistent with Prudent Utility Practice to construct and complete,and to operate and maintain the Project (or to arrange for such operation and maintenance)to provide power at the lowest reasonable cost to the Purchasers in a manner that is compatible with the Purchasers'Systems and consistent with the Act,the Bond Resolution,and this Ag- reement. (e)Best efforts by Committee members.To the extent that the cost of Project power is or may be affect- ed by actions of the Committee under Section 13,each Purchaser in its capacity as a member of the Committee agrees to use its best efforts consistent with Prudent Utility Practice to assist in assuring that the Project provides power at the lowest reasonable cost to the Pur- chasers in a manner that is compatible with the Purchas- ers'Systems and consistent with the Act,the Bond Resolu- tion,and this Agreement. Section 7.Payment Obligation. (a)Payment Obligation.Each Purchaser agrees to pay its Percentage Share of Annual Project Costs for each Fiscal Year.The procedures for determining the amount of and for making such payments are set forth in Section 13 of this Agreement. (b)Purchaser's Obligations.Each Purchaser shall make payments in the amounts and at the times re-quired by this Agreement notwithstanding a suspension or reduction in the amount of power supplied by the Project. Such payments shall not be subject to any reduction,byoffsetorotherwise.The parties intend and interpret the foregoing two sentences to mean that the obligation tomakesuchpaymentsshallbeabsoluteandunconditionalandunaffectedbyanyinterruption,interference,or curtail-ment in whole or in part of power supplied by the Project. In the event that (i)the Project is no longer operable, or its operation is interrupted or curtailed for any rea- son whatsoever in whole or in part,and (ii)the Authority does not restore the Project to full operation within a reasonable time,then the Purchasers may upon reasonable notice to the Authority and at their own expense take suchactionastheydeemnecessarytosorestoretheProject. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 12 Exhibit A The taking of such action by the Purchasers shall not al- ter each Purchaser's obligation to pay its Percentage Share of Annual Project Costs. ME Section 8.Annual Project Costs (a)Annual Project Costs defined.Annual Pro- ject Costs means all of the costs resulting from the own- ership,operation,maintenance of and renewals and re- placements to the Project,properly incurred or paid dur- ing each Fiscal Year,including: (i)Amounts reguired to be set aside by the Authority for the payment of Debt Service on Bonds issued to pay the Cost of Acquisition and Con- struction in an aggregate principal amount up to but not exceeding the Recoverable Construction Cost; (ii)Amounts required to be set aside for the payment of Debt Service on other Bonds and debt service on other obligations approved in accordance with Sections 11 and 13; (iii)Amounts required to restore the funds established under the Bond Resolution to the levels required by the Bond Resolution to be main- tained therein; (iv)Amounts which may be required to pay for Required Project Work,to the extent that such costs are not covered by insurance or Bond proceeds or by the Renewal and Contingency Reserve Fund; (v)Other amounts determined by the Com- mittee to be necessary or appropriate to supplement and to be paid into the Funds established under the Bond Resolution; (vi)Excess Payment Amounts,if any,com- puted in accordance with Section 29; (vii)All other costs of producing and de- livering Project power (excluding depreciation)not accounted for by the payments out of funds and re- serves specified in the foregoing sections and prop-erly chargeableto the Project under the Uniform Sys- tem of Accounts,less any credits against said costsbyreasonofrevenuesfromsourcesotherthanthedi-rect sale of power to Purchasers,and also less any credits for interest earned during construction and available for Project purposes;provided,that income from interest earned on reserve funds shall be used at least annually to accumulate and maintain saidreservefundsintheamountsrequiredundertheBond BRADLEY LAKE PROJECT POWER SALES AGREEMENT E pegs 13XNib! Resolution or in such greater amounts as may be de- termined by the Committee,or to reduce Annual Pro ject Costs.Such other costs shall include: (A)Project operating and maintenance costs,in accordance with the Annual Budget adopted in accordance with Section 13; (B)Costs of Project-related insur- ance,and,to the extent permitted with respect to each Purchaser under Section 5,the costs of electric power reserves for the Project; (C)Project-specific administrative and general expenses of the Authority,such as costs of safety inspections and investigations; (D)Costs of the Committee,whether incurred by the Authority or incurred by a Pur- chaser on behalf of the Committee;and (E)Such other Project costs as the 'Committee may from time to time approve for in- ,clusion in Annual Project Costs in accordance with procedures to be adopted by the Committee. (b)Proceeds of a taking.Any payment received by the Authority as a result of a taking of the whole or any portion of the capacity,facilities,available water, or output of the Project by any state or federal govern- ment agency shall be used by the Authority,after consult- ation with the Committee,to (i)reduce Annual Project Costs,(ii)retire Bonds,or (iii)reimburse the State of Alaska for a portion of the State's capital contribution to the Project (recognizing the separate sources of Pro- ject funding under Section 6(b)),whichever of these uses or combination of such uses shall be equitable and proper under the circumstances existing at the time of the tak- ing. Section 9.Obligations In The Event Of Default. (a)Enforcement.Upon failure of a Purchaser:.to perform any obligation herein,the Authority may bringanysuit,action or proceeding at law or in equity -("Suit"),including mandamus,injunction and action for specific performance,as may be necessary or appropriate.to enforce any covenant,agreement or obligation of this Agreement against that Purchaser.The Authority may bring _such Suit (i)thirty days after giving the Purchaser a written demand for performance,in the case of default by the Purchaser on any obligation other than a payment obli-- gation,and (ii)immediately,in the case of default bythePurchaseronanypaymentobligation.Each Purchaser BRADLEY LAKE PROJECT POWER SALES AGREEMENT Exhibits 14xhibitA shall continue to make payments in the event of any dis- pute regarding performance of any obligation by any party under this Agreement or in the event of any dispute undertheBondResolution,and this obligation of continued pay- ment pending resolution of disputes shall be immediately enforceable by any party upon application to any court of competent jurisdiction. (b)Additional rights and remedies.In addi- tion to the Authority's rights under Section 9(a),if a Purchaser has for any reason suspended or reduced,or has failed to make or has been prevented from making,payments required under this Agreement,the Authority may terminate or suspend the delivery of power to that non-paying Pur-chaser if,after consulting with the other Purchasers,the Authority reasonably determines that such termination or suspension is more effective than other available alterna- tives in minimizing adverse impacts on such other Purchas- ers. (i)If the Authority so terminates or sus- pends deliveries,the Authority shall: (A)offer to other Purchasers,on terms and conditions applicable to other power sold under this Agreement,any power not deliv- ered to the non-paying Purchaser,and if neces- sary allocate such power pro rata on the basis of Percentage Shares among Purchasers accepting such offer;, (B)offer any power not sold under Section 9(b)(i)(A)to any qualified utility (in- cluding the other Purchasers)on terms and con- ditions deemed favorable by the Authority after consultation with the Committee;and (Cc)if the Authority projects that the amounts to be deposited into the Revenue Fund will nonetheless be insufficient to pay Annual Project Costs,increase every other Purchaser's Percentage Share of Annual Project Costs and Project Capacity pro rata to the extent and fortheperiodnecessarytocompensateforsuchin- sufficiency;provided,that no Purchaser's Per-centage Share shall be increased by more than twenty-five (25)percent above the amount setforthinExhibitDwithoutthewrittenconsent of that Purchaser. (ii)If the Authority determines that the process of offering power to others under Sections9(b)(i)(A)or (B)would delay exercise of the Author- ity's rights under Section 9(b)(i)(C),and that as a BRADLEY LAKE PROJECT POWER SALES AGREEMENT Ec hinee 15xhibitA result the Authority will be unable to make deposits when required under the Bond Resolution,the Authori- ty may exercise its rights under (C)immediately and take the actions required under (A)and (if neces- sary)under (B)as soon as practicable thereafter. No exercise by the Authority of any of its rights (or any failure by the Authority to exercise any of its rights)under this Section 9(b)shall relieve any non-paying Purchaser of any payment obligation under this Agreement or relieve such Purchaser of any lia- bility for damages resulting from non-payment.Inparticular,sales of power under Section 9(b)(i)(A)and (B)are intended to reduce the financial impact of any Purchaser's non-payment on other,paying Pur-chasers.Such sales are not intended to,nor shall they,reduce the payment obligations of the non- paying Purchaser or the damages for which such non- paying Purchaser may be liable. (iii)To the extent that the Authority uses Project reserve funds to permit it to make time- ly payments under the Bond Resolution following non- payment by a Purchaser,the amount needed to replen- ish such reserve funds shall be added to the Annual Payment Obligation of the non-paying Purchaser,and if the non-paying Purchaser fails to make payment of its Annual Payment Obligation as so increased,the Authority may exercise any of the rights available to it under this Section 9(b). (c)Litigation.If Purchasers'Percentage Shares are increased pursuant to Section 9(b)(i)(C),then the Authority shall,and any other Purchaser(s)may,im- mediately initiate and diligently pursue litigation in any court of competent jurisdiction to compel full and timely payment by the non-paying Purchaser,to recover amounts needed to compensate Purchasers whose Percentage Shares have been increased,and to obtain such other relief as shall be fair and equitable.The same or similar litiga- tion against any non-paying Purchaser may also be initi- ated and pursued by the Authority and/or by any paying Purchaser if in response to any non-payment the Authority