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HomeMy WebLinkAboutBPMC Dec 1, 2017UNOFFICIAL EXCERPT OF THE MINUTES BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING December 1,2017 D.Battle Creek e Clarification Amendments and proposal to Resolution 2017-02 Mr.Gibson cited inconsistencies in Resolutions 2017-02.He provided a red-line document to address the clarifications and capture the intent of the BPMC.The first proposed change is on page three,to delete "tentatively November 8,"and replace "November 30"with "December 6," as the date upon which participation should be noticed.The next proposed change is to clarify the next to the last Be It Further Resolved,with respect to what amounts a non-participating purchaser would have to pay to become a participating purchaser.The recommendation is to remove the word "including”and replace with "to include only,”and then list the particular items that a non-participating purchaser would have to pay. Mr.Izzo expressed concern regarding the phrase "to include only,”because it removes BPMC's ability to address potential unforeseen risks that are not specifically stated in the language. MOTION:Mr.Borgeson made a motion to adopt the changes in the first amendment to Resolution 2017-02 Battle Creek Diversion Project.Mr.Warner seconded the motion. Mr.Gibson advised all unforeseen circumstances that were financed will be shared by newly participating purchasers upon buy-in. Mr.Borgeson stated the language provides significant clarity on what is included for future participants. MOTION:Mr.[zzo made a motion to amend the motion to adopt the changes in the first amendment to Resolution 2017-02 by removing the words,"include only,”and go back to the original wording of,"including."Mr.Thibert seconded the motion. Mr.Thibert commented he understood the original motion language was deliberate and intended to specifically include only the items listed. Mr.Warner believes the specific language was chosen to clarify intent. Motion to amend the motion to adopt the changes in the first amendment to Resolution 2017-02 by removing the words,"include only,"and go back to the original wording of, "including,”failed,with Mr.!zzo and Mr.Foutz voting in favor. Motion to adopt the changes in the first amendment to Resolution 2017-02 Battle Creek Diversion Project passed unanimously. Mr.Gibson informed GVEA proposed an amendment regarding the sale or transfer of Battle Creek Diversion (BCD)shares to and from participating and non-participating purchasers.The amendment wording was provided to members and inserted in two sections of the resolution. The language is permissive and allows non-participating purchasers to sell or transfer their right to participate.As it is written,the non-participating purchaser has to give notice and buy-in tobecomeaparticipatingpurchaserbeforetheycansellortransfertheirshares. Excerpt BPMC Minutes 12/1/17 Page 1 of 3 MOTION:Mr.Borgeson made a motion to add the proposed language to the first amendment to Resolution 2017-02 Battle Creek Diversion Project regarding the ability for a non-participating utility to sell their right to participate to a participating or non- participating purchaser.Mr.Warner seconded the motion. Mr.Thibert expressed opposition to the motion because he does not believe the non- participating purchasers have the right to sell or transfer shares they do not own.The decision to participate or not participate has to be made by December 6th in order to continue with 100% financing.Mr.Thibert understands a non-participant can become a participant at a later date and subsequently sell their shares. Mr.Izzo expressed opposition to the motion because he does not believe a non-participant can sell their value without having paid in. Mr.Warner agreed with Mr.Gibson that the amendment removes one step of the process of transfer or sale of shares and the ultimate result is the same with or without the amendment. A roll call was taken,and the motion to add the proposed language to the first amendment to Resolution 2017-02 Battle Creek Diversion Project regarding the ability for a non-participating utility to sell their right to participate to a participating or non- participating purchaser failed,with Mr.Borgeson,Mr.Warner,and Mr.Foutz voting in favor. e Battle Creek Financing Q&A Mr.Eoff gave a comprehensive overview presentation on the Battle Creek financing.After review of the loan proposals,National Rural Utilities Cooperative Finance Corporation (CFC) was selected for financing.The loan commitment on the term sheet is $47 million,bifurcated into three series to accommodate the success of garnering interest rate subsidy programs. Series A of $40 million is connected to an interest rate subsidy through the New Clean Renewable Energy Bonds (NCREB)program at 70%of the basis rate,subject to a 6% sequestration holdback. Mr.Eoff explained Series B is expected to be connected to an allocation from the State of Alaska for about $2.1 million under the Qualified Energy Conservation Fund program at 70%of the basis rate.The State Bond Commission will meet on Dec 4 to review our request.Series C of about $4.8 million is the balance of the total loan commitment at the CFC loan interest rate and will only be drawn for project costs.There is a reasonable chance the Battle Creek project may be completed without having to draw any of the Series C loan. Mr.Eoff reviewed the financials under each of the scenarios provided.Financing proceeds are anticipated to be applied to transaction expenses.Mr.Eoff noted he has been informed the utilities have elected to fund the capital reserve fund through a cash call. Mr.Eoff reported the tax bill Congress is currently trying to pass may create a potential sequestration impact on the interest rate subsidy program relating to the Pay-As-You-Go (PAYGO)statutory restriction from 2010.He explained an exception to the restriction could be passed with 60 votes in the Senate.Another potential impact to the interest rate subsidies could be triggered from the likely significant federal deficit associated with the tax bill.Mr.Eoff commented the hope and expectation is Congress will determine a solution to the PAYGO restriction. Excerpt BPMC Minutes 12/1/17 Page 2 of 3 Mr.Borgeson inquired as to the cost of power if the interest rate subsidy was not available.Mr. Eoff indicated the average cost of power over 30 years under the optimal scenario with the full benefit of the interest rate subsidy is approximately $58 per megawatt hour.With no interest rate subsidy under the optimal scenario,the average cost of power is approximately $76.30 per megawatt hour.Under the full draw scenario over 30 years,the average cost per megawatt hour increases from $65.60 to $85. MOTION:Mr.Carey made a motion to go into Executive Session to discuss confidential term sheets and negotiating strategy.Mr.Borgeson seconded the motion. Motion passed without objection. Attest:Y)2 LogBryan Alaska Energy Authority,BPMC Secretary Excerpt BPMC Minutes 12/1/17 Page 3 of 3 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority,Anchorage,Alaska December 1,2017 of 1.CALL TO ORDER Chair Janorschke called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:03 a.m. 2.ROLL CALL FOR COMMITTEE MEMBERS Cory Borgeson (Golden Valley Electric Association [GVEA]);Bryan Carey (Alaska Energy Authority [AEA]);Lee Thibert (Chugach Electric Association [CEA]);Tony !zzo (Matanuska Electric Association [MEA]);Jeff Warner (Anchorage Municipal Light &Power [ML&P]);John Foutz (phone)(City of Seward);and Brad Janorschke (Homer Electric Association [HEA)). 3.PUBLIC ROLL CALL Amy Adler,Brenda Applegate (phone),Tom Erickson (phone),Kirk Warren,Teri Webster,Brandi White (AEA);Crystal Enkvist (Alaska Power Association);Brian Hickey,Sherri Highers,Mark Johnson,Josh Resnick (CEA);Brian Bjorkquist (Department of Law);Leo Quiachon,Ron Woolf (phone)(GVEA);Bob Day,Alan Owens (phone),Larry Jorgensen (HEA);Cynthia Cartledge (Jermain,Dunnagan &Owens);Kirk Gibson (McDowell Rackner Gibson,PC);Matt Reisterer, David Pease,Tony Zellers (MEA);Molly Morrison (ML&P);Fred Eoff (phone)(PFM Group Consulting);TW Patch (Public);Bernie Smith (Public);Gary Dixon,Lee Wassilie (Swalling & Associates);and Sydney Hamilton (Accu-Type Depositions). 4.PUBLIC COMMENTS None. 5.AGENDA APPROVAL MOTION:Mr.Carey made a motion to add two items under 7D -Clarification Amendments and Proposal by GVEA to Resolution 2017-02;and add an Executive Session to discuss draft term sheets and negotiated strategy.Motion seconded by Mr.Thibert. The amended agenda was unanimously approved. 6.APPROVAL OF PRIOR MINUTES MOTION:Mr.Izzo made a motion to approve the minutes of September 29,2017,and October 13,2017.Motion seconded by Mr.Thibert. Motion passed unanimously. 7.NEW BUSINESS BPMC Minutes 12/1/17 Page |of 6 A.Approval of Annual Audited Financial Statements Chair Janorschke introduced Mr.Dixon of Swalling and Associates to review the June 30,2017, Financial Statements of the Operating Fund and the Revenue Fund.Mr.Dixon stated members were provided copies of the financial statements and noted they are posted to the AEA website. Mr.Dixon informed the statements'sole purpose is for the Committee to know and approve the refunds for the member utilities.The statements do not have to follow generally accepted accounting principles.The auditing is conducted under generally accepted auditing standards relevant to special-purpose financial statements.The statements were created in the same manner as prior years.No adjustments were made in the sequence of events and no difficulties were encountered with AEA staff in retrieving information.The statements include supplementary information.The opinion is not modified. Mr.Dixon gave a detailed analysis of each page of the report.The 2017 Payable to Utilities O&M refund is $1,223,409.The 2017 Payable to Utilities R&C refund is $1,147,663.Both payables will be brought before the Committee for approval in a resolution later in the meeting. Mr.Borgeson inquired as to the reason for the increase in Due to Others from $15,048 in 2016 to $622,007 in 2017.Mr.Dixon believes the difference reflects a timing issue in June of when payables came in and were booked,but not yet reimbursed.Mr.Dixon stated he will take the list from the prior year and compare it,and report back to the Committee. Mr.Borgeson asked if the efforts for Battle Creek are included in this audit.Mr.Dixon advised the original events went through the R&C Fund.The funding from the participating utilities has been segregated and is not included in this audit. Mr.Dixon expressed appreciation to Ms.Applegate,Ms.Garner,Ms.Adler,and staff for their participation in the process and continued diligence for BPMC.Chair Janorschke expressed appreciation additionally to Mr.Woolf and the Finance Committee for their work. MOTION:Mr.Borgeson made a motion to accept the FY17 Audited Financial Statements and approve a total refund to the utilities of $2,371,072,of which $1,223,409 from O&M and $1,147,663 from R&C funds.Mr.1zzo seconded the motion. Motion passed unanimously. B.Operator RFP update Mr.Carey informed MEA and ML&P will not be submitting an RFP for operator.Both utilities have submitted a representative for the working group to develop the scope criteria for evaluating proposals.Mr.Carey provided and reviewed the draft schedule for the procurement.The scope and criteria could be completed by the end of January.The due date could be April 1.The contractor might be known in May and could be ready to take over on January 1,2019.The HEA contract ends on December 31,2018. Cc,Soldotna SVC O&M Agreement update Chair Janorschke informed the SVC O&M Agreement expired the end of 2013,and CEA has continued to maintain the O&M.HEA will take over the service as of January 1,2018.The draft BPMC Minutes 12/1/17 Page 2 of 6 agreements are being reviewed.The final agreement is anticipated to be distributed to the Committee about a week before the January BPMC meeting,at which time,it will be addressed. D.Battle Creek e Project Update Mr.Carey noted the bid opening was held on November 8th,and drew in six contractors.The low bid of $36.5 million came in from Orion Marine Contractors.The engineer's estimate came in at $38.1 million.The Notice of Intent to Award cannot be given until financing is in place.Mr.Carey relayed anecdotal information on Orion Marine Contractors,noting good performance on a current project in Juneau. Mr.Carey informed he has the list of subcontractors,but may not be able to release them at this time.State procurement officers have requested Orion Marine Contractors provide references. Mr.Erickson stated the evaluation process includes review of references,prior projects,financial information,equipment financing,insurance and bonding.Mr.Carey noted he can keep the BPMC apprised of the ongoing vetting process. e Contract Housing Approval Mr.Warner,as Chair of the O0&D Committee,informed the BPMC had asked for the Committee to review possible housing needs for the project support staff.The option for support staff to stay in the crew's quarters at Bradley Lake is suggested to be set at $65 a night per person.The contractors will have their own camp. MOTION:Mr.Thibert made a motion to approve the use of the Bradley Project facilities by the support contractors at a rate of $65 per person per night.The motion was seconded. Mr.Warner stated the use of the crews'quarters by project support staff poses no concern of interference with the operation.Use of the kitchen is included in the terms.Food is not included. Motion passed unanimously. e Clarification Amendments and proposal to Resolution 2017-02 Mr.Gibson cited inconsistencies in Resolutions 2017-02.He provided a red-line document to address the clarifications and capture the intent of the BPMC.The first proposed change is on page three,to delete "tentatively November 8,"and replace "November 30"with "December 6,”as the date upon which participation should be noticed.The next proposed change is to clarify the next to the last Be It Further Resolved,with respect to what amounts a non-participating purchaser would have to pay to become a participating purchaser.The recommendation is to remove the word "including"and replace with "to include only,”and then list the particular items that a non-participating purchaser would have to pay. Mr.Izzo expressed concern regarding the phrase "to include only,"because it removes BPMC's ability to address potential unforeseen risks that are not specifically stated in the language. MOTION:Mr.Borgeson made a motion to adopt the changes in the first anendment to Resolution 2017-02 Battle Creek Diversion Project.Mr.Warner seconded the motion. BPMC Minutes 12/1/17 Page 3 of 6 Mr.Gibson advised all unforeseen circumstances that were financed will be shared by newly participating purchasers upon buy-in. Mr.Borgeson stated the language provides significant clarity on what is included for future participants. MOTION:Mr.!zzo made a motion to amend the motion to adopt the changes in the first amendment to Resolution 2017-02 by removing the words,"include only,"and go back to the original wording of,"including."Mr.Thibert seconded the motion. Mr.Thibert commented he understood the original motion language was deliberate and intended to specifically include only the items listed. Mr.Warner believes the specific language was chosen to clarify intent. Motion to amend the motion to adopt the changes in the first amendment to Resolution 2017-02 by removing the words,"include only,"and go back to the original wording of, "including,”failed,with Mr.Izzo and Mr.Foutz voting in favor. Motion to adopt the changes in the first amendment to Resolution 2017-02 Battle Creek Diversion Project passed unanimously. Mr.Gibson informed GVEA proposed an amendment regarding the sale or transfer of Battle Creek Diversion (BCD)shares to and from participating and non-participating purchasers.The amendment wording was provided to members and inserted in two sections of the resolution.The language is permissive and allows non-participating purchasers to sell or transfer their right to participate.As it is written,the non-participating purchaser has to give notice and buy-in to become a participating purchaser before they can sell or transfer their shares. MOTION:Mr.Borgeson made a motion to add the proposed language to the first amendment to Resolution 2017-02 Battle Creek Diversion Project regarding the ability fora non-participating utility to sell their right to participate to a participating or non- participating purchaser.Mr.Warner seconded the motion. Mr.Thibert expressed opposition to the motion because he does not believe the non-participating purchasers have the right to sell or transfer shares they do not own.The decision to participate or not participate has to be made by December 6th in order to continue with 100%financing.Mr. Thibert understands a non-participant can become a participant at a later date and subsequently sell their shares. Mr.Izzo expressed opposition to the motion because he does not believe a non-participant can sell their value without having paid in. Mr.Warner agreed with Mr.Gibson that the amendment removes one step of the process of transfer or sale of shares and the ultimate result is the same with or without the amendment. A roll call was taken,and the motion to add the proposed language to the first amendment to Resolution 2017-02 Battle Creek Diversion Project regarding the ability for a non- participating utility to sell their right to participate to a participating or non-participating purchaser failed,with Mr.Borgeson,Mr.Warner,and Mr.Foutz voting in favor. BPMC Minutes 12/1/17 Page 4 of 6 °Battle Creek Financing Q&A Mr.Eoff gave a comprehensive overview presentation on the Battle Creek financing.After review of the loan proposals,National Rural Utilities Cooperative Finance Corporation (CFC)was selected for financing.The loan commitment on the term sheet is $47 million,bifurcated into three series to accommodate the success of garnering interest rate subsidy programs.Series A of $40 million is connected to an interest rate subsidy through the New Clean Renewable Energy Bonds (NCREB)program at 70%of the basis rate,subject to a 6%sequestration holdback. Mr.Eoff explained Series B is expected to be connected to an allocation from the State of Alaska for about $2.1 million under the Qualified Energy Conservation Fund program at 70%of the basis rate.The State Bond Commission will meet on Dec 4 to review our request.Series C of about $4.8 million is the balance of the total loan commitment at the CFC loan interest rate and will only be drawn for project costs.There is a reasonable chance the Battle Creek project may be completed without having to draw any of the Series C loan. Mr.Eoff reviewed the financials under each of the scenarios provided.Financing proceeds are anticipated to be applied to transaction expenses.Mr.Eoff noted he has been informed the utilities have elected to fund the capital reserve fund through a cash call. Mr.Eoff reported the tax bill Congress is currently trying to pass may create a potential sequestration impact on the interest rate subsidy program relating to the Pay-As-You-Go (PAYGO)statutory restriction from 2010.He explained an exception to the restriction could be passed with 60 votes in the Senate.Another potential impact to the interest rate subsidies could be triggered from the likely significant federal deficit associated with the tax bill.Mr.Eoff commented the hope and expectation is Congress will determine a solution to the PAYGO restriction. Mr.Borgeson inquired as to the cost of power if the interest rate subsidy was not available.Mr. Eoff indicated the average cost of power over 30 years under the optimal scenario with the full benefit of the interest rate subsidy is approximately $58 per megawatt hour.With no interest rate subsidy under the optimal scenario,the average cost of power is approximately $76.30 per megawatt hour.Under the full draw scenario over 30 years,the average cost per megawatt hour increases from $65.60 to $85. MOTION:Mr.Carey made a motion to go into Executive Session to discuss confidential term sheets and negotiating strategy.Mr.Borgeson seconded the motion. Motion passed without objection. e Executive Session:11:53 am. The Committee reconvened its regular meeting at 12:26 pm. 8.COMMITTEE REPORTS 0&D Committee Mr.Warner reported the O&D Committee discussed the O&M cost analysis assignment and decided a better understanding of the current maintenance of the facility is needed for the BPMC Minutes 12/1/17 Page 5 of 6 analysis.HEA is working to provide the information for discussion at the next O&D meeting.Mr.Wamer will continue to provide updates. Finance Subcommittee Mr.Carey reported the RFP for the insurance review for Bradley and Intertie resulted in one proposal for approximately $12,000.The proposal was forwarded to Mr.Woolf to confirm the desire to award. 9.OPERATOR REPORT Mr.Day provided the Operator's Report to members.He reported Bradley operated at basically100%availability this month and Unit Two was electively taken out of service for six hours.Mr. Day noted the LED lightsin the power house are performing effectively and providing savings dueprimarilytotheoccupancysensor. Mr.Quiachon expressed appreciation to Mr.Day for hosting him during his recent visit to Bradley. He commented on the impressive state,condition and operation of the plant.He believes there is a high probability of meeting the 50-year license extension. 10.COMMITTEE ASSIGNMENTS None. 11.MEMBERS COMMENTS Mr.Carey informed the new Executive Director will begin in January as the BPMC representative. He expressed appreciation for all the work on the financing. Mr.Thibert expressed appreciation to AEA and Finance Committee for their diligent work.Mr. Borgeson and Chair Janorschke echoed the appreciation for the work on financing,and for the clean audit. 9.NEXT MEETING DATE -Wednesday,December 6,2017 10.ADJOURNMENT There being no further business for the committee,the meeting adjourned at 12:33 p.m. BY: oPP.Janorschke,Cattest:"2 Oe Pa)Bryan deyAlaskaEnergy Authority,Secre: BPMC Minutes 12/1/17 Page 6 of 6 NAALPBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Friday,December 1,2017 10:00 a.m. Alaska Energy Authority's Board Room 813 West Northern Lights Boulevard,Anchorage,AK To participate by phone,dial 1-888-585-9008 and use code 467 050 126. CALL TO ORDER ROLL CALL FOR COMMITTEE MEMBERS PUBLIC ROLL CALL PUBLIC COMMENTS AGENDA APPROVAL APPROVAL OF PRIOR MINUTES --Sept 29,2017;Oct.13,2017 NEW BUSINESS A.Approval of Annual Audited Financial Statements Swalling &Assoc. B.Operator RFP update AEA C.Soldotna SVC O&M Agreement update HEA D.Battle Creek AEA e Project update e Contract Housing Approval e Battle Creek Financing Q&A >Draft Resolution authorizing financing >Three Supplemental Bond Resolutions for each of the loans e $40M Bond;$4.864M Bond;$2.136M Bond COMMITTEE REPORTS e O&D e Finance OPERATOR REPORT .COMMITTEE ASSIGNMENTS .MEMBERS COMMENTS NEXT MEETING DATE -December 6,2017 ADJOURNMENT BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority,Anchorage,Alaska September 29,2017 1.CALL TO ORDER Chair Janorschke called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 2:00 p.m. 2.ROLL CALL FOR COMMITTEE MEMBERS Brad Janorschke (Homer Electric Association [HEA]);Cory Borgeson (Golden Valley ElectricAssociation[GVEA]);Bryan Carey (Alaska Energy Authority [AEA]);Lee Thibert (ChugachElectricAssociation[CEA]);Tony Izzo (Matanuska Electric AssociationIMEA));and MarkJohnston(Anchorage Municipal Light &Power [ML&P)).SS v .: 3.PUBLIC ROLL CALL ON,.SO, Brenda Applegate,Katie Conway,Tom Erickson,Jocelyn Garner,Jessica Houston,ValerieLeavitt,Kirk Warren,Teri Webster,Brandi White (AEA);Crystal Enkvist (Alaska PowerAssociation(APA));Renee Curran,Brian Hickey,Sherri Highers,Mark Johnson,Burke Wick (CEA);Brian Bjorkquist (Department of Law);*Leo Quiachon,.Ron Woolf (phone)(GVEA);RickBaldwin,Bob Day,Emily Hutchinson,Larry Jorgensen (HEA);Kirk Gibson (McDowell Rackner Gibson,PC);Jim Brooks,Gary Kuhn,David Pease (MEA);Jeff Warner (ML&P);Fred Eoff (PFMGroupConsulting);TW Patch (Fublic Jay Layne (RCA);ChuckSensiba (VNF);and LadonnaLindley(Accu-Type Depositions).\,' 4.PUBLICCOMMENTS. None.,;fe5."AGENDA APPROVAL.asMOTION:Mr.Johnston made a motion to approve the agenda.Motion seconded by Mr.Thibert."' The agenda was unanimously approved. 6.|APPROVAL OF PRIOR MINUTES -July 28;August 18;and September 6,2017 MOTION:Mr.Thibert made a motion to approve the minutes of July 28,2017.Motion seconded by Mr.Johnston. The motion passed unanimously. MOTION:Mr.Borgeson made a motion to approve the minutes of August 18,2017. Motion seconded by Mr.Thibert. The motion passed unanimously. DRAFT BPMC Minutes 9/29/17 Page 1 of 5 MOTION:Mr.Borgeson made a motion to approve the minutes of September 6,2017. Motion seconded by Mr.Izzo. The motion passed unanimously. 7.NEW BUSINESS A.FERC Land Fees _Federal Energy Regulatory Commission (FERC)issued a Notice of Proposed Rulemaking (NOPR)to change the method for determining the per-acre fee for federal lands at FERC-licensed projects in Alaska.Mr.Carey informed the FERC fee group savings is $20 an acre, totalling $108,000 per year.Mr.Sensiba noted the group consists of BPMC,AEL&P,Copper Valley Electric,Ketchikan Public Utilities,SEAPA,and CEA.:Mr.Sensiba explained the group'sissuescurrentlybeforeFERCthatweredetailedinanemailrecentlysenttoCommitteevamembers.4? Mr.Borgeson inquired if the FERC land fees discussion should take place under executive session or during the open public meeting.Mr.Bjorkquist suggested executive session be utilized to discuss any attorney/client privileged information.¢Mr:Gibson concurred with Mr.Bjorkquist's advice and noted previous FERC land use fee discussions have been public. Mr.Borgeson discussed the possibility of submitting all of the issues to FERC,due to the changein Commissioners.Mr.Sensiba noted two of the three Commissioners are new and twoadditionalnewCommissionersareawaitingSenateconfirmation.'Mr.Sensiba believes furtherdetaileddiscussionregardinga|Commissioner outreach strategy would be appropriateinexecutivesession.é fa eh ; MOTION:Mr.Borgeson made a'motion authorizing VNF to)provide responsivecommentstoFERCasoutlinediintheSeptember11,2017,email from Mr.Sensiba onbehalfoftheBPMCandthegroup."Motion seconded by Mr.Johnston.Mr.Borgeson encouraged Mr.Carey tocomment on al three matters.The motion \was unanimously approved. B.Battle Creek Project:Battle Creek Update;Financing;Bradley Lake Water Scheduling &Allocation Mr.Carey informed the application for the Clean Renewable Energy Bonds (CREBs)was sent out and the Invitation to Bid for the Battle Creek Project was publically advertised on September 15th.The prebid meeting for contractors was held.The first site visit with 14 contractors occurred and the second site visit with 10 contractors is scheduled.An addendum to the electrical engineering is anticipated to be sent to contractors within three weeks.The scheduled due date for bids is November 15th.The bid costs will be public and are believed to be good for 90 days.The scheduled date for the Notice of Intent to Award is January 2nd.Mr.Carey discussed the remaining projected timeline,including the possible final completion date of August 31,2020. DRAFT BPMC Minutes 9/29/17 Page 2 of5 Mr.Carey explained AEA continues to work on financing.He asked Ms.Applegate to discuss the draft construction financing schedule for Battle Creek.Ms.Applegate reviewed the dates of the schedule and provided explanation of the information outlined. Mr.Bjorkquist informed the AEA Board expressed a desire to hear support from the utilities regarding two issues;1)support of optional project work and agreement for the allocation of cost,and 2)approval of financing. Ms.Applegate reported the analysis of the financial details and timing is ongoing.She requested Mr.Eoff deliver the financing presentation.Mr.Eoff gave a detailed review of the five financing options available.He noted Option 1 CREBs solution remains the most favorable cost of finance.Mr.Eoff believes the CREBs subsidy could apply to Option 3,4,or 5.Mr.Eoff reported the potential best alternative could be the utilization of a short-term facility and a long-term permanent option.é Chair Janorschke requested Mr.Wick to present on the Bradley Lake water scheduling and allocation.Mr.Wick gave detailed definitions of commonly used terms,such as initial allocation of water,carryover pond,storage capacity,minimum use requirement,and spill.Mr.Wick walked the Committee through examples of the spl calculator and resultant procedures for use.Chair Janorschke requested Mr.Gibson to present on Battle Creek participation.Mr.Gibson discussed the status of the red-lined resolution and attachment regarding the Battle Creek Diversion Project provided to Committee members.He noted the vote on the resolution is anticipated to be brought before the Committee soon.Mr.Thibert informed additional discussions occurred and a subsequent red-lined resolution will be circulated and finalized. Cc.Bradley oam ContractMr.Carey informed HEA.was given notice the existing OaM contract would end on December31,2018.Mr.Carey requested input from Committee members regarding the possibility of allowing all qualified companies or utilities to participate in the request for proposal (RFP),including out of state companies and non--railbelt utilities.Mr.Johnston expressed his understanding the decision and change to statute was already made for non-railbelt utilities to participatein the RFP.Mr.Carey noted the statute does not qualify whether or not the contractor has to be Alaskan.Mr.Thibert stated the BPMC determined it was in the best interest to allow both utilities and contractors to participate in theRFP.. Mr.Carey requested the utilities who propose to be the operator communicate with AEA.The utilities proposing on the operator will not provide input to the contractor scope or contractor evaluation criteria.The remaining utilities will meet to develop the scope and evaluation criteria. The RFP is expected to be advertised next spring. Mr.Izzo commented the document behind Tab 7C suggests AEA believes the utilities are not interested in providing the lowest cost operation.Mr.lzzo took exception to that belief.He confirmed the cost conscious intent of utilities is stated in numerous ways.Mr.!zzo suggested AEA address the utilities directly regarding any concerns of disfunction.He considered it counterproductive for AEA to communicate a negative message about the utilities.Mr.Carey stated AEA supports long-term lower costs for the rate payers and long-term safety and maintenance of the asset at Bradley Lake. DRAFT BPMC Minutes 9/29/17 Page 3 of 5 Mr.Johnston encouraged the proposal be amended to require all proposed contractors to demonstrate their management capability ability,technical ability,and experience with projects of similar type,size,license,status,complexity and technology to operate and maintain a power project. D.2018 BPMC Meeting Schedule Chair Janorschke advised the 2018 BPMC Meeting Schedule has been provided.One meeting is scheduled each month.If a specific month's meeting is not necessary,it will be cancelled in a timely manner. 8.COMMITTEE REPORTS a, Mr.Thibert informed CEA and HEA were requested at the last meeting to suggest an approach for non-participating utilities to optin at a future date and become participating utilitiesin BattleCreek.Mr.Thibert invited Ms.Highers and Ms.Curran.to present the recommended methodology.Ms.Highers gave a detailed reviewof the provided model and assumptions.ShestatedcommentsonthemethodologywerereceivedfromtheBudgetaandFinanceSubcommittees.-- Ms.Garner presented the unaudited Fourth Quarters+Report.'The auditis scheduled for the firstweekofNovember.Audit approval and refunds are expected in December.Ms.Garnerinformedthecurrentliabilitiesishigh.this,year |because of the SVC project bills that will be paidduringthenextfiscalyear.%i 9.OPERATOR REPORTMr.Day submitted and reviewed the September 2017 OperaiorReport10.COMMITTEE ASSIGNMENTS _Chair Janorschke assigned himself and Mr.Thibert to follow-up on the Soldotna SVC O&MagreementandtobringitbeforetheBPMCforapproval.Chair Janorschke assigned.Mr.Thibert to coordinate efforts on Resolution 2017-02 (BattleCreekOptionalProjectWork),Chair Janorschkeassigned AEA toprovide a procurement schedule for the operator O&Mprocess.Ye fo4 Chair Janorschke assigned the Finance Committee to follow up and provide a prudent utilityinsurancereviewatthenextmeeting. 11.MEMBERS COMMENTS Chair Janorschke expressed appreciation to the O&D Committee for their work on the Battle Creek water allocations.Chair Janorschke thanked the Finance Committee for their efforts on the Battle Creek cost allocations.Chair Janorschke expressed gratitude to AEA for keeping Battle Creek moving forward. Mr.Borgeson expressed appreciation for the work today and welcomed Mr.Quiachon to Alaska and to GVEA. DRAFT BPMC Minutes 9/29/17 Page 4 of 5 Mr.Izzo informed Mr.Kuhn will be retiring.An alternate will be named in the near future. 