takes action pursuant to Sections 9(b)(i)(A)or (B). (ad)Default by the Authority.In the event of any default by the Authority under any covenant,agreementorobligationunderthisAgreementwithrespecttoaPur-chaser,that Purchaser may,upon thirty (30)days written notice to the Authority,bring any suit,action or pro-ceeding,at law or in equity,including mandamus,injunc-tion and action for specific performance,as may be neces sary or appropriate to enforce any covenant,agreement orobligationofthisAgreementagainsttheAuthority.No BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 16 Exhibit A payment obligation of a Purchaser under this Agreement issubjecttooffset,however. Section 10.Purchasers'Systems. (a)Character of expense.The amounts payable under this Agreement are operating expenses of each Pur- chaser's System,and are valid and binding obligations of each Purchaser,payable only from the gross revenues of said Purchaser's System as a cost of purchased electric power,and not payable from any taxes. (b)Purchasers'rate covenants.In order to afford,permit,and make timely payments as specified in this Agreement,each Purchaser agrees that it will estab- lish,charge and collect rates,fees,and charges withrespecttothatPurchaser's System in accordance with ap- plicable law to provide revenues sufficient to meet its obligations under this Agreement and sufficient to pay, together with any other funds or monies available there- for,any and all other amounts payable from or which con- stitute or may constitute a charge and lien upon such rev- enues including,but not limited to,amounts sufficient to meet obligations to service debt incurred by the Purchaser to finance the Purchaser's System. (c)Operation and maintenance of Purchasers' Systems.Each Purchaser covenants and agrees that it willoperateandmaintainitsSystemingoodrepair,working order and condition,and in accordance with Prudent Utili- ty Practice. (d)Limitation on certain contracts.Each Pur- chaser covenants and agrees not to enter voluntarily into any contract or agreement to take or to take or pay for power,other than this Agreement,payable from the rev- enues of the Purchaser's System on a parity with or super- ior to the payment of its obligations under this Agree- ment,except that a Purchaser may enter into such a con tract or agreement of not to exceed two years"duration under which the Purchaser's payment obligation is on a parity with the payment of its obligations under this Ag-reement.The limitations of this Section 10(d)shall notapplytocontractsoragreementscreatingobligationsonaparitywithobligationsunderthisAgreementifawrittenopinionfromaConsultantisrenderedthat(i)the con-tract or agreement is reasonably expected to contribute to the conduct of the business of the Purchaser's System in an efficient and economical manner consistent with Prudent Utility Practice,and (ii)the contract or agreement willnotimpairtheabilityofthePurchasertoraiserevenues sufficient to meet its obligations under this Agreement. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 17 ExhibitA Section 11.Bond Resolution. (a)Amendment or supplementation of Bond Reso- lution.Except as provided in Section 12,the Authority will not amend or supplement the Bond Resolution in any manner,or adopt a new Bond Resolution in connection with the refunding of the Bonds,which would materially ad- versely affect the ability of a Purchaser to fulfill the terms of this Agreement or impose any increased burden or obligation,financial or otherwise,on a Purchaser,with- out the consent of the Purchaser,unless: (i)the Committee has approved the Auth- ority's proposed action by a resolution adopted by the affirmative vote of members whose Percentage Shares equal or exceed eighty percent (80%)of Pro- ject Capacity and of Annual Project Costs;or (ii)the Committee by majority vote of the Purchasers requests that Required Project Work be paid for out of the proceeds of Bonds,and such Work is projected to cost in excess of the amount of money then available in the Renewal and Contingency Reserve Fund established pursuant to the Bond Resolution, plus available insurance proceeds,in which event,if such Bonds can then be legally issued and can be sold,the Authority shall issue such Bonds,payable from the Revenues of the Project (as defined in the Bond Resolution),to pay the portion of such costs which exceed insurance proceeds,if any,and to re- store said Reserve Fund to its required level. (b)Insurance.The Authority will maintainphysicallossinsurancetotheextentrequiredbytheBond Resolution,and the Authority will consult with the Com- mittee as provided in Sections 12 and 13 with respect tothedispositionofproceedsofsaidinsurancereceivedas a consequence of physical destruction or impairment of theProject,including but not limited to disposition for the purpose of redemption of Bonds,replacement of the Pro- ject,or replacement of power.The Committee shall advisetheAuthorityfromtimetotimeastotheappropriateex- tent of insurance coverage. (c)Information.The Authority shall provide each Purchaser a copy of any report,certificate,letter, or other communication which the Authority is required to furnish to the Trustee under the Bond Resolution or that the Trustee furnishes to the Authority. Section 12.Purchasers'Consent To Supplemental Bond Resolutions To Construct The Project.The Purchasers hereby consent to the adoption by the Authority of supplemental BondResolutionspursuanttoSection11(a),as necessary to comply BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 18 Exhibit A with the Authority's obligation to finance and construct the Project pursuant to Section 6(b)and the Authority's obligation under Section 6(d)to use its best efforts to complete the Pro- ject expeditiously and in accordance with sound engineering practices and with the provisions of the Bond Resolution.The Authority shall consult with the Purchasers regarding the pro- visions to be included in such supplemental Bond Resolutions, and shall use its reasonable best efforts to comply with the requests of the Purchasers with respect thereto.Unless other- wise approved in accordance with Section 11(a)(i),such supple- mental Bond Resolutions shall: (a)provide that the total amounts required for the payment of Debt Service when due shall be,on an an- nual basis,as nearly equal as practicable; (b)provide that the final maturity of Bonds issued pursuant to such supplemental Bond Resolutions shall not'be earlier than twenty-five (25)years from the date when the first of such Bonds is issued; (c)be substantially in the form attached here- to as Exhibit E,except to the extent that the Authority finds that modifications are necessary to sell the Bonds on a tax-exempt basis;and (a)be adopted no earlier than January 1,1989. Section 13.Establishment Of The Committee.| (a)Formation and composition of the Committee. The parties aqree that a Project Management Committee ("Committee")shall be established on January 15,1988,or on such earlier date as may be agreed to by the parties. The Committee shall consist of the Authority and the Pur- chasers (including as Purchasers for this purpose both Homer Electric Association,Inc.,and Matanuska Electric Association,Inc.,for themselves and for AEG&T as a Pur- chaser represented by and through those utilities).No Committee member shall obtain an additional vote through merger with,acquisition of,or assignment from any other Committee member,and AEG&T shall have no direct vote,but shall be represented by and through Homer Electric Associ-ation,Inc.,and Matanuska Electric Association,Inc., each of which shall be entitled to vote as a Purchaser member for purposes of Committee procedure.Each Commit-tee member entitled to vote shall name one representative to serve on the Committee and one designated alternate for that representative.Each such member shall notify allothermembersinwritingofthenames,addresses,and tel- ephone numbers of its representative and designated al-ternate.After it is established,the Committee shall meet not less than once each quarter.Costs of the Com- mittee (other than costs incurred by the Authority)which BRADLEY LAKE PROJECT POWER SALES AGREEMENT c hibits 19Xhrol are incurred prior to the Date of Commercial Operation shall be borne by the Purchasers in accordance with the Percentage Shares of each. (b)Adoption of rules of procedure.The Com- mittee shall adopt,by the affirmative vote of a majority of the Purchasers and the affirmative vote of the Authori- ty,procedural rules governing the conduct of the Commit- tee's affairs.Such rules shall address,among other mat- ters,procedures for the periodic selection of Committee officers,the conduct of Committee meetings,dispute res- olution,the approval (including possible pre-approval)of Consultants,and modification of the Committee's procedur- al rules,and,to the extent not otherwise specified in this Agreement,such rules shall also specify the applic-able voting requirements for approval of matters to be decided by the Committee.Committee approval of opera- tions and maintenance arrangements for the Project,the sufficiency of the annual budget and wholesale power rates,and the undertaking of Optional Project Work shall require the affirmative vote of a majority of the Purchas- ers and the affirmative vote of the Authority. (c)Committee responsibilities;approval by the Authority. (i)As the legal owner and licensee of the Project,the issuer of Project debt,and the agency charged by statute with various duties affecting or affected by the Project,the Authority has certain non-delegable rights,duties,and responsibilities with respect to the Project.Subject to such non- delegable rights,duties,and responsibilities,the Committee shall be responsible for the management, operation,maintenance,and improvement of the Pro- ject,in recognition that as take-or-pay purchasers of Project Capacity after the Date of Commercial Op- eration,the Purchasers have substantial long-term financial interests in,and service and planning re- sponsibilities affected by,the Project. (ii)The Committee shall take the follow- ing actions,subject to the provisions of the Bond Resolution,federal and state law,the requirements of licensing and regulatory agencies,and the rights of the Authority and the Purchasers under other pro- visions of this Agreement: {A)Arrange for the operation and maintenance of the Project,and the scheduling, production,and dispatch of Project power; (B)Establish procedures for the use of each Purchaser's Water Allocation in a manner BRADLEY LAKE PROJECT POWER SALES AGREEMENT e hibte 20XNIDI consistent with the needs and desires of other Purchasers and the capabilities of the Project; (C)Adopt in each Fiscal Year (and revise as necessary or prudent during such Fisc- al Year)a budget of Annual Project Costs for that Fiscal Year,which budget shall be in an amount estimated by the Committee to be suffic- ient to pay all Annual Project Costs; (D)Establish for each Fiscal Year the estimated Annual Payment Obligation of each Purchaser,together with a schedule for each Purchaser of equal monthly payments that such Purchaser shall be required to make during that Fiscal Year,which payment schedule shall be (I) designed to recover such estimated Annual Pay- ment Obligation from that Purchaser during the Fiscal Year,and (II)revised during such Year to reflect any revisions to the budget of Annual Project Costs for that Fiscal Year; (E)Determine after the conclusion of each Fiscal Year the actual Annual Project Costs for that Fiscal Year,the actual Annual Payment Obligation of each Purchaser for that Fiscal Year,and the amount of any additional payment required from (or the amount of any refund to be returned to)each Purchaser to ensure that the total of all payments received from each Pur- chaser for each Fiscal Year is equal to that Purchaser's actual Annual Payment Obligation for that Fiscal Year; (F)Evaluate and select among altern- ative methods (if any)of carrying out and fund- ing (including through issuance of bonds)Re- quired Project Work; (G)Adopt provisions to evaluate and approve Optional Project Work,and to determinethecompensation(if any)to be provided in ac- cordance with Section 4(d)of this Agreement if the Committee approves any such Optional Project Work; (H)Adopt procedures consistent with Section 13(£)for the resolution of disputes that may arise between or among the PurchasersandtheAuthorityconcerningtheinterpretation of this Agreement,the obligations created by this Agreement,or the performance of such ob- ligations; BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 21 Exhibit A (I)Make an initial determination of "customary"insurance within the meaning of Section 714 of the Bond Resolution and determine the appropriate amount of,and obtain,insurance for or related to the Project,in addition to such insurance as may be required by the Bond Resolution; (J)Adopt maintenance schedules for the Project that do not interfere unreasonably with the operations of the Purchasers; (K)Adopt and implement procedures relating to electric power reserves for the Pro- ject in accordance with Section 5;and (L)Consider the need for and approve any additional amount to be added to the Renewal and Contingency Reserve Fund over and above the Renewal and Contingency Reserve Requirement pro- vided under the Bond Resolution. (iii)If and when no Bonds are outstanding under the Bond Resolution,and the Bond Resolution is therefore no longer effective,the Committee shall provide for the establishment of such accounts and the taking of such actions as may be necessary to manage the Project. '(da)Payment obligation unimpaired.Notwith- standing any Committee action or inaction under this Ag- reement,each Purchaser's obligation to make the monthly payments necessary to pay its Purchaser's Percentage Share of Debt Service,costs of operation and maintenance,and all other amounts to be paid by Purchasers under this Ag- reement shall be absolute and unimpaired. (e)The Authority's ability to take Required Action.In the event the Committee fails to take any oftheactionssetforthinSection13(c)(ii)(C)-(E)in a timely fashion,or fails to take any other action which the Authority believes to be a Required Action,and as a result the Authority determines that it will be unable to meet any of its obligations imposed by statute,by theBondResolution,by this Agreement,or by any licensing or regulatory agency,then the Authority may (i)adopt a bud-get of Annual Project Costs,(ii)estimate the Annual Pay-ment Obligation of each Purchaser,(iii)require each Pur-chaser to make payments on the basis of such estimatedAnnualPaymentObligation,and (iv)take such other actionastheAuthoritydeemsnecessarytomeetsuchobligations.Failure of the Committee to adopt an Annual Project Budget by the ninetieth (90th)day prior to the beginning of aFiscalYearshallpermittheAuthoritytoadoptanAnnual BRADLEY LAKE PROJECT POWER SALES AGREEMENT E Page 22xhibitA Project Budget pursuant to this subsection,All actions and determinations under this Section 13{e)shall be taken and made in accordance with Prudent Utility Practice. (£)Purchasers'duties and rights of review. Each Purchaser shall make payment as required by the Auth- ority as a result of any action taken by the Authority under Section 13(e),but such payment shall not constitute a waiver of any Purchaser's rights under this Agreement. Any Purchaser may seek review of such action in accordance with the dispute resolution procedures adopted by the Com- mittee,or may seek to enforce this Agreement judicially in accordance with Section 9(d)if no applicable dispute resolution procedures have been adopted. Section 14.End Of Project (a)Authority's declaration.The Authority shall declare the Project ended,and the Authority's ob- ligations to make power available to the Purchasers and to operate and maintain (or to assure the operation and main- tenance of)the Project shall also end,if and when (i) such a declaration is required under Section 14(b),or (ii)the Project can no longer be operated in accordance with Prudent Utility Practice. (b)Consultant's report.The Authority shall make the declaration described in Section 14(a)if all of the following conditions are met: (i)the Project cannot be operated at full capacity in a manner consistent with Prudent Utility Practice absent repairs,modifications,or additions ("Repairs")to the Project; (ii)a Consultant retained by the Commit- tee concludes that such Repairs are not cost- effective in comparison with other power supply alt- ernatives then available to the Purchasers;and (iii)Committee members who are Purchasers and whose Percentage Shares total eighty percent (80%)vote that such Repairs should not be undertak- en. (c)Consequences of Authority's declaration. After the Authority has declared the Project ended,each Purchaser shall complete its payment obligation for Pro- ject Capacity and associated energy delivered to such Pur-chaser before the Project ended,and shall do so by payingitsPercentageShareofAnnualProjectCostsuntilallBondshavebeenpaidorprovisionhasbeenmadeforthepaymentoftheBondsinaccordancewiththeBondResolu-tion;provided,that from the date on which the Authority BRADLEY LAKE PROJECT POWER SALES AGREEMENT Exhinie A 23 declares the Project ended,Annual Project Costs shall nolongerinclude(except with Committee approval)costs oth- er than those set forth in Sections 8(a)(i),8(a)(ii), 8(a)(iii),8(a)(vii)(C),and 8(a)(vii)(D). Section 15.Records.In addition to meter records, the parties shall keep log sheets and other records as may beneededforthepurposesofthisAgreement.In keeping books of account,each Purchaser will,to the extent that different rules are not prescribed by this Agreement or by federal andstatelawsoragencies,follow the system of accounts pre-scribed for public utilities and licensees by the Federal Ener- gy Regulatory Commission,except that as long as a Purchaser is a borrower from REA then it shall follow the system of accounts prescribed by REA for its electric borrowers. Section 16.Inspection Of Facilities.For purposesofthisAgreement,each party may,but shall not be obligatedto,inspect any other party's facilities relating to the Pro- ject at any time upon reasonable notice,but such inspection orfailuretoinspectshallnotrendertheinspectingparty,itsofficers,agents or employees,liable or responsible for any injury,loss,damage,or accident resulting from defects in such electric installation,or for violation of this Agreement. Section 17.Covenants To Maintain Integrity Of Ag- reement. (a)Retail rate approval.Each Purchaser will affirmatively and promptly pursue all administrative and judicial remedies necessary to secure Alaska Public Utili- ty Commission approval of retail rates required to meet the terms of this Agreement where Commission approval is required. (b)Compliance with law.Each Purchaser will take all necessary steps to comply with applicable federal and state laws and regulations,licenses and permits re- lating to the use and operation of the Purchaser's System. (c)Sales,mergers,and assignments.No Pur- chaser shall abandon,sell,mortgage,lease or otherwise Gispose of the Purchaser's System or any assets of that System (including by sale to or merger with any other utility),or assign this Agreement or any interest there- under to any assignee or successor in interest,unless: (1)such disposal or assignment accords with the terms of any of the Purchaser's covenants or agreements with the holders of the Purchaser's bonds,notes or other evidences of indebtedness relating to the abandonment,sale,mortgage,lease or other dis- position of property of the Purchaser's System;and BRADLEY LAKE PROJECT POWER SALES AGREEMENT E hie 24XNIbI (2)such disposal or assignment is: (A)consented to in writing by a maj- ority of the Committee,including the Authori- ty's representative;or (B)made to another utility that is already a Purchaser under this Agreement and is able to meet the obligations resulting from the disposal or assignment;or (C)limited to assets that the Pur- chaser determines to be surplus to the needs of that Purchaser's System,but the depreciated value of assets so disposed of or assigned in any given year shall not exceed five percent (5%)of the depreciated value of the assets of the Purchaser's System prior to the disposal or assignment;or (D)evaluated by a Consultant and that Consultant certifies that,taking into ac- count the other obligations of the Purchaser or of the assignee or successor in interest (as the case may be),the Purchaser or the assignee or successor in interest will have (A)substantial- ly the same or greater ability to produce suf- ficient revenues to meet its payment obligations as would the Purchaser absent the transaction, and (B)the ability to perform all obligations under this Agreement. Any assignee of this Agreement must assume in writing all of the assigning Purchaser's obligations hereunder,must pay any amounts due and owing from the assigning Purchaserhereunder,and (unless the assignee is already a Purchas- er)must provide the Authority and the Purchasers with an opinion of counsel that this Agreement is enforceable against the assignee. (da)Status of Bonds.The parties will not take any action,including entry into power sales agreements,which would cause the interest on any Bond which is orig- inally issued on a tax-exempt basis to become taxable un- der the Internal Revenue Code of 1986,as the same may be amended from time to time. (e)Licenses and permits.The parties will take all necessary steps within their control to