12.NEXT MEETING DATE-Friday,November 3,2017 The next meeting will be coordinated by Ms.Webster and is tentatively scheduled for October 10th.The meeting in November is scheduled for Friday,November 3rd. 13.ADJOURNMENT There being no further business for the committee,the meeting adjourned at 4:03 p.m. BY: Brad Janorschke,Chair Attest:x Bryan Carey Alaska Energy Authority,Secretary DRAFT BPMC Minutes 9/29/17 Page 5 of 5 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority,Anchorage,Alaska . October 13,2017 1.CALL TO ORDER Chair Janorschke called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 1:00 p.m. 2.ROLL CALL FOR COMMITTEE MEMBERS Brad Janorschke (Homer Electric Association [HEA]);Cory Borgeson (Golden Valley Electric Association [GVEA]);Bryan Carey (Alaska Energy Authority [AEA]);Lee Thibert (Chugach Electric Association [CEA]);Tony Izzo (Matanuska Electric Association [MEA]);Mark Johnston (Anchorage Municipal Light &Power [ML&P]);and John Foutz (City of Seward). 3.PUBLIC ROLL CALL Amy Adler,Brenda Applegate,Tom Erickson,Valerie Leavitt,Kirk Warren (AEA);Mark Johnson(CEA);Brian Bjorkquist (Department of Law);Leo Quiachon (phone)(GVEA);Rick Baldwin,Bob Day,Emily Hutchinson (phone),Larry Jorgensen (HEA);Kirk Gibson (McDowell Rackner Gibson,PC);David Pease,Tony Zellers (MEA);Jeff Warner (ML&P);Fred Eoff (phone)(PFMGroupConsulting);TW Patch (Public);Bernie Smith (Public);and Ladonna Lindley (Accu-TypeDepositions)."a uf Seah4.PUBLIC COMMENTS None. 5.AGENDA APPROVALMOTION:Mr.Borgeson made za motion to amend the agenda adding Item 5.5.ExecutiveSessiontodiscussconfidentiallegalmattersregardingBattleCreek.Motion secondedbyMr.Thibert. The motion to amend passed with no objection.A motion to approve the amended agenda was done by Mr.Johnston and seconded by Mr.Thibert. MOTION:Mr.Johnston made a motion to go into Executive Session to discuss confidential legal matters related to Battle Creek.Mr.Thibert seconded the motion. Motion passed unanimously. 5.5 EXECUTIVE SESSION:1:04 pm. The Committee reconvened its regular meeting at 1:53 pm. 6.NEW BUSINESS A.Battle Creek Project DRAFT BPMC Minutes 10/13/17 Page 1 of5 Resolution 2017-02 -Optional Project Work Approval MOTION:Mr.Johnston made a motion to approve Resolution 2017-02 and included Attachment 1.Motion seconded by Mr.Thibert. Mr.Carey provided an update on Battle Creek Project materials.The Bradley Lake operator has been utilizing gravel and sand from the original construction project.Low levels of gravel and sand remain.The line items of 1,500 yards of sand and 1,500 yards of gravel is expected to provide a 10 to 20-year supply for runway and roads for Bradley Lake.The supply could come at a savings from the materials being generated from blasting during the Battle Creek Project,or the supply could partially come from the existing materials currently on the pad,or the supply could come from a standalone project at a potentially higher cost.Mr.Carey noted the contractor may decide to use up to 500 yards of the existing materials to potentially makeconcretefortheBattleCreekProject.A Mr.Johnston believes the gravel and sandis a sunk cost.”He suggested the Project pay forcrushingtherockwhiletheequipmentisalreadyatthesite.Mr.Johnston reiterated his concernthatoneprojectshouldnotsubsidizetheotherproject. Mr.Borgeson emphasized the importance of keeping two separate and appropriate accounting allocations,one for the Bradley Lake Project and onee for the Battle Creek Project.Chair Janorschke assigned the Finance Committee |to determine the appropriate and fair costallocationofthe3,000 yards of sand and gravel.Pa Mr.lzzo expressed concern regarding the uncertainty of the engineering and construction.Heemphasizedthereimbursementofanequitableportionofcostsshouldbebasedontransparentandverifiableaccounting.Mr.-Thibert explained the Finance Committee developed the currentrequirementlanguagetoincludethecashcallsandtheinterestduringconstruction.MOTION:Mr.Johnston made a motion to amend Resolution 2017-02,changing thediscountrateof5%,under the second to the last Be It Resolved section,to read,"Thetimevalueofmoneyusingadiscountrateequaltothelong-term financing cost for theproject,nettthe CREBs benefit."Motion seconded by Mr.Thibert.The motion to amend Resolution 2017-02 passed with MEA opposing.MOTION:Mr.Borgeson made.a motionto amend Resolution 2017-02 inserting on page three after the sixth Be It Further Resolved,"Be it further resolved by the BPMC that a participating purchaser shall have the unfettered right to arrange for the sale or transfer of its respective BCD share to another participating purchaser and the BPMC shall honor such arrangement in the allocation process for BCD shares."Motion seconded by Mr. Izzo. The motion to amend Resolution 2017-02 passed unanimously. MOTION:Mr.Thibert made a motion to amend Resolution 2017-02 in several places;on page three by inserting the words,"In accordance with this Resolution No.2017-02," after "The ability to participate in the BCD project without restriction";on page four after the next "Be It Further Resolved,”by removing the semicolon after "Project"and inserting the language to read,"With such reasonable development costs including the non-participating purchasers”keeping the subsequent language after "Pro-rata share"; DRAFT BPMC Minutes 10/13/17 Page 2 of5 and on page three after the third "Be It Further Resolved",change the date from November 15th to November 8th. The motion to amend Resolution 2017-02 passed unanimously. Mr.Izzo inquired as to the 4%charge to BCD of the Bradley Lake O&M.He requested consideration to eliminate the 4%and the amount to be determined by a study.Mr.Johnston informed he authored this section.He explained allocation of O&M is generally between 2% and 4%,but could be as high as 10%.Mr.Johnston believes a specific number is important in the document to provide incentive for the study to be completed.Mr.Warner provided an overview of the discussion that occurred at O&M Committee on October 6th regarding this issue. Mr.Borgeson expressed his belief the Battle Creek share of 4%of the O&M cost is extremely low.He suggested Battle Creek should pay its proportionate share of the entire Bradley Lake $19 million cost.Mr.Borgeson noted he accepts the current language as written at 4%. MOTION:Mr.Izzo made a motion to amend Resolution 2017-02 by removing the words,"4%of the Bradley Lake annual O&M".Motion seconded by Mr.Foutz.Mr.Johnston expressed opposition to the motion:. Mr.Borgeson expressed opposition to the motion. Mr.Thibert expressed opposition to the motion.og Mr.Foutz requested clarification regarding who iis.obligated to payfor the study.Mr.BorgesonexpressedhisviewthestudyshouldbeincludedintheBPMCbudgetandtheBPMCshould oversee the study process,perhaps conducted by the O&D Committee.Chair JanorschkeassignedtheO&D Committee to work on the studyof the Battle Creek share of the BradleyLakeO&M costs."ego hy ' Mr.Foutz 'asked if the numbers would be moré accurate from a study of actuals after the projectiscompletedratherthanrelyingonnumbersfromastudybeforetheprojectbegins.Mr.Johnston agreed the numbers would probably be more accurate from a study after the project iscompleted,and stated he believes thereis sufficient experience with other projects to be able todetermineareasonablefacsimilebeforetheprojectiscompletethatcouldbeupdatedovertime. WITHDRAWN MOTION:Mr.lez0 withdrew his motion to amend Resolution 2017-02.Mr. tzzo withdrew his second of the motion.Motion withdrawn. MOTION:Mr.Borgeson made a motion to amend Resolution 2017-02 in the section regarding the annual O&M charge to read,"The BCD Project will be charged four percent (4%)of the Bradley Lake annual Operation and Maintenance costs (the O&M charge), unless and until the BPMC conducts a study of the impacts of the BCD Project on the Bradley Lake Project,after which the O&M charge,if any,will be established by the BPMC based upon the study.Any change to the O&M charge must be approved by an affirmative vote,”with the continued resolution language remaining.Motion seconded by Mr.Foutz. The motion to amend Resolution 2017-02 passed unanimously. DRAFT BPMC Minutes 10/13/17 Page 3 of5 Chair Janorschke opened the floor to possible amendments to Attachment 1 to Resolution 2017-02. MOTION:Mr.Thibert made a motion to amend Resolution 2017-02 Attachment 1 in several places with technical changes.Motion seconded by Mr.Izzo. The motion to amend Resolution 2017-02 Attachment 1 passed unanimously. MOTION:Mr.Borgeson made a motion to amend Resolution 2017-02 Attachment 1 by replacing the language in C3 with the approved amended language.Motion seconded by Mr.Johnston. The motion to amend Resolution 2017-02 Attachment 1 passed with no objection. MOTION:Mr.Borgeson made a motion to amend Resolution 2017-02 Attachment 1 onItemB10byreplacingthediscountratetomatchthatoftheresolution.Motion secondedbyMr.Thibert.A The motion to amend Resolution 2017-02 Attachment 1 passed with MEA opposing.MOTION:Mr.Carey made a motion to approve amended language Resolution 2017-02,page 2 paragraph 10,by deleting"for financing"and replacing with "of",to read,"Approval of the BCD Project as optional project work."Motion seconded by Mr.Thibert.The motion to amend Resolution 2017-02 passed with unanimously.A roll call was taken,and the motion tozapprove Resolution 2017-02 and includedAttachment1asamendedduringthemeetingpassedunanimously.Chair Janorschke requested Mr.Carey to provide the update on+financing.Mr.Carey clarifiedtheoptiontoutilizethematerialsatthesiteiscurrentlynotavailabletothecontractorsandis not included in the bids.Mr.Carey introduced Ms.Applegate and Mr.Eoff to continue the presentation on financing.Ms.Applegate advised the full $40 million of Clean Renewable Energy Bonds (CREBs)allocation subsidy was received.Financing loan details with RUS arebeingconsideredandincludepossibleinterimconstructionfinancingandlong-term financing. RUS will be available at the November 3rd BPMC meeting.The financing construct and details need to be finalized before the CREBs expiration date of April 3rd,2018.Discussions areongoingregardingthepossibleuseof$7 million from the Qualified Energy Development Conservation Bonds (QECBs)._Mr.Eoff continued the presentation and expressed his optimism.He discussed the next steps in the process and explained how the interest rate could potentially be at zero for the entire finance. 7.COMMITTEE ASSIGNMENTS Chair Janorschke assigned the Finance Committee to research a cost/cause or cost/payer methodology between Bradley Lake participants and Battle Creek to ensure costs are recovered equitably. Chair Janorschke assigned the O&D Committee to study the O&M impacts from Battle Creek on the Bradley Lake Project. 8.MEMBERS COMMENTS DRAFT BPMC Minutes 10/13/17 Page 4 of5 Mr.Carey commented he was happy to see the CREBs financing come to fruition. Mr.Borgeson specifically recognized Ms.Highers for bringing forward the phenomenal CREBs opportunity.He expressed additional appreciation to those involved in the process. Mr.Thibert expressed appreciation to the Finance Committee,Ms.Applegate,Mr.Eoff and all staff involved in moving the project forward. Mr.Foutz expressed gratitude to the Finance Committee and Mr.Gibson for their diligence in the process. Mr.Izzo and Mr.Johnston echoed the appreciation given by members. Chair Janorschke expressed appreciation to everyone for their efforts. 9.NEXT MEETING DATE-Friday,November 3,2017 The next meeting is tentatively scheduled for Friday,November 3,2017.Chair Janorschke will coordinate with members to reschedule the meeting date. 10.ADJOURNMENT There being no further business for the committee,the meeting adjourned at 3:10 p.m. BY:., Brad Janorschke,Chair |Nos y Attest: Bryan Carey :Alaskaa Energy Authority,Secretary DRAFT BPMC Minutes 10/13/17 Page 5 of5 Financial Statements and Supplementary Information BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Years ended June 30,2017 and 2016 (With Independent Auditor's Report) SWALLING &ASSOCIATES Certified Public Accountants &Business Advisers BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Financial Statements and Supplementary Information Years ended June 30,2017 and 2016 Contents Independent Auditor's Report Statements of Assets and Liabilities Statements of Revenues and Expenses Statements of Cash Flows Notes to Financial Statements Independent Auditor's Report on Supplementary Information Statements of Expenses SWALLING &ASSOCIATES Certified Public Accountants &Business Advisers INDEPENDENT AUDITOR'S REPORT Bradley Lake Project Management Committee Anchorage,Alaska We have audited the accompanying special-purpose financial statements of the Bradley Lake Project Management Committee (a project management committee)Operating and Revenue Funds,which comprise the special-purpose statements of assets and liabilities as of June 30, 2017 and 2016,and the related special-purpose statements of revenues and expenses and special- purpose statements of cash flows for the years then ended,and the related notes to the financial statements. Management's Responsibility for the.Financial Statements The Bradley Lake Project Management Committee is responsible for the preparation and fair presentation of these special-purpose financial statements in accordance with the accounting requirements of the Operating and Revenue Funds established under the Alaska Energy Authority Power Revenue Bond Resolution as described in Note A.The Bradley Lake Project Management Committee is also responsible for the design,implementation,and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these special-purpose financial statements based on our audits.We conducted our audits in accordance with auditing standards generally accepted in the United States of America.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures selected depend on the auditor's judgment,including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error.In making those risk assessments,the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly,we express no such opinion.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 3201 C Street,Suite 405 .Anchorage.Alaska 99503 e mber of DFKI national -a worldwid soctation3SoFadependent.accounting firms ond business.advisers Ph 907.563.7977 -Fax 907.561.7683 °www.swallingcepas.com Bradley Lake Project Management Committee Opinion In our opinion,the special-purpose financial statements referred to above present fairly,in all material respects,the assets and liabilities of the Bradley Lake Project Management Committee Operating and Revenue Funds as of June 30,2017 and 2016,and the revenues and expenses,and cash flows for the years then ended,on the basis of accounting described in Note A. Basis of Accounting We draw attention to Note A of the special-purpose financial statements,which describes the basis of accounting.The financial statements are prepared on the basis of the accounting requirements of the Operating and Revenue Funds established under the Alaska Energy Authority Power Revenue Bond resolution,.as discussed in Note A,which is a basis of accounting other than accounting principles generally accepted in the United States of America, 'to comply with accounting requirements of the bond resolution referred to above.Our opinion is not modified with respect to that matter. Restriction on Use This report is intended solely for the information and use of the Bradley Lake Project Management Committee and is not intended to be and should not be used by anyone other than this specified party. avatlieg -Asaccully |PC. Anchorage,Alaska November 28,2017 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF ASSETS AND LIABILITIES June 30,2017 and 2016 2017 2016 ASSETS Current assets: Investments (Note B)$3,769,778 $1,789,047 Due from R &C Fund (Note E)1,147,663 1,055,961 Prepaid expense -85,194 Total assets $_4,917,441 $2,930,202 LIABILITIES Current liabilities: Due to AEA (Note D)$622,007 $15,048 Accounts payable 1,035,795 778,494 Payable to utilities -O &M refund (Note E)1,223,409 1,064,413 Payable to utilities -R &C refund (Note E)1,147,663 1,055,961 Unearned revenue (Note A)888.567 16,286 Total liabilities 4,917,441 2,930,202 See accompanying notes to the financial statements. 3 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF REVENUES AND EXPENSES Years ended June 30,2017 and 2016 2017 Variance Favorable 2016 Budget Actual (Unfavorable)Actual Revenues: Utility contributions, net of surplus refund $19,543,371 $17,172,295 $(2,371,076)$17,828,513 Interest receipts 1,755,000 1,991,555 236,555 1,930,547 Total revenue 21,298,371 19,163,850 (2,134,521)19,759,060 Expenses,fixed asset replacements,transfers and debt service: Operations and maintenance 8,416,893 6,488,688 1,928,205 6,966,344 Debt service 12,426,200 12,426,200 -12,494,600 Arbitrage transfer 290,809 334,404 (43,595)281,419 Fixed asset replacements 250,000 89 249,911 26,444 Interfund transfer (85,531)(85,531)-(9,747) Total expenses,fixed asset replacements, transfers and debt service 21,298,371 19,163,850 2,134,521 19,759,060 Excess of revenues over expenses,fixed asset replacements,transfers and debt service $-§- See accompanying notes to the financial statements. 4 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF CASH FLOWS Years ended June 30,2017 and 2016 2017 2016 Cash flows from operating activities: Excess of revenues over expenses, fixed asset replacements,transfers and debt service $-$- Adjustments to reconcile excess of revenues over expenses,fixed asset replacements, transfers and debt service to net cash provided by (used in)operating activities: Increase in due from R &C Fund (91,702)(1,035,750) Decrease in other receivable -520,416 Decrease (increase)in prepaid expense 85,194 (32,936) Increase (decrease)in amounts due to AEA 606,959 (11,128) Increase (decrease)in accounts payable 257,301 (155,833) Decrease in due to R &C Fund -(69,953) Increase (decrease)in payable to utilities -O &M refund 158,996 (329,840) Increase in payable to utilities -R &C refund 91,702 1,035,750 Increase (decrease)in unearned revenue 872,281 (415,625) Net cash provided by (used in) operating activities 1,980,731 (494,899) Available cash and cash equivalents,beginning of year 1,789,047 2,283,946 Available cash and cash equivalents,end of year $3,769,778 $1,789,047 Supplemental disclosure of cash flows information: Interest paid 3,137,900 655,225 See accompanying notes to the financial statements. 5 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS June 30,2017 and 2016 NOTE A:SIGNIFICANT ACCOUNTING POLICIES Description of Business:The Bradley Lake Project Management Committee (the Committee) was established pursuant to Section 13 of the Agreement for the Sale and Purchase of Electric Power (Power Sales Agreement)dated December 8,1987.The purpose of the Committee is to arrange for the operation and maintenance of the Bradley Lake Hydroelectric Project (the Project),which became operational in September 1991,and the scheduling,production and dispatch of power.The members of the Committee include the Alaska Energy Authority (AEA) and the five purchasers under the Power Sales Agreement -Chugach Electric Association,Inc.; Golden Valley Electric Association,Inc.;the Municipality of Anchorage (Municipal Light & Power);the City of Seward (Seward Electric System);and the Alaska Electric Generation & Transmission Cooperative,Inc.(AEG&T).AEG&T assigned its rights pertaining to Homer Electric Association,Inc.(HEA)under the Power Sales Agreement to Alaska Electric and Energy Cooperative,Inc.(AE&EC)in 2003.HEA and the Matanuska Electric Association,Inc. (MEA)are additional parties to the Power Sales Agreement but are included as power purchasers for purposes of representation while AEG&T and AEX&EC have no direct vote as a consequence of the individual representation of HEA and MEA. Section 13 of the Power Sales Agreement delineates other Committee responsibilities,including: establishing procedures for each party's water allocation,budgeting for annual Project costs and calculating each party's required contribution to fund annual Project costs.Committee approval of operations and maintenance arrangements for the Project,sufficiency of the annual budgets and wholesale power rates and the undertaking of optional Project work requires a majority affirmative vote and the affirmative vote of AEA. The Power Sales Agreement extends until the later of:1)50 years after commencement of commercial operation or 2)the complete retirement of bonds outstanding under the AEA Power Revenue Bond Resolution along with the satisfaction of all other payment obligations under the Power Sales Agreement.Renewal options for additional terms exist. During the years ended June 30,2017 and 2016,approximately $876,000 and $190,000, respectively,of capital additions occurred relating to the Battle Creek Diversion project to enhance the Bradley Lake Hydroelectric Project.The construction cost estimate for this project is $46.5 million.To date funding for this project has come from State appropriations,the Bradley Lake R &C Fund,and direct contributions from the Battle Creek Participating Utilities (BCPU).The State funded approximately $52,000 and $41,000 in years ended June 30,2017 and 2016,respectively.The BCPU began direct funding the project in October 2016 and funded approximately $799,000 in the year ended June 30,2017.Future funding is to be determined. This project will divert the upper part of Battle Creek into Bradley Lake and the increase in water will enable the Project to produce an additional annual average of 37,000 megawatt hours (nearly a 10%increase in Bradley Lake's annual energy).An amendment to the Bradley Lake Hydroelectric Project Federal Energy Regulatory Commission license was received in September 2016.Construction could begin in 2018 and be completed in the fall of 2020. 6 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2017 and 2016 NOTE A:SIGNIFICANT ACCOUNTING POLICIES (Continued) Establishment of Trust Funds:Article V,Section 502 of the Alaska Energy Authority's Power Revenue Bond Resolution established a Revenue Fund and an Operating Fund,including an Operating Reserve account,to be held by AEA.In actuality these funds,along with the Debt Service,Excess Investment Earnings (arbitrage),and various construction funds related to the Bradley Lake Hydroelectric Project are all held by the Corporate Trust Department of US Bank in Seattle,Washington. All deposits,including utility contributions and interest transferred from other funds,are made into the Revenue Fund,which transfers amounts approximately equal to one-twelfth of the annual operating and maintenance budget into the Operating Fund on a monthly basis. Additional transfers are made from the Revenue Fund to the Debt Service Fund in order to satisfy semiannual interest payments and annual principal payments on the Project's outstanding bonds payable. Interest earnings available for operations and maintenance are derived from the following funds: Debt Service Fund;Operating Reserve Fund;Operating Fund;Revenue Fund;Capital Reserve Fund;and the Renewal &Contingency Fund when the fund balance is $5,000,000 or greater. Revenue and Expense Recognition:Utility contributions are recognized as revenue when due to be received under the terms of the Power Sales Agreement.Utility contributions of $888,567 and $16,286 for the years ended June 30,2018 and 2017,respectively,were received prior to June 30,2017 and 2016,respectively,and are included in liabilities as unearned revenue. Transfers from other funds are recognized when the transfer is made and interest earnings are recognized when received.Operating and maintenance expenses are recognized when incurred, while transfers to Debt Service Fund and Excess Earnings Funds are recognized when the transfer is made.Purchases of fixed asset replacements are expensed when purchased.The Renewal and Contingency Reserve Fund (R &C Fund)is reimbursed for capital costs over a four year period.Transfers to the R &C Fund for repayment of funds withdrawn for capital costs occur monthly based on the budgeted R &C expenditures.At year end,the actual Operating Fund expenses and R &C Fund repayments are compared to the actual revenue and a refund is given to the utilities when a surplus of revenues occurs or invoices are issued to the utilities if expenses exceed revenues. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVEUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2017 and 2016 NOTE A:SIGNIFICANT ACCOUNTING POLICIES (Continued) Estimates:The preparation of the special-purpose financial statements of the Operating and Revenue Funds requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates. Income Taxes:The Bradley Lake Project Management Committee is exempt from income taxation under Section 501 (a)of the Internal Revenue Code.Therefore,the Committee had no deferred tax liabilities or assets or tax carryforwards as of June 30,2017 and 2016 and no current or deferred tax expense for the years then ended. NOTE B:INVESTMENTS At June 30,2017,$2 of the balance in the Operating Fund is invested in First American Treasury Obligations money market fund and $2,431,119 of the balance is invested in collateralized guaranteed investment contracts with JP Morgan Chase Bank through the trust department of US Bank.At June 30,2016,the balance in the Operating Fund was invested in collateralized guaranteed investment contracts with JP Morgan Chase Bank through the trust department of US Bank.At June 30,2017,$888,575 of the balance in the Revenue Fund is invested in First American Treasury Obligations money market fund and $450,082 of the balance is invested in collateralized guaranteed investment contracts with JP Morgan Chase Bank.At June 30,2016, $16,286 of the balance in the Revenue Fund is invested in First American Treasury Obligations money market fund and $369,023 of the balance is invested in collateralized guaranteed investment contracts with JP Morgan Chase Bank.The specified interest rate for monies from the Operating and Revenue Funds invested in the contracts with JP Morgan Chase is 7.38%per annum.Balances at June 30,2017 and 2016 are as follows: 201 016 Operating Fund $2,431,121 $1,403,738 Revenue Fund 1,338,657 385,309 Total investments $3,769,778 $1,789,047 Investments are sold as needed to cover operating requisitions submitted to the trustee and are therefore considered to be short-term and available for sale.Investments are presented at aggregate cost,which is equal to fair value. For purposes of the cash flow statements,management considers the full amount of the investment balance to be cash available for operations. 8 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2017 and 2016 NOTE C:MAJOR CONTRACTS AND AGREEMENTS During May 1994,the Alaska Energy Authority (AEA)entered into the Master Maintenance and Operating agreement with the Committee.The purpose of the agreement is to establish contract administration and budgeting procedures for maintenance and operation contracts of the Bradley Lake Hydroelectric Project and to provide for the lease or other use of facilities and equipment in a manner consistent with the requirements of the Power Sales Agreement.The term of the Master Agreement is indefinite,remaining in effect until termination of the Power Sales Agreement or until AEA no longer legally exists.This agreement authorizes AEA to enter into any contracts necessary to perform operating or maintenance-type services to the Project,subject to the approval of the Committee. On behalf of the Committee,the AEA entered into an agreement with Chugach Electric Association,Inc.(CEA)in August 1996,for the provision of all services necessary to dispatch the Project's electric power output.The dispatch agreement runs concurrently with the wheeling and related services contract entered into by and among the parties to the Power Sales Agreement in December 1987 and remains in effect for the term of the wheeling agreement unless CEA ceases to be the output dispatcher. In August 1996,the Alaska Energy Authority entered into an agreement with CEA on behalf of the Committee for the provision of maintenance services for the Daves Creek and Soldotna SVC Substations. An operation and maintenance agreement dated February 11,1994,was executed between Homer Electric Association,Inc.and the Alaska Energy Authority.This agreement provides for the operation and maintenance of the Bradley Lake Hydroelectric Project by Homer Electric Association,Inc.The agreement,as amended effective June 15,2016,is through December 30, 2016 and automatically continues in successive five year terms thereafter unless terminated by either party as set forth in the amended agreement.Generally,to avoid an automatic,successive five year term extension,notice of termination by either party must be given two years in advance of the termination date.AEA gave notice of termination to the second amendment and restated operation and maintenance agreement for the Bradley Lake Project on December 27, 2016 and the agreement is currently ending December 30,2018.HEA is to be reimbursed for costs associated with the operation,maintenance and repair of the Project as determined in advance through the submission of an annual budget based upon prudent estimates and anticipated operation and maintenance costs. In August 1996,the agreement was amended to separate the maintenance of the transmission facilities from the hydroelectric project.The transmission agreement continues from year to year,except upon written notice to terminate by either party.Notice of termination must be given six months in advance of termination dates.In June 1999,the transmission agreement was again amended to require HEA to provide communication services in addition to the other services. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2017 and 2016 NOTE D:RELATED PARTY TRANSACTIONS During the years ended June 30,2017 and 2016,costs incurred under the various contracts with related parties described in Note C were as follows: 201 201 Homer Electric Association,Inc.-operation, maintenance,communications and fixed asset replacements $2,299,506 $2,324,468 Chugach Electric Association,Inc.-substation service maintenance and fixed asset replacements $160,311 $159,956 Alaska Energy Authority -administrative fees $200,000 $200,000 For the years ended June 30,2017 and 2016,Chugach Electric Association,Inc.provided dispatch services to the Committee at the agreed upon amount which is zero. Amounts payable to related parties at June 30,2017 and 2016 were as follows: 2017 201 Included in accounts payable: Homer Electric Association,Inc.$614,107 $445,115 Chugach Electric Association,Inc.$82,475 $10,117 Due to others: Alaska Energy Authority -short-term borrowings for vendor payments $622,007 $15,048 NOTE E:SURPLUS REFUNDS The $1,223,409 operations and maintenance and $1,147,663 renewal and contingency surpluses at June 30,2017 will be refunded to member utilities in fiscal year 2018 pursuant to the Power Sales Agreement and direction of the Committee. The $1,064,413 operations and maintenance and $1,055,961 renewal and contingency surpluses at June 30,2016 were refunded to member utilities in fiscal year 2017 pursuant to the Power Sales Agreement and direction of the Committee. 10 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2017 and 2016 NOTE F:_SUBSEQUENT EVENTS The Committee has evaluated subsequent events through November 28,2017,the date the financial statements were available to be issued,and did not identify anything requiring additional disclosure. 11 Supplementary Information SWALLING @ ASSOCIATES Certified Public Accountants &Business Advisers INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION Bradley Lake Project Management Committee Anchorage,Alaska We have audited the special-purpose financial statements of the Bradley Lake Project Management Committee Operating and Revenue Funds as of and for the years ended June 30, 2017 and 2016,and our report thereon dated November 28,2017,which expressed an unmodified opinion on those special-purpose financial statements,appears on pages 1 and 2. Our audits were conducted for the purpose of forming an opinion on the special-purpose financial statements as a whole.The supplemental special-purpose Statements of Expenses are presented for purposes of additional analysis and are not a required part of the special-purpose financial statements.Such information is the responsibility of the Bradley Lake Project Management Committee and was derived from and relates directly to the underlying accounting and other records used to prepare the special-purpose financial statements.The information has been subjected to the auditing procedures applied in the audits of the special-purpose financial statements and certain additional procedures,including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the special- purpose financial statements or to the special-purpose financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the United States of America.In our opinion,the information is fairly stated in all material respects in relation to the special-purpose financial statements as a whole. This report is intended solely for the information and use of the Bradley Lake Project Management Committee and is not intended to be and should not be used by anyone other than this specified party. Avatleg ha Qezetutl,>F.C. Anchorage,Alaska November 28,2017 3201 C Street,Suite 405 .Anchorage.Alaska 99503nendenfnte-a worldwide iati3OfIndependent,eeounting "Heme ond 'pusiness.advisers Ph 907.563.7977 °Fax 907.561.7683 -www.swallingcpas.com BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF EXPENSES Years ended June 30,2017 and 2016 2017 Variance Favorable 2016 Budget Actual (Unfavorable)Actual Expenses: Generation expense: Operation supervision and engineering $324,898 293,523 $31,375 $333,371 Hydraulic operation 99,646 72,202 27,444 82,954 Electric plant operation 285,440 231,505 53,935 231,820 Hydraulic power generation operation 574,407 438,398 136,009 524,308 FERC land use fees 312,176 230,614 81,562 279,876 Structure maintenance 392,242 345,782 46,460 360,464 Reservoir,dam,and waterway maintenance 85,609 124,151 (38,542)57,158 Electric plant maintenance 481,728 316,825 164,903 419,480 Hydraulic plant maintenance 159,646 92,033 67,613 122,697 System control and load dispatching 496,472 324,629 171,843 423,918 Substation operation and maintenance 160,414 160,311 103 159,956 Overhead line maintenance 654,671 237,061 417.610 61,371 Total generation expense 4,027,349 2,867,034 1,160,315 3,057,373 Administrative,general and regulatory expense: Insurance 564,637 554,670 9,967 530,522 AEA administrative fee 200,000 200,000 -200,000 PMC costs 57,124 99,492 (42,368)206,552 Regulatory commission: FERC administrative fees 180,000 122,210 $7,790 182,885 FERC licensing and study 125,000 168,377 (43,377)96,301 Total administrative,general and regulatory expense 1,126,761 1,144,749 (17,988)1,216,260 Total operations and maintenance expenses, before capital project reimbursement 5,154,110 4,011,783 1,142,327 4,273,633 R &C Fund repayment 3,262,783 2,476,905 785,878 2,692,711 Total operations and maintenance expenses 13 $8,416,893 $6.488.688 $1,928,205 $ 6.966,344 Financial Statements and Supplementary Information BRADLEY LAKE , PROJECT MANAGEMENT COMMITTEE | OPERATING AND REVENUE FUNDS -Years ended June 30,2017 and 2016 (With Independent Auditor's Report) SWALLING &.ASSOCIATESCertifiedPublicAccountants&Business Advisers BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Financial Statements and Supplementary Information Years ended June 30,2017 and 2016 Contents Page Independent Auditor's Report 1-2 Statements of Assets and Liabilities 3 Statements of Revenues and Expenses 4 Statements of Cash Flows 5 Notes to Financial Statements 6-11 Independent Auditor's Report on Supplementary Information 12 Statements of Expenses 13 SWALLING &ASSOCIATESPC Certilied Public Accountants &Business Advisers INDEPENDENT AUDITOR'S REPORT Bradley Lake Project Management Committee Anchorage,Alaska We have audited the accompanying special-purpose financial statements of the Bradley Lake Project Management Committee (a project management committee)Operating and Revenue Funds,which comprise the special-purpose statements of assets and liabilities as of June 30, 2017 and 2016,and the related special-purpose statements of revenues and expenses and special- purpose statements of cash flows for the years then ended,and the related notes to the financial statements. Management's Responsibility for the Financial Statements The Bradley Lake Project Management Committee is responsible for the preparation and fair presentation of these special-purpose financial statements in accordance with the accounting requirements of the Operating and Revenue Funds established under the Alaska Energy Authority Power Revenue Bond Resolution as described in Note A.The Bradley Lake Project Management Committee is also responsible for the design,implementation,and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these special-purpose financial statements based on our audits.We conducted our audits in accordance with auditing standards generally accepted in the United States of America.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures selected depend on the auditor's judgment,including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error.In making those risk assessments,the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly,we express no such opinion.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. c 4 -r3201CStreet.Suite 405 °Anchorage.Alaska 99503AS|Independent member cf DFK International -a worldwide associationofindependentaccountingfirmsandbusinessadvisers Ph 907.563.7977 °Fax 907.561.7683 °www.swallingcpas.com Bradley Lake Project Management Committee Opinion In our opinion,the special-purpose financial statements referred to above present fairly,in all material respects,the assets and liabilities of the Bradley Lake Project Management Committee Operating and Revenue Funds as of June 30,2017 and 2016,and the revenues and expenses,and cash flows for the years then ended,on the basis of accounting described in Note A. Basis of Accounting We draw attention to Note A of the special-purpose financial statements,which describes the basis of accounting.The financial statements are prepared on the basis of the accounting requirements of the Operating and Revenue Funds established under the Alaska Energy Authority Power Revenue Bond resolution,as discussed in Note A,which is a basis of accounting other than accounting principles generally accepted in the United States of America, to comply with accounting requirements of the bond resolution referred to above.Our opinion is not modified with respect to that matter. Restriction on Use This report is intended solely for the information and use of the Bradley Lake Project Management Committee and is not intended to be and should not be used by anyone other than this specified party. ug f Costly,PC.? Anchorage,Alaska November 28,2017 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF ASSETS AND LIABILITIES June 30,2017 and 2016 2017 2016 ASSETS Current assets: Investments (Note B)$3,769,778 $1,789,047 Due from R &C Fund (Note E)1,147,663 1,055,961 Prepaid expense -85,194 Total assets $_4,917,441 $__2,930,202 LIABILITIES Current liabilities: Due to AEA (Note D)$622,007 $15,048 Accounts payable 1,035,795 778,494 Payable to utilities -O &M refund (Note E)1,223,409 1,064,413 Payable to utilities -R &C refund (Note E)1,147,663 1,055,961 Unearned revenue (Note A)888.567 16,286 Total liabilities $4,917,441 $2,930,202 See accompanying notes to the financial statements. 3 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF REVENUES AND EXPENSES Years ended June 30,2017 and 2016 2017 Variance Favorable 2016 Budget Actual (Unfavorable)Actual Revenues: Utility contributions, net of surplus refund $19,543,371 $17,172,295 $(2,371,076)$17,828,513 Interest receipts 1,755,000 1,991,555 236,555 1,930,547 Total revenue 21,298,371 19,163,850 (2,134,521)19,759,060 Expenses,fixed asset replacements,transfers and debt service: Operations and maintenance 8,416,893 6,488,688 1,928,205 6,966,344 Debt service 12,426,200 12,426,200 -12,494,600 Arbitrage transfer 290,809 334,404 (43,595)281,419 Fixed asset replacements 250,000 89 249,911 26,444 Interfund transfer (85,531)(85,531)-(9,747) Total expenses,fixed asset replacements, transfers and debt service 21,298,371 19,163,850 2,134,521 19,759,060 Excess of revenues over expenses,fixed asset replacements,transfers and debt service $- See accompanying notes to the financial statements. 4 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF CASH FLOWS Years ended June 30,2017 and 2016 Cash flows from operating activities: Excess of revenues over expenses, fixed asset replacements,transfers and debt service Adjustments to reconcile excess of revenues over expenses,fixed asset replacements, transfers and debt service to net cash provided by (used in)operating activities: Increase in due from R &C Fund Decrease in other receivable Decrease (increase)in prepaid expense Increase (decrease)in amounts due to AEA Increase (decrease)in accounts payable Decrease in due to R &C Fund Increase (decrease)in payable to utilities --O &M refund Increase in payable to utilities -R &C refund Increase (decrease)in unearned revenue Net cash provided by (used in) operating activities Available cash and cash equivalents,beginning of year Available cash and cash equivalents,end of year Supplemental disclosure of cash flows information: Interest paid See accompanying notes to the financial statements. 5 2017 2016 §-§- (91,702)(1,035,750) -520,416 85,194 (32,936) 606,959 (11,128) 257,301 (155,833) -(69,953) 158,996 (329,840) 91,702 1,035,750 872,281 (415,625) 1,980,731 (494,899) 1,789,047 2,283,946 $3,769,778 $_1,789,047 $3,137,900 $3,655,225 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS June 30,2017 and 2016 NOTE A:SIGNIFICANT ACCOUNTING POLICIES Description of Business:The Bradley Lake Project Management Committee (the Committee) was established pursuant to Section 13 of the Agreement for the Sale and Purchase of Electric Power (Power Sales Agreement)dated December 8,1987.The purpose of the Committee is to arrange for the operation and maintenance of the Bradley Lake Hydroelectric Project (the Project),which became operational in September 1991,and the scheduling,production and dispatch of power.The members of the Committee include the Alaska Energy Authority (AEA) and the five purchasers under the Power Sales Agreement -Chugach Electric Association,Inc.; Golden Valley Electric Association,Inc.;the Municipality of Anchorage (Municipal Light & Power);the City of Seward (Seward Electric System);and the Alaska Electric Generation & Transmission Cooperative,Inc.(AEG&T).AEG&T assigned its rights pertaining to Homer Electric Association,Inc.(HEA)under the Power Sales Agreement to Alaska Electric and Energy Cooperative,Inc.(AE&EC)in 2003.HEA and the Matanuska Electric Association,Inc. (MEA)are additional parties to the Power Sales Agreement but are included as power purchasers for purposes of representation while AEG&T and AE&EC have no direct vote as a consequence of the individual representation of HEA and MEA. Section 13 of the Power Sales Agreement delineates other Committee responsibilities,including: establishing procedures for each party's water allocation,budgeting for annual Project costs and calculating each party's required contribution to fund annual Project costs.Committee approval of operations and maintenance arrangements for the Project,sufficiency of the annual budgets and wholesale power rates and the undertaking of optional Project work requires a majority affirmative vote and the affirmative vote of AEA. The Power Sales Agreement extends until the later of:1)50 years after commencement of commercial operation or 2)the complete retirement of bonds outstanding under the AEA Power Revenue Bond Resolution along with the satisfaction of all other payment obligations under the Power Sales Agreement.Renewal options for additional terms exist. During the years ended June 30,2017 and 2016,approximately $876,000 and $190,000, respectively,of capital additions occurred relating to the Battle Creek Diversion project to enhance the Bradley Lake Hydroelectric Project.The construction cost estimate for this project is $46.5 million.To date funding for this project has come from State appropriations,the Bradley Lake R &C Fund,and direct contributions from the Battle Creek Participating Utilities (BCPU).The State funded approximately $52,000 and $41,000 in years ended June 30,2017 and 2016,respectively.The BCPU began direct funding the project in October 2016 and funded approximately $799,000 in the year ended June 30,2017.Future funding is to be determined. This project will divert the upper part of Battle Creek into Bradley Lake and the increase in water will enable the Project to produce an additional annual average of 37,000 megawatt hours (nearly a 10%increase in Bradley Lake's annual energy).An amendment to the Bradley Lake Hydroelectric Project Federal Energy Regulatory Commission license was received in September 2016.Construction could begin in 2018 and be completed in the fall of 2020. 6 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2017 and 2016 NOTE A:SIGNIFICANT ACCOUNTING POLICIES (Continued) Establishment of Trust Funds:Article V,Section 502 of the Alaska Energy Authority's Power Revenue Bond Resolution established a Revenue Fund and an Operating Fund,including an Operating Reserve account,to be held by AEA.In actuality these funds,along with the Debt Service,Excess Investment Earnings (arbitrage),and various construction funds related to the Bradley Lake Hydroelectric Project are all held by the Corporate Trust Department of US Bank in Seattle,Washington. All deposits,including utility contributions and interest transferred from other funds,are made into the Revenue Fund,which transfers amounts approximately equal to one-twelfth of the annual operating and maintenance budget into the Operating Fund on a monthly basis. Additional transfers are made from the Revenue Fund to the Debt Service Fund in order to satisfy semiannual interest payments and annual principal payments on the Project's outstanding bonds payable. Interest earnings available for operations and maintenance are derived from the following funds: Debt Service Fund;Operating Reserve Fund;Operating Fund;Revenue Fund;Capital Reserve Fund;and the Renewal &Contingency Fund when the fund balance is $5,000,000 or greater. Revenue and Expense Recognition:Utility contributions are recognized as revenue when due to be received under the terms of the Power Sales Agreement.Utility contributions of $888,567 and $16,286 for the years ended June 30,2018 and 2017,respectively,were received prior to June 30,2017 and 2016,respectively,and are included in liabilities as unearned revenue. Transfers from other funds are recognized when the transfer is made and interest earnings are recognized when received.Operating and maintenance expenses are recognized when incurred, while transfers to Debt Service Fund and Excess Earnings Funds are recognized when the transfer is made.Purchases of fixed asset replacements are expensed when purchased.The Renewal and Contingency Reserve Fund (R &C Fund)is reimbursed for capital costs over a four year period.Transfers to the R &C Fund for repayment of funds withdrawn for capital costs occur monthly based on the budgeted R &C expenditures.At year end,the actual Operating Fund expenses and R &C Fund repayments are compared to the actual revenue and a refund is given to the utilities when a surplus of revenues occurs or invoices are issued to the utilities if expenses exceed revenues. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVEUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2017 and 2016 NOTE A:SIGNIFICANT ACCOUNTING POLICIES (Continued) Estimates:The preparation of the special-purpose financial statements of the Operating and Revenue Funds requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates. Income Taxes:The Bradley Lake Project Management Committee is exempt from income taxation under Section 501 (a)of the Internal Revenue Code.Therefore,the Committee had no deferred tax liabilities or assets or tax carryforwards as of June 30,2017 and 2016 and no current or deferred tax expense for the years then ended. NOTE B:INVESTMENTS At June 30,2017,$2 of the balance in the Operating Fund is invested in First American Treasury Obligations money market fund and $2,431,119 of the balance is invested in collateralized guaranteed investment contracts with JP Morgan Chase Bank through the trust department of US Bank.At June 30,2016,the balance in the Operating Fund was invested in collateralized guaranteed investment contracts with JP Morgan Chase Bank through the trust department of US Bank.At June 30,2017,$888,575 of the balance in the Revenue Fund is invested in First American Treasury Obligations money market fund and $450,082 of the balance is invested in collateralized guaranteed investment contracts with JP Morgan Chase Bank.At June 30,2016, $16,286 of the balance in the Revenue Fund is invested in First American Treasury Obligations money market fund and $369,023 of the balance is invested in collateralized guaranteed investment contracts with JP Morgan Chase Bank.The specified interest rate for monies from the Operating and Revenue Funds invested in the contracts with JP Morgan Chase is 7.38%per annum.Balances at June 30,2017 and 2016 are as follows: 017 201 Operating Fund $2,431,121 $1,403,738 Revenue Fund 1,338,657 385,309 Total investments $3.769.778 $1.789.047 Investments are sold as needed to cover operating requisitions submitted to the trustee and are therefore considered to be short-term and available for sale.Investments are presented at aggregate cost,which is equal to fair value. For purposes of the cash flow statements,management considers the full amount of the investment balance to be cash available for operations. 8 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2017 and 2016 NOTE C:MAJOR CONTRACTS AND AGREEMENTS During May 1994,the Alaska Energy Authority (AEA)entered into the Master Maintenance and Operating agreement with the Committee.The purpose of the agreement is to establish contract administration and budgeting procedures for maintenance and operation contracts of the Bradley Lake Hydroelectric Project and to provide for the lease or other use of facilities and equipment in a manner consistent with the requirements of the Power Sales Agreement.The term of the Master Agreement is indefinite,remaining in effect until termination of the Power Sales Agreement or until AEA no longer legally exists.This agreement authorizes AEA to enter into any contracts necessary to perform operating or maintenance-type services to the Project,subject to the approval of the Committee. On behalf of the Committee,the AEA entered into an agreement with Chugach Electric Association,Inc.(CEA)in August 1996,for the provision of all services necessary to dispatch the Project's electric power output.The dispatch agreement runs concurrently with the wheeling and related services contract entered into by and among the parties to the Power Sales Agreement in December 1987 and remains in effect for the term of the wheeling agreement unless CEA ceases to be the output dispatcher. In August 1996,the Alaska Energy Authority entered into an agreement with CEA on behalf of the Committee for the provision of maintenance services for the Daves Creek and Soldotna SVC Substations. An operation and maintenance agreement dated February 11,1994,was executed between Homer Electric Association,Inc.and the Alaska Energy Authority.This agreement provides for the operation and maintenance of the Bradley Lake Hydroelectric Project by Homer Electric Association,Inc.The agreement,as amended effective June 15,2016,is through December 30, 2016 and automatically continues in successive five year terms thereafter unless terminated by either party as set forth in the amended agreement.Generally,to avoid an automatic,successive five year term extension,notice of termination by either party must be given two years in advance of the termination date.AEA gave notice of termination to the second amendment and restated operation and maintenance agreement for the Bradley Lake Project on December 27, 2016 and the agreement is currently ending December 30,2018.HEA is to be reimbursed for costs associated with the operation,maintenance and repair of the Project as determined in advance through the submission of an annual budget based upon prudent estimates and anticipated operation and maintenance costs. In August 1996,the agreement was amended to separate the maintenance of the transmission facilities from the hydroelectric project.The transmission agreement continues from year to year,except upon written notice to terminate by either party.Notice of termination must be given six months in advance of termination dates.In June 1999,the transmission agreement was again amended to require HEA to provide communication services in addition to the other services. 9 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2017 and 2016 NOTE D:RELATED PARTY TRANSACTIONS During the years ended June 30,2017 and 2016,costs incurred under the various contracts with related parties described in Note C were as follows: 017 2016 Homer Electric Association,Inc.-operation, maintenance,communications and fixed asset replacements $2,299,506 $2,324,468 Chugach Electric Association,Inc.-substation service maintenance and fixed asset replacements $160,311 $159,956 Alaska Energy Authority -administrative fees $200,000 $200,000 For the years ended June 30,2017 and 2016,Chugach Electric Association,Inc.provided dispatch services to the Committee at the agreed upon amount which is zero. Amounts payable to related parties at June 30,2017 and 2016 were as follows: 201 016 Included in accounts payable: Homer Electric Association,Inc.$614,107 $445,115 Chugach Electric Association,Inc.$82,475 $10,117 Due to others: Alaska Energy Authority -short-term borrowings for vendor payments $622,007 $15,048 NOTE E:SURPLUS REFUNDS The $1,223,409 operations and maintenance and $1,147,663 renewal and contingency surpluses at June 30,2017 will be refunded to member utilities in fiscal year 2018 pursuant to the Power Sales Agreement and direction of the Committee. The $1,064,413 operations and maintenance and $1,055,961 renewal and contingency surpluses at June 30,2016 were refunded to member utilities in fiscal year 2017 pursuant to the Power Sales Agreement and direction of the Committee. 10 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2017 and 2016 NOTE F:SUBSEQUENT EVENTS The Committee has evaluated subsequent events through November 28,2017,the date the financial statements were available to be issued,and did not identify anything requiring additional disclosure. 11 Supplementary Information SWALLING &ASSOCIATESPC Certified Public Accountants &Business Advisers INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION Bradley Lake Project Management Committee Anchorage,Alaska We have audited the special-purpose financial statements of the Bradley Lake Project Management Committee Operating and Revenue Funds as of and for the years ended June 30, 2017 and 2016,and our report thereon dated November 28,2017,which expressed an unmodified opinion on those special-purpose financial statements,appears on pages 1 and 2. Our audits were conducted for the purpose of forming an opinion on the special-purpose financial statements as a whole.The supplemental special-purpose Statements of Expenses are presented for purposes of additional analysis and are not a required part of the special-purpose financial statements.Such information is the responsibility of the Bradley Lake Project Management Committee and was derived from and relates directly to the underlying accounting and other records used to prepare the special-purpose financial statements.The information has been subjected to the auditing procedures applied in the audits of the special-purpose financial statements and certain additional procedures,including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the special- purpose financial statements or to the special-purpose financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the United States of America.In our opinion,the information is fairly stated in all material respects in relation to the special-purpose financial statements as a whole. This report is intended solely for the information and use of the Bradley Lake Project Management Committee and is not intended to be and should not be used by anyone other than this specified party. auntleg P > Anchorage,Alaska November 28,2017 3201 C Street.Suite 405 .Anchorage.Alaska 99503SIndependentmemberofDFKInternational-a worldwide associationofindependentaccountingfirmsandhusinessadvisers Ph 907.563.7977 Fax 907.561.7683 °www.swallingcpas.com BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF EXPENSES Years ended June 30,2017 and 2016 Expenses: Generation expense: Operation supervision and engineering Hydraulic operation Electric plant operation Hydraulic power generation operation FERC land use fees Structure maintenance Reservoir,dam,and waterway maintenance Electric plant maintenance Hydraulic plant maintenance System control and load dispatching Substation operation and maintenance Overhead line maintenance Total generation expense Administrative,general and regulatory expense: Insurance AEA administrative fee PMC costs Regulatory commission: FERC administrative fees FERC licensing and study Total administrative,general and regulatory expense Total operations and maintenance expenses, before capital project reimbursement R &C Fund repayment Total operations and maintenance expenses 13 2017 Variance Favorable 2016 Budget Actual (Unfavorable)Actual $324,898 $293,523 $31,375 $333,371 99,646 72,202 27,444 82,954 285,440 231,505 53,935 231,820 574,407 438,398 136,009 524,308 312,176 230,614 81,562 279,876 392,242 345,782 46,460 360,464 85,609 124,151 (38,542)57,158 481,728 316,825 164,903 419,480 159,646 92,033 67,613 122,697 496,472 324,629 171,843 423,918 160,414 160,311 103 159,956 654,671 237,061 417,610 61,371 4,027,349 2,867,034 1,160,315 3,057,373 564,637 554,670 9,967 $30,522 200,000 200,000 -200,000 57,124 99,492 (42,368)206,552 180,000 122,210 57,790 182,885 125,000 168,377 (43,377)96,301 1,126,761 1,144,749 (17,988)1,216,260 5,154,110 4,011,783 1,142,327 4,273,633 3,262,783 2,476,905 785,878 2,692,711 $8,416,893 $6,488,688 1,928,205 6.966.344 Bradley Project Operator Procurement Schedule Date Task Responsible Party AEA notice to utilities to decide propose or not AEA Nov 22,2017 Utilities state if they will not propose and provide names of Utilities working group Nov 22 -Jan 31 |Write up scope &evaluation criteria for RFP AEA/Utilities Feb 10,2018 RFP advertised AEA April 1,2018 RFP Due.RFPs evaluated by SOA and Utility representatives.|AEA/Utilities Additional information,interviews,evaluations? May 1,2018 Notice of Intent to Award provided AEA Sept 1,2018 New Operator staff (several)at Bradley New Operator November 2018 |New Operator setup (logistics,storage,contracts)in Homer Pp-4 DRAFT NOVEMBER 30,2017 DRAFT RESOLUTION AUTHORIZING THE FINANCING OF THE BATTLE CREEK DIVERSION PROJECT AND RELATED MATTERS WHEREAS,pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power (the "Power Sales Agreement")dated as of December 8,1987,by and among the Chugach Electric Association,Inc.,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 Alaska Electric Generation &Transmission Cooperative,Inc.,and as Additional Parties Homer Electric Association,Inc.and Matanuska Electric Association,Inc.(as used hereincollectively,the "Power Purchasers"),and the Alaska Energy Authority (the"Authority"),a Project Management Committee (the "Committee")has beendulyformedinconnectionwiththeBradleyLake:Hydroelectric Project (the"Bradly Lake Project")of the Authority for.the purposes 'and with theresponsibilitiesspecifiedbythePowerSalesAgreement,and -WHEREAS,the Bradley Lake Project was financed with proceeds oftheAuthority's power.revenue bonds (the "Bradley Lake Bonds”)which wereissuedunder,and pursuant to,the terms of the Authority's Power RevenueBondResolution,adopted on September 9,1989,as supplemented from time totime(the "Authority's Bond Resolution'),andWHEREAS,the Power Purchasers are obligated under the Power SalesAgreementtopaytotheAuthoritytheirrespectivePercentageSharesofAnnualProjectCostsinconnectionwiththeBradleyLakeProject,including withoutlimitation,amounts required to be set aside by the Authority for payment of DebtServiceontheBradleyLakeBondsandonadditionalbondsapprovedin accordance with Sections V and 13 of the Power Sales Agreement;andWHEREAS,'the Authority's Bond Resolution authorizes the issuance of additional bonds for purposes of financing acquisition and construction costs ofcapitalimprovementsinconnectionwiththeBradleyLakeProjectsubjectto terms and conditions stated therein and in the Power Sales Agreement;and WHEREAS,the Committee supports the development of the Battle Creek Diversion Project (the "Battle Creek Project”)which diverts the water flow of Battle Creek into the Bradley Lake thereby increasing the amount of water for use by the Bradley Lake Project and therefore is a Capital Improvement in connection with the Bradley Lake Project;and {00759248} BPMC Resolution Authorizing Financing of BCP Page 1 DRAFT NOVEMBER 30,2017 DRAFT WHEREAS,the Committee,on behalf of the Power Purchasers and Authority,supports the issuance of additional bonds under the Authority's Bond Resolution to finance costs of the Battle Creek Project which thereby increases the amount of Annual Project Costs payable by each Power Purchaser under the Power Sales Agreement,or as otherwise agreed to by the Power Purchasers,subject to the terms and conditions of the Power Sales Agreement; and WHEREAS,the Committee approved Resolution No.2017-02 on October13,2017 ("Resolution No.2017-02”):which resolved,among othermatters,that the Battle Creek Project is»Optional Ptelect Work”under thePowerSalesAgreement;and oo , WHEREAS,Resolution No.017-02tesolved also the manner in which the costs and benefits of the Battle Creek Project will be managed and allocatedamongthePowerPurchaserswhoelecttoparticipatein,and benefit from,theBattleCreekProject(the "Participating Purchasers')and "ae WHEREAS,Resolution No.2017-02.was approved by an affirmative voteofatleastfour(4)representatives of the Power Purchasers,whose percentagesharesoftheoutputfromtheBradleyLakeProjectaregreaterthanfifty-onepercent(51%),plus the affi mative vote of the Authority;andWHEREAS,'the Committee has determined on behalf of the PowerPurchasersandAuthoritythatitisinthebestinterestsofthePowerPurchasers,and their respective customers and.atepayers,and the Authority,that theAuthority.should proceed with the financing of the Battle Creek Project by useoftheAuthority's Bond Resolution;andWHEREAS,Section 11 of the Power Sales Agreement provides that theAuthoritywillnotsupplementtheAuthority's Bond Resolution in any manner,oradoptanewbondresolution,which would materially adversely affect the ability of a Power Purchaser to fulfill the terms of the Power Sales Agreement or impose any increased burden or obligation,financial or otherwise,on a Power Purchaser without its consent unless the Committee has approved the Authority's proposed action by resolution adopted by the affirmative vote of the members of the Committee whose Percentage Shares of output from the Bradley Lake Project equal or exceed eighty percent (80%)of Project Capacity and Annual Project Costs (as such terms are defined in the Power Sales Agreement);and {00759248} BPMC Resolution Authorizing Financing of BCP Page 2 DRAFT NOVEMBER 30,2017 DRAFT WHEREAS,the Authority's Bond Resolution will need to be supplemented to allow for the issuance of additional bonds,the proceeds of which will be used to finance costs of the Battle Creek Project;and WHEREAS,the Authority's Bond Resolution requires as a condition of the issuance of additional bonds that the Capital Reserve Fund created under the terms of the Authority's Bond Resolution be funded such that amounts held therein satisfy the Capital Reserve Fund Requirement;and WHEREAS,it has been determined that establishment of the Capital Reserve Fund supporting payment of the Battle Creek Project debt obligationsisinthebestinterestsofthePowerPurchasersandenhancesthemarketabilityofsuchdebtobligations;and oFfe eeWHEREAS,the Participating Purchasers have agreed to cash fund theCapitalReserveFundinanamountsufficienttosatisfytheCapitalReserveFundRequirementasdefinedintheAuthority'Ss Bond Resolution;andWHEREAS,the Committee 'has determined,on behalf of the PowerPurchasersandAuthority,that cash funding the Capital Reserve Fund by theParticipatingPurchasersisauthorizedbythetermsandconditionsofthePowerSalesAgreementgenerally,and specifi cally Section 4(d)of the Power SalesAgreement;and WHEREAS,the "Authority and the Power Purchasers have eachreviewed-the Battle Creek Project "financing proposal prepared by theAuthority's fifinancial advisor,PEM Financial Advisors LLC;andWHEREAS,the Committee.has determined,on behalf of the PowerPurchasersandAuthority,that financing of the Battle Creek Project may beaccomplishedwiththeissuanceofadditionalbondsissuedunder,andpursuantto,the Authority's Bond Resolution and cash of the ParticipatingPurchasers,but that it is in the best interests of the Authority and the Power Purchasers,and their respective customers and ratepayers,that the aggregate principal amount of such financings shall not exceed $47,000,000 and that the Authority and the Power Purchasers should proceed with finalizing all the necessary documents in connection therewith; and WHEREAS,the Committee has determined on behalf of the Power Purchasers and Authority that it is in the best interests of the Power {00759248} BPMC Resolution Authorizing Financing of BCP Page 3 DRAFT NOVEMBER 30,2017 DRAFT Purchasers,and their respective customers and ratepayers,that the Authority issue additional series of bonds under,and pursuant to the terms, of the Authority's Bond Resolution in an amount not to exceed $47,000,000 (the "BCP Bonds”)for purposes of financing costs of the Battle Creek Project,including costs of issuance of the BCP Bonds;and WHEREAS,the BCP Bonds will,under and pursuant to the Authority's Bond Resolution,consist of three series of "additional bonds”as follows,(i)not to exceed principal amount of $40,000,000 Power Revenue Bonds (the "Series A Bonds'),(ii)not to exceed principal amount of$2,136,000 Power Revenue Bonds (the "SeriesB.Bonds'),and (iti)not toexceedprincipalamountof$4,864,000.Power,'Revenue Bonds (the"SeriesC Bonds”);and og uy WHEREAS,in connection with the issuance of theBCP Bonds,theCommitteehasdeterminedonbehalf.of the Power Purchasers andAuthoritythatitisinthebestinterestsofthePowerPurchasers,and theirrespectivecustomersandratepayers,that.there is deposited into theCapitalReserveFundanamount'sufficient to satisfy the Capital ReserveFundRequirement,from cash''received |by the:Participating PurchasersbenefittingfromtheBattleCreekProject,and=OOWHEREAS;.”National'Cooperative Services Corporation (the"Purchaser”)has proposed to.enter into a loan agreement with the Authorityinconnection”with each ©_series»of BCP Bonds (together,the "LoanAgreement'),'under which,among other things,subject to terms,conditions,representations,warranties and agreements contained therein,PurchaseragreestoPurchasethe.BGP Bonds:andWHEREAS,the purpose ofthis resolution is to provide evidence to allpartiestothePowerSales'Agreement,counsel to the Committee and thePurchaseroftheBCPBonds,of the Committee's approval on behalf of thePowerPurchasersofandtothetermsoftheAuthority's Financing Documents (as defined below),including funding of the Capital Reserve Fund by the Participating Purchasers;and WHEREAS,the Financing Agreements include the Authority's Supplemental Resolution Nos.2017-07,2017-08 and 2017-09,authorizing the sale,issuance and delivery of the BCP Bonds and related matters,all substantially in the forms presented to the Committee on the date hereof as Exhibits A,B and C,and the Purchaser's Loan Agreement,substantially in the {00759248} BPMC Resolution Authorizing Financing of BCP Page 4 DRAFT NOVEMBER 30,2017 DRAFT form presented to the Committee on the date hereof as Exhibit D;these documents are collectively referred to herein as the "Financing Agreements”; NOW,THEREFORE,IT IS RESOLVED BY THE COMMITTEE ON BEHALF OF THE POWER PURCHASERSas follows: 1.General_Approval_of Financing.The Committee hereby approves the financing of the Battle Creek Project,in an aggregate principal amount not to exceed $47,000,000,by.the issuance of BCPBonds,the proceeds of which will be used to pay.costs of construction of the Battle Creek Project and pay costs of issuanceof the BCP Bonds. 