comply with applicable federal and state laws and regulations,and to obtain and thereafter comply with all applicable licenses and permits relating to the use and operation oftheProject,including without limitation,the FederalEnergyRegulatoryCommissionlicenseapplicabletothe BRADLEY LAKE PROJECT POWER SALES AGREEMENT E hibit 25XNibt Project.The Authority will take all necessary steps to cause the Federal Energy Regulatory Commission license to be renewed,if necessary,so that it is in effect during the term of this Agreement or any renewal hereof. Section 18.Assignment. (a)Assignment generally.This Agreement shall inure to the benefit of,and shall be binding upon the respective successors and assigns of the parties to this Agreement;provided,that this Agreement or any interesthereinmaybetransferredorassignedbyaPurchaseronly in accordance with the provisions of Section 17(c). (b)Specific rights and transactions.Notwith- standing Sections 17(c)and 18(a): (1)A Cooperative Purchaser shall have the right to assign its assets,including its rights un- der this Agreement for security purposes to REA,or to a lender or guarantor in connection with loans to such Cooperative Purchaser where the proceeds of such loans are used to refinance obligations of such Coop- erative Purchaser to REA or the Federal Financing Bank under Section 311 of the Rural Electrification Act or otherwise;provided,however,that (A)neither REA nor any secured lender or guarantor exercising any rights,powers or privileges with respect to this Agreement under any mortgage,deed of trust or other security agreement shall be entitled to exercise the rights of the Cooperative Purchaser under this Agree- ment unless the obligations of such Cooperative Purchaser hereunder shall have been performed,(B)no such assignment shall in any way relieve such Cooper- ative Purchaser of any obligations hereunder,and (C) no assignment shall be permitted hereunder if such assignment would adversely affect the tax exemption of interest on any Bonds Outstanding under the Bond Resolution that originally were issued on a tax- exempt basis. (2)A Purchaser's agreement to resell pow- er from the Project shall not be deemed a transfer or assignment of this Agreement,but neither shall anysuchresaleofProjectpowerrelievethePurchaserof any payment obligation under this Agreement. Section 19.Notices,Computation Of Time And Holi- days.Any notice required by this Agreement to be given to anypartyshallbeeffectivewhenitisreceivedbysuchparty,andincomputinganyperiodoftimefromsuchnotice,such periodshallcommenceat12:01 p.m.prevailing time at the place ofreceiptonthedateofreceiptofsuchnotice.Whenever thisAgreementcallsfornoticetoornotificationbyanypartythe BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 26 Exhibit A same (unless otherwise specifically provided)shall be in writ- ing directed to the Authority's executive director or a Pur- chaser's general manager.If the date for making any paymentorperforminganyactisadayonwhichbankinginstitutions are closed in the place where payment is to be made or a legal holiday,payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day when banking institutions are closed in such place, Section 20.Applicable Law.The laws of the State of Alaska (including without limitation the equal opportunity laws set forth in AS 18.80.220,as the same may be amended from time to time)shall govern the interpretation and application of this Agreement and the actions of the parties hereunder. Section 21.Availability Of Information.The par- ties shall make available to each other,for inspection and copying during business hours,all books,records,plans and other information relating to any calculation or determination to be made pursuant to this Agreement. Section 22.Severability. (a)Severability generally.If any section, paragraph,clause or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,the remainder of this Agreement shall be unaffected by such adjudication and all the re- maining provisions of this Agreement shall remain in full force and effect as if such section,paragraph,clause or provision or any part thereof so adjudicated to be invalid had not been included herein. (b)Correction and substitution.If any sec- tion,paragraph,clause or provision of this Agreement oranyagreementreferredtointhisAgreementshallbefi- nally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,then and in such event the parties agree that they shall exercise their best efforts to correct such invalidation and substitute appropriate agreements and contractual arrangements to achieve the intent of this Agreement. (c)References to REA.From and after the time any Cooperative Purchaser is no longer indebted to REAunderanymortgageorothersecurityagreementwithREA,all references to REA and required approvals of the Admin- istrator of REA provided for in this Agreement shall be of no further force and effect with respect to that Coopera- tive Purchaser. Section 23.Remedies Cumulative.No remedy confer- red upon or reserved to the parties hereto is intended to be BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 27 Exhibit A exclusive of any other remedy or remedies available hereunder or now or hereafter existing at law,in equity,by statute or otherwise,but each and every such remedy shall be cumulative and shall be in addition to every other such remedy. Section 24.Waiver Not Continuing.Any waiver atanytimebyeitherpartytothisAgreementofitsrightswith respect to any default of the other party hereto,or with re- spect to any other matter arising in connection with this Ag-reement,shall not be considered a waiver with respect to anysubsequentdefault,right or matter. Section 25.Section Headings.The section headingsinthisAgreementareforconvenienceonly,and do not purportto,and shall not be deemed to,define,limit or extend the scope or intent of the section to which they pertain. Section 26.Multiple Copies.This Agreement shall be executed in several counterparts,each of which shall be an original,but all of which shall constitute one and the same instrument. Section 27.Covenant To Act In Good Faith.In order to permit this Agreement,throughout its term,to be fully ef-fective in accordance with the original intent of the parties, each party agrees that it shall at all times act in good faithinperformingitsobligationsandinexercisingitsrightsunderthisAgreement. Section 28.No Third Party Beneficiaries.Notwith- standing that the operation of this Agreement may and is in- tended to confer benefits on third parties who are not signa-tories to this Agreement,this Agreement shall be enforceable only in accordance with its provisions expressly governing en- forcement.In promising performance to one another under this Agreement,the parties intend to create binding legal obliga- tions to and rights of enforcement in (a)one another,and (b) such assignees or successors in interest of the parties as may enjoy a right to enforce this Agreement by virture of provis- ions of this Agreement that expressly create such a right in such assignees or successors in interest.By entering into this Agreement,the parties expressly do not intend to create any obligation or promise any performance to any other third party,nor have the parties created for any other third party any right to enforce this Agreement. Section 29.Excess Payments. (a)Payments in Recognition of Efforts to Ob- tain Intertie.In recognition of the Railbelt Energy Council's commitment to continue efforts to obtain a sat- isfactory transmission intertie between Fairbanks and the Kenai Peninsula,and the Railbelt Energy Council's recog- nition of the importance of such an intertie to the well- BRADLEY LAKE PROJECT POWER SALES AGREEMENT Ec hibit 28xhibit being of the Railbelt region and the Purchasers'ratepay- ers,and in anticipation of legislative funding of such an intertie,the Purchasers agree to make the payments de- scribed below in excess of actual debt service required for retirement of Bonds issued to pay Recoverable Con- struction Costs.The Purchasers'obligations to make pay- ment under this Section 29 are not contingent upon the success of such continued efforts to obtain a satisfactory transmission intertie between Fairbanks and the Kenai Pen- insula. (b)Calculation of Excess Payment Amount.Sub- ject to the limitations set forth in Sections 29(e)and 29(f),upon the retirement of all Bonds issued to pay Re- coverable Construction Costs (and of all Bonds issued to refund such Bonds)and the consequent reduction of DebtServiceincludable"in Annual Project Costs,there shall beaddedtoandincludedinAnnualProjectCostsanamount (the "Excess Payment Amount")calculated as follows: (i)The average annual Debt Service on such retired Bonds,less (ii)any debt service included in Annual Project Costs that is associated with bonds or other debt issued to fund Required Project Work. In no event shall the Excess Payment Amount be negative. (c)Payment of Excess Payment Amount.Each Purchaser shall pay its Percentage Share of the Excess Payment Amount as part of that Purchaser's Annual Payment Obligation so long as that Purchaser continues to purchase Project power under this Agreement or any renewal thereof. (d)Disposition of Payments.All Excess Pay- ment Amounts received from Purchasers,and all additional charges paid pursuant to Section 29(b),shall be paid totheAuthorityfordepositintotheRailbeltEnergyFund. (e)Limitation.Notwithstanding any other pro- vision of this Section 29,no Purchaser's Annual Payment Obligation shall include a charge with respect to any Ex- cess Payment Amount in excess of four cents ($0.04)perkilowatthourofProjectpowerdeliveredtosuchPurchaser. (f)Duration.The provisions of this Section 29 shall not serve to extend the term of this Agreement or any renewal thereof,and shall cease to be effective upontheexpirationorterminationofthisAgreement(as thesamemaybeextendedthroughanyrenewalthereof). BRADLEY LAKE PROJECT POWER SALES AGREEMENT Exhinn 29| Section 30.Special Arrangements Regarding AEG&T. (a)Contracts acknowledged.The parties recog- nize that Homer Electric Association,Inc.("HEA")and Matanuska Electric Association,Inc.("MEA"),have previ- ously entered into contracts with the Alaska Electric Gen- eration &Transmission Cooperative,Inc.