2.Approval of Financing Documents.In'.connection with the issuance of the BCP Bonds,in the aggregate principal amount not toexceed$47,000,000,the Financing Documents are hereby approved.Thissectionconstitutesapprovalofthesupplements.to the Authority's BondResolutionmadeinconnectionwiththe-issuance of the.BCP BondspursuanttotheAuthority's Supplemental Resolution Nos.2017-07,2017-08 and 2017-09 (collectively,the "Authority's:Resolutions”)attached asExhibitsA,B and C hereto and as required by §Section 11 of the PowerSalesAgreement.- 3.Payment Obligations.Pursuant to Sections 11 and 13 of the Power Sales Agreement,the Committee hereby expressly approves anddeterminesthatthe.payment.obligations to be imposed on the Authorityarisingoutofthesale,purchase,issuance and delivery of the BCP Bondsunder.and°pursuant.to the terms of the Loan Agreement,are and shall,pursuant.to Section 8(a)ofthe Power Sales Agreement,be specificallyincludedinnAnnualProjectCostsunderthePowerSalesAgreement. 4.'Capital Reserve Fund.In connection with the issuance of the BCP Bonds,the Committee hereby approves funding of the CapitalReserveFundbytheParticipatingPurchasersinanamountsufficienttosatisfytheCapitalReserveFundRequirementpursuanttothetermsofSection4(d)of the Power Sales Agreement.Funding of the Capital Reserve Fund in connection with the Series A Bonds and Series B Bonds will be required on the date of issuance of such bonds.Funding of the Capital Reserve Fund in connection with the Series C Bonds (which will take the form of a drawdown obligation)will be required with each principal advance under the terms of such bonds. {00759248} BPMC Resolution Authorizing Financing of BCP Page 5 DRAFT NOVEMBER 30,2017 DRAFT 5.Committee's_Authorized__Representative.The Committee appoints Lee Thibert,Chief Executive Officer of Chugach Electric Association,Inc.,as the authorized representative of the Committee (the"Authorized Representative'),and authorizes and directs him to evidence the Committee's approval of the Loan Agreement;provided that the aggregate principal amount of the BCP Bonds shall not exceed $47,000,000,the interest rate of the Series A Bonds and Series B Bonds shall be a fixed rate of interest not to exceed the sum of (y)the percentage rate that expresses the yield to maturity of the ten (10)year on-the-run U.S. Treasury securities,as quoted by Bloomberg data services,on or about the date of issuance of the Bonds plus (z)plus 200 basis points per annum,and the interest rate on the Series C Bonds shall not exceed the variable rate of interest equal to National Cooperative Services Standard Variable Rate,as quoted by National Cooperative Services Corporation on a daily basis,for the first thirty-six (36)months and thereafter convert to a fixed rate ofinterestnottoexceedtheNationalCooperativeServicesCorporationLongTermFixedRate,as quoted by National Cooperative Services Corporationonadailybasis.Subject to the foregoing,the Authorized Representative is further authorized to execute all other necessary documents,on behalf of the Committee,in connection with the issuance of the BCP Bonds as mayberequestedbytheAuthority.ue : 6.Resolution Irrevocable."This resolution shall be irrevocable,and each Power Purchaser shall,pursuant to the Power Sales Agreement,cooperate with the Authority and Purchaser and take such actions as arereasonablyrequiredto.accomplish the issuance and delivery of the BCPBonds,'subject to all of the terms,conditions,representations,warranties,and agreements contained iin the Financing Documents. 7.:.Whereas.'Clauses.The Whereas Clauses to this resolution areincorporatedintothisresolutionasiffullysetforthherein. 8.Capitalized Terms.Any capitalized term used and not otherwise defined in the Whereas Clauses or this resolution shall have the meaning given such term in Authority's Bond Resolution or the Power Purchase Agreement,as applicable. ADOPTED this___day of December,2017. {00759248} BPMC Resolution Authorizing Financing of BCP Page 6 CHUGACH ELECTRIC ASSOCIATION,INC. By: Name: Title: MUNICIPALITY OF ANCHORAGE MUNICIPAL LIGHT&POWER By: Name: Title: ALASKA ELECTRIC &ENERGY COOPERATIVE,INC. (acting on behalf of Homer Electric Association,Inc.) By: Name: Title: {00759248} BPMC Resolution Authorizing Financing of BCP PERCENTAGE SHARE OF CAPACITY AND ANNUAL COSTS UNDER POWER SALES AGREEMENT 30.4% 25.9% 12.0% Page 7 MATANUSKA ELECTRIC ASSOCIATION,INC. By: Name: Title: GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. By: Name: Title: CITY OF SEWARD dba SEWARD ELECTRIC SYSTEM By: Name: Title: ALASKA ENERGY AUTHORITY By: Name: Title: {00759248} BPMC Resolution Authorizing Financing of BCP PERCENTAGE SHARE OF CAPACITY AND ANNUAL COSTS UNDER POWER SALES AGREEMENT 13.8% 16.9% 1.0% Page 8 EXHIBIT A Supplemental Resolution No.2017-07 BPMC Resolution Authorizing Financing of BCP Page 9 {00759248} EXHIBIT B Supplemental Resolution No.2017-08 BPMC Resolution Authorizing Financing of BCP Page 10 {00759248} EXHIBIT C Supplemental Resolution No.2017-09 BPMC Resolution Authorizing Financing of BCP Page 11 {00759248} EXHIBIT D Purchaser's Loan Agreement BPMC Resolution Authorizing Financing of BCP Page 12 {00759248} "Fb-2 WFUBC Diversion Project RFP No.:18-018 11/8/2017 2 $e 2 BIDDER a <s z U 2 B 2 =s z 2 B =f 2 Oo <x éeeQ5oo a 5 D>z rw)w =>fe oO <x 2oOocnOo2&Oo ke z Ww t Z 8 N ry S S<=2 Y G =o 2 G &S O Total Basic Bid $46,496,225.00 $48,439,808.00 $38,976,720.00 $45,396,429.64 $50,701,886.00 $36,475,777.50 Bid Mod.-$100,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 Mod.Basic Bid 46,396,225.00 48,439,808.00 38,976,720.00 45,396,429.64 50,701,886.00 36,475,777.50 Preferences AK Bidder's 2,319,811.25 0.00 1,948,836.00 2,269,821.48 0.00 1,823,788.88 0.00 5% AK Veteran 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5% AK Products 49,000.00 174,934.20 0.00 126,042.26 0.00 123,593.68 0.00 Adjusted Bid 44,027,413.75 48,264,873.80 37,027,884.00 43,000,565.90 50,701,886.00 34,528,394.95 $0.00 Adjusted Bid amounts are for evaluation purposes only. *AK Veterns preference not to exceed $5,000)BID RESULTS The above are bid opening results adjusted for bid modifications and applying preferences claimed by bidders. AEA has not made determination that any bids meet the minimum requirements. DRAFT 11/30/17 ALASKA ENERGY AUTHORITY RESOLUTION NO.2017-07 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF POWER REVENUE BONDS,SEVENTH SERIES (BATTLE CREEK DIVERSION PROJECT),IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $40,000,000 AND DETERMINING RELATED MATTERS BE IT RESOLVED by the Board of Directors of the Alaska Energy Authority on the 7th day of December,2017 that pursuant to the Power Revenue Bond Resolution adopted on September 7,1989,(hereinafter referred to as the "Resolution'),this Supplemental Resolution is adopted as follows: ARTICLE I Definitions and Authority Section 101.Short Title.This resolution may hereafter be cited by the Authority,and is hereinafter sometimes referred to,as the "Sixth Supplemental Resolution.” Section 102.Definitions. (A)All defined terms contained in the Resolution shall have the same meanings in this Sixth Supplemental Resolution as such defined terms are given in Section 102 of the Resolution. (B)In addition,as used in this Sixth Supplemental Resolution,unless the context shall otherwise require,the following terms shall have the following respective meanings: Authorized Denomination means $25,000 and integral multiples of $1.00 in excess thereof. Beneficial Owner means the person in whose name a Bond is recorded as the beneficial owner of such Bond by the respective systems of DTC and the DTC Participants or the registered owner of the Bond if the Bond is not then held in book-entry form under Section 203. Bonds means the Seventh Series Bonds. Code means the Internal Code of 1986,as amended. Sixth Supplemental Resolution Page 1 {00764848} DRAFT 11/30/17 Continuing Disclosure Agreement means the Continuing Disclosure Agreement,if any, executed by the Authority and dated the date of the Bonds are issued and as it may be amended from time to time in accordance with the terms thereof. Designated Representative means the Authority's Executive Director,Acting Executive Director and Chief Financial Officer. DTC means The Depository Trust Company,a limited purpose trust company organized under the laws of the State of New York,and its successors and assigns. DTC Participant means a trust company,bank,broker,dealer,clearing corporation and any other organization that is a participant of DTC. Diversion Project means the Battle Creek Diversion Project which is a Capital Improvement approved by the Committee as Optional Project Work. Fixed Rate of Interest means (i)the sum of (y)the percentage rate that expresses the yield to maturity of the ten (10)year on-the-run U.S.Treasury securities,as quoted by Bloomberg data services,on or about the date of issuance of the Bonds plus (z)175 basis points per annum,or (ii)such other fixed rate approved by the Designated Representative pursuant to Section 301 hereof. Letter of Representations means the Blanket Issuer Letter of Representations dated October 24,1997,from the Authority to DTC. Loan Agreement means that certain loan agreement,or similar type agreement,between the Authority and the Purchaser relating to the sale of the Bonds. Purchaser means National Cooperative Services Corporation. Seventh Series Bonds means the Bonds of the Authority authorized by this Sixth Supplemental Resolution and herein designated "Power Revenue Bonds,Seventh Series.” Section 103.Authority for this Resolution.This Sixth Supplemental Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization;Terms and Issuance Section 201.Authorization,Principal Amount,Interest Rate,Designation and Series. (A)In order to provide funds necessary for the purposes specified in Section 204 of the Resolution,in accordance with and subject to the terms,conditions and limitations established herein and in the Resolution,a Series of Power Revenue Bonds is hereby authorized to be issued in an aggregate principal amount not to exceed $40,000,000.The Bonds are being Sixth Supplemental Resolution Page 2 {00764848} DRAFT 11/30/17 issued for the purpose of financing a portion of the costs of the Diversion Project.The Bonds of such Series shall be designated and entitled "Power Revenue Bonds,Seventh Series (Battle Creek Diversion Project).” (B)The Bonds shall bear interest at the Fixed Rate of Interest. (C)The Authority hereby designates the Bonds as "New Clean Renewable Energy Bonds”for purposes of Section 54C(a)(3)of the Code. (D)The Authority hereby finds and determines that the establishment in the Resolution of the Capital Reserve Fund will enhance the marketability of the Bonds. Section 202.Purposes:Construction Fund:Reserve Fund. (A)The purpose for which the Bonds are being issued is to finance costs and expenses of planning,designing,acquiring,and construction of the Diversion Project.The Authority is of the opinion and hereby determines that the Diversion Project is an addition, betterment or expansion of the Project.The Committee has,by resolution,deemed the Diversion Project as Optional Project Work pursuant to the terms of the Power Sales Agreement. (B)There is hereby established within the Construction Fund the Seventh Series Construction Account.The Trustee shall deposit proceeds of the Bonds into the Seventh Construction Account and shall hold such proceeds for the payment of Costs of Acquisition and Construction of the Diversion Project in accordance with Section 503 of the Resolution; provided,however,that the Designated Representative may instruct the Trustee to hold a portion of such proceeds or such other amounts for payment of Costs of Issuance,and the Trustee shall apply such proceeds or such other amounts to pay such costs as instructed by the Designated Representative. (C)There is hereby established within the Capital Reserve Fund the Seventh Series Capital Reserve Account.The Trustee shall deposit cash provided by the Authority into the Seventh Series Capital Reserve Account and shall hold such amounts in accordance with Section 508 of the Resolution. Section 203.Issue Date and Form;Book-Entry. (A)The Bonds shall be dated as of the date of delivery of the Bonds to the Purchaser. (B)The Bonds shall be registered initially in the name of the Purchaser of the Bonds, and shall be issued initially in the form of a single Bond with principal installments for each maturity.Registered ownership of the Bonds,or any portions thereof,may not thereafter be transferred except as provided in paragraph (D)below. Sixth Supplemental Resolution Page 3 {00764848} DRAFT 11/30/17 (C)The Authority confirms its appointment of the Trustee to serve as the Bond Registrar under the terms of the Resolution. (D)In the case of any transfer of ownership of the Bonds,the Trustee shall,upon receipt of all Outstanding Bonds,together with a written request of an Authorized Officer and a supply of new Bonds authenticate a single new Bond with principal installments for each maturity in the amount of such maturity or new Bonds,in Authorized Denominations,for each maturity of Bonds then Outstanding,registered in the name of a new person,entity or depository,or its nominee,as the case may be,all as specified in such written request. (E)If the Bonds are subsequently held in book-entry form under this Section,the Authority and the Trustee may treat DTC (or its nominee)as the sole and exclusive registered owner of the Bonds registered in its name for the purposes of payment of principal or Redemption Price of and interest on such Bonds,selecting such Bonds or portions thereof to be redeemed,giving any notice permitted or required to be given to Bondholders under the Resolution,registering the transfer of such Bonds and obtaining any consent or other action to be taken by Bondholders and for all other purposes whatsoever,and neither the Authority nor the Trustee shall be affected by any notice to the contrary.Neither the Authority nor the Trustee shall have any responsibility or obligation to any DTC Participant,any person claiming a beneficial ownership interest in the Bonds under or through DTC or any DTC Participant,or any other person not shown on the registration books of the Trustee as being a registered owner with respect to the accuracy of any records maintained by DTC or any DTC Participant,the payment by DTC or any DTC Participant of any amount in respect of the principal or Redemption Price of or interest on the Bonds,any notice which is permitted or required to be given to Bondholders under the Resolution,the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of the Bonds,or any consent given or other action taken by DTC as Bondholder.The Trustee shall pay from monies available under the Resolution all principal and Redemption Price of and interest on Bonds only to or upon the order of DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to the principal or Redemption Price of and interest on the Bonds to the extent of the sum or sums so paid. Section 204.Places and Manner of Payment.Payment of interest on the Bonds will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee, or,upon the written request of a registered owner of at least $1,000,000 in principal amount of Bonds received at least 15 days prior to an interest payment date,by wire transfer in immediately available funds to an account in the United States of America designated by such registered owner;principal of the Bonds will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee with the final installment of principal payable at the corporate trust office of the Trustee upon surrender of the Bonds representing such principal. Both principal of and interest on the Bonds are payable in any coin or currency of the United States of America which,on the respective dates of payment thereof,shall be legal tender for the payment of public and private debts.If all the Outstanding Bonds shall subsequently be Sixth Supplemental Resolution Page 4 {00764848} DRAFT 11/30/17 bdregisteredinthenameof"Cede &Co.,”or its registered assigns,as nominee of DTC, payment of principal and interest thereon shall be made as provided in the Letter of Representations and the operational arrangements referred to therein as amended from time to time. Section 205.Maturities and Interest Rate.The Bonds shall be issued in Authorized Denominations,shall mature no later than July 1,2050,and shall bear interest at the Fixed Rate of Interest,all as further determined by the Designated Representative pursuant to Section 301 hereof. Section 206.Numbers and Letters.Bonds shall be numbered and lettered in such manner as the Designated Representative shall determine prior to delivery thereof. Section 207.Redemption.The Bonds shall be subject to redemption (including redemption by application of sinking fund payments)as determined by the Designated Representative pursuant to Section 301 hereof. Section 208.No Redemption of Bonds from Construction Fund Moneys.The Bonds shall not be subject to redemption pursuant to subsection 503(8)of the Resolution. ARTICLE III Sale and Delivery of Bonds Section 301.Sale of Bonds. (A)The Bonds shall be sold at negotiated sale to the Purchaser pursuant to the terms of the Loan Agreement.The Designated Representative is hereby authorized to negotiate terms for the purchase of the Bonds,review,approve and execute the Loan Agreement,with such terms as are approved by him or her pursuant to this Section and consistent with this Sixth Supplemental Resolution.The Authority's financial advisor has advised the Authority that market conditions are fluctuating and,as a result,the most favorable market conditions may occur on a day other than a scheduled meeting date of the Authority.The Authority has determined that it would be in the best interest of the Authority to delegate to the Designated Representative for a limited time the authority to approve the final interest rate or rates, interest payment dates,aggregate principal amount,terms of redemption and redemption rights and principal amounts of each principal installment/maturity date of the Bonds.The Designated Representative is hereby authorized to approve the final interest rate or rates,interest payment dates,principal installment/maturity date(s),principal installments/maturities,terms of redemption and redemption rights for the Bonds in the manner provided hereafter so long as the aggregate principal amount of the Bonds does not exceed $40,000,000;provided,however,that notwithstanding the foregoing the Designated Representative is not authorized,empowered,or directed to execute or deliver the Loan Agreement until the Committee,or its designee for the Diversion Project,shall have approved the final terms of the Loan Agreement and shall have requested the Authority to execute and deliver the Loan Agreement. Sixth Supplemental Resolution Page 5 {00764848} DRAFT 11/30/17 In determining the final interest rate or rates,interest payment date or dates,aggregate principal amount,principal installment/maturities dates,terms of redemption and redemption rights,the Designated Representative,in consultation with Authority staff and the Authority's financial advisor shall take into account those factors that,in his or her judgment,will result in the most favorable terms for the Bonds,including,but not limited to current financial market conditions and current interest rates for obligations comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in this Section 301,the Designated Representative is hereby authorized to execute the final form of the Loan Agreement,upon the Designated Representative's approval of the final interest rate or rates,interest payment dates, aggregate principal amount,principal installments/maturities,terms of redemption and redemption rights set forth therein.Such terms shall be set forth in Exhibit A to the Loan Agreement and an exhibit setting forth such final terms of the Bonds shall be attached to this Sixth Supplemental Resolution as Exhibit A,and thereby incorporated into this Sixth Supplemental Resolution.The authority granted to the Designated Representative by this Section 301 shall expire 90 days after the date of approval of this Sixth Supplemental Resolution.If a Loan Agreement for the Bonds has not been executed within 90 days after the date of final approval of this Sixth Supplemental Resolution,the authorization for the issuance of the Bonds shall be rescinded,and the Bonds shall not be issued nor their sale approved unless such Bonds shall have been re-authorized by resolution of the Authority.The resolution re-authorizing the issuance and sale of such Bonds may be in the form of a new Supplemental Resolution repealing this Sixth Supplemental Resolution in whole or in part or may be in the form of an amendatory resolution approving a Loan Agreement or establishing terms and conditions for the authority delegated under this Section 301. (B)Upon the passage and approval of this Sixth Supplemental Resolution,each Designated Representative is authorized and directed to undertake all action necessary for the prompt execution and delivery of the Bonds to the Purchaser and to execute the Loan Agreement and all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the Loan Agreement. Section 302.Delivery of Bonds.The Chair,Vice Chair,Executive Director,Acting Executive Director,Chief Financial Officer and such other person or persons as may be designated by the Executive Director are specifically designated as Authorized Officers as defined in the Resolution,and they hereby are severally authorized,after execution of the Bonds,to deliver the Bonds to the Trustee for authentication under the Resolution and,upon authentication and upon receipt of the balance of the purchase price of the Bonds,to deliver to the Trustee a written order in the name of the Authority directing the Trustee to deliver the Bonds to or upon the order of the Purchaser and to receive the proceeds of sale of the Bonds and give a written receipt therefor on behalf of the Authority,to apply said proceeds and the other moneys required to be transferred or deposited in accordance with the terms of the Resolution and this Sixth Supplemental Resolution and in such manner as is required to cause the conditions precedent to the issuance of the Bonds to be complied with,and to do and perform or cause to be done and performed,for and on behalf of the Authority,all acts and things that constitute conditions precedent to the authentication and delivery of the Bonds or Sixth Supplemental Resolution Page 6 {00764848} DRAFT 11/30/17 that are otherwise required or convenient to be done and performed by or on behalf of the Authority prior to or simultaneously with the delivery of the Bonds.Such Authorized Officers are hereby severally authorized for and on behalf of the Authority to do or cause to be done all acts and things required or desirable to be done by the Authority under and pursuant to the terms of the Resolution and in accordance with the terms and conditions of the Loan Agreement. ARTICLEIV Paying Agent Section 401.Appointment of Paving Agent.U.S.Bank National Association is appointed Paying Agent for the Bonds pursuant to Section 902 of the Resolution. ARTICLE V Ratification Section 501.Ratification,Confirmation and Approval.Pursuant to Section 713 of the Resolution,the Authority has assigned,pledged and transferred its rights under the Power Sales Agreement to the Trustee for the benefit of Bondholders and further agreed to enforce its terms.This Board hereby ratifies,approves and confirms the Power Sales Agreement as a valid and binding obligation of the Authority and further authorizes and directs that the Power Sales Agreement,including all amendments thereto,certified by an Authorized Officer,be filed with the Trustee. ARTICLE VI Effective Date Section 601.Sixth Supplemental Resolution Effective Date.This Sixth Supplemental Resolution shall take effect immediately. Supplemental Resolution approved and adopted by the Alaska Energy Authority on December 7,2017. ALASKA ENERGY AUTHORITY CHAIR [SEAL] ATTEST: SECRETARY Sixth Supplemental Resolution Page 7 {00764848} DRAFT 11/30/17 EXHIBIT A BOND TERMS Sixth Supplemental Resolution Page 8 {00764848} "To-+ {00764851} ALASKA ENERGY AUTHORITY RESOLUTION NO.2017-08 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF POWER REVENUE BONDS,EIGHTH SERIES (BATTLE CREEK DIVERSION PROJECT),IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $2,136,000 AND DETERMINING RELATED MATTERS Adopted December 7,2017 DRAFT 11/30/17 TABLE OF CONTENTS Page ARTICLE I Definitions and Authority Section 101.Short Title.0...eee eseeesscecseeeseeeeseeeseeeessesssaeeseseseccsseccsesesseeesesessssaceessseeoees 1 Section 102.Definitions.2.0...ce esscescsecesecseseseseesenscenesesessaseeseesssseessssesasessssesesseseeseessneses 1 Section 103.Authority for this Resolution........ce cecscesesssecseeesseeesescsesesssessscssesesseeeaes 2 ARTICLE II Authorization;Terms and Issuance Section 201.Authorization,Principal Amount,Interest Rate,Designation and Series......2 Section 202.Purposes;Construction Fund;Reserve Fund...cece seseseesseesseseecessceeeee 3 Section 203.Issue Date and Form;Book-Entry............cesceesscssesesesesesseesesescesessscesesessseseoes 3 Section 204.Places and Manner of Payment...........cccesssessesteesesseesssssscesaseresssscsessseseneses 4 Section 205.Maturities and Interest Rates.0...cece cecesecssecseserecescessecseesseessscnseseesoeeeseeanes 5 Section 206.Numbers and Letters.200.0...cecsescsscsssesesesscsesssssssesesccssecsasessessesesesseessnsseseaes 5 Section 207.Redemption ...........ceesscseececeseesseceesecesseesssesesesesseesssesssesossessssessesessascseseseessees 5 Section 208.No Redemption of Bonds from Construction Fund Money6...............s000 5 ARTICLE III Sale and Delivery of Bonds Section 301.Sale of Bonds..........ceeeescsscesecesceseessecscsesesonesesevensesecessesseseaeensseseseseseseveseneaegs 5 Section 302.Delivery of Bonds...esesesecssseeesceseeresssssscsscnessesessnesesscsesessnesssesesonenes 6 ARTICLEIV Paying Agent Section 401.Appointment of Paving Agent..00...eee eeeseceeeeeeceseeeseeeseecessseeeesesesoues 7 ARTICLE V Ratification Section 501.Ratification,Confirmation and Approval.0.0.0...eeeesssseseeseeseeeeeeeeeeees 7 ARTICLE VI Effective Date Section 601.Seventh Supplemental Resolution Effective Date......0.eeeeeeeceeeeeeeeees 7 Exhibit A Bond Terms {00764851}i DRAFT 11/30/17 ALASKA ENERGY AUTHORITY RESOLUTION NO.2017-08 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF POWER REVENUE BONDS,EIGHTH SERIES (BATTLE CREEK DIVERSION PROJECT),IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $2,136,000 AND DETERMINING RELATED MATTERS BE IT RESOLVED by the Board of Directors of the Alaska Energy Authority on the 7th day of December,2017 that pursuant to the Power Revenue Bond Resolution adopted on September 7,1989,(hereinafter referred to as the "Resolution”),this Supplemental Resolution is adopted as follows: ARTICLE I Definitions and Authority Section 101.Short Title.This resolution may hereafter be cited by the Authority,and is hereinafter sometimes referred to,as the "Seventh Supplemental Resolution.” Section 102.Definitions. (A)All defined terms contained in the Resolution shall have the same meanings in this Seventh Supplemental Resolution as such defined terms are given in _Section 102 of the Resolution. (B)In addition,as used in this Seventh Supplemental Resolution,unless the context shall otherwise require,the following terms shall have the following respective meanings: Authorized Denomination means $25,000 and integral multiples of $1.00 in excess thereof. Beneficial Owner means the person in whose name a Bond is recorded as the beneficial owner of such Bond by the respective systems of DTC and the DTC Participants or the registered owner of the Bond if the Bond is not then held in book-entry form under Section 203. Bonds means the Eighth Series Bonds. Code means the Internal Code of 1986,as amended. Seventh Supplemental Resolution Page 1 {00764851} DRAFT 11/30/17 Continuing Disclosure Agreement means the Continuing Disclosure Agreement,if any, executed by the Authority and dated the date of the Bonds are issued and as it may be amended from time to time in accordance with the terms thereof. Designated Representative means the Authority's Executive Director,Acting Executive Director and Chief Financial Officer. DTC means The Depository Trust Company,a limited purpose trust company organized under the laws of the State of New York,and its successors and assigns. DTC Participant means a trust company,bank,broker,dealer,clearing corporation and any other organization that is a participant of DTC. Diversion Project means the Battle Creek Diversion Project which is a Capital Improvement approved by the Committee as Optional Project Work. Eighth Series Bonds means the Bonds of the Authority authorized by this Seventh Supplemental Resolution and herein designated "Power Revenue Bonds,Eighth Series.” Fixed Rate of Interest means (i)the sum of (y)the percentage rate that expresses the yield to maturity of the ten (10)year on-the-run U.S.Treasury securities,as quoted by Bloomberg data services,on or about the date of issuance of the Bonds plus (z)175 basis points per annum,or (ii)such other fixed rate approved by the Designated Representative pursuant to Section 301 hereof. Letter of Representations means the Blanket Issuer Letter of Representations dated October 24,1997,from the Authority to DTC. Loan Agreement means that certain loan agreement,or similar type agreement,between the Authority and the Purchaser relating to the sale of the Bonds. Purchaser means National Cooperative Services Corporation. Section 103.Authority for this Resolution.This Seventh