("AEG&T"),and that under such contracts AEG&T is to sell and HEA and MEA are to buy electric power in amounts necessary to meet the full requirements of HEA and MEA,such power to be gen- erated by AEG&T or to be purchased by AEG&T from other suppliers.Under this Agreement,therefore,AEG&T is a Purchaser on behalf of HEA and MEA,and AEG&T's payment obligations are secured by HEA's and MEA's respective ob- ligations to provide at all times the monies necessary for the performance of AEG&T's payment obligations,as more fully described in Section 30(b). (b)Treatment of HEA and MEA as Purchasers for certain purposes.HEA and MEA shall have all the rights and obligations of individual Purchasers and/or Coopera- tive Purchasers with respect to Sections 2(a),4(d),6(e), 8(a)(vii)(D),10,13(c),13(d),15,17,18,31,and 32, unless the context otherwise requires.If AEG&T at any time fails to meet its payment obligations under this Ag- reement,then to the extent of such failure by AEG&T and for so long as such failure continues,HEA and MEA shall each be obligated to meet directly its respective share of AEG&T's payment obligations in the same manner as if HEA and MEA were individual Purchasers obligated to make pay- ment in accordance with Section 7 and Section 9.All rights and remedies available to the Authority and/or to the other Purchasers against AEG&T shall also be available to the Authority and the other Purchasers against HEA and MEA to the extent of the respective individual share of HEA and/or MEA,as applicable.For purposes of this Sec- tion 30(b),HEA's share shall be a Percentage Share of Project Capacity equal to 12.0 percent,and MEA's shareshallbeaPercentageShareofProjectCapacityequalto 13.8 percent. (c)Arrangements among HEA,MEA,and AEG&T.In accordance with the provisions of Section 30(a)and sub-ject to the provisions of Section 30(b),AEG&T as a Pur-chaser hereunder shall act on behalf of HEA and MEA for purposes of power deliveries,billing,payment,notifica-tion,and other communications under this Agreement. AEG&T shall be,on behalf of HEA and/or MEA,the Purchaser from the Authority and the re-seller to HEA and/or MEA ofpowertobetakenbyHEAand/or by MEA under this Agree-ment.Further,AEG&T will receive,on behalf of HEA and/or MEA,all billings and other communications under BRADLEY LAKE PROJECT POWER SALES AGREEMENT :hiKice 30xhibit this Agreement,and AEG&T will be required to pay suchbillsforandonbehalfofHEAand/or MEA from funds made available to AEG&T by HEA and/or MEA for this purpose. Section 31.Capitalization Of Certain Costs Of Pur- chasers. (a)Promptly after the Committee is formed,and before the Authority first issues Bonds,the Purchaser members of the Committee shall determine by the affirma-tive vote of members whose Percentage Shares equal or ex-ceed eighty percent (80%)of Project Capacity and of An-nual Project Costs: (i)whether and to what extent the costs borne by the Purchasers pursuant to the last sentence of Section 13(a)should be capitalized through issu- ance of additional Bonds,with the costs of debt ser- vice on those additional Bonds to be added to Annual Project Costs;and (ii)whether and to what extent the costs incurred by the individual Purchasers in conjunction with this Agreement prior to the Date of Commercial Operation should be capitalized and reimbursed through issuance of additional Bonds,and whether and to what extent the costs of debt service on those additional Bonds should be added to Annual ProjectCostsandallocatedamongPurchaserseitherinac- cordance with their respective Percentage Shares or in some other manner. (b)If the Purchasers provide the Authority with a written determination that additional Bonds should be issued for either or both of the foregoing purposes, then notwithstanding any other provision of this Agree- ment,the Authority shall issue additional Bonds in the requisite principal amount,allocate the proceeds of such additional Bonds among the appropriate Purchasers in ac- cordance with such written determination,and include the costs of debt service on such additional Bonds in Annual Project Costs;provided,that the Authority shall not beobligatedtoissuesuchadditionalBondsunlesstheAuth- ority is reasonably able to do so in conjunction with the issuance of other Bonds;and provided further,that the allocation among Purchasers of the costs of debt service on additional Bonds issued for the purpose set forth in Section 31(a)(ii)shall be made in the manner specified in such written determination. Section 32.Efforts To Obtain Intertie.The Pur- chasers recognize the importance of the completion of a satis- factory high-capacity Fairbanks to Kenai Peninsula transmission BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 31 Exhibit A intertie,and of full $218 million funding for the Project,andagreetocontinueallreasonableeffortstoobtainsufficient state funding for such transmission intertie and Bradley Lake. IN WITNESS WHEREOF,the parties have caused this Ag- reement to be executed the day and year first above written. THE ALASKA POWER AUTHORITY By As ALASKA ELECTRIC GENERATION &TRANSMISSION COOPERATIVE, .fotByALtalltitles)/. -- As CHUGACH ELECTRIC ASSOCIATION,INC. HOMER ELECTRIC ASSOCIATION,INC. By Mbt AL pooglorJao As ALAiAit BRADLEY LAKE PROJECT POWER SALES AGREEMENT INC. ExtphigA 32 GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. a MW The aAsCun.Yonnc \ MATANUSKA ELECTRIC ASSOCIATION,INC. .Kadena bnXa THE MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT AND POWER By. As ad aoe THE CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM wy onal BorasSE? BRADLEY LAKE PROJECT POWER SALES AGREEMENT ERAtDaAB3 EXHIBIT B Delivery Point The Delivery Point of the Project and the point at which the Purchasers accept delivery shall be at the point where the 115 kV Project transmission lines connect to a 115 kv switching station (included within the Project)at Bradley Junction on the Fritz Creek -Soldotna transmission line to be built by the Hom- er Electric Association,Inc. POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT B --Page 1 ExhibitA EXHIBIT C Description Of The Project The Bradley Lake Hydroelectric Project site is located on the Kenai Peninsula,about 105 miles south of Anchorage and 27 miles northeast of Homer,Alaska.Bradley Lake,with an exist- ing elevation of 1,080,is situated in the Kenai Mountain Range. A Project Location Map is attached. The proposed development includes raising the existing Bradley Lake level 100 feet by constructing a diversion tunnel, dam,spillway and outlet facility at the lake outlet.An 18,760 foot long,11 foot diameter concrete lined power tunnel will connect the reservoir intake works with a two 45 MW (nominal rating)unit powerhouse located just above sea level on the northeast shore of Kachemak Bay. A substation containing step-up transformers will be locat- ed at the power plant.Project transmission facilities include approximately 20 miles of two parallel,single circuit,115 kV transmission lines to connect the power plant to a 115 kV switch- ing station at Bradley Junction (which is also included within the project).The switching station will connect to a 115 kV transmission line (not included in the project)which will transmit power between Fritz Creek and Soldotna on the Kenai Peninsula.The Project also includes the Middle Fork Diversion consisting of a small diversion structure and excavated channel which diverts the upper Middle Fork flows into Bradley Lake,and the construction of a small diversion works at the headwaters of the Nuka River which diverts flows from Nuka Glacier into Bradley Lake. The project site is remote and will be designed to be operated as an unattended plant,but will require on-site main- tenance personnel.A supervisory control and data acquisition (SCADA)system will be provided.Site access is by water or airborne transportation.To support construction,operations and maintenance of the Project,a barge basin,airstrip,con- struction camp,permanent housing facilities,and approximatelytenmilesofaccessroadwillberequired. Provisions for adding a third 45 MW turbine-generator will be included in the Project. A Project Location Map and general plan are attached. POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT C --Page 1 ExhibitA 11. 12. 13. 14. Dam Spillway Power Tunnel Diversion Steel Liner/ Penstock Middle Fork Nuka Diversion Powerhouse Turbines Generators Transmission Barge Dock Access Roads Airstrip PROJECT DATA Concrete-faced,rock fill,610 feet long,125 feet high,362,000 cubic yards rock fill,10,800 cubic yards concrete. Ungated concrete ogee section,175 feet long. 11-foot nominal diameter,fully con- crete lined,18,760 feet long. 21-foot horseshoe tunnel,440 feet long. Steel 11-foot diameter,2,400 feet long tapering to 9 foot diameter manifold with 6 1/2 foot diameter branches. Excavated channel and river diversion structure. 9 foot high gravel fill dike. Above ground,steel superstructure,160 feet long,80 feet wide,92 feet high. 2 each Pelton,vertical shaft. 2 each;63 MVA with nominal output of 45 MW. 115 kv,steel pole,2 parallel single circuits,20 Line miles long,with 115 kV switching station at Bradley Junction. Sheetpile cellular structure,granular fill. 10.8 miles gravel surfaced. Gravel surfaced,2,400 feet long x 75 feet wide. POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT C --Page 2 Exhibit A V¥qiyxyeligiet eal te)FHTE CHEER fin ONAN WYSmaregens10%Let wance coca warearom,AD><reaisRSmeStenaAnca"CONSTRUCTIONS POWER CONSTRUCTION ACCESS ROAD Quaaey wamir Tal °§z 3[AD SEEN Sums |Scalemn Mies Y Ye a8 Ome F8t0nD 4 .wae tg ee * 1 : i % LA 1 "6 i :We, %a a eg in . . a he cama maen ° Exhibit D Purchasers'Percentage Shares Of Project Capacity And Of Annual Project Costs PURCHASER PERCENTAGE SHARE Alaska Electric Generation & Transmission Cooperative,Inc.25.8 Chugach Electric Association,Inc.30.4 Golden Valley Electric Association,Inc.16.9 Municipality of Anchorage,d/b/a Municipal Light and Power 25.9 City of Seward,d/b/a Seward Electric System 1.0 100.00% POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT D - Page 1 ExhibitA ExhibitE ALASKA POWER AUTHORITY RESOLUTION NO. A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE OF $ POWER REVENUE BONDS,FIRST SERIES BE IT RESOLVED by the Board of Directors of the Alaska Power Authority on the day of ,19 , that pursuant to the General Bond Resolution adopted on ,19 ,(hereinafter referred to as the "Resolu- tion"),this Supplemental Resolution is adopted as follows: ARTICLE I Definitions and Authority 101.Short Title.This Resolution may hereafter be cited by the Authority,and is hereinafter sometimes referred to as the "First Series Resolution". 102.Definitions.