Supplemental Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization;Terms and Issuance Section 201.Authorization,Principal Amount,Interest Rate,Designation and Series. (A)In order to provide funds necessary for the purposes specified in Section 204 of the Resolution,in accordance with and subject to the terms,conditions and limitations established herein and in the Resolution,a Series of Power Revenue Bonds is hereby authorized to be issued in an aggregate principal amount not to exceed $2,136,000.The Bonds are being Seventh Supplemental Resolution Page 2 {00764851} DRAFT 11/30/17 issued for the purpose of financing a portion of the costs of the Diversion Project.The Bonds ofsuchSeriesshallbedesignatedand_entitled "Power Revenue Bonds,Eighth Series (Battle Creek Diversion Project).” (B)The Bonds shall bear interest at the Fixed Rate of Interest. (C)Subject to receipt of an allocation of volume cap from the State of Alaska,the Authority designates the Bonds as "Qualified Energy Conservation Bonds”for purposes of Section 54D(a)(3)of the Code. (D)The Authority hereby finds and determines that the establishment in the Resolution of the Capital Reserve Fund will enhance the marketability of the Bonds. Section 202.Purposes:Construction Fund:Reserve Fund. (A)The purpose for which the Bonds are being issued is to finance costs and expenses of planning,designing,acquiring,and construction of the Diversion Project.The Authority is of the opinion and hereby determines that the Diversion Project is an addition, betterment or expansion of the Project.The Committee has,by resolution,deemed the Diversion Project as Optional Project Work pursuant to the terms of the Power Sales Agreement. (B)There is hereby established within the Construction Fund the Eighth Series Construction Account.The Trustee shall deposit proceeds of the Bonds into the Eighth Series Construction Account and shall hold such proceeds for the payment of Costs of Acquisition and Construction of the Diversion Project in accordance with Section 503 of the Resolution; provided,however,that the Designated Representative may instruct the Trustee to hold a portion of such proceeds or such other amounts for payment of Costs of Issuance,and the Trustee shall apply such proceeds or such other amounts to pay such costs as instructed by the Designated Representative. (C)There is hereby established within the Capital Reserve Fund the Eighth Series Capital Reserve Account.The Trustee shall deposit available amounts provided by the Authority into the Eighth Series Capital Reserve Account and hold such amounts in accordance with Section 508 of the Resolution. Section 203.Issue Date and Form:Book-Entry. (A)The Bonds shall be dated as of the date of delivery of the Bonds to the Purchaser. (B)The Bonds shall be registered initially in the name of the Purchaser of the Bonds, and shall be issued initially in the form of a single Bond with principal installments for each maturity.Registered ownership of the Bonds,or any portions thereof,may not thereafter be transferred except as provided in paragraph (D)below. Seventh Supplemental Resolution Page 3 {00764851} DRAFT 11/30/17 (C)The Authority confirms its appointment of the Trustee to serve as the Bond Registrar under the terms of the Resolution. (D)In the case of any transfer of ownership of the Bonds,the Trustee shall,upon receipt of all Outstanding Bonds,together with a written request of an Authorized Officer and a supply of new Bonds authenticate a single new Bond with principal installments for each maturity in the amount of such maturity or new Bonds,in Authorized Denominations,for each maturity of Bonds then Outstanding,registered in the name of a new person,entity or depository,or its nominee,as the case may be,all as specified in such written request. (E)If the Bonds are subsequently held in book-entry form under this Section,the Authority and the Trustee may treat DTC (or its nominee)as the sole and exclusive registered owner of the Bonds registered in its name for the purposes of payment of principal or Redemption Price of and interest on such Bonds,selecting such Bonds or portions thereof to be redeemed,giving any notice permitted or required to be given to Bondholders under the Resolution,registering the transfer of such Bonds and obtaining any consent or other action to be taken by Bondholders and for all other purposes whatsoever,and neither the Authority nor the Trustee shall be affected by any notice to the contrary.Neither the Authority nor the Trustee shall have any responsibility or obligation to any DTC Participant,any person claiming a beneficial ownership interest in the Bonds under or through DTC or any DTC Participant,or any other person not shown on the registration books of the Trustee as being a registered owner with respect to the accuracy of any records maintained by DTC or any DTC Participant,the payment by DTC or any DTC Participant of any amount in respect of the principal or Redemption Price of or interest on the Bonds,any notice which is permitted or required to be given to Bondholders under the Resolution,the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of the Bonds,or any consent given or other action taken by DTC as Bondholder.The Trustee shall pay from monies available under the Resolution all principal and Redemption Price of and interest on Bonds only to or upon the order of DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to the principal or Redemption Price of and interest on the Bonds to the extent of the sum or sums so paid.. Section 204.Places and Manner of Payment.Payment of interest on the Bonds will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee, or,upon the written request of a registered owner of at least $1,000,000 in principal amount of Bonds received at least 15 days prior to an interest payment date,by wire transfer in immediately available funds to an account in the United States of America designated by such registered owner;principal of the Bonds will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee with the final installment of principal payable at the corporate trust office of the Trustee upon surrender of the Bonds representing such principal. Both principal of and interest on the Bonds are payable in any coin or currency of the United States of America which,on the respective dates of payment thereof,shall be legal tender for the payment of public and private debts.If all the Outstanding Bonds shall subsequently be Seventh Supplemental Resolution Page 4 {00764851} DRAFT 11/30/17 >registered in the name of "Cede &Co.,”or its registered assigns,as nominee of DTC, payment of principal and interest thereon shall be made as provided in the Letter of Representations and the operational arrangements referred to therein as amended from time to time. Section 205.Maturities and Interest Rates.The Bonds shall be issued in Authorized Denominations,shall mature no later than July 1,2050,and shall bear interest at the Fixed Rate of Interest,all as further determined by the Designated Representative pursuant to Section 301 hereof. Section 206.Numbers and Letters.Bonds shall be numbered and lettered in such manner as the Designated Representative shall determine prior to delivery thereof. Section 207.Redemption.The Bonds shall be subject to redemption (including redemption by application of sinking fund payments)as determined by the Designated Representative pursuant to Section 301 hereof. Section 208.No Redemption of Bonds from Construction Fund Moneys.The Bonds shall not be subject to redemption pursuant to subsection 503(8)of the Resolution. ARTICLE III Sale and Delivery of Bonds Section 301.Sale of Bonds. (A)The Bonds shall be sold at negotiated sale to the Purchaser pursuant to the terms of the Loan Agreement.The Designated Representative is hereby authorized to negotiate terms for the purchase of the Bonds,review,approve and execute the Loan Agreement,with such terms as are approved by him or her pursuant to this Section and consistent with this Seventh Supplemental Resolution.The Authority's financial advisor has advised the Authority that market conditions are fluctuating and,as a result,the most favorable market conditions may occur on a day other than a scheduled meeting date of the Authority.The Authority has determined that it would be in the best interest of the Authority to delegate to the Designated Representative for a limited time the authority to approve the final interest rate or rates, aggregate principal amount,interest payment dates,terms of redemption and redemption rights and principal amounts of each principal installment/maturity date of the Bonds.The Designated Representative is hereby authorized to approve the final interest rate or rates,interest payment dates,principal installment/maturity dates,principal installments/maturities,terms of redemption and redemption rights for the Bonds in the manner provided hereafter so long as the aggregate principal amount of the Bonds does not exceed $2,136,000;provided,however,that notwithstanding the foregoing the Designated Representative is not authorized,empowered,or directed to execute or deliver the Loan Agreement until the Committee,or its designee for the Diversion Project,shall have approved the final terms of the Loan Agreement and shall have requested the Authority to execute and deliver the Loan Agreement. Seventh Supplemental Resolution Page 5 {00764851} DRAFT 11/30/17 In determining the final interest rate or rates,interest rate payment date or dates, aggregate principal amount,principal installment/maturity dates,principal installment/maturities,terms of redemption and redemption rights,the Designated Representative,in consultation with Authority staff and the Authority's financial advisor shall take into account those factors that,in his or her judgment,will result in the most favorable terms for the Bonds,including,but not limited to current financial market conditions and current interest rates for obligations comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in this Section 301,the Designated Representative is hereby authorized to execute the final form of the Loan Agreement,upon the Designated Representative's approval of the final interest rate or rates,interest payment dates, aggregate principal amount,principal installment/maturities,terms of redemption and redemption rights set forth therein.Such terms shall be set forth in Exhibit A to the Loan Agreement and an exhibit setting forth such final terms of the Bonds shall be attached to this Seventh Supplemental Resolution as Exhibit A,and thereby incorporated into this Seventh Supplemental Resolution.The authority granted to the Designated Representative by this Section 301 shall expire 90 days after the date of approval of this Seventh Supplemental Resolution.If a Loan Agreement for the Bonds has not been executed within 90 days after the date of final approval of this Seventh Supplemental Resolution,the authorization for the issuance of the Bonds shall be rescinded,and the Bonds shall not be issued nor their sale approved unless such Bonds shall have been re-authorized by resolution of the Authority.The resolution re-authorizing the issuance and sale of such Bonds may be in the form of a new Supplemental Resolution repealing this Seventh Supplemental Resolution in whole or in part or may be in the form of an amendatory resolution approving a Loan Agreement or establishing terms and conditions for the authority delegated under this Section 301. (B)Upon the passage and approval of this Seventh Supplemental Resolution,each Designated Representative is authorized and directed to undertake all action necessary for the prompt execution and delivery of the Bonds to the Purchaser and to execute the Loan Agreement and all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the Loan Agreement. Section 302.Delivery of Bonds.The Chair,Vice Chair,Executive Director,the Acting Executive Director,Chief Financial Officer and such other person or persons as may be designated by the Executive Director are specifically designated as Authorized Officers as defined in the Resolution,and they hereby are severally authorized,after execution of the Bonds,to deliver the Bonds to the Trustee for authentication under the Resolution and,upon authentication and upon receipt of the balance of the purchase price of the Bonds,to deliver to the Trustee a written order in the name of the Authority directing the Trustee to deliver the Bonds to or upon the order of the Purchaser and to receive the proceeds of sale of the Bonds and give a written receipt therefor on behalf of the Authority,to apply said proceeds and the other moneys required to be transferred or deposited in accordance with the terms of the Resolution and this Seventh Supplemental Resolution and in such manner as is required to cause the conditions precedent to the issuance of the Bonds to be complied with,and to do and perform or cause to be done and performed,for and on behalf of the Authority,all acts Seventh Supplemental Resolution Page 6 {00764851} DRAFT 11/30/17 and things that constitute conditions precedent to the authentication and delivery of the Bonds or that are otherwise required or convenient to be done and performed by or on behalf of the Authority prior to or simultaneously with the delivery of the Bonds.Such Authorized Officers are hereby severally authorized for and on behalf of the Authority to do or cause to be done all acts and things required or desirable to be done by the Authority under and pursuant to the terms of the Resolution and in accordance with the terms and conditions of the Loan Agreement. ARTICLEIV Paying Agent Section 401.Appointment of Paving Agent.U.S.Bank National Association is appointed Paying Agent for the Bonds pursuant to Section 902 of the Resolution. ARTICLE V Ratification Section 501.Ratification,Confirmation and Approval.Pursuant to Section 713 of the Resolution,the Authority has assigned,pledged and transferred its rights under the Power Sales Agreement to the Trustee for the benefit of Bondholders and further agreed to enforce its terms.This Board hereby ratifies,approves and confirms the Power Sales Agreement as a valid and binding obligation of the Authority and further authorizes and directs that the Power Sales Agreement,including all amendments thereto,certified by an Authorized Officer,be filed with the Trustee. ARTICLE VI Effective Date Section 601.Seventh Supplemental Resolution Effective Date.This Seventh Supplemental Resolution shall take effect immediately. Supplemental Resolution approved and adopted by the Alaska Energy Authority on December 7,2017. ALASKA ENERGY AUTHORITY CHAIR [SEAL] ATTEST: SECRETARY Seventh Supplemental Resolution Page 7 {00764851} DRAFT 11/30/17 EXHIBIT A BOND TERMS Seventh Supplemental Resolution Page 8 {00764851} {00764853} ALASKA ENERGY AUTHORITY RESOLUTION NO.2017-09 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF POWER REVENUE BONDS,NINTH SERIES (BATTLE CREEK DIVERSION PROJECT),IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $4,864,000 AND DETERMINING RELATED MATTERS Adopted December 7,2017 DRAFT 11/30/17 - Section 101. Section 102. Section 103. TABLE OF CONTENTS Page ARTICLE I Definitions and Authority Short Title.0...eee sesscssessecesccescescesseecseeesseseesscssesesesecsessesseesseseeeeesseeesesesens 1 Definitions,........eceeeeeececsceeeceeececessceceesscesceescsesecssecscessecsecsceeeeseneesesensseasenasens 1 Authority for this Resolution............:ccscccssssssssscesscseeceeaeceseeeseceseeeeseeeneeeses 2 ARTICLE II Authorization;Terms and Issuance Section 201.Authorization,Principal Amount,Interest Rates,Designation and Series...2 Section 202.Purposes;Construction Fund;Reserve Fund............ccsccsssessecesseceseseteeeeoneres 3 Section 203.Issue Date and Form;Book-Enttry............ccsccssscssseceecsrecesceetecseeecssaceneseesneoes 3 Section 204.Places and Manner of Payment.00.0...eesecseesscseecesecsetscesseseesesusseseesseeos 4 Section 205.Maturities and Interest Rates..........ccc eesesssecssceescceeceesseeeceeceeeeeeseseeeseeeesseees 5 Section 206.Numbers and Letters.0.0...ceesscssceesecesceeceseeeeeesceesseesccesseeeseeesseseseeeseeeeseeees 5 Section 207.Redemption........ccccsscscsssssssssserssssessnsesteseseseneseeseenessessasasesesereeeesessseseseseesenenes 5 Section 208.No Redemption of Bonds from Construction Fund MoneyS.............:+++5 ARTICLE III Sale and Delivery of Bonds Section 301.Sale of Bonds,o.....eee eeesssssceesceseceecesceeseeeaecacesecencesseessesesseeneseneseaeeeneesneees 5 Section 302.Delivery of Bonds.0.0...ceesessssscsseceesececeeeceenecenenseseceseceeeeeseseaeeseeeaseneeeneees 6 ARTICLEIV Paying Agent Section 401.Appointment of Paving Agent.00.0.0...ccesccsssesseececceseeesseeeseseeeessneeeneeeseeees 7 ARTICLE V Ratification Section 501.Ratification,Confirmation and Approval..........c.cccscsssssceeeeesessseseesees 7 ARTICLE VI Effective Date Section 601.Eighth Supplemental Resolution Effective Date...ceseccsseeseesseeeeees 7 Exhibit A Bond Terms {00764853}i DRAFT 11/30/17 ALASKA ENERGY AUTHORITY RESOLUTION NO.2017-09 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF POWER REVENUE BONDS,NINTH SERIES (BATTLE CREEK DIVERSION PROJECT),IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $4,864,000 AND DETERMINING RELATED MATTERS BE IT RESOLVED by the Board of Directors of the Alaska Energy Authority on the 7th day of December,2017 that pursuant to the Power Revenue Bond Resolution adopted on September 7,1989,(hereinafter referred to as the "Resolution”),this Supplemental Resolution is adopted as follows: ARTICLE I Definitions and Authority Section 101.Short Title.This resolution may hereafter be cited by the Authority,and is hereinafter sometimes referred to,as the "Eighth Supplemental Resolution.” Section 102.Definitions. (A)All defined terms contained in the Resolution shall have the same meanings in this Eighth Supplemental Resolution as such defined terms are given in Section 102 of the Resolution. (B)In addition,as used in this Eighth Supplemental Resolution,unless the context shall otherwise require,the following terms shall have the following respective meanings: Authorized Denomination means $25,000 and integral multiples of $1.00 in excess thereof. Beneficial Owner means the person in whose name a Bond is recorded as the beneficial owner of such Bond by the respective systems of DTC and the DTC Participants or the registered owner of the Bond if the Bond is not then held in book-entry form under Section 203. Bonds means the Ninth Series Bonds. Continuing Disclosure Agreement means the Continuing Disclosure Agreement,if any, executed by the Authority and dated the date of the Bonds are issued and as it may be amended from time to time in accordance with the terms thereof. Eighth Supplemental Resolution Page 1 {00764853} DRAFT 11/30/17 Conversion Date means the date on which interest on the Bonds is converted from the Variable Rate of Interest to the Fixed Rate of Interest. Designated Representative means the Authority's Executive Director,Acting Executive Director and Chief Financial Officer. DTC means The Depository Trust Company,a limited purpose trust company organized under the laws of the State of New York,and its successors and assigns. DTC Participant means a trust company,bank,broker,dealer,clearing corporation and any other organization that is a participant of DTC. Diversion Project means the Battle Creek Diversion Project which is a Capital Improvement approved by the Committee as Optional Project Work. Fixed Rate of Interest means,on or about the Conversion Date,the fixed rate of interest not to exceed the National Cooperative Services Corporation Long Term Fixed Rate,as quoted by National Cooperative Services Corporation on a daily basis. Letter of Representations means the Blanket Issuer Letter of Representations dated October 24,1997,from the Authority to DTC. Loan Agreement means that certain loan agreement,or similar type agreement,between the Authority and the Purchaser relating to the sale of the Bonds. Ninth Series Bonds means the Bonds of the Authority authorized by this Eighth Supplemental Resolution and herein designated "Power Revenue Bonds,Ninth Series.” Purchaser means National Cooperative Services Corporation. Variable Rate of Interest means the variable rate of interest not to exceed the National Cooperative Services Corporation Standard Variable Rate,as quoted by National Cooperative Services Corporation on a daily basis. Section 103.Authority for this Resolution.This Eighth Supplemental Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization;Terms and Issuance Section 201.Authorization,Principal Amount,Interest Rates,Designation and Series. (A)In order to provide funds necessary for the purposes specified in Section 204 of the Resolution,in accordance with and subject to the terms,conditions and _limitations established herein and in the Resolution,a Series of Power Revenue Bonds (taxable)is hereby Eighth Supplemental Resolution Page 2 {00764853} DRAFT 11/30/17 authorized to be issued in an aggregate principal amount not to exceed $4,864,000.The Bonds are being issued for the purpose of financing a portion of the costs of the Diversion Project.The Bonds of such Series shall be designated and entitled "Power Revenue Bonds,Ninth Series (Battle Creek Diversion Project).” (B)The Bonds will be issued in the form of a draw-down obligation to be funded over time,as necessary,to pay costs of the Diversion Project.The Bonds will be issued and sold to the Purchaser as a single bond and will be dated as of the date of delivery of the Bonds to the Purchaser.The Bonds shall bear interest at the Variable Rate of Interest for the first thirty-six months following the date of delivery of the Bonds to the Purchaser and thereafter interest on the Bonds shall convert to,and accrue at,the Fixed Rate of Interest until maturity. (C)The Authority hereby finds and determines that the establishment in the Resolution of the Capital Reserve Fund will enhance the marketability of the Bonds. Section 202.Purposes;Construction Fund;Reserve Fund. (A)The purpose for which the Bonds are being issued is to finance costs and expenses of planning,designing,acquiring,and construction of the Diversion Project.The Authority is of the opinion and hereby determines that the Diversion Project is an addition, betterment or expansion of the Project.The Committee has,by resolution,deemed the Diversion Project as Optional Project Work pursuant to the terms of the Power Sales Agreement. (B)There is hereby established within the Construction Fund the Ninth Series Construction Account.The Trustee shall deposit proceeds of the Bonds into the Ninth Series Construction Account and shall hold such proceeds for the payment of Costs of Acquisition and Construction of the Diversion Project in accordance with Section 503 of the Resolution; provided,however,that the Designated Representative may instruct the Trustee to hold a portion of such proceeds or such other amounts for payment of Costs of Issuance,and the Trustee shall apply such proceeds or such other amounts to pay such costs as instructed by the Designated Representative. (C)There is hereby established within the Capital Reserve Fund the Ninth Series Capital Reserve Account.The Trustee shall deposit available amounts provided by the Authority into the Ninth Series Capital Reserve Account,as necessary to satisfy the Capital Reserve Fund Requirement,and hold such amounts in accordance with Section 508 of the Resolution. Section 203.Issue Date and Form:Book-Entry. (A)The Bonds shall be dated as of the date of delivery of the Bonds to the Purchaser. (B)The Bonds shall be registered initially in the name of the Purchaser of the Bonds, and shall be issued initially in the form of a single Bond.Registered ownership of the Bonds, or any portions thereof,may not thereafter be transferred except as provided in paragraph (D) Eighth Supplemental Resolution Page 3 {00764853} DRAFT 11/30/17 below. (C)The Authority confirms its appointment of the Trustee to serve as the Bond Registrar under the terms of the Resolution. (D)In the case of any transfer of ownership of the Bonds,the Trustee shall,upon receipt of all Outstanding Bonds,together with a written request of an Authorized Officer and a supply of new Bonds authenticate a single new Bond with principal installments for each maturity in the amount of such maturity or new Bonds,in Authorized Denominations,for each installment/maturity of Bonds then Outstanding,registered in the name of a new person,entity or depository,or its nominee,as the case may be,all as specified in such written request. (E)If the Bonds are subsequently held in book-entry form under this Section,the Authority and the Trustee may treat DTC (or its nominee)as the sole and exclusive registered owner of the Bonds registered in its name for the purposes of payment of principal or Redemption Price of and interest on such Bonds,selecting such Bonds or portions thereof to be redeemed,giving any notice permitted or required to be given to Bondholders under the Resolution,registering the transfer of such Bonds and obtaining any consent or other action to be taken by Bondholders and for all other purposes whatsoever,and neither the Authority nor the Trustee shall be affected by any notice to the contrary.Neither the Authority nor the Trustee shall have any responsibility or obligation to any DTC Participant,any person claiming a beneficial ownership interest in the Bonds under or through DTC or any DTC Participant,or any other person not shown on the registration books of the Trustee as being a registered owner with respect to the accuracy of any records maintained by DTC or any DTC Participant,the payment by DTC or any DTC Participant of any amount in respect of the principal or Redemption Price of or interest on the Bonds,any notice which is permitted or required to be given to Bondholders under the Resolution,the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of the Bonds,or any consent given or other action taken by DTC as Bondholder.The Trustee shall pay from monies available under the Resolution all principal and Redemption Price of and interest on Bonds only to or upon the order of DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to the principal or Redemption Price of and interest on the Bonds to the extent of the sum or sums so paid. Section 204.Places and Manner of Payment.Payment of interest on the Bonds will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee, or,upon the written request of a registered owner of at least $1,000,000 in principal amount of Bonds received at least 15 days prior to an interest payment date,by wire transfer in immediately available funds to an account in the United States of America designated by such registered owner;principal of the Bonds will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee with the final installment of principal payable at the corporate trust office of the Trustee upon surrender of the Bonds representing such principal. Both principal of and interest on the Bonds are payable in any coin or currency of the United Eighth Supplemental Resolution Page 4 {00764853} DRAFT 11/30/17 States of America which,on the respective dates of payment thereof,shall be legal tender for the payment of public and private debts.If all the Outstanding Bonds shall subsequently be registered in the name of "Cede &Co.,”or its registered assigns,as nominee of DTC, payment of principal and interest thereon shall be made as provided in the Letter of Representations and the operational arrangements referred to therein as amended from time to time Section 205.Maturities and Interest Rates.The Bonds shall be issued in Authorized Denominations,shall mature no later than July 1,2050,and shall bear interest at the Variable Rate of Interest for the three years following the date of issuance of the Bonds and then convert to the Fixed Rate of Interest through maturity,all as further determined by the Designated Representative pursuant to Section 301 hereof. Section 206.Numbers and Letters.Bonds shall be numbered and lettered in such manner as the Designated Representative shall determine prior to delivery thereof. Section 207.Redemption.The Bonds shall be subject to redemption (including redemption by application of sinking fund payments)as determined by the Designated Representative pursuant to Section 301 hereof. Section 208.No Redemption of Bonds from Construction Fund Moneys.The Bonds shall not be subject to redemption pursuant to subsection 503(8)of the Resolution. ARTICLE ITI Sale and Delivery of Bonds Section 301.Sale of Bonds. (A)The Bonds shall be sold at negotiated sale to the Purchaser pursuant to the terms of the Loan Agreement.The Designated Representative is hereby authorized to negotiate terms for the purchase of the Bonds,review,approve and execute the Loan Agreement,with such terms as are approved by him or her pursuant to this Section and consistent with this Eighth Supplemental Resolution.The Authority's financial advisor has advised the Authority that market conditions are fluctuating and,as a result,the most favorable market conditions may occur on a day other than a scheduled meeting date of the Authority.The Authority has determined that it would be in the best interest of the Authority to delegate to the Designated Representative for a limited time the authority to approve the final aggregate principal amount,the principal installment(s)/maturity dates,terms of redemption and redemption rights and principal amounts of each principal installments/maturity dates of the Bonds.The Designated Representative is hereby authorized to approve the principal installments/maturity date(s),interest payment dates,terms of redemption and redemption rights for the Bonds in the manner provided hereafter so long as the aggregate principal amount of the Bonds does not exceed $4,864,000;provided,however,that notwithstanding the foregoing the Designated Representative is not authorized,empowered,or directed to execute or deliver the Loan Agreement until the Committee,or its designee for the Diversion Project,shall have Eighth Supplemental Resolution Page 5 {00764853} DRAFT 11/30/17 approved the final terms of the Loan Agreement and shall have requested the Authority to execute and deliver the Loan Agreement. In determining the aggregate principal amount,interest payment dates,principal installments/maturities dates,principal installments/maturities,terms of redemption and redemption rights,the Designated Representative,in consultation with Authority staff and the Authority's financial advisor shall take into account those factors that,in his or her judgment, will result in the most favorable terms for the Bonds,including,but not limited to current financial market conditions and current interest rates for obligations comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in this Section 301,the Designated Representative is hereby authorized to execute the final form of the Loan Agreement,upon the Designated Representative's approval of the aggregate principal amount,interest payment dates,principal installments/maturities dates,principal installments/maturities,terms of redemption and redemption rights set forth therein.Such terms shall be set forth in Exhibit A to the Loan Agreement and an exhibit setting forth such final terms of the Bonds shall be attached to this Eighth Supplemental Resolution as Exhibit A,and thereby incorporated into this Eighth Supplemental Resolution.The authority granted to the Designated Representative by this Section 301 shall expire 90 days after the date of approval of this Eighth Supplemental Resolution.If a Loan Agreement for the Bonds has not been executed within 90 days after the date of final approval of this Eighth Supplemental Resolution,the authorization for the issuance of the Bonds shall be rescinded,and the Bonds shall not be issued nor their sale approved unless such Bonds shall have been re-authorized by resolution of the Authority.The resolution re-authorizing the issuance and sale of such Bonds may be in the form of a new Supplemental Resolution repealing this Eighth Supplemental Resolution in whole or in part or may be in the form of an amendatory resolution approving a Loan Agreement or establishing terms and conditions for the authority delegated under this Section 301. (B)Upon the passage and approval of this Eighth Supplemental Resolution,each Designated Representative is authorized and directed to undertake all action necessary for the prompt execution and delivery of the Bonds to the Purchaser and to execute the Loan Agreement and all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the Loan Agreement. Section 302.Delivery of Bonds.The Chair,Vice Chair,Executive Director,Acting Executive Director,Chief Financial Officer and such other person or persons as may be designated by the Executive Director are specifically designated as Authorized Officers as defined in the Resolution,and they hereby are severally authorized,after execution of the Bonds,to deliver the Bonds to the Trustee for authentication under the Resolution and to deliver to the Trustee a written order in the name of the Authority directing the Trustee to deliver the Bonds to or upon the order of the Purchaser,to cause the conditions precedent to the issuance of the Bonds to be complied with,and to do and perform or cause to be done and performed,for and on behalf of the Authority,all acts and things that constitute conditions precedent to the authentication and delivery of the Bonds or that are otherwise required or Eighth Supplemental Resolution Page 6 {00764853} DRAFT 11/30/17 convenient to be done and performed by or on behalf of the Authority prior to or simultaneously with the delivery of the Bonds.Such Authorized Officers are hereby severally authorized for and on behalf of the Authority to do or cause to be done all acts and things required or desirable to be done by the Authority under and pursuant to the terms of the Resolution and in accordance with the terms and conditions of the Loan Agreement. ARTICLEIV Paying Agent Section 401.Appointment of Paving Agent.U.S.Bank National Association is appointed Paying Agent for the Bonds pursuant to Section 902 of the Resolution. ARTICLE V Ratification Section 501.Ratification,Confirmation and Approval.Pursuant to Section 713 of the Resolution,the Authority has assigned,pledged and transferred its rights under the Power Sales Agreement to the Trustee for the benefit of Bondholders and further agreed to enforce its terms.This Board hereby ratifies,approves and confirms the Power Sales Agreement as a valid and binding obligation of the Authority and further authorizes and directs that the Power Sales Agreement,including all amendments thereto,certified by an Authorized Officer,be filed with the Trustee. ARTICLE VI Effective Date Section 601.Eighth Supplemental Resolution Effective Date.This Eighth Supplemental Resolution shall take effect immediately. Supplemental Resolution approved and adopted by the Alaska Energy Authority on December 7,2017. ALASKA ENERGY AUTHORITY CHAIR [SEAL] ATTEST: SECRETARY Eighth Supplemental Resolution Page 7 {00764853} DRAFT 11/30/17 EXHIBIT A BOND TERMS Eighth Supplemental Resolution Page 8 {00764853} MD pfm _Alaska Energy Authority Battle Creek Diversion Project Finance Plan Summary November 30,2017 PFM Financial Advisors LLC 1200 Fifth Avenue Fred Eoff Suite 1200 206.858.5370 Seattle,WA 98101 eofff@pfm.com Q Battle Creek Diversion Project Finance Plan Overview @ The finance team solicited loan proposals from the following lenders USDA Rural Utility Services *CoBank National Rural Utilities Cooperative Finance Corporation (NRUCFC) @ NRUCFC was selected as the lender of choice based on terms proposed @ Loan Commitment totaling $47,000,000 *Series ALoan *$40,000,000 *This loan is connected to an interest rate subsidy provided by the New Clean Renewable Energy Bond (NCREB) program.AEA applied for and was awarded this subsidy authorization on October 5,2017 *SeriesBLoan *$2,136,000 «This loan is expected to be connected to an interest rate subsidy provided by the Qualified Energy Conservation Bond program.The application is pending with the State of Alaska and we are optimistic we will be awarded the maximum allowed capacity of $2,136,000. »SeriesCLoan +$4,864,000 *This loan will carry no interest subsidy.It is approved by CFC but will be drawn only in an amount,if any,needed for project costs oa ©PFM me Series A (NCREB) Net Debt Service Comparison SerlesB(QECB)SerlesC "NetPeriodEndsO&M _Net , 7/1 Costs*Principal Interest 7 Subsidy *Principal _Interest”Subsidy *Principal Interest?Debt Service Annual Cost 2018 $837,200 ($537,424)$44,706 ($28,698)oo 315,784 $315,784 2019 1,656,000 (1,074,847)88,430 (57,397)oe -612,186 612,186 2020 1,656,000 (1,074,847)88,430 (57,397)612,186 612,186 2021 $275,000 $1,333,334 1,656,000 (1,074,847)-«$71,200 88,430 (57,397) a 2,016,720 2,291,720 2022 280,500 1,333,334 1,600,800 (1,039,019)71,200 85,483.