(a)All defined terms contained in the Resolution shall have the same meanings,respectively, in this First Series Resolution as such defined terms are given in Section 102 of the Resolution. (b)In addition,as used in this First Series Resolution,unless the context shall otherwise require,the following terms shall have the following respective meanings: "Bonds"or "First Series Bonds"means the Bonds of the Authority of the Series authorized by this First Series Resolution and herein designated "Power Revenue Bonds,First Series". "Series Bonds"means any First Series Bond maturing on or before . (c)Unless the context shall otherwise indicate, words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders, words importing the singular number shall include the plural Exhibit A number and vice versa,and words importing persons shall include firms,associations,partnerships (including limited partnerships),trusts,corporations and other legal entities, including public bodies,as well as natural persons. The terms "hereby","hereof","hereto","herein", "hereunder”,and any similar terms,as used in this Series Resolution,refer to this Series Resolution and such terms when used in the form of bond herein refer to said bond. 103.Authority for this Resolution.This First Series Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization,Terms and Issuance 201.Authorization,Principal Amount,DescriptionandSeries.In order to provide funds necessary for the purpose specified in Section 203,in accordance with and subject to the terms,conditions and limitations established herein and in the Resolution,a Series of Power Revenue Bonds is hereby authorized to be issued in the aggregate principal amount of §$-The Authority is of the opinion and hereby determines that the issuance of the Bonds in said amount is necessary to provide sufficient funds to be used and expended for the purpose specified in Section 203.In addition to the title "Power Revenue Bond",the Bonds of such Series shall bear the additional designation "First Series”and each as so designated shall be entitled "Power Revenue Bond,First Series".The Power Revenue First Series Bonds shall consist of $C «Cprincipal amount of Serial Bonds and $s principal amount of Term Bonds and shall be issued in fully registered forn. 202.Purposes.The purposes for which the ___ Series Bonds are being issued are to provide funds for deposit in the Renewal and Contingency Reserve,Capital Reserve Fund, Operating Reserve Account,and Construction Fund,respectively, all to the extent and subject to the limitations and in the amounts provided in the Resolution and in Article III hereof. 203.Issue Date.The First Series Bonds shall be dated ,except as otherwise provided in the Resolution in the case of Bonds issued on or subsequent to 204.Maturities and Interest Rates.The Series Bonds shall mature on the anniversary of their date in RESOLUTION NO. Page 2.A7802FJIG Exhibit A the following years and the Bonds maturing in each such year shall mature in the principal amount and bear interest from the date thereof,payable semi-annually on the first day of each month commencing 6 months and 12 months from date,at the rates set opposite such year in the following table: Amount Interest Amount Interest Years Maturing Rates Years Maturing Rates 205.Denominations,Numbers and Letters.The First Series Bonds maturing in each year shall be issued in denomina- tions of $5,000,or any whole multiple thereof not exceeding the aggregate principal amount of First Series Bonds maturing in such year,in the case of fully registered Bonds.The First Series Bonds shall be lettered A and numbered separately from 1 consecutively upwards in such order as the Trustee in its discretion shall determine. 206.Paying Agents.,in ,and ,are hereby appointed the Paying Agents for the Series Bonds pursuant to Section 902 of the Resolu- tion. 207.Redemption at the Election of the Authority and Terms.The Bonds maturing and thereafter shall also be subject to redemption,either as a whole or in part,and in such amount or amounts of such maturity or maturities as the Authority shall elect,on any date (which date shall be deter- mined by the Authority or selected by the Trustee,subject to the provisions of,and in accordance with,the Resolution and when so determined or selected shall be deemed and is hereby set forth as the redemption date)on and after ' and prior to their respective maturities,upon notice as provided in Article IV of the Resolution,at the respective Redemption Prices (expressed as percentages of the principal -amount of such Bonds to be so redeemed)set opposite such period in the following table,plus in each case interest accrued to the redemption date: RESOLUTION NO. Page 3.A7802EFJG Exhibit A Redemption Prices Period (Expressed as a (Both Dates Inclusive)Percentage) 208.Sinking Fund Payments.The Term Bonds shall be subject to redemption in part by operation of the Principal Account through application of Sinking Fund Payments as provid- ed in subsection 507(2)of the Resolution on and on each 1 thereafter as herein provided in each case at a Redemption Price equal to the principal amount of each Bond or portion thereof to be redeemed,together with interest accrued to the redemption date.There shall be due and the Authority shall at any and all-events be required to pay on 1 of each of the years set forth in the following table the amount set opposite each such year in said table and said amount is hereby established as and shall constitute a Sinking Fund Payment for the retirement of the Term Bonds, provided,however,that the amount set opposite in said table shall be payable at the stated maturity date of the Term Bonds and shall not constitute a Sinking Fund Payment: Year in ayments 209.Selection by Lot.If less than all of the First Series Bonds of a like maturity are to be redeemed,the particular Bonds of such maturity to be redeemed shall be selected by lot in accordance with Section 404 of the Resolu- tion. RESOLUTION NO. Page 4.A7802FJIG Exhibit A ARTICLE III Disposition of Proceeds 301.Deposits.Upon receipt of the proceeds of sale of the First Series Bonds,there shall be deposited (a)in the Capital Reserve Fund to equal the Capital Reserve Fund Require- ment immediately after delivery of the First Series Bonds,(b) in the Interest Account the amount of accrued interest on the First Series Bonds from their date to the date of delivery thereof and payment therefor,(c)in the Renewal and Contingen- cy Reserve Fund the amount necessary to cause the amount in the Fund to equal the Renewal and Contingency Reserve Requirement, and (d)in the Operating Reserve Account §. 302.Construction Fund.After the deposits referred to in Section 301 hereof have been made,the balance of the © proceeds of sale of the First Series Bonds shall be deposited in the First Series Bonds Account of the Construction Fund. ARTICLE IV Effective Date 401.This Resolution shall take effect immediately. RESOLUTION _NO. Page 5.A7802EFJG Exhibit A wsETNON ISAASKAGapE£NERGY AUTHORITY TABLE UF CUNTENTS Report to Alaskans Letter from the Governor Introduction St.George Larsen Bay Nightmute Energy Planning Financial Highlights oOFBN DECEMBER 2014 REPURT 10 ALASKANS COMMUNITY FIRST.These two words carry meaning and power at the Alaska Energy Authority (AEA).In 2014,AEA launched the Community First Initiative,and through this report,we hope to demonstrate the positive results stemming from our efforts. AEA's mission to reduce the cost of energy in Alaska is an ambitious yet clear directive,and one that we as an organization reflect on daily. |am proud of the work we have done with planning energy policy and of our investment in Alaska's energy infrastructure,diversification of Alaska's energy portfolio and the technical and community assistance we provide.However,as with any agency,corporation or business that has expanded its operations,it's important to reassess internal structure and how we can best serve the state of Alaska. Previously,AEA's structure separated rural energy,alternative energy and energy efficiency into individual departments.This structure did not promote open internal dialogue and did not set an example for a community-based approach to which we strive for providing energy solutions.In June 2014,AEA launched a revised internal structure.AEA's new structure organizes the authority into program development (including programs such as Renewable Energy Grant Fund and Emerging Energy Technology Fund),project implementation and energy policy and outreach.This more community-based approach applies to every facet of AEA's project and program development. As you will see in this report,AEA's project management staff is working with communities around the state to fully integrate their energy systems,including diesel,renewable energy and transmission.Our community assistance team is branching out from its technical focus and assisting communities in finding resources to lower energy-related costs,including resources outside of AEA.Our regional planning group is working to fully integrate its efforts with the Alaska Affordable Energy Strategy,which is focused on providing a long-term energy planning structure for communities that will not have direct access to the natural gas pipeline.And finally,our Power Cost Equalization team continues to meet with stakeholders to evaluate ways to maximize program benefits to rural ratepayers. AEA continues to play a leading role in informing and implementing Alaska's energy policies,and is taking steps to promote multi- agency collaboration to break down external silos and encourage increased communication within the authority. Providing stable and affordable power across Alaska presents many challenges,but through the vision of AEA's board of directors,Alaska's elected officials and AEA's committed staff,we are making improvements.AEA will continue our Community First focus,and we look forward to furthering positive discussions and energy- related work in the state of Alaska. Sincerely, Vero tshn-Cond Sara Fisher-Goad EXECUTIVE DIRECTOR Lee ola eee Se ---ae,Ween.wn et TSeeig |ainaReera er ee:SeOe on etneesmee>mae ee:ino *pee:Padfie eee Pos.-ainenNeeTF ..Se ht ORS i'pe:"9 toe STs attte'7 I yi iad wir,eewa adpregSames.reg iamci.oud.;Bs on seh.ede,rare'oe 4maeSei6:a wisnWengenwe,ough re meatPuteigeyee| PRUGRAM HIGHLIGHT THE ALASKA ENERGY EFFICIENCY PARTNERSHIP: A 40-plus efficiency stakeholder engagement group committed to encouraging multi-agency coordination and integrated planning in the deployment of energy efficiency resources around Alaska. DECEMBER 2014 LETTER FRUM THE GUVERNOR DEAR FELLOW ALASKAN, As we look to the opportunities in the year ahead,affordable energy remains a constant focus of my administration.Simply put,energy is one of my highest priorities as governor; one that we must address in order to meet the immediate needs of those who are burdened with the high cost of heat and electricity. Even in an age of smartphones and high-speed Internet,too many Alaskans deal with the developing world's struggles of astronomically expensive energy.It is not uncommon for many Alaskans to pay more for their monthly heating bills than a mortgage or rent payment. During my early years of growing up,we attempted to heat our home with an old, inefficient wood stove.In the morning,it would be as cold inside as it was outside -sometimes forcing us out of bed at 10 degrees below zero. Waking up in a cold house is something |will never forget,and it is still a part of who lam today.Knowing that some Alaskans still live in these dire circumstances makes me even more eager to find solutions to our energy woes. The Afaska Energy Authority is working hard to bring energy security to our state,and to stabilize the cost of heat and electricity bills for all Alaskans.Whether it is through the promotion of alternative energy sources,energy efficiency programs or maintaining our state's transmission grids,AEA is on the front line of our energy sector,finding new opportunities to bring affordable energy solutions to Alaska. It is my firm belief that our next energy opportunity lies in natural gas.Since the oil boom of the 1970s,Alaskans have recognized that production of North Slope gas was a no-brainer.