(57,397)SO 1,994,401 2,274,901 2023 286,110 1,333,334 1,545,600 (1,003,191)71,200 82,535 (53,570)__"1,975,908 2,262,018 2024 291,832 1,333,334 1,490,400 -(96 7,362)71,200 79,587 -=(51,657)- 1,955,502 2,247,334 2025 297,669 =1,333,334 1,435,200 (931,534)71,200 76,640 (49,744); Oo 1,935,095 2,232,764 2026 303,622 =»1,333,334 1,380,000 (895,706)71,200 73,692,(47,831)"1,914,689 2,218,311 2027 309,695 1,333,334 1,324,800 (859,878)=71,200 70,744 =(45,917)1,894,283 2,203,978 2028 315,889 «1,333,334 1,269,600 =(824,049)-=71,200 67,797 (44,004)oo 1,873,877 2,189,765 2029 322,206 =»1,333,334 1,214,400 (788,221)71,200 «64,849 = (42,091)_"1,853,471 2,175,6772030328,650 1,333,334 1,159,200 (752,393)=71,200 61,901 (40,178);1,833,064 2,161,715 2031 335,223 1,333,333 1,104,000 (716,565)=71,200 58,954 (38,265)a 1,812,657 2,147,881 2032 341,928 1,333,333 1,048,800 «=(680,736)«71,200 56,006 =(36,351)-_1,792,251 2,134,179 2033 348,766 1,333,333 993,600 (644,908)=71,200 53,058 =(34,438)ss 2,120,628 2034 355,742 «1,333,333 938,400 (609,080)==71,200 50,212 (32,525)1,751,439 «2,107,1802035,362,857 1,333,333 883,200 (573,252)«71,200 =47,163 (30,612) a 1,731,032 2,093,889 2036 370,114 1,333,333 828,000 (537,423)«71,200 =44,215 =(28,698)1,710,626 2,080,740 2037 377,516 =--«1,333,333 772,800 =(501,595)71,200 41,268 = (26,785)1,690,220 _--2,067,736 2038 385,066 1,333,333 717,600 ©(465,767)71,200 38,320 (24,872)1,669,814 2,054,880 2039 392,768 1,333,333 662,400 (429,939)71,200 35,372 (22,959)1,649,407 2,042,175 2040 400,623 1,333,333 «607,200 =(394,111)==71,200 «32,424 -(21,046)1,629,001 2,029,624 2041 408,636 1,333,333 552,000 (358,282)-=-71,200 29,477,(19,132)OO 1,608,595 2,017,231 2042,416,808 1,333,333 «496,800 (322,454)71,200 26,529 (17,219)1,588,189 2,004,997 2043 425,144 1,333,333 441,600 «=(286,626)=»71,200 «=23,581.(15,306)a 1,567,783 1,992,927 2044 433,647 1,333,333 386,400 (250,798)-=71,200 20,634 (13,393)1,547,376 1,981,024 2045 442,320 1,333,333 «331,200 (214,969)=71,200 17,686 (11,479)-1,526,970 1,969,290 2046 451,167 1,333,333 276,000 =(179,141)==71,200 14,738 =(9,566)a «1,806,564 1,957,731 2047 460,190 1,333,333 220,800 =(143,313)71,200 11,791 (7,653)1,486,158 1,946,348 2048 469,394 1,333,333 «165,600 -=s (107,485)-=-71,200 8843 (5,740)- 1,465,752 1,935,145 2049 478,782 1,333,333 110,400 =(71,656)=71,200 5,895 (3,826)1,445,345 1,924,127 2050 488,357 _1,333,333 55,200 __'(35,828)_-=71,200 __2,948 (1,913)1,424,939 _1,913,296 40,000,000 29,817,196 (19,347,247)2,136,000 1,592,238 (1,035,056)0 ==--<C C: S:* * "*é« S AG 3,132 64,319,353 1)O&M Cost Inflater@ 2.00% .7 Total Cost of Power (30 Years)$64,319,353 2)Loan rate assumed @ 4.14% . , .Total MWh 1,110,000 3)NCREB&QECB subsidy basis @ 4.11%Average $/MWh $57.95 Net Debt Service Comparison -Full Draw Period Ends o&M SeriesA (NCREB)Series B (QECB)Series C Net Net 7/1 Costs*Principat Interest ?Subsidy*Principal Interest?Subsidy?Principal Interest >Debt Service Annual Cost 2018 $837,200 ($537,424)$44,706 ($28,698)101,804 417,588 $417,588 2019 1,656,000 (1,074,847)88,430 (57,397)201,370 813,556 813,556 2020 1,656,000 (1,074,847)88,430 (57,397)201,370 813,556 813,556 2021 $275,000 $1,333,334 1,656,000 (1,074,847)$71,200 88,430 (57,397)162,134 201,370 2,380,224 2,655,224 2022 280,500 1,333,334 1,600,800 (1,039,019)71,200 85,483 (57,397)162,134 194,657 2,351,192 2,631,692 2023 286,110 1,333,334 1,545,600 (1,003,191)71,200 82,535 (53,570)162,134 187,945 2,325,987 2,612,097 2024 291,832 1,333,334 1,490,400 (967,362)71,200 79,587 (51,657)162,134 181,233 2,298,868 2,590,700 2025 297,669 1,333,334 1,435,200 (931,534)71,200 76,640 (49,744)162,134 174,520 2,271,750 2,569,419 2026 303,622 1,333,334 1,380,000 (895,706)71,200 73,692 (47,831)162,134 167,808 2,244,631 2,548,253 2027 309,695 1,333,334 1,324,800 (859,878)71,200 70,744 (45,917)162,134 "161,096 2,217,513 2,527,207 2028 315,889 1,333,334 1,269,600 (824,049)71,200 67,797 (44,004)162,134 154,383 2,190,394 2,506,283 2029 322,206 1,333,334 1,214,400 (788,221)71,200 64,849 (42,091)162,134 147,671 2,163,275 2,485,482 2030 328,650 1,333,334 1,159,200 (752,393)71,200 61,901 (40,178)162,134 140,958 2,136,157 2,464,807 2031 335,223 1,333,333 1,104,000 (716,565)71,200 58,954 (38,265)162,133 134,246 2,109,036 2,444,260 2032 341,928 1,333,333 1,048,800 (680,736)71,200 56,006 (36,351)162,133 127,534 2,081,918 2,423,846 2033 348,766 1,333,333 993,600 (644,908)71,200 53,058 (34,438)162,133 120,822 2,054,799 2,403,566 2034 355,742 1,333,333 938,400 "(609,080)71,200 50,111 (32,525)162,133 114,109 2,027,681 2,383,423 2035 362,857 1,333,333 883,200 (573,252)71,200 47,163 |(30,612)162,133 107,397 2,000,562 2,363,419 2036 370,114 1,333,333 828,000 (537,423)71,200 44,215 (28,698)162,133 100,685 1,973,444 2,343,558 2037 377,516 1,333,333 772,800 (501,595)71,200 41,268 (26,785)162,133 _93,972 1,946,325 2,323,841 2038 385,066 1,333,333 "-717,600 (465,767)71,200 38,320 (24,872)162,133 87,260 1,919,207 2,304,273 2039 392,768 1,333,333 662,400 (429,939)-«71,200 35,372 -«(22,959)162,133 80,548 1,892,088 2,284,856 2040 400,623 "1,333,333 607,200 (394,111)71,200 -32,424 (21,046)162,133 73,835 1,864,970 2,265,593 2041 408,636 1,333,333 552,000 (358,282)71,200 29,477 (19,132)162,133 67,123 1,837,851 2,246,487 2042 416,808 1,333,333 496,800 (322,454)71,200 26,529 (17,219)162,133 60,411 1,810,733 2,227,541 2043 425,144 1,333,333 441,600 (286,626)71,200 23,581 (15,306)162,133 53,698 1,783,614 2,208,758 2044 433,647 1,333,333 386,400 (250,798)71,200 20,634 (13,393)162,133 46,986 1,756,496 2,190,143 2045 442,320 1,333,333 331,200 (214,969)71,200 17,686 (11,479)162,133 40,274 1,729,377 2,171,697 2046 451,167 1,333,333 276,000 (179,141)71,200 14,738 (9,566)162,133 33,562 1,702,259 2,153,425 2047 460,190 1,333,333 220,800 (143,313)71,200 11,791 (7,653)162,133 26,849 1,675,140 2,135,330 2048 469,394 1,333,333 165,600 (107,485)71,200 8,843 (5,740)162,133 20,137 1,648,022 2,117,415 2049 478,782 1,333,333 110,400 (71,656)71,200 5,895 (3,826)162,133 13,425 1,620,903 2,099,685 2050 488,357 1,333,333 55,200 (35,828)71,200 2,948 (1,913)162,133 6,712 1,593,785 2,082,142 40,000,000 29,817,196 (19,347,247)2,136,000 1,592,238 (1,035,056)4,864,000 3,625,767 61,652,898 72,809,120 1)O&M Cost Inflater @ 2.00%Total Cost of Power(30 Years)$72,809,120 2)Loan rate assumed @ 4.14%Total MWh 1,110,000 3)NCREB&QECB subsidy basis @ 4.11%Average $/MWh $65.59 ©PFM . ,/ _ ci Sources and Uses ia .-. 'Sejeigate i Be een Re ee Sa ane eteTab oe ne nae FE cotta peersBL centantsnica NorlandME Siena seinen ay acme er| .-a Optimal Full Draw Series A Loan (NCREB)$40,000,000 $40,000,000 SeriesBloan(QECB)ss --Ss«2,136,000 (2,136,000 SeriesClonn =4,864,000 Utility Cash Contribution -_3,148,964 -3,512,468 TotalSources ss $45,284,964 $50,512,468 r ProjectConstruction ©941,964,000 $46,828,000 Capital Reserve Fund 3,148,904 3,512,468 Transaction Expenses 172,000 172,000 Total Uses_-$45,284,964 =$50,512,468 ©PFM Bradley Lake Operator Report BPMC December 1,2017 Unit Statistics:as of 11/28/2017* Generation Unit 1 (MWhrs)Unit 2 (MWhrs)Total (MWhrs) November*2017 22,335 21,385 43,720 Hydraulics Avg.Lake Level (ft.)Usage (ac ft.)Fish water (ac ft.) November*2017 1167.3 39,068 62.15 AVG Lake Level -1162.2'as of 11/28/2017 Capital Projects: 1)Unit 2 high PD indication -Awaiting the report back from IRIS -no change at this time. 2)Fish Water Control Automation --corrected issue with the reading "saturating” and going to 0 (false indication)during high tides.The gaging stations are now showing evidence of icing up. 3)Public Dock -The floating dock has been removed for winter. 4)Loader Purchase -Proposals were received from potential vendors to supply a new loader to Bradley lake.The O&D is going to assist in the evaluation of the proposals. Operations,Maintenance,and Inspections: 1) 2) 3) 4) 5) Operations-Operations at the Plant were fairly normal with high output (43,720 MWH). Unit availability-Unit 1 100%,Unit 2 99.06%(6-hour shutdown due to unit 2 not needed). Winter Prep -Chains were placed on the grader,the dump truck and the plow truck and the dump truck was filled with sand. Runway lights -fixed all runway indicators. LED lights in Powerhouse -installed the first row of three of the highefficiencyLEDhighbaylights.Not only do they use a lot less electricity when on,they are programmed to go off (except a couple)when the bay is not occupied.We are looking at paying for the lights (14,000 dollars costs)in electrical savings (at $45/MWh)in about 2 to 3 years. Completed inspections -Spillway drains,tunnel drains,fire Extinguisher inspection and DSSP compliance. Monthly Safety Meeting -was held November 13. Holidays and vacations -Due to the holidays and vacations this month it meant we operated with a reduced crew. Bradley Lake Operator Report Page 1 Bradley Lake Project Management Committee -Alaska Online Public Notices Page 1 of 1 STATUS:Active Bradley Lake Project Management Committee ALASKA ENERGY AUTHORITY (AEA) Bradley Lake Project Management Committee Notice is hereby given that the Bradley Lake Project Management Committee will hold a regular meeting on Friday,December 1,2017 at 10:00 a.m.For additional information contact Teri Webster at 907-771-3074.This meeting will be conducted by electronic media pursuant to AS 44.62.310 at the following location: Alaska Energy Authority Board Conference Room,813 West Northern Lights Boulevard,Anchorage,Alaska; A teleconference line has been set up for those unable to attend in person.Dial 1-888-585-9008,Enter Code 467-050-1 26#. The public is invited to attend.The State of Alaska (AEA)complies with Title fl of the Americans with Disabilities Act of 1990.Disabled persons requiring special modifications to participate should contact AEA staff at 907- 771-3074 to make arrangements. Attach ments,History,Details Attachments BPMC Agenda 12-1.pdf Revision History Created 11/22/2017 2:40:01 PM by tawebster Modified 11/22/2017 2:40:40 PM by tawebster [Details] Details Department: Category: Sub-Category: Location(s): Project/Regulation #: Publish Date: Archive Date: Events/Deadlines: Commerce,Community and Economic Development Public Notices Statewide 11/22/2017 12/2/2017 https://aws.state.ak.us/OnlinePublicNotices/Notices/View.aspx?id=187897 |11/22/2017 (i rNagaYPNXSEN 8. 12. 13. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Friday,December 1,2017 10:00 a.m. Alaska Energy Authority's Board Room 813 West Northern Lights Boulevard,Anchorage,AK To participate by phone,dial 1-888-585-9008 and use code 467 050 126. CALL TO ORDER ROLL CALL FOR COMMITTEE MEMBERS PUBLIC ROLL CALL PUBLIC COMMENTS AGENDA APPROVAL APPROVAL OF PRIOR MINUTES -Sept 29,2017;Oct.13,2017 NEW BUSINESS A.Approval of Annual Audited Financial Statements Swalling &Assoc. B.Operator RFP update AEA > C.Soldotna SVC O&M Agreement update HEA D.Battle Creek AEAfet2O\1-OL %o Resolution"@ Project update Ny Contract Housing Approval Battle Creek Financing Q&A Fee >Draft Resolution authorizing financing on e $40M Bond;$4.864M Bond;$2.136M Bond COMMITTEE REPORTS e O&D e Finance OPERATOR REPORT .COMMITTEE ASSIGNMENTS MEMBERS COMMENTS NEXT MEETING DATE -December 6,2017 ADJOURNMENT >Three Supplemental Bond Resolutions for each of the loans Bradley Lake Project Management Committee Meeting Friday,December 1,2017 Agenda Item:7A-Approval of FY17 Audited Financial Statements and O&M and R&C refund MOTION:Move that the Bradley Lake Project Management Committee accept the fiscal year 2017 Audited Financial Statements and approve a refund of $2,371,072 ($1,223,409 O&M and $1,147,663 R&C)to the utilities. AMove:Lory Porac SOY __ Second:lony T7720 7:23 ana BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE First Second First Second First Second fy Fits}SecondBPMC21/1/17 GAM LO Fatt OH eat |ee TeiL(OS EET AAO GE LS Roll Call Agenda Minutes Audit Executive Session Roll call from top to bottom ending with Chair \ Yes No Yes ty NS Yes No Yes No Yes No : os \Us 4 hk Matanuska Electric Association TW WwW ()s Qwyy Chugach Electric Association LL fe]Q -:ad City of Seward x)oY)Y) Golden Valley Electric Association tory Lae Alaska Energy Authority B tN an Municipal Light &Power nee Homer Electric Association rad First Second First Secand First Second First Second First Second oee324BLO(0 pusing CsUT-OL |]Fisk AmteraRollcallfromtoptobottomendingwithChair(5S ZOVI-O2 Yes No Yes No Yes No Yes No Yes No Matanuska Electric Association " Chugach Electric Association NI iY " City of Seward \\\.wae Woe Golden Valley Electric Association oc 4 Alaska Energy Authority {Ry " Municipal Light &Power \Y WV Yv " Homer Electric Association ,\Ag &" Vay].YY we SO ao le a a .Rk ke ee cee Next Meeting:11/3 7¢CEA 1s FURH INA Since toped O13FonW1®HEA [Fake Oe Tan BPMC Meehers- $ILOK Re bh SCs 2oarpoz CryMovetoremve Only -lease wat ne lading'Cory No to AtMeng Lee Wms Be dis@usdio IAF -Clorthy chert "onl!MéA oly yes,£05 yesRlotheawo Mobon Fails Motion Pass2rty amend COVT-O2 -a yes MoveL9(7-02 oe 3 add language -nor Pant fd sell Fre poh to pow or Aon patLeeoppobed-cant sell hot you dort have,ay opposes De tr r Slatus-1clerences Financialseurowertck ows roy GranceMrtssuroncedbondirayFequeskedlishAySubeontrachéssngBrontoProvide%ut.op stikias o te qaes thew processESE-cappock oily An Noung Nar 20 belo Dowl,coat #69 &kt /yr er i"De sant mee od.Can war Vidchan shawer,ef ¢see pe ” 2017-02 ° WFUBC Diversion Project RFP No.:18-018 11/8/2017 yz <to fo)3 2>-2BIDDER7<x OFF 2 s rs)5 5 <fe)S)<2 ew ==3S 2 ve)Wain52Ss)4 2°5>6 =a)Os & i 5 ra Y zo=5 a oO <2m xe)rea A G)><=°O 2 uw S <7 -Oo UO Oo 2 z2 g e2OoNOo=O°5 e a a z S ze f°oO <Ss)a =Oo Total Basic Bid $46,496,225.00]$48,439,808.00]$38,976,720.00|$45,396,429.64]$50,701,886.00]$36,475,777.50 Bid Mod.-$100,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 Mod.Basic Bid 46,396,225.00 48,439,808.00 38,976,720.00 45,396,429.64 50,701,886.00 36,475,777.50 Preferences AK Bidder's 2,319,811.25 0.00 1,948,836.00 2,269,821.48 0.00 1,823,788.88 0.00 5% AK Veteran 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5% AK Products 49,000.00 174,934.20 0.00 126,042.26 0.00 123,593.68 0.00 Adjusted Bid 44,027,413.75 48,264,873.80 37,027,884.00 43,000,565.90 50,701,886.00 34,528,394.95 $0.00 Adjusted Bid amounts are for evaluation purposes only. *AK Veterns preference not to exceed $5,000)BID RESULTS The above are bid opening results adjusted for bid modifications and applying preferences claimed by bidders. AEA has not made determination that any bids meet the minimum requirements. Bradley Project Operator Procurement Schedule Date Task Responsible Party AEA notice to utilities to decide propose or not AEA Nov 22,2017 Utilities state if they will not propose and provide names of Utilities working group Nov 22 -Jan 31 |Write up scope &evaluation criteria for RFP AEA/Utilities Feb 10,2018 RFP advertised AEA April 1,2018 RFP Due.RFPs evaluated by SOA and Utility representatives.|AEA/Utilities Additional information,interviews,evaluations? May 1,2018 Notice of Intent to Award provided AEA Sept 1,2018 New Operator staff (several)at Bradley New Operator November 2018 |New Operator setup (logistics,storage,contracts)in Homer not OddingMea MUP i ' i!i Li eee wed i i i1 | : 'CEA | | /MLP | GVEA. MEA | { | as ( 1 || \ | ! HEA | ATTENDANCE -BPMC MEETING,Dec 1 @ 10:00.am_COMMITTEE MEMBERSvACoryBorgeson,Chair . JLee Thibert,Vice Chair /rad Janorschke _aesCarey,Secretary/T reasurer |ony Izzo qnJohn Foutz . Public Members Brian Hickey (CEA/y ()/ So|Mark Johnson (CEA)SY/|Sherti Higher (CEA)/:Paul Risse (CEA)| !Rich Baldwin (HEA)pneAlan Owens (HEA)|v _Emily Hutchinson (HEA)J Larry Jorgensen (HEA):J,Anna Henderson (MLP)WAMolly Morrison (MLP)Y|pno'Ron Woolf (GVEA)/:Pete Sarauer (GVEA)-im Brooks (MEA)A|David PPease (MEA)/-.J Bernie Smith "J ||Crystal Enkvist (APA)J |Mel Hutchinson (APA) /TW Patch /|pho Fred Eoff(PFM)4 Cindy Cartledge (JDO)Y:Eric Myers (American Transmission Co)|bagj DON SquadoyeeoWa.$s,\yeYWSeshResirele-(Céa)/ ALTERNATE |eo Quiachon |”|GVEA |wien achon|CEA "Burke WickHEA7"Bob Day vu AEA Kirk Warren Due -MEA |Tony Zelles / "MLP :7,seff Warner YY COUNSEL | -, | Kirk Gibson,McDowell Rackner &Gibson PC| Brian Bjorkquist,Dept.of Law |AEA borer Applegate yy Amy Ader|Jocelyn Gardner=1 78eBrandi White _y en Noole |:rteeri Webster -Vv-Bavid-tockardAKirkWarren / ::Jessica Houston| ' ! Mott Reistree HED :ahah qnaieSydr ByersSONyHemilit7 -Bradley Lake Project Management Committee Friday,December 1,2017 @ 10:00 am. **PLEASE WRITE LEGIBLY*™ NAME ORGANIZATION OL GW&oor BPMC --MRG Tid.Cat Y Ca dlic AQUA,HOUMA DAL ACUL TUrpetfLrJornVaApey"LEMS YEA fou Adley A "Brak Bye Kgs AGOVihiic S 4sy Che)4¢tl,Lite Ad KhloeWe 5 AJoLbs a Ass radeLSckwy£Sov hea Pur blLiCe Larry Doryens er HtA 'Bole Day HE A b.hn (piss ALL? Z!'nil LOLahl(a OLOoyLOofLoeFECLO ALEEA[MBERT CHUOACI4 (a a Dosteon OM,Lhrg Po ASS0 ATES Reed Seneesibele eee HEAgharHigherCEH. Jixv-\d Vo M ftSos_Resnn-CEH- Folin tracy HUGEUbLEOGLecabltheCCB Cugrh Ged vist MaeMeth;¢Mar Pr BPMC or IMC meeting availability IMC Possible ML&P |GVEA CEA MEA AEA Board room dates,(Kirk)utes \Z\\Vés vd ¥cK (20 BPMC HEA MERE CEA MEAMLP |Seward GVEA AEA Board ; MEA RAF ot room iZ\\Y t ¥|Mare 0 Y¥we |ils ¥ \ -a Teri Webster Subject:BPMC committee assignments Oct 13 meeting Chair Janorschke assigned the Finance Committee to research a cost/cause or cost/payer methodology between Bradley Lake participants and Battle Creek to ensure costs are recovered equitably.fon Am Janorschke assigned the O&D Committee to study the O&M impacts from Battle Creek on the 4 6 uy Bradley Lake Project.SeSF Sept 29 meeting p.V.Brad slodi$Chair Janorschke assigned himself and Mr.Thibert to follow-up on the Soldotna SVC O&M agreement and to bring it before the BPMC for approval. Chair Jatterschke assigned Mr.Thibert to coordinate efforts on Resolution 2017-02 (Battle Creek Optional Project Work). Chair Janorschke assigned AEA to provide a procurement schedule for the operator O&M process.NaN Prudentuthdy wsChairJanorschkeassignedtheFinanceCommitteetofollowupandprovideaninsurancemaximumfeVieroprobablelossstudyatthenextmeeting. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Friday,December 1,2017 10:00 a.m. Alaska Energy Authority's Board Room 813 West Northern Lights Boulevard,Anchorage,AK To participate by phone,dial 1-888-585-9008 and use code 467 050 126. 12. 13. CALL TO ORDER ROLL CALL FOR COMMITTEE MEMBERS PUBLIC ROLL CALL PUBLIC COMMENTS AGENDA APPROVAL APPROVAL OF PRIOR MINUTES -Sept 29,2017;Oct.13,2017 NEW BUSINESS A.Approval of Annual Audited Financial Statements -Swalling B.Battle Creek e Project update e Contract Housing Approval e Resolution C.Operator RFP updote 5 COMMITTEE REPORTS C&D47 Jef>Kane Ds ieOPERATORREPORTZu= _COMMITTEE ASSIGNMENTS .MEMBERS COMMENTS NEXT MEETING DATE -TBD ADJOURNMENT Bradley Lake Project Management Committee Meeting Friday,December 1,2017 Agenda Item:7A--Approval of FY17 Audited Financial Statements and O&M and R&C refund MOTION:Move that the Bradley Lake Project Management Committee accept the fiscal year 2017 Audited Financial Statements and approve a refund of $2,371,072 ($1,223,409 O&M and $1,147,663 R&C)to the utilities. Move: Second: |Confidential +For Discussion Purposes Lender National Cooperative Services Corporation ("NCSC”). Borrower Alaska Energy Authority ("AEA”). Purpose Loan proceeds shall be used to finance the Battle Creek Diversion Project (the "Diversion Project”),an improvement to the Bradley Lake Hydroelectric Facility ("BLHF Project”). Not to exceed $40-600,606-692,136.000.00 (the "NCREBTerm Loan”). Amount Closing/Funding |No later than one-hundred-eighty-days-fromthe-date-that_the US Proray Hond NCEE"with NCSC for the Diversion Project but-in_enyevent,the-("NCREB Loan-witl fund neater than December 342047”) NCSC TERM AA002-X(JABLONJ) 220324-10220350-7 Confidential 2 For Discussion Purposes Security Secured under AEA'S Power and Revenue Bond Resolution adopted September 7,1989 (as supplemented,the "Bond Resolution”)on a parity with all other outstanding bonds related to the BLHF Project by a pledge of (i)the revenues derived from the ownership and operation of the BLHF Project,including all revenues received under the Agreement for the Sale and Purchase of Electric Power,dated as of December 8,1987,by and among AEA,Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,Alaska Electric Generation &Transmission Cooperative, Inc.(acting on behalf of Matanuska Electric Association),Alaska Electric and Energy Cooperative,Inc.,(acting on behalf of Homer Electric Association,Inc.),the Municipality of Anchorage ("ML&P),and the City of Seward (collectively,the "Power Purchasers”)("Power Contract')and (ii) all of Borrower's rights under the Power Contract. Term Interest Rate and Pricing Options Fhe NGREBInterest rat and bas a.Option selected for the NCREB Loan,The Term Loan will bear interest ata fixed rate equal to the sum of the ten (10)year on-the-run U.S.Treasury on the Commitment Date plus a spread.This rate will be set on the Commitment Date.f{FO-BE-DISCUSSED} For indicative purposes,as of November 29,2017 the spread was 155 basis points. The spread is predicated upon execution of a Supplemental Resolution under the Bond Resolution providing for the acceleration or mandatory redemption of the NCREB Loan upon an Event of Default occurring after July 1,2021 ("Pricing Option 1”). In the event such Supplemental Resolution is not executed,then the spread will be the spread quoted for Pricing Option 1,plus 20 basis points ("Pricing Option 2”). Payment Dates Principal shall be payable annually following the 36 month interest only period. Interest shall be payable semi-annually. Ekpenses AEA will pay all expenses associated with the NCREBTerm Loan NCSC TERM AA002-X(JABLONJ)|220321-19220350-7 Confidential 3 For Discussion Purposes regardless of closing. Prepayment AEA may at any time,on three (3)business days'prior written notice, prepay all or any portion of the NCREBTerm Loan.All prepayments will be subject to an Administrative Fee of 33bps and a make-whole premium covering all costs in respect of breakage or redeployment costs incurred in connection with such prepayments. Representations and Warranties As usual and customary in NCSC loan documentation,including but not limited to the following:Good Standing,Authority,No Conflicting Agreements,Taxes,Licenses and Permits,Litigation,Financial Statements, Material Adverse Change,Required Approvals,Compliance with Laws, Disclosure,No Other Liens,Environmental Matters,Power Contract. In addition,a representation from AEA that it has pledged,assigned and transferred to the Trustee,acting on behalf of all Bondholders,all of its rights under the Power Sales Agreement.The terms "Bondholders”and "Power Sales Agreement”have the meanings assigned to them in the Bond Resolution. Loan Documentation The commitment is subject to underwriting due diligence,credit approval and to the preparation,execution and delivery of mutually acceptable loan documentation to contain:conditions precedent,representations and warranties,covenants,events of default and other provisions customary for aEOQPSRTSPTLREDave On fav au eee os pn lone =tanta soweee ra ie 1s dino hhC3qdo facilities of this nature,including,but not limited to,those noted below. NCSC TERM AA002-X(JABLONJ)|220324-10220350-7 Confidential 4 For Discussion Purposes NCSC TERM AA002-X(JABLON 220324-10220350-| there shall not have occurreda material adve b in the busine assets,liabilities (actual or contingent),operations,condition (financialorotherwise)of AEA and or in the facts and information regarding such entity as represented to date. The receipt and satisfactory review by NCSC of such financial information regarding AEA and its subsidiaries as they may reasonably request,to include quarterly and annual financials and a financial forecast. The absence of material litigation,subject to certain exceptions previously disclosed and agreed to by NCSC. AEA shall be in compliance with all existing material financial obligations. AEA shall have obtained,in writing,all governmental and regulatory approvals necessary for the Diverston-Prejectproject and the transaction. AEA is not in default under any agreement for borrowed money. The receipt of a legal opinion from AEA's counsel in form and substance satisfactory to NCSC. The receipt of a legal opinion from counsel to the Power Purchasers,or alternatively the Power Purchasers participating in the Diversion Project and AEA,as to the continued validity and enforceability of the Power Contract as to each Power Purchaser except Seward. The receipt of a certificate from the General Manager and Chief Financial Officer of each Power Purchaser,or alternatively the Power Purchasers participating in the Diversion Project and AEA,to the effect that there is no litigation pending contesting the validity or enforceability of the Power Contract. The payment of all reasonable out of pocket expenses incurred including engineering and legal expenses associated with the NEREBTerm Loan, ns «f Confidential 5 For Discussion Purposes ten}-Delivery of all documents required to be delivered to the Trustee for the NGCREBTerm Loan to be authenticated as an Additional Bond (as defined in the Bond Resolution)under the Bond Resolution. an For Pricing Option 1 only:Execution of a Supplemental Resolution under the Bond Resolution providing for the acceleration or mandatory redemption of the NCREB Loan upon an Event of Default occurring after July 1,2021. *For Pricing Option 1 only:Execution of an amendment the definition of "Debt Service”in the Power Contract:"Debt Service”means (a)until July 1,2021,amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds,as the same are scheduled to become due under the Bond Resolution,and not by reason of acceleration and (b) thereafter,amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds. Conditions Precedent to Lpan Advance If the elesine-dateClosingDate is not the Commitment Date,delivery of a closing certificate certifying that all representations and warranties made by AEA in the Loan Agreement are true and correct on the elesinge-dateClosing Date. Covenants Usual and customary for transactions of this type,to include without limitation:(i)delivery of financial statements,compliance certificates, government reports and notices of default,material litigation and material governmental and environmental proceedings;(ii)compliance with laws (including environmental laws and ERISA matters)and material contractual obligations;(iii)payment of taxes;(iv)maintenance of insurance;(v) preservation of existence and franchises;(vi)maintenance of books and records/inspection rights;(vii)use of proceeds;(viii)limitation on liens;(ix) providing notice of material changes to the Power Contract;(x)no termination of Power Contract;(xi)prompt notice to NCSC,in writing,of any material event with respect to the BLHF Project or with respect to the Diversion Project;(xii)AEA shall covenant to enforce the provisions of the Power Contract and will not amend the Power Contract so as to reduce the payments required thereunder or otherwise materially affect the security for NCSC TERM AA002-X(JABLONJ) 220321-10220350-7 Confidential '6 For Discussion Purposes the NCREBTerm Loan;and (xiii)if Pricing Option 1 is selected AEA shall not grant acceleration rights to any other Bondholder under the Bond Resolution unless it contemporaneously grants such rights to NCSC for the NCREBTerm Loan. Financial Covenants Debt Service Coverage Ratio ("CDSCR”)-AEA will maintain a minimum annual DSCR of 1.0x. Loan Agreement Event of Default and Remedies NCSC standard loan documentation Events of Default,including cross default to other Bradley Lake Hydroelectric Project Bonds. Default Rate The default rate will be the interest rate in effect for the NEREBTerm Loan plus 300 basis points (the "Default Rate”).If there is a payment default that continues for 30 days after the due date,then beginning on the 31"day after the payment is due,the NEREBTerm Loan will bear interest at the Default Rate.A "payment default”means,regardless of the source of payment,a failure to pay NCSC principal of the interest on the NEREBTerm Loan. Upon the occurrence of an event of default (other than a payment default), the interest rate on the NEREBTerm Loan will be at the Default Rate until the event of default is cured.In the event that more than one event of default exists at any time,the aggregate interest rate applicable to the NEREBTerm Loan will be the Default Rate. Miscellaneous This term sheet is confidential and shall not be shared with any third party other than AEA's existing financial and legal advisors,without the express written consent of NCSC.If not closed upon,the terms outlined herein shall expire on January 1,2018 unless extended in writing by NCSC. Governing Law Virginia The loan agreement will provide for exclusive jurisdiction and venue in the Alaska Superior Court located in Anchorage,Alaska. NCSC TERM AA002-X(JABLONJ) 220321-10220350-7 Confidential 7 For Discussion Purposes" FOR DISCUSSION PURPOSES ONLY -NOT A COMMITMENT TO LEND This Term Sheet is not meant to be,nor shall be construed as either a binding commitment or an attempt to define all terms and conditions of the transaction described herein.This Term Sheet represents a proposal which NCSC may be willing to recommendfor approval to senior management,provided that,among other things,all due diligence deemed necessary is completed to NCSC's satisfaction. NCSC TERM AA002-X(JABLONJ) 220324-40220350-7 Document comparison by Workshare Compare on Thursday,November 30, 2017 5:45:45 PM Input: Document1 ID interwovenSite://IMANDOC/imandoc1/220321/10 H#220321v10<imandoc1>-AEA NCREB Term SheetDescription11-30-17 Document 2 ID interwovenSite:/IMANDOC/imandoc1/220350/7 #220350v7<imandoc1>-AEA $2.136MM Term SheetDescription11-30-17 Rendering set Standard Legend: Insertion. Deletion Movedfrent Moved to. Style change Format change Meveddeletion- Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 39 Deletions 42 Moved from 0 Moved to 0 Style change 0 Format changed 0 Total changes 81 Confidential 1 For Discussion Purposes Alaska Energy Authority NCSC Loan Evidenced by New Clean Renewable Energy Bonds (NCREBs) Bradley Lake Hydroelectric Facility -Battle Creek Diversion Project SUMMARY OF TERMS AND CONDITIONS Lender National Cooperative Services Corporation ("NCSC”). Borrower Alaska Energy Authority ("AEA”). Purpose Loan proceeds shall be used to finance the Battle Creek Diversion Project (the "Diversion Project”),an improvement to the Bradley Lake Hydroelectric Facility ("CBLHF Project”). NCREB Loan Not to exceed $40,000,000.00 (the "NCREB Loan”). Amount Closing/Funding |No later than one hundred eighty days from the date that the U.S. Department of the Treasury ("Treasury”)awards the allocation for the Diversion Project but in any event,the NCREB Loan will fund no later than December 31,2017. There shall be a single advance of all NCREB Loan proceeds no later than two (2)business days after the closing date;any NCREB Loan proceeds that are not yet eligible for reimbursement of qualifying project expenditures are to be invested. NCREB Loan Not to exceed the maximum term determined each month by the Term and Treasury as in effect on the date the loan is cleared (""NCREB Amortization Term”).A loan is "cleared”on the first day on which there is a binding written contract for the loan ("Commitment Date”). NCSC TERM AA002-X(JABLONJ) 220321-910 Confidential 2 For Discussion Purposes Alaska Energy Authority NCSC Loan Evidenced by New Clean Renewable Energy Bonds (NCREBs) Bradley Lake Hydroelectric Facility -Battle Creek Diversion Project SUMMARY OF TERMS AND CONDITIONS So long as the NCREB Term is at least 33 years,the NCREB Loan will amortize as a 33-year loan with 36 months interest only followed by an up to 30-year level principal amortization.To the extent the NCREB Term is shorter,the interest only period will remain 36 months and the level principal period will thereafter continue for the remainder of the NCREB Term. NCREB Loan Security Secured under AEA'S Power and Revenue Bond Resolution adopted September 7,1989 (as supplemented,the "Bond Resolution”)on a parity with all other outstanding bonds related to the BLHF Project by a pledge of (i)the revenues derived from the ownership and operation of the BLHF Project,including all revenues received under the Agreement for the Sale and Purchase of Electric Power,dated as of December 8,1987,by and among AEA,Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,Alaska Electric Generation &Transmission Cooperative,Inc.