|remember first getting involved in the push for liquefied natural gas during a 1976 meeting with California Governor Jerry Brown and the group called Organization for Management of Alaska's Resources (now known as the Resource Development Council).Since then,my commitment to bring Alaska's gas to Alaskans and the world market has been unwavering,and as governor |plan to see this project to fruition. While the year ahead brings a host of fiscal challenges,the opportunity for Alaska to utilize its energy resources still shines bright.It is speculated that the amount of North Slope natural gas is in the hundreds of trillions of cubic feet,enough to sell and use for hundreds of years.By working directly with global markets,and not allowing others to dictate our timeline,we can achieve our goal to develop North Slope gas in the very near future. {look forward to working with the folks at AEA in the year to come in order to provide affordable energy to all Alaskans.Our state depends on it and our residents deserve nothing less. Sincerely, Et bible. Bill Walker GOVERNOR D D9 SPwenn Fee teeee eS .- . eee oe Ee art eAntero£*Oe ae wasoHieothe? :*.>*bstees,oerx5 oan oe AKENERGYAUTHORITY.ORG VMALASKA @ammm@ ENERGY AUTHORITY PRUGRAM HIGHLIGHT POWER COST EQUALIZATION PROGRAM (PCE):Established in 1985,the program provides cost relief for electric power to residents and community facilities.The program reduced power costs at an average of 55 percent for residential customers using up to 500 kilowatt hours per month and for eligible community commercial facilities.In 2014,the AEA community assistance team helped four communities reinstate in the PCE program,bringing the total to 192 participating communities. PS,SE me AMAAas banatio The Alaska Energy Authority is an independent corporation governed by a board of directors with the mission to reduce the cost of energy in Alaska.In its capacity as the state's official energy office,AEA serves as the lead authority responsible for statewide energy policy and program development. From building modern and code-compliant bulk fuel tank farms to upgrading to high-efficiency generators in rural powerhouse systems or integrating renewable energy projects, AEA emphasizes community-based project management.AEA's core programs work to diversify Alaska's energy portfolio,lead energy planning and policy,invest in Alaska's energy ony nee. Memenos om St VS Ml ae infrastructure and provide rural Alaska with technical and community assistance. AEA also manages the Renewable Energy Fund, Emerging Energy Technology Fund,Power Cost Equalization Program and various energy efficiency and conservation programs.AEA provides grants and loans for qualified energy infrastructure projects and also owns energy infrastructure that benefits Alaskans. This 2014 annual report includes highlights from programs and projects AEA spearheaded throughout the year.Additional information can be found online at AKEnergyAuthority.org. deeb peed _a oie _" TeaeTEER STW PRUGRAM HIGHLIGHT VILLAGE ENERGY EFFICIENCY PROGRAM (VEEP):Provides grant-funded efficiency improvements to public buildings in high-cost communities with a population of 8,000 or fewer people.Completed VEEP projects have returned more than $600,000 in annual savings,with an average $3 return for every dollar invested. "ee. *, vues THsarewastt S|GERURGE & Alaska is at the forefront of renewable energy resource development with programs serving some of the nation's most remote regions.It is also an industry leader when it comes to integrating renewable energy into small,diesel-run electrical systems. St.George is the southernmost of the Pribilof Islands -four volcanic islands located 750 air miles from Anchorage in the heart of the Bering Sea.Freight, including diesel fuel,is brought over by barge from Anchorage,or occasionally by cargo delivery from Seattle,Washington.[In 2011,one diesel-powered generator was providing power to the entire community with a population of 160 people. The community of St.George recognized the benefits of providing more stable and affordable power in order to support and grow commercial fishing operations.In me "4 =ee me Ae..eta '4snail thalawaMe ir ra addition,it recognized the potential of harnessing the island's most plentiful local resource:wind. Through the Renewable Energy Grant Fund and Rural Powerhouse System Upgrade programs and Denali Commission funds,St.George was slated to receive multiple project grants.AEA worked with the community to navigate multiple capital sources to fund a whole-system design and construction plan rather than treating the powerhouse module,wind system and integration as individual projects. The St.George project included the design and construction of a new energy-efficient modular powerhouse,waste heat recovery system,integrated controls with remote monitoring and wind turbine power distribution.AEA and the community worked with contractor Marsh Creek,LLC for the purchase and installation of all required equipment. Due to the island's remoteness,AEA planned a unique approach to testing the combined power system and training its operators.Trainees traveled to Anchorage to participate in the actual construction of the powerhouse module and switchgear installation. The module and wind turbine were tested at the AEA warehouse with a simulation of the variable wind conditions common to St.George !sland.AEA went out to bid on materials and engaged private-sector contractors as much as possible. AEA''s experience in rural power systems and wind projects,paired with consistent coordination between AEA,the community and the private sector, streamlined the process of maintenance and repairs of the powerhouse module.This whole-system approach saved St.George more than a million dollars in costs,and the project was completed eight months earlier than originally scheduled.It also contributed to the identification and resolution of several technical issues prior to construction,avoiding costly fixes in the field. St.George's energy projects successfully launched in 2014.At one point,the wind turbine supplied 80 percent of the community's electrical needs.The community's goal is to receive 50 percent of its annual electrical supply from the variable energy resource.However,even under these ideal conditions, technical challenges arise.In November,the wind turbine experienced a technical failure and was deemed unsalvageable.AEA is working with the community and the turbine manufacturers to replace the turbine and proactively troubleshoot any future potential challenges. This project remains a model for effective project development as well as community and local workforce engagement in rural Alaska. PESspe gee Kared cane de oe See OCC eS.eee,cee ee 2 ee eeee| eae)|eet ee oe Oe eS ee ee Pe ghee av ah So CyE MN SeyE ease ere Thiesee.btaakd- eeataten!epee We .hegaeceaese fa heey Ta:SPEER CRO OS ba ewe hogs are oh er 2 ee 2 2 C2 2 ceeee PSAB TRE Bre HR [ee ee,Soe oe Hd esp ey aps oetde ak pth t age SBR gas MRP EN ese Seeecsg Ay eee eae,nes 7 re oe eo *eit a aaes =at see Bde >om igaae Abe €*abse SE etAdPens meee,nest Ware thoy ogie . PRUGRAM HIGHLIGHI 4COMMERCIALBUILDINGENERGYAUDIT(CBEA):Provides grant reimbursement for up to the full cost of an energy audit for a privately owned,non-residential property including businesses and nonprofits.CBEA energy audits have identified an average potential savings of 30 percent for an average cost of $7 per square foot. PRUGRAM HIGHLIGHT RURAL POWER SYSTEM UPGRADES:Improves powerhouse operations,resulting in more stabilized energy generation and reduced diesel consumption through increased supply-side efficiency.AEA offers powerhouse operator training.For communities participating in the RPSU program and avoiding debt financing,the average weighted rate savings is 19 cents per kilowatt hour.f*7"Aroefe LARSEN BAY ° There is nothing typical about projects planned for rural Alaska.Rural energy infrastructure plans often take many years to complete and can include multiple projects.Communities face a complicated combination of funding sources,including state and federal programs.In the case of Larsen Bay,AEA worked with the community on multiple projects and provided flexible solutions in order to achieve the best possible outcome. Larsen Bay is a small community located on Kodiak Island and is fortunate to have access to hydropower. AEA began working with the city during the late 1980s on a hydroelectric project.Although AEA aimed to find creative solutions to financing and project management,the process was planned around a very traditional model.As a result,the state provided infrastructure and the community struggled with local capacity to maximize hydropower production and to functionally manage the utility.Both AEA and Larsen Bay were ready for a paradigm shift. Hydropower is a valuable and stable power source, however diesel remains the backbone of many rural communities.The powerhouse in Larsen Bay was in need of repair and an AEA report recommended relocating a powerhouse near the hydroelectric turbines to maximize the use of hydropower.This required working with the community not only on infrastructure development,but also to adopt a holistic,big-picture approach so that all the energy pieces fit together. The solutions involved a Rural Power System Upgrade (RPSU)as well as repairs and improvements to the hydropower facility and distribution system. Additionally,in August 2014,Larsen Bay School installed a new electric boiler.Installation of the boiler allows the city to collect revenues from sales of electricity to the school while the school enjoys stable and affordable hydropower.In addition to providing power to the school's electric boiler,the city is also selling hydropower to Icicle Seafoods,a local seafood processing company. The human element of the project was perhaps the most important piece to its success.Creating sustainable management and maintenance processes were crucial to providing maximum benefit to the community.For example,proper rate setting has the potential to determine a utility's financial success. AEA is working with the region on energy and business planning and has worked with the city to provide training to local operators as well as utility management training in order to maximize the effectiveness of the hydro facility. The new diesel powerhouse and rebuilt hydropower turbine launched in August 2014.Construction of the distribution system is set to be completed by the fall of 2015.The diesel,renewable and distribution systems were planned in concert with one another to the benefit of the community while maximizing the effectiveness of state resources. About 97 percent of the energy used by Larsen Bay is derived from renewable resources,with additional opportunities for expanding efficiencies.AEA was also able to turn over ownership of the hydroelectric project to the city of Larsen Bay.The community- based approach has allowed Larsen Bay to maximize its affordable hydropower,decrease its reliance on costly diesel and sell excess power to provide additional revenues to the city. wt 70neeraspennefa wreres:weestinssadapne #%Se SAN ®ee 2J e a®*eye 2 ree 3 or eeee ee eeeres eee ee Pee ios ee 2 a Sed eitests anys gh eo the eortas etae Pwis sbledda Sheaweea *.my - .:. eee sbde ghee celtagee ay GPE epee iar ewe gah geem peer tape eae 2 "aes ogi speter pee gece Pe Op RES .wo +PREPeS OPPS ET Sad eh c aes.ee ec.