(acting on behalf of Matanuska Electric Association),Alaska Electric and Energy Cooperative,Inc.,(acting on behalf of Homer Electric Association,Inc.),the Municipality of Anchorage (""ML&P),and the City of Seward (collectively,the "Power Purchasers”)("Power Contract”)and (ii)all of Borrower's rights under the Power Contract-+tself. NCREB Interest Rate and Pricing Options The NCREB Loan will bear interest at a fixed rate equal to the sum of the ten (10)year on-the-run U.S.Treasury on the Commitment Date plus a spread.This rate will be set on the Commitment Date. [TO BE DISCUSSED] For indicative purposes,as of November 20,29,2017 the spread was 155 basis points. The spread is predicated upon execution of a Supplemental Resolution under the Bond Resolution providing for the acceleration or mandatory redemption of the NCREB Loan upon an Event of Default occurring after July 1,2021 ("Pricing Option 1”). In the event such Supplemental Resolution is not executed,then the spread will be the spread quoted for Pricing Option 1,plus 20 basis points ("Pricing Option 2”). NCSC TERM AA002-X(JABLONJ) 220321-910 Confidential 3 For Discussion Purposes Alaska Energy Authority NCSC Loan Evidenced by New Clean Renewable Energy Bonds (NCREBs) Bradley Lake Hydroelectric Facility -Battle Creek Diversion Project SUMMARY OF TERMS AND CONDITIONS Payment Dates |Principal shall be payable annually following the 36 month interest only period. Interest shall be payable semi-annually. Expenses AEA will pay all expenses associated with the NCREB Loan regardless of closing. Prepayment AEA may at any time,on three (3)business days'prior written notice,prepay all or any portion of the NCREB Loan.All prepayments will be subject to an Administrative Fee of 33bps and a make-whole premium covering all costs in respect of breakage or redeployment costs incurred in connection with such prepayments. Representations |As usual and customary in NCSC loan documentation,includingandWarranties|but not limited to the following:Good Standing,Authority,No Conflicting Agreements,Taxes,Licenses and Permits,Litigation,Financial Statements,Material Adverse Change,Required Approvals,Compliance with Laws,Disclosure,No Other Liens, Environmental Matters,Power Contract. In addition,a representation from AEA that it has pledged, assigned and transferred to the Trustee,acting on behalf of all Bondholders,all of its rights under the Power Sales Agreement. The terms "Bondholders”and "Power Sales Agreement”have the meanings assigned to them in the Bond Resolution. Loan The commitment is subject to underwriting due diligence,credit Documentation |approval and to the preparation,execution and delivery of mutually acceptable loan documentation to contain:conditions precedent, representations and warranties,covenants,events of default and other provisions customary for facilities of this nature,including, but not limited to,those noted below. Conditions Conditions customary in long-term commitments of this type NCSC TERM AA002-X(JABLONJ) 22032 1-910 Confidential 4 For Discussion Purposes Alaska Energy Authority NCSC Loan Evidenced by New Clean Renewable Energy Bonds (NCREBs) Bradley Lake Hydroelectric Facility -Battle Creek Diversion Project SUMMARY OF TERMS AND CONDITIONS Precedent to Closing including,but not limited to: AEA shall have received an allocation of New Clean Renewable Energy Bond volume cap for the Diversion Project in an amount no less than the amount of the NCREB Loan. The negotiation,execution and delivery of definitive documentation (including,without limitation,satisfactory legal opinions,corporate formation and authority documents and other customary closing documents)for the NCREB Loan satisfactory to NCSC. There shall not have occurred a material adverse change in the business,assets,liabilities (actual or contingent),operations, Conditions Precedent to closing (cont.) condition (financial or otherwise)of AEA and or in the facts and information regarding such entity as represented to date. The receipt and satisfactory review by NCSC of such financial information regarding AEA and its subsidiaries as they may reasonably request,to include quarterly and annual financials and a financial forecast. The absence of material litigation,subject to certain exceptions previously disclosed and agreed to by NCSC. AEA shall be in compliance with all existing material financial obligations. AEA shall have obtained,in writing,all governmental and regulatory approvals necessary for the Diversion Project and the transaction. AEA is not in default under any agreement for borrowed money. The receipt of a legal opinion from AEA's counsel in form and substance satisfactory to NCSC. The receipt of a legal opinion from counsel to the Power Purchasers,or alternatively the Power Purchasers participating in the Diversion Project and AEA,as to the continued validity and enforceability of the Power Contract as to each Power Purchaser except Seward. The receipt of a certificate from the General Manager and Chief Financial Officer of each Power Purchaser,or alternatively the Power Purchasers participating in the Diversion Project and AFA,to the effect that there is no litigation pending contesting the validity or enforceability of the Power Contract. The payment of all reasonable out of pocket expenses incurred NCSC TERM AA002-X(JABLONJ) 220321-91.0 Confidential 5 For Discussion Purposes Alaska Energy Authority NCSC Loan Evidenced by New Clean Renewable Energy Bonds (NCREBs) Bradley Lake Hydroelectric Facility -Battle Creek Diversion Project SUMMARY OF TERMS AND CONDITIONS including engineering and legal expenses associated with the NCREB Loan,if any: Conditions «Evidence of funding of the Capital Reserve Fund (as defined in Precedent to the Bond Resolution)so that the amount thereof is equal to closing (cont.)Capital Reserve Fund Requirement (as defined in the Bond Resolution). «Delivery of all documents required to be delivered to the Trustee for the NCREB Loan to be authenticated as an Additional Bond (as defined in the Bond Resolution)under the Bond Resolution. "For Pricing Option 1 only:Execution of a Supplemental Resolution under the Bond Resolution providing for the acceleration or mandatory redemption of the NCREB Loan upon an Event of Default occurring after July 1,2021. «For Pricing Option 1 only:Execution of an amendment the definition of "Debt Service”in the Power Contract:"Debt Service”means (a)until July 1,2021,amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds,as the same are scheduled to become due under the Bond Resolution,and not by reason of acceleration and (b) thereafter,amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds. Conditions If the closing date is not the Commitment Date,delivery of a Precedent to closing certificate certifying that all representations and warranties Loan Advance |made by AEA in the Loan Agreement_aretrueandcorrectontheclosingdate. Covenants Usual and customary for transactions of this type,to include without limitation:(i)delivery of financial statements,compliance certificates,government reports and notices of default,material litigation and material governmental and environmental proceedings;(ii)compliance with laws (including environmental laws and ERISA matters)and material contractual obligations;(iii) payment of taxes;(iv)maintenance of insurance;(v)preservation of existence and franchises;(vi)maintenance of books and records/inspection rights;(vii)use of proceeds;(viii)limitation on liens;(ix)providing notice of material changes to the Power NCSC TERM AA002-X(JABLONSJ) 220321-910 Confidential 6 For Discussion Purposes Alaska Energy Authority NCSC Loan Evidenced by New Clean Renewable Energy Bonds (NCREBs) Bradley Lake Hydroelectric Facility -Battle Creek Diversion Project SUMMARY OF TERMS AND CONDITIONS Contract;(x)no termination of Power Contract;(xi)prompt notice to NCSC,in writing,of any material event with respect to the BLHF Project or with respect to the Diversion Project;(xii)AEA shall covenant to enforce the provisions of the Power Contract and will not amend the Power Contract so as to reduce the payments required thereunder or otherwise materially affect the security for the NCREB Loan;and (xiii)if Pricing Option 1 is selected AEA shall not grant acceleration rights to any other Bondholder under the Bond Resolution unless it contemporaneously grants such rights to NCSC for the NCREB Loan. Financial Covenants Debt Service Coverage Ratio ("DSCR”)-AEA will maintain a minimum annual DSCR of 1.0x. Loan Agreement Event of Default and Remedies NCSC standard loan documentation Events of Default,including cross default to other Bradley Lake Hydroelectric Project Bonds. Default Rate The default rate will be the interest rate in effect for the NCREB Loan plus 300 basis points (the "Default Rate”).If there is a payment default that continues for 30 days after the due date,then beginning on the 31st day after the payment is due,the NCREB Loan will bear interest at the Default Rate.A "payment default” means,regardless of the source of payment,a failure to pay NCSC principal of the interest on the NCREB Loan.Upon the occurrence of an event of default (other than a payment default),the interest rate on the NCREB Loan will be at the Default Rate until the event of default is cured.In the event that more than one event of default exists at any time,the aggregate interest rate applicable to the NCREB Loan will be the Default Rate. Miscellaneous This term sheet is confidential and shall not be shared with any third party other than AEA's existing financial and legal advisors, without the express written consent of NCSC.If not closed upon, the terms outlined herein shall expire on January 1,2018 unless extended in writing by NCSC. NCSC TERM AA002-X(JABLONJ) 220321-910 Confidential 7 For Discussion Purposes Alaska Energy Authority NCSC Loan Evidenced by New Clean Renewable Energy Bonds (NCREBs) Bradley Lake Hydroelectric Facility -Battle Creek Diversion Project SUMMARY OF TERMS AND CONDITIONS Governing Law |Virginia The loan agreement will provide for exclusive jurisdiction and venue in the Alaska Superior Court located in Anchorage,Alaska. FOR DISCUSSION PURPOSES ONLY --NOT A COMMITMENT TO LEND This Term Sheet is not meant to be,nor shall be construed as either a binding commitment or an attempt to define all terms and conditions of the transaction described herein.This Term Sheet represents a proposal which NCSC may be willing to recommendfor approval to senior management,provided that,among other things,all due diligence deemed necessary is completed to NCSC's satisfaction. NCSC TERM AA002-X(JABLONJ) 220321-910 Document comparison by Workshare Compare on Thursday,November 30, 2017 5:30:32 PM Input: Document1 [D interwovenSite:/IMANDOC/imandoc1/220321/9 Description reneev9<imandoc1>-AEA NCREB Term Sheet Document 2 ID interwovenSite://IMANDOC/imandoc1/220321/10 #220321v10<imandoc1>-AEA NCREB Term SheetDescription41-30-17 Rendering set Standard Legend: Style change Format change Moved deletion- Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions Deletions Moved from Moved to Style change Format changed Total changes SNLPOTOlLO;O;@Qs;A |Confidential +For Discussion Purposes Lender National Cooperative Services Corporation ("NCSC”). Borrower Alaska Energy Authority ("AEA”). Purpose Loan proceeds shall be used to finance the Battle Creek Diversion Project (the "Diversion Project”),an improvement to the Bradley Lake Hydroelectric Facility (""BLHF Project”). NCREB-Lear- Amount Not to exceed $40,000,000-002,136,000.00 (the "NEREBTerm Loan”). Closing/Funding No later than one-hundred-eighty-days-from-the-date-that-the US EnergyBond Ss RER”)with N¢"SC for the Diversion Project but-in_any: event,the ("NCREB Loan-witH fund neater than December 3420472") ortization NCSC TERM AA002-X(JABLONJ) 220321-40220350-7 Confidential 2 For Discussion Purposes Security Secured under AEA'S Power and Revenue Bond Resolution adopted September 7,1989 (as supplemented,the "Bond Resolution”)on a parity with all other outstanding bonds related to the BLHF Project by a pledge of (i)the revenues derived from the ownership and operation of the BLHF Project,including all revenues received under the Agreement for the Sale and Purchase of Electric Power,dated as of December 8,1987,by and among AEA,Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,Alaska Electric Generation &Transmission Cooperative, Inc.(acting on behalf of Matanuska Electric Association),Alaska Electric and Energy Cooperative,Inc.,(acting on behalf of Homer Electric Association,Inc.),the Municipality of Anchorage ("ML&P),and the City of Seward (collectively,the "Power Purchasers”)("Power Contract”)and (ii) all of Borrower's rights under the Power Contract. Term. Interest Rate and Pricing Options Option selected for the NCREB Loan,The Tem LiLoan will bear interest at afixedrateequaltothesumoftheten(10)year on-the-run U.S.Treasury on the Commitment Date plus a spread.This rate will be set on the Commitment Date {FO-BE-DISCUSSEP} For indicative purposes,as of November 29,2017 the spread was 155 basis points. The spread is predicated upon execution of a Supplemental Resolution under the Bond Resolution providing for the acceleration or mandatory redemption of the NCREB Loan upon an Event of Default occurring after July 1,2021 ("Pricing Option 1”). In the event such Supplemental Resolution is not executed,then the spread will be the spread quoted for Pricing Option 1,plus 20 basis points ("Pricing Option 2”). Payment Dates Principal shall be payable annually following the 36 month interest only period. Interest shall be payable semi-annually. Expenses AEA will pay all expenses associated with the NGREBTerm Loan NCSC TERM AA002-X(JABLON3J)|220324-10220350-7 Confidential 3 For Discussion Purposes regardless of closing. Prepayment AEA may at any time,on three (3)business days'prior written notice, prepay all or any portion of the NCREBTerm Loan.All prepayments will be subject to an Administrative Fee of 33bps and a make-whole premium covering all costs in respect of breakage or redeployment costs incurred in connection with such prepayments. Representations and Warranties As usual and customary in NCSC loan documentation,including but not limited to the following:Good Standing,Authority,No Conflicting Agreements,Taxes,Licenses and Permits,Litigation,Financial Statements, Material Adverse Change,Required Approvals,Compliance with Laws, Disclosure,No Other Liens,Environmental Matters,Power Contract. In addition,a representation from AEA that it has pledged,assigned and transferred to the Trustee,acting on behalf of all Bondholders,all of its rights under the Power Sales Agreement.The terms "Bondholders”and "Power Sales Agreement”have the meanings assigned to them in the Bond Resolution. Loan Documentation The commitment is subject to underwriting due diligence,credit approval and to the preparation,execution and delivery of mutually acceptable loan documentation to contain:conditions precedent,representations and warranties,covenants,events of default and other provisions customary for aEQFRESPTSLEDfacilities of this nature,including,but not limited to,those noted below. o > NCSC TERM AA002-X(JABLONJ) 220321-40220350-7 Confidential 4 For Discussion Purposes Conditions Precedent to (gont.)Closing NCSC TERM AA002-X(JABLON 220324-10220350-17 oT|=assets liabilities (actual or contingent),operations,condition (financialorotherwise)of AEA and or in the facts and information regarding such entity as represented to date. The receipt and satisfactory review by NCSC of such financial information regarding AEA and its subsidiaries as they may reasonably request,to include quarterly and annual financials and a financial forecast. The absence of material litigation,subject to certain exceptions previously disclosed and agreed to by NCSC. AEA shall be in compliance with all existing material financial . obligations. AEA shall have obtained,in writing,all governmental and regulatory approvals necessary for the Diversion Prejeetproject and the transaction. AEA is not in default under any agreement for borrowed money. The receipt of a legal opinion from AEA's counsel in form and substance satisfactory to NCSC. The receipt of a legal opinion from counsel to the Power Purchasers,or alternatively the Power Purchasers participating in the Diversion Project and AEA,as to the continued validity and enforceability of the Power Contract as to each Power Purchaser except Seward. The receipt of a certificate from the General Manager and Chief Financial Officer of each Power Purchaser,or alternatively the Power Purchasers participating in the Diversion Project and AEA,to the effect that there is no litigation pending contesting the validity or enforceability of the Power Contract. The payment of all reasonable out of pocket expenses incurred including engineering and legal expenses associated with the NEREBTerm Loan, if any. |Confidential $For Discussion Purposes Conditions Precedent to og (qont.) Pond 2 io%)-Delivery of all documents required to be delivered to the Trustee for the NGREBTerm Loan to be authenticated as an Additional Bond (as defined in the Bond Resolution)under the Bond Resolution. ConcurrentclosingoftheNCREBLoan.For Pricing Option 1 only:Execution of a Supplemental Resolution under the Bond Resolution providing for the acceleration or mandatory redemption of the NCREB Loan upon an Event of Default occurring after July 1,2021. *For Pricing Option 1 only:Execution of an amendment the definition of "Debt Service”in the Power Contract:"Debt Service”means (a)until July 1,2021,amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds,as the same are scheduled to become due under the Bond Resolution,and not by reason of acceleration and (b) thereafter,amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds. Conditions Precedent to Lpan Advance If the elesinge-dateClosingDate is not the Commitment Date,delivery of a closing certificate certifying that all representations and warranties made by AEA in the Loan Agreement are true and correct on the elesinge-dateClosing Date. Covenants Usual and customary for transactions of this type,to include without limitation:(i)delivery of financial statements,compliance certificates, government reports and notices of default,material litigation and material governmental and environmental proceedings;(ii)compliance with laws (including environmental laws and ERISA matters)and material contractual obligations;(iii)payment of taxes;(iv)maintenance of insurance;(v) preservation of existence and franchises;(vi)maintenance of books and records/inspection rights;(vii)use of proceeds;(viii)limitation on liens;(ix) providing notice of material changes to the Power Contract;(x)no termination of Power Contract;(xi)prompt notice to NCSC,in writing,of any material event with respect to the BLHF Project or with respect to the Diversion Project;(xii)AEA shall covenant to enforce the provisions of the Power Contract and will not amend the Power Contract so as to reduce the payments required thereunder or otherwise materially affect the security for NCSC TERM AA002-X(JABLONJ) 220321-10220350-7 Confidential 6 For Discussion Purposes the NCREBTerm Loan;and (xiii)if Pricing Option 1 is selected AEA shall not grant acceleration rights to any other Bondholder under the Bond Resolution unless it contemporaneously grants such rights to NCSC for the NGREBTerm Loan. Financial Covenants Debt Service Coverage Ratio ("DSCR”)-AEA will maintain a minimum annual DSCR of 1.0x. Loan Agreement Event of Default and Remedies NCSC standard loan documentation Events of Default,including cross default to other Bradley Lake Hydroelectric Project Bonds. Default Rate The default rate will be the interest rate in effect for the NCREBTerm Loan plus 300 basis points (the "Default Rate”).If there is a payment default that continues for 30 days after the due date,then beginning on the 31"day after the payment is due,the NEREBTerm Loan will bear interest at the Default Rate.A "payment default”means,regardless of the source of payment,a failure to pay NCSC principal of the interest on the NEREBTerm Loan. Upon the occurrence of an event of default (other than a payment default), the interest rate on the NCREBTerm Loan will be at the Default Rate until the event of default is cured.In the event that more than one event of default exists at any time,the aggregate interest rate applicable to the NGEREBTerm Loan will be the Default Rate. Miscellaneous This term sheet is confidential and shall not be shared with any third party other than AEA's existing financial and legal advisors,without the express written consent of NCSC.If not closed upon,the terms outlined herein shall expire on January 1,2018 unless extended in writing by NCSC. Governing Law Virginia The loan agreement will provide for exclusive jurisdiction and venue in the Alaska Superior Court located in Anchorage,Alaska. NCSC TERM AA002-X(JABLONJ) 220324-10220350-7 yf |Confidential 7 For Discussion Purposes FOR DISCUSSION PURPOSES ONLY -NOT A COMMITMENT TO LEND This Term Sheet is not meant to be,nor shall be construed as either a binding commitment or an attempt to define all terms and conditions of the transaction described herein.This Term Sheet represents a proposal which NCSC may be willing to recommendfor approval to senior management,provided that,among other things,all due diligence deemed necessary is completed to NCSC's satisfaction. NCSC TERM AA002-X(JABLONJ) 220321-10220350-7 Document comparison by Workshare Compare on Thursday,November 30, 2017 5:45:45 PM Input: Document1 ID interwovenSite://IMANDOC/imandoc1/220321/10 H#220321v10<imandoc1>-AEA NCREB Term SheetDescription41-30-17 Document 2 ID interwovenSite:/IMANDOC/imandoc1/220350/7 #220350v7<imandoc1>-AEA $2.136MM Term SheetDescription41-30-17 Rendering set Standard Legend: Insertion Deletion Meovedtren- Moved to_ Style change Format change Moved deletisa- Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 39 Deletions 42 Moved from 0 Moved to 0 Style change 0 Format changed 0 Total changes 81 Confidential +For Discussion Purposes Lender National Cooperative Services Corporation ("NCSC”). Borrower Alaska Energy Authority ("AEA”). Purpose Loan proceeds shall be used to finance the Battle Creek Diversion Project (the "Diversion Project”),an improvement to the Bradley Lake Hydroelectric Facility ("BLHF Project”). Not to exceed $40,000,600-004,864.000.00 (the "NCREBTerm Loan”). Amount Closing/Fundins-|No later than one-hundred-eighty-deys-from-the-date-that-the-U-S- ortization NCSC TERM AA002-XY(JABLONJ) 220321-10220785-6 Confidential 2 For Discussion Purposes NCREB-Lean- Security Secured under AEA'S Power and Revenue Bond Resolution adopted September 7,1989 (as supplemented,the "Bond Resolution”)on a parity with all other outstanding bonds related to the BLHF Project by a pledge of (i)the revenues derived from the ownership and operation of the BLHF Project,including all revenues received under the Agreement for the Sale and Purchase of Electric Power,dated as of December 8,1987,by and among AEA,Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,Alaska Electric Generation &Transmission Cooperative, Inc.(acting on behalf of Matanuska Electric Association),Alaska Electric and Energy Cooperative,Inc.,(acting on behalf of Homer Electric Association,Inc.),the Municipality of Anchorage (""ML&P),and the City of Seward (collectively,the "Power Purchasers”)("Power Contract”)and (ii) all of Borrower's rights under the Power Contract. NCREB InterestR Pho NCREBEor the nial36 bl ods ate and Term Loan will bear interest at a fixedrate-equaltethe-sum-eftheten0)-PhieingPayment -_|year-on-the-run-U-S-TreasuryentheCommitmentDateplus-a-spread-This-OptionsDates rate-will be-set-on the Commitment Date {70 BE DISCUSSED} ion Dra i <Icostand(a)if AEA has executed a Supplemental Resolution under the Bond Resolution providing for the acceleration or mandatory redemption of the NCREBTerm Loan upon an Event of Default occurring after July 1, 2021 ("Pricing Option 1”) convert 7 NCSC'sS standard_fixed rate for the remaining term of th e i erm NCSC TERM AA002-XX(JABLONJ) 220324-10220785-6 Confidential 3 For Discussion Purposes Loan,to be set at time of conversion,or (b)in the event such SupplementalResolutionisnotexecuted,then the spread-wilt be the spread _queted for Payment Dates Principal shall be payable annually following the 36 month interest only period. Interest shall be payable semi-annually.Ekpenses AEA will pay all expenses associated with the NEREBTerm Loan regardless of closing. Prepayment AEA may at any time,on three (3)business days'prior written notice, prepay all or any portion of the NCREBTerm Loan.All prepayments will bex ete Omtoan»Aaiministrative Fee oftiveFeeof 23bps ene -ln_addition (othe.premiumcoveringallcostsinrespectofbreakageorredeploymentcostsincurredin connection with such prepayments. Representations and Warranties As usual and customary in NCSC loan documentation,including but not limited to the following:Good Standing,Authority,No Conflicting Agreements,Taxes,Licenses and Permits,Litigation,Financial Statements, Material Adverse Change,Required Approvals,Compliance with Laws, Disclosure,No Other Liens,Environmental Matters,Power Contract. In addition,a representation from AEA that it has pledged,assigned and transferred to the Trustee,acting on behalf of all Bondholders,all of its rights under the Power Sales Agreement.The terms "Bondholders”and "Power Sales Agreement”have the meanings assigned to them in the Bond Resolution. Loan Documentation The commitment is subject to underwriting due diligence,credit approval and to the preparation,execution and delivery of mutually acceptable loan documentation to contain:conditions precedent,representations and warranties,covenants,events of default and other provisions customary for NCSC TERM AA002-XY(JABLONJ) 220324-10220785-6 Confidential 4 For Discussion Purposes |facilities of this nature,including,but not limited to,those noted below. ots a oatet np lone rN atantos seve ras =a1 V2 FE-¥e Ilhere shall not have occurred a material adverse changein the busine assets,liabilities (actual or contingent),operations,condition (financialorotherwise)of AEA and or in the facts and information regarding such entity as represented to date. The receipt and satisfactory review by NCSC of such financial information regarding AEA and its subsidiaries as they may reasonably request,to include quarterly and annual financials and a financial forecast. The absence of material litigation,subject to certain exceptions previously disclosed and agreed to by NCSC. AEA shall be in compliance with all existing material financial obligations. AEA shall have obtained,in writing,all governmental and regulatory approvals necessary for the Diversien-Prejectproject and the transaction. AEA is not in default under any agreement for borrowed money. The receipt of a legal opinion from AEA's counsel in form and substance satisfactory to NCSC. The-receiptefatecalepinionfromcounseltothePowerPurchaserser NCSC TERM AA002-XY(JABLONJ) 2o0785-622032140;co Confidential $For Discussion Purposes Conditions Precedent to oesdont.)LdEvidence of funding of tofthe Capital Reserve Fund (as defined iinthe Bond Resolution)so that the amount thereofis equal to Capital Reserve Fund Requirement (as defined in the Bond Resolution). Delivery of all documents required to be delivered to the Trustee for the NGCREBTerm Loan to be authenticated as an Additional Bond (as defined in the Bond Resolution)under the Bond Resolution. ConcurrentclosingoftheNCREBLoan,For Pricing Option 1 only:Execution of a Supplemental Resolution under the Bond Resolution providing for the acceleration or mandatory redemption of the NCREB Loan upon an Event of Default occurring after July 1,2021. For Pricing Option 1 only:Execution of an amendment the definition of "Debt Service”in the Power Contract:"Debt Service”means (a)until July 1,2021,amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds,as the same are scheduled to become due under the Bond Resolution,and not by reason of acceleration and (b) thereafter,amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and NCSC TERM AA002-XXY(JABLONJ) 220321-40220785-6 Confidential &For Discussion Purposes Conditions P.recedent toLpanAdvance Covenants Usual and customary for transactions of this type,to include without limitation:(i)delivery of financial statements,compliance certificates, government reports and notices of default,material litigation and material governmental and environmental proceedings;(ii)compliance with laws (including environmental laws and ERISA matters)and material contractual obligations;(iii)payment of taxes;(iv)maintenance of insurance;(v) preservation of existence and franchises;(vi)maintenance of books and records/inspection rights;(vii)use of proceeds;(viii)limitation on liens;(ix) providing notice of material changes to the Power Contract;(x)no termination of Power Contract;(xi)prompt notice to NCSC,in writing,of any material event with respect to the BLHF Project or with respect to the Diversion Project;(xii)AEA shall covenant to enforce the provisions of the Power Contract and will not amend the Power Contract so as to reduce the payments required thereunder or otherwise materially affect the security for the NCREBTerm Loan;and (xiii)if Pricing Option 1 is selected AEA shall not grant acceleration rights to any other Bondholder under the Bond Resolution unless it contemporaneously grants such rights to NCSC for the NCREBTerm Loan . NCSC TERM AA002-XY(JABL ONS) 220321-10220785-6 'Confidential 7 For Discussion Purposes |SUMMARY OF FERMS-AND CONDITIONS Financial Debt Service Coverage Ratio ("DSCR”)-AEA will maintain a minimum Covenants annual DSCR of 1.0x. Loan Agreement |NCSC standard loan documentation Events of Default,including cross Event of Default default to other Bradley Lake Hydroelectric Project Bonds. and Remedies Default Rate The default rate will be the interest rate in effect for the NEREBTerm Loan plus 300 basis points (the "Default Rate”).If there is a payment default that continues for 30 days after the due date,then beginning on the 31*day after|the payment is due,the NEREBTerm Loan will bear interest at the Default Rate.A "payment default”means,regardless of the source of payment,a|failure to pay NCSC principal of the interest on the NEREBTerm Loan. Upon the occurrence of an event of default (other than a payment default),|the interest rate on the NEREBTerm Loan will be at the Default Rate until the event of default is cured.In the event that more than one event of default exists at any time,the aggregate interest rate applicable to the|NGREBTerm Loan will be the Default Rate. Miscellaneous This term sheet is confidential and shall not be shared with any third party other than AEA's existing financial and legal advisors,without the express written consent of NCSC.If not closed upon,the terms outlined herein shall expire on January 1,2018 unless extended in writing by NCSC. Governing Law Virginia The loan agreement will provide for exclusive jurisdiction and venue in the Alaska Superior Court located in Anchorage,Alaska. FOR DISCUSSION PURPOSES ONLY -NOT A COMMITMENT TO LEND This Term Sheet is not meant to be,nor shall be construed as either a binding commitment or an attempt to define all terms and conditions of the transaction described herein.This Term Sheet NCSC TERM AA002-%Y(JABLONJ) 220324-10220785-6 Confidential &For Discussion Purposes represents a proposal which NCSC may be willing to recommendfor approval to senior management,provided that,among other things,all due diligence deemed necessary is completed to NCSC's satisfaction. NCSC TERM AA002-%Y(JABLONJ) 220324-10220785-6 Document comparison by Workshare Compare on Thursday,November 30, 2017 5:46:44 PM Input: Document1 ID interwovenSite://IMANDOC/imandoc1/220321/10 H#220321v10<imandoc1>-AEA NCREB Term SheetDescription41-30-17 Document 2 ID interwovenSite:/IMANDOC/imandoc1/220785/6 #220785v6<imandoct1>-AEA $4.864MMTerm SheetDescription11-30-17 Rendering set Standard Legend: Unsertion. Deletion- Meved-front Moved to. Style change Format change Moved deletion- Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 54 Deletions 54 Moved from;0 Moved to 0 Style change 0 Format changed 0 Total changes 108 FIRST AMENDMENT _TO ATTACHMENT 1 TO RESOLUTION NO.2017-02 OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Battle Creek Diversion Project Framework The costs and benefits of the Battle Creek Diversion Project ("BCD Project”)shall be managed in accordance with Resolution No.2017-02 and this Attachment 1 to Resolution No.2017-02,Battle Creek Diversion Project Framework ("Attachment 1”),as follows: A.General Applicability of Bradley Lake Project Provisions: 1.The provisions of the Power Sales Agreement and any of the documents,agreements, and understanding generally referred to as the Bradley Lake Agreements,where applicable,will be used to manage the energy generated and delivered from the BCD Project. Subject to the rights held by the Alaska Energy Authority,the BPMC will be the final arbiter on any issue involving the BCD Project and the Bradley Lake Project and/or the Purchasers,and any such issues shall be resolved in accordance with the voting requirements set forth in Resolution No.2017-02 and the Dispute Resolution provisions of the BPMC Bylaws. For purposes of governance of any conflicts,the terms and conditions of Resolution No. 2017-02,will contro!over this Attachment 1,which will control over the BPMC Bylaws. B.BCD Project Capacity: 1.The original shares of Bradley Lake Project capacity,i.e,Chugach (30.4%),GVEA (16.9%),HEA (12.0%),ML&P (25.9%),MEA (13.8%),and Seward (1.0%)will not change in any manner by Resolution 2017-02 and this Attachment 1. Each Purchaser shall have the right to participate in the BCD Project at the same percentage that it holds capacity in the Bradley Lake Project subject to Resolution No. 2017-02 and this Attachment 1. 