©eeeS Pe eo.2 ee en oe tr ee ee?ene Soe rotsee2 a+et coer 4m ay wae geeBR ew gy Fa Beh Sask PRRR ES a Ee Reniosepeghere oe bigs Sie pets eeeSees et ee2or eeea eee age bbe Ge adw te laeg bes ow 0%gaeens he das at Sik wes SG ARETASP Sy gey Fees Cem nanet ed. PRUGRAM HIGHLIGHI BULK FUEL UPGRADES:Many rural bulk fuel tank farms were constructed more than 20 years ago. The program provides funding for the design,business planning and construction management to build code-compliant bulk fuel tank farms in rural communities.AEA also offers bulk fuel operator training. ,-TT ee)4 ee TE Ee m Oh pt aie 7.ot .. : - 'oT ee PoeerideseyespeeresyokegtRATTSeae teRMTeeereeySLLSheey ssBEaBPgehyyalonLeneAegeigoBO4 :mein trasats_ :at OF)CaCeiy OLA 2 pig epemomeohogRecsytToapeWat,Ge als My hd"ca byx'a aoe 4 .eens i 4 aE .beat al Aeend.'ei ie $yet fanAEeaE<: PRUG RAM HIGHLIGHT RENEWABLE ENERGY FUND (REF): At Provides grant funding to study and develop i rea PT, eeTy RF pa ES ES |renewable generation resources,including nat te but not limited to wind,hydro,biomassoe.gat yo GP ©gs r .os t/'and heat recovery.The REF also provides aaLoe ;'vetting mechanism for energy projects and .4 32 provides benefits for rural businesses notaeOleyS|ahh a WAS a ..Lene AL Tr .FONE v3 eligible for Power Cost Equalization.Gln Aa EM RO So AARrea?Fe ew.en 3 A ;Aare PEER OAS Met SAN ee hl 8 pm.eT OA eTyeeens 15 + xpbs Tage : €wg*4 NIGHTMUTEIn2009,multiple partners gathered in the Western Alaska village of Nightmute to implement a complete energy efficiency retrofit of the community's commercial buildings, including home weatherization of some residences.Approximately 300 people live in the community,located on Nelson Island near Toksook Bay outside of Bethel.AEA led the effort and partnered with Alaska Housing Finance Corp.,RuralCAP,Denali Commission, Association of Village Council Presidents Regional Housing Authority,the city of Nightmute,Alaska Village Electric Cooperative and other local and private-sector partners. It is a unique accomplishment to have this many partner organizations working to simultaneously implement energy efficiency projects in one location.The trip resulted in 10 commercial buildings,including the post office,village store and community hall,as well as 34 homes retrofitted with new lighting and weatherization improvements.Additionally,lighting upgrades were made to the school gym and four teacher housing units.Homes received foam,loose-fill insulation and window replacements,while several community buildings underwent insulation,roofing and foundation repairs. Five years later,the original stakeholders returned to the table to review the results of their work and examine their effectiveness.Planning began for a smaller team to return to the community. In November 2014,some members of the original group (along with additional regional stakeholders Nuvista Light and Electric Cooperative and Cold Climate Housing Research Center)traveled to Nightmute to meet with the community and listen to their experiences. There,the group was assured that the state's energy efficiency programs achieved their goals. The average house and community building cut energy use in half;estimated annual fuel savings to the village store alone were estimated at $10,639;community lighting upgrades resulted in more than $14,000 in annual estimated savings. The total annual energy savings for the community was calculated around $75,000. The conclusion was that community buy-in is critical to the success of such a project.The city of Nightmute not only provided additional capital to pay for energy efficiency improvements,but the entire program was developed with feedback from elders,community leaders and residents,and local labor was employed wherever possible. In the end,partners realized the true benefits were derived from AEA's coordination and communication between the various energy partners and the community,and less so from the partner entities all performing their work simultaneously.AEA will continue to lead the Alaska Energy Efficiency Partnership and work with other agencies to implement energy programs for the benefit of Alaskans. a= Sickderes 6 gee tembhedsy aba 6 cab 08 wie gd oye peeohde SkeneTe 6 Fy eee Peek Hemete Cree Op A RPOeS eee fede Tyegens yieeretee bith eset Feit peete tee Cee int ae eece ee 2 eee eestae ©ee et oe ee Eel or'ce egebica t 8 eye Fact coe en,Ce2s $5 og garaayey.Pars Blecva-a o4 ER eats PARR ORE Tbe BE Bao lb arekag tt eae Peer ges REE Gem te OT Ga bebe tn bon eM ise we Pr eo.Cee ee esec 2 eSee ears.Cre re aeTE aiachgabises °wanyetbae ok BASE PEERS S eee ies Pt CnSok ee ee2 oe _sehntoteemcensinecaboamntite prerwernene | ae Beet wa ** Vetoes,NAGE EE BN oe Ceelel'0 ct Mid CR aL PRUGRAM HIGHLIGHT REGIONAL ENERGY PLANNING:In addition to the Alaska Affordable Energy Strategy effort, AEA is contracting with regional organizations to produce energy plans in six regions,including 96 communities and a total population of approximately 50,000 people.Discussions are underway to add two additional regions to the effort.The plans are locally driven and will provide community-vetted blueprints for sustainability. 17 ENERGY PLANNING AEA has been involved in several efforts to provide energy planning for the state.There is no one-plan- fits-all approach;from Ketchikan to Barrow,Alaska's communities are diverse,and effective energy plans must address unique challenges while capitalizing on available local resources. AEA has completed energy plans for Southeast Alaska and Railbelt communities.Currently,AEA is working with communities in Kodiak,Northwest Arctic and Bering Strait regions,the Aleutian Islands,Bristol Bay,Copper Valley and with Tanana Chiefs Conference for the Yukon-Koyukuk and Upper Tanana regions on energy plans.AEA also serves an advisory role with Nuvista Light and Electric Cooperative in the Lower Yukon-Kuskokwim region and with Arctic Slope Regional Corp.on the North Slope as they do energy planning. These efforts are driven by each community and 4 Pa involve many regional stakeholders.This type of °Pe aM regional energy planning serves an important role forLEacommunitiestodevelopasustainableenergyfuture. In addition,the Alaska Senate passed Senate Bill 138 in 2014,enabling the state to work on a natural gas pipeline.The Alaska Affordable Energy Strategy (AKAES)was formed as a result of this legislation and AEA was tasked with developing a plan to identify necessary infrastructure in order to deliver affordable energy to areas of Alaska that will not have direct access to a North Slope natural gas pipeline.This report is due to the Legislature in January of 2017, eee onPeeeOew..Cee eyoe5arar PS malge PROGRAM HIGHLIGHT COMMUNITY ASSISTANCE:AEA helps communities develop energy projects, identify funding sources and address issues that may prevent projects from moving forward.So far in fiscal year 2015, the program has assisted 91 communities throughout the state. Oo oO PROGRAM HIGHLIGHI INFRASTRUCTURE:AEA owns critical energy infrastructure along the Railbelt,including the Bradley Lake Hydroelectric Project on the Kenai Peninsula and the Alaska Intertie -the electrical backbone that connects Southcentral to Interior Alaska.Currently,Bradley supplies upward of 10 percent of the Railbelt's power. ee -ee _ ;/vatya'jli' 1 .14 iy .'t -AD eee ee ees f -t a---an Pieda a :. a ean .*a Seg ary Senate ener sae Mo gt natge tyaoUe"8a sy rays 8s wceroro.&Dapeng,a be annt)a MRS trae.at.oy my ey 7 r(boom FF4 . 7 ,ba ke Pend liars be:| R | -RUSSELL DIC DANA PRUHS RANDALL HOFFBECK FRED PARADY Chairman Vice-Chair Commissioner,Acting Commissioner, Alaska Department Alaska Department of of Revenue Commerce,Community and Economic Development aes eS<2 tee'? CRYSTAL NYGARD GARY WILKEN WILSON HUGHES tennerwe-VFeaten i 4 a3 pa j a *3Fo OPERATING REVENUES: Federal grants 7,454 6,077 Revenue from operating plants 17,542 16,937 State operating revenues 67,510 79,152 Interest on loans 277 277 Other operating revenues 2 - ..TOTAL OPERATING REVENUES $92,783 102,443 OPERATING EXPENSES:i|rr...”"-_°Grants and projects 91,431 99,634 a | "vem 'Power cost equalization grants 40,305 40,100 ASSETS:Interest expense 4127 4,561 Investment securities and cash 1,188,614 1,060,707 Plant operating 4,720 4,363 Loans,net 6,144 5,245 General and administrative 5,424 5,291 Capital assets,net 341,002 270,563 Provision for loan losses 28 186 Receivables and other assets 25,685 15,823 Depreciation 10,464 11,786 [TOTALASSETS $1,561,445 1.552.338 |ONer Project expenses LIABILITIES AND NET POSITION:[TOTAL OPERATING EXPENSES $156,499 '165,921 Liabilities Bonds payable 78,890 86,190 Operating loss (63,716)(63,478) Payables and other liabilities 76,362 85,235 Investment Income,net 173,093 113,415 TOTAL LIABILITIES 155,252 171,425 State of Alaska Fund Capitalization 115,875 76,476 Net position 1,406,193 1,180,913 Transfer of Bulk Fuel Loan Fund =(15,873) Other non-operating losses 28 36 TOTAL LIABILITIES >seine oe swe gan EARLE aRRE 8 SE tae Mm BRE \i Seay ENEeR HR TBE Ry Bg PE tes poate test ease lumens cee camera mee wae -owe.|AND NET POSITION SUBGTAGS 1882588 |[INCREASE IN NET POSITION $225,280 _M0576 Beeton ommend 4!ba '- ; er eastesweee- ar i ery ee "«eT poate tooemegre 1k oe fs : o-<a bssyste .ie « ay ..:. :.-8*: .-bd--Nae!o el*=