3.The right to the capacity of the BCD Project shall initially be allocated to all Purchasers in accordance with their respective shares of Bradley Lake Project capacity (hereinafter referred to as their "BCD Share'). {00031494.1}Page 1 of 4 -Attachment 1 to Resolution 2017-02 4.To participate in the BCD Project each Purchaser must expressly so notify the BPMC in writing by November 30,2017,indicating it wants to maintain its allocated BCD Share (or a specific percentage of its total allocated BCD Share)of BCD Project capacity. 5.Any Purchaser that notifies the BPMC that it does not want to participate in the BCD Project,or a Purchaser that fails to provide any notice regarding participation,shall be deemed by the BPMC to have declined its initial opportunity to participate in the BCD Project and thereafter such Purchaser shall be a Non-Participating Purchaser.A Non- Participating Purchaser shall have the right to participate at its BCD Share without restriction subject to the notice requirements in Resolution 2017-02. 6.The BCD Share for any Non-Participating Purchaser shall be placed into a share pool ("BCD Pool')and reallocated by the BPMC in accordance with the respective percentage of original shares of Bradley Lake Project capacity held by the Participating Purchasers taking into account any arrangement made by any Participating Purchaser.The Participating Purchasers may allocate their BCD Share and/or the redistributed BCD Shares from the BCD Pool by agreement. 7.A Participating Purchaser and a Non-Participating Purchaser shall have the unfettered right to arrange for the sale or transfer of its respective BCD Share to another Participating Purchaser or Non-Participating Purchaser and the BPMC shall honor such arrangement in the allocation process for BCD Shares. 8.Any Purchaser desiring to maintain its respective share (or a percentage of their respective shares)of BCD Project capacity but not immediately participate in the BCD Project (i.e.,Non-Participating Purchasers)shall have the right to call back its respective BCD Share by providing written notice to the BPMC ("Call Back Notice'). 9.A Call Back Notice must be provided to the BPMC by a Non-Participating Purchaser of its intent to become a Participating Purchaser one year in advance of the start of the Project Water Year,June 1*to be effective for participation in the BCD Project beginning at the start of the next Project Water Year.A Call Back Notice provided with less than one year in advance of the start of the Project Water Year,June 1*shall be effective for participation in the BCD Project to begin one year from the start of the next Project Water Year.A Call Back Notice can be made without restriction. 10.The Non-Participating Purchaser providing a Call Back Notice and complying with all other obligations and responsibilities set forth in Resolution 2017-02 and this Attachment 1 shall be able to participate at the level equal to the capacity percentage it holds in the Bradley Lake Project (i-e.,its initial BCD Share).The BPMC shall make the necessary adjustments to the BCD Shares held by the other Participating Purchasers to accommodate the return of the Non-Participating Purchaser providing a valid Call Back Notice. 11.Any Non-Participating Purchaser providing a Call Back Notice must reimburse the Participating Purchasers then participating in the BCD Project for the equitable portion of the reasonable costs incurred to develop the BCD Project as determined by the BPMC at the time the Non-Participating Purchaser chooses to participate in the BCD Project with such reasonable development costs including the Non-Participating Purchaser's pro-rata {00031494.1}Page 2 of 4 -Attachment 1 to Resolution 2017-02 share of AEA cash calls and Interest During Construction (IDC)paid up front by the Participating Purchasers and adjusted for the time value of money using a discount rate equal to the long-term financing cost for the BCD Project net the credit from the Clean Renewable Energy Bonds (CREBS).This reimbursement must be paid to the Participating Purchasers by the Non-Participating Purchaser providing a Call Back Notice on or before May 1*prior to the Project Water Year in which that Non-Participating Purchaser shall be eligible to participate in the BCD Project. C.BCD Project Cost Responsibility: 1.The amounts contributed to date towards the development of the BCD Project by the Non- Participating Purchasers shall be reimbursed by the Participating Purchasers in amounts determined by the BPMC within forty-five (45)days following the financing for the BCD Project.The responsibility of payment of such costs associated with this reimbursement shall be allocated by the BPMC to the Participating Purchasers in accordance with their respective BCD Shares,adjusted by the amount of the BCD Share allocated from a Non- Participating Purchaser ("Adjusted BCD Share'). The Operator for the Bradley Lake Project will be required to develop and propose for BPMC approval,the methodology and procedures for tracking all costs involved or associated with the BCD Project;such approval by the BPMC shall be in accordance with the voting requirements set forth in Resolution No.2017-02.The methodology and procedures for tracking all costs involved or associated with the BCD Project will be approved by the BPMC. The BCD Project will be charged four percent (4%)of the Bradley Lake annual O&M or an amount to be determined by a study of the impacts of the BCD Project to the Bradley Lake Project.The results of the study will be approved by the affirmative vote of members whose percentage shares of the output from the Bradley Lake Project are equal to or exceed eighty percent (80%)of Bradley Lake Project capacity and Annual Project Costs. Participating Purchasers will hold harmless the Non-Participating Purchasers from all of the costs (including cost of financing)associated with the BCD Project as follows: a.The Participating Purchasers,in accordance with their Adjusted BCD Shares,will pay all of the costs (including cost of financing)associated with the BCD Project. b.The BPMC shall determine and allocate the BCD project costs to the Participating Purchasers during the determination of the Annual Project Costs for the Bradley Lake Project. c.The costs associated with the BCD Project will be invoiced to Participating Purchasers as a separate surcharge amount shown on a schedule similar in form to the Schedule C accompanying the Bradley Lake Project determinations of "Monthly Utility Contributions.” d.Any amounts received from Participating Purchasers for the costs associated with the BCD Project in excess of the actual costs associated with the BCD Project in {00031494.1}Page 3 of 4 Attachment 1 to Resolution 2017-02 a given fiscal year will be distributed to the Participating Purchasers in accordance with their respective Adjusted BCD Shares for that fiscal year. e.Any additional amounts required for more than the budgeted costs associated with the BCD Project in each fiscal year shall be the responsibility of the Participating Purchasers in accordance with their respective Adjusted BCD Shares for that fiscal year. D.BCD Project Water Tracking &Allocation: 1.The Operator for the Bradley Lake Project will be required to develop for BPMC approval the methodology and procedures for the tracking and allocation of water;such approval by the BPMC shall be in accordance with the voting requirements set forth in Resolution No.2017-02. 2.A Participating Purchaser's water rights in each fiscal year from the BCD Project will be allocated based upon its Adjusted BCD Share. {00031494.1}Page 4 of 4 -Attachment 1 to Resolution 2017-02 FIRST AMENDMENT TO ATTACHMENT 1 TO RESOLUTION NO.2017-02 OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Battle Creek Diversion Project Framework The costs and benefits of the Battle Creek Diversion Project ('BCD Project”)shall be managed in accordance with Resolution No.2017-02 and this Attachment 1 to Resolution No.2017-02,Battle Creek Diversion Project Framework ("Attachment 1”),as follows: A.General Applicability of Bradley Lake Project Provisions: 1.The provisions of the Power Sales Agreement and any of the documents,agreements, and understanding generally referred to as the Bradley Lake Agreements,where applicable,will be used to manage the energy generated and delivered from the BCD Project. Subject to the rights held by the Alaska Energy Authority,the BPMC will be the final arbiter on any issue involving the BCD Project and the Bradley Lake Project and/or the Purchasers,and any such issues shall be resolved in accordance with the voting requirements set forth in Resolution No.2017-02 and the Dispute Resolution provisions of the BPMC Bylaws. For purposes of governance of any conflicts,the terms and conditions of Resolution No. 2017-02,will control over this Attachment 1,which will control over the BPMC Bylaws. B.BCD Project Capacity: 1.The original shares of Bradley Lake Project capacity,i.e.,Chugach (30.4%),GVEA (16.9%),HEA (12.0%),ML&P (25.9%),MEA (13.8%),and Seward (1.0%)will not change in any manner by Resolution 2017-02 and this Attachment 1. Each Purchaser shall have the right to participate in the BCD Project at the same percentage that it holds capacity in the Bradley Lake Project subject to Resolution No. 2017-02 and this Attachment 1. The right to the capacity of the BCD Project shall initially be allocated to all Purchasers in accordance with their respective shares of Bradley Lake Project capacity (hereinafter referred to as their "BCD Share'). {00031494.2}Page 1 of 4 -Attachment 1 to Resolution 2017-02 4.To participate in the BCD Project each Purchaser must expressly so notify the BPMC in writing by November 30,2017,indicating it wants to maintain its allocated BCD Share (or a specific percentage of its total allocated BCD Share)of BCD Project capacity. 5.Any Purchaser that notifies the BPMC that it does not want to participate in the BCD Project,or a Purchaser that fails to provide any notice regarding participation,shall be deemed by the BPMC to have declined its initial opportunity to participate in the BCD Project and thereafter such Purchaser shall be a Non-Participating Purchaser.A Non- Participating Purchaser shall have the right to participate at its BCD Share without restriction subject to the notice requirements in Resolution 2017-02. 6.The BCD Share for any Non-Participating Purchaser shall be placed into a share pool ('BCD Pool”)and reallocated by the BPMC in accordance with the respective percentage of original shares of Bradley Lake Project capacity held by the Participating Purchasers taking into account any arrangement made by any Participating Purchaser.The Participating Purchasers may allocate their BCD Share and/or the redistributed BCD Shares from the BCD Pool by agreement. 7.A Participating Purchaser and a Non-Participating Purchaser shall have the unfettered right to arrange for the sale ortransfer of its respective BCD Share to another Participating Purchaser or Non-Participating Purchaser and the BPMC shall honor such arrangement in the allocation process for BCD Shares. 8.Any Purchaser desiring to maintain its respective share (or a percentage of their respective shares)of BCD Project capacity but not immediately participate in the BCD Project (i.e.,Non-Participating Purchasers)shall have the right to call back its respective BCD Share by providing written notice to the BPMC ("Call Back Notice”). 9.A Call Back Notice must be provided to the BPMC by a Non-Participating Purchaser of its intent to become a Participating Purchaser one year in advance of the start of the Project Water Year,June 1°to be effective for participation in the BCD Project beginning at the start of the next Project Water Year.A Call Back Notice provided with less than one year in advance of the start of the Project Water Year,June 1*shall be effective for participation in the BCD Project to begin one year from the start of the next Project Water Year.A Call Back Notice can be made without restriction. 10.The Non-Participating Purchaser providing a Call Back Notice and complying with all other obligations and responsibilities set forth in Resolution 2017-02 and this Attachment 1 shall be able to participate at the level equal to the capacity percentage it holds in the Bradley Lake Project (i.e.,its initial BCD Share).The BPMC shall make the necessary adjustments to the BCD Shares held by the other Participating Purchasers to accommodate the return of the Non-Participating Purchaser providing a valid Call Back Notice. 11.Any Non-Participating Purchaser providing a Call Back Notice must reimburse the Participating Purchasers then participating in the BCD Project for the equitable portion of the reasonable costs incurred to develop the BCD Project as determined by the BPMC at the time the Non-Participating Purchaser chooses to participate in the BCD Project with such reasonable development costs including the Non-Participating Purchaser's pro-rata {00031494.2}Page 2 of 4 --Attachment 1 to Resolution 2017-02 share of AEA cash calls and Interest During Construction (IDC)paid up front by the Participating Purchasers and adjusted for the time value of money using a discount rate equal to the long-term financing cost for the BCD Project net the credit from the Clean Renewable Energy Bonds (CREBS).This reimbursement must be paid to the Participating Purchasers by the Non-Participating Purchaser providing a Call Back Notice on or before May 1*prior to the Project Water Year in which that Non-Participating Purchaser shall be eligible to participate in the BCD Project. C.BCD Project Cost Responsibility: 1.The amounts contributed to date towards the development of the BCD Project by the Non- Participating Purchasers shall be reimbursed by the Participating Purchasers in amounts determined by the BPMC within forty-five (45)days following the financing for the BCD Project.The responsibility of payment of such costs associated with this reimbursement shall be allocated by the BPMC to the Participating Purchasers in accordance with their respective BCD Shares,adjusted by the amount of the BCD Share allocated from a Non- Participating Purchaser ("Adjusted BCD Share”). The Operator for the Bradley Lake Project will be required to develop and propose for BPMC approval,the methodology and procedures for tracking all costs involved or associated with the BCD Project;such approval by the BPMC shall be in accordance with the voting requirements set forth in Resolution No.2017-02.The methodology and procedures for tracking all costs involved or associated with the BCD Project will be approved by the BPMC. The BCD Project will be charged four percent (4%)of the Bradley Lake annual O&M or an amount to be determined by a study of the impacts of the BCD Project to the Bradley Lake Project.The results of the study will be approved by the affirmative vote of members whose percentage shares of the output from the Bradley Lake Project are equal to or exceed eighty percent (80%)of Bradley Lake Project capacity and Annual Project Costs. Participating Purchasers will hold harmless the Non-Participating Purchasers from all of the costs (including cost of financing)associated with the BCD Project as follows: a.The Participating Purchasers,in accordance with their Adjusted BCD Shares,will pay all of the costs (including cost of financing)associated with the BCD Project. b.The BPNC shall determine and allocate the BCD project costs to the Participating Purchasers during the determination of the Annual Project Costs for the Bradley Lake Project. c.The costs associated with the BCD Project will be invoiced to Participating Purchasers as a separate surcharge amount shown on a schedule similar in form to the Schedule C accompanying the Bradley Lake Project determinations of "Monthly Utility Contributions.” d.Any amounts received from Participating Purchasers for the costs associated with the BCD Project in excess of the actual costs associated with the BCD Project in {00031494.2}Page 3 of 4 -Attachment 1 to Resolution 2017-02 a given fiscal year will be distributed to the Participating Purchasers in accordance with their respective Adjusted BCD Shares for that fiscal year. e.Any additional amounts required for more than the budgeted costs associated with the BCD Project in each fiscal year shall be the responsibility of the Participating Purchasers in accordance with their respective Adjusted BCD Shares for that fiscal year. D.BCD Project Water Tracking &Allocation: 1.The Operator for the Bradley Lake Project will be required to develop for BPMC approval the methodology and procedures for the tracking and allocation of water;such approval by the BPMC shall be in accordance with the voting requirements set forth in Resolution No.2017-02. 2.A Participating Purchaser's water rights in each fiscal year from the BCD Project will be allocated based upon its Adjusted BCD Share. {00031494.2}Page 4 of 4 -Attachment 1 to Resolution 2017-02 RESOLUTION OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE FIRST AMENDMENT TORESOLUTIONNO.2017 -02:Battle Creek Diversion Project Introduction:The Bradley Lake Project Management Committee ("BPMC')is considering the development of a project to divert the water flows of Battle Creek into Bradley Lake to increase the water for use by the Bradley Lake Hydroelectric Project ("Bradley Lake Project”).All Purchasers are supportive of the expansion of the capabilities of the Bradley Lake Project through the development of the Battle Creek Diversion Project ("BCD Project”).While all Purchasers wish for the BCD Project to move forward,all Purchasers may not want to participate in the BCD Project.The activities of the BPMC regarding the BCD Project are authorized as Optional Project Work under the Power Sales Agreement. Purpose of Resolution No.2017-02:Resolution No.2017-02,and Attachment 1 to Resolution No.2017-02 Battle Creek Diversion Project Framework,set forth the terms and conditions under which participation in the costs and benefits of the BCD Project as Optional Project Work under the Power Sales Agreement will be managed by the BPMC. Purpose of First Amendment to Resolution No.2017-02:The First Amendment to Resolution 2017-02;Battle Creek Diversion Project is made to:1)clarify the time when a Purchaser is required to provide notice to the BPMC regarding participation in the Battle Creek Project;and-2) clarify the amounts that a Non-Participating Purchaser providing a Call-Back Notice must reimburse the Participating Purchasers then participating in the BCD Project;and 3)allow for the sale or transfer of the rights of a Purchaser between any Purchaser irrespective of whether the Purchaser is a Participating Purchaser or a Non-Participating Purchaser. Definitions:In addition to the definitions contained in Power Sales Agreement,the following definitions are used as part of this Resolution 2017-02 and Attachment 1: "Non-Participating Purchaser”means a Purchaser that is not participating in the BCD Project. "Participating Purchaser'means a Purchaser participating in the development of the BCD Project. RESOLUTION NO.2017-02 WHEREAS,Chugach Electric Association,Inc.("Chugach”),Golden Valley Electric Association,Inc.("GVEA”),Homer Electric Association,Inc.("HEA”),the Municipality of Anchorage d/b/a Municipal Light and Power ("ML&P”),Matanuska Electric Association,Inc. ('MEA'),and the City of Seward ("Seward”),are the purchasers of the power generated by Bradley Lake Project under the Power Sales Agreement (hereinafter referred to jointly as the "Purchasers”and individually as a "Purchaser'); {00031493.3}Page 1 of4 -Resolution 2017-02;Battle Creek Diversion Project WHEREAS,the Purchasers along with the Alaska Energy Authority ("AEA”)constitute the BPMC; WHEREAS,the BPMC has authorized preliminary work comprised of completing design,environmental,and bid-related documents on the BCD Project as Optional Project Work under the Power Sales Agreement; WHEREAS,the BCD Project is designed to supplement the water available for the Bradley Lake Project and the BCD Project will be using the facilities of the Bradley Lake Project,the BPMC will oversee and manage all aspects of the use of facilities of the Bradley Lake Project under the BPMC's authority provided by the Power Sales Agreement; WHEREAS,all Purchasers support the development of the BCD Project; WHEREAS,AEA is now moving forward with obtaining financing of the BCD Project; WHEREAS,not all Purchasers may want to participate in the development and resulting benefits of the BCD Project at this time; WHEREAS,Purchasers desire an arrangement under which a Purchaser not wishing to participate in the BCD Project now can preserve the ability to participate in the BCD Project at a later date; WHEREAS,the Participating Purchasers wish to hold harmless the Non-Participating Purchasers from incurring any costs associated with the development of the BCD Project; WHEREAS,the Participating Purchasers shall reimburse the Non-Participating Purchasers for any amounts previously advanced by a Non-Participating Purchasers; WHEREAS,the Participating Purchasers wish to provide an opportunity for the Non- Participating Purchasers to participate in the BCD Project later so long as the Non-Participating Purchasers reimburse the Participating Purchasers for an equitable portion of the reasonable costs incurred to develop the BCD Project prior to the time their respective participation begins; WHEREAS,the development and financing of the BCD Project will be required to have no effect on the Bradley Lake Project Power Revenue Bond Resolution ("Bond”)and related bond covenants associated with the Bradley Lake Project; WHEREAS,this Resolution No.2017-02 along with the Power Sales Agreement and the BPMC Bylaws provide the authorization for the BPMC to manage the allocation of costs and benefits of the BCD Project including the determination of the equitable costs to be paid by a Non- Participating Purchaser to a Participating Purchaser should the Non-Participating Purchaser choose to participate in the BCD Project at a later date; WHEREAS,approval of the BCD Project as Optional Project Work under the Power Sales Agreement will require the affirmative vote of at least four (4)representatives of the Purchasers, whose percentage shares of the output from the Bradley Lake Project are greater than fifty-one percent (51%),plus the affirmative vote of the AEA;and, WHEREAS,approval for the financing of the BCD Project as Optional Project Work under the Power Sales Agreement will require the affirmative vote of members whose percentage {00031493.3}Page 2 of 4 -Resolution 2017-02;Battle Creek Diversion Project shares of the output from the Bradley Lake Project are equal to or exceed eighty percent (80%) of project capacity and annual project costs. NOW,THEREFORE,IT 1S HEREBY RESOLVED BY THE BPMC,that the costs and benefits of the BCD Project shall be managed and allocated in accordance with this Resolution No.2017-02 and Attachment 1 to this Resolution No.2017-02,Battle Creek Diversion Project Framework,as part of the BPMC process for determining Annual Project Costs for the Bradley Lake Project;and, BE IT FURTHER RESOLVED BY THE BPMC,that the BCD Project is approved as Optional Project Work under the Power Sales Agreement and this Resolution No.2017-02 and the terms and conditions set forth in Attachment 1 to this Resolution No.2017-02;and, BE IT FURTHER RESOLVED BY THE BPMC,that the above Recitals be incorporated and made part of to this Resolution No.2017-02;and, BE IT FURTHER RESOLVED BY THE BPMC,that the right to the capacity of the BCD Project shall initially be allocated to all Purchasers in accordance with their respective shares of Bradley Lake Project capacity (hereinafter referred to as their "BCD Share”). BE IT FURTHER RESOLVED BY THE BPMC,that Purchasers will have until financing terms and bid results are known before deciding whether to participate and obtain their respective right to the capacity in the BCD Project;and, BE IT FURTHER RESOLVED BY THE BPMC,that the costs and benefits of the BCD Project should not affect the rights,duties,and obligations of the Purchasers as set forth in the Power Sales Agreement and Bond;and, BE IT FURTHER RESOLVED BY THE BPM,that the costs and benefits associated with the BCD Project shall be allocated by the BPMC to only those Purchasers choosing to participate in the BCD Project (i.e.,Participating Purchasers);and, BE IT FURTHER RESOLVED BY THE BPMC,that Purchasers wishing to participate in the BCD Project shall expressly notify the BPMC of their election to participate in the BCD Project, and the percentage level of their BCD Share at which it would like to participate in the BCD Project;and, BE IT FURTHER RESOLVED BY THE BPMC,that a Participating Purchaser and a Non- Participating Purchaser shall have the unfettered right to arrange for the sale or transfer of its respective BCD Share to another Participating Purchaser or Non-Participating Purchaser and the BPNC shall honor such arrangement in the allocation process for BCD Shares;and, BE IT FURTHER RESOLVED BY THE BPMC,that any Purchaser failing to expressly notify the BPMC (or notifying the BPMC that it does not wish to participate in the BCD Project) December 6,2017 shall be deemed to be choosing to not participate in the BCD Project and that Purchaser's share of the BCD Project (i.e.,its respective BCD Share)shall be reallocated by the BPMC between the Participating Purchasers;and, BE IT FURTHER RESOLVED BY THE BPMC,that a Non-Participating Purchaser having its BCD Share reallocated shall continue to have its ability to participate in the BCD Project without restriction subject to the notice requirements in this Resolution 2017-02;and, {00031493.3}Page 3 of 4 -Resolution 2017-02;Battle Creek Diversion Project BE IT FURTHER RESOLVED BY THE BPWMC,that the Non-Participating Purchasers will not bear any costs or suffer any adverse effect due to the BCD Project;and, BE IT FURTHER RESOLVED BY THE BPWNC,the BCD Project will be charged four percent (4%)of the Bradley Lake annual O&M or an amount to be determined by a study of the impacts of the BCD Project to the Bradley Lake Project.The results of the study will be approved by the affirmative vote of members whose percentage shares of the output from the Bradley Lake Project are equal to or exceed eighty percent (80%)of Bradley Lake Project capacity and Annual Project Costs;and, BE IT FURTHER RESOLVED BY THE BPMC,that the Non-Participating Purchasers have no restriction to participate at a later date but must provide notice of their intent to become a Participating Purchaser one year in advance of the start of the Project Water Year,June 1°; and, BE IT FURTHER RESOLVED BY THE BPMC,that the Non-Participating Purchasers choosing to participate in the BCD Project at a later date shall contribute an equitable portion of the reasonable costs incurred to develop the BCD Project which amount shall be determined by the BPMC at the time the Non-Participating Purchaser chooses to participate in the BCD Project with such reasonable development costs to include only the Non-Participating Purchaser's pro- rata share of AEA cash calls and Interest During Construction (IDC)paid up front by the Participating Purchasers and adjusted for the time value of money using a discount rate equal to the long-term financing cost for the BCD Project net the credit from the Clean Renewable Energy Bonds (CREBS);and, BE IT FURTHER RESOLVED BY THE BPMC,that any changes to the terms and conditions of this Resolution 2017-02 and Attachment 1 that directly affect the rights and obligations of the Participating Parties to receive their respective benefits from the BCD Project shall require the unanimous consent of the Participating Parties. Dated at Anchorage Alaska,this 18 day of December 2017. Chair Attest: Secretary {00031493.3}Page 4 of 4 -Resolution 2017-02;Battle Creek Diversion Project RESOLUTION OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE FIRST AMENDMENT tO RESOLUTION NO.2017 -02:Battle Creek Diversion Project Introduction:The Bradley Lake Project Management Committee ("BPMC”)is considering the development of a project to divert the water flows of Battle Creek into Bradley Lake to increase the water for use by the Bradley Lake Hydroelectric Project ("Bradley Lake Project”).All Purchasers are supportive of the expansion of the capabilities of the Bradley Lake Project through the development of the Battle Creek Diversion Project ("BCD Project”).While all Purchasers wish for the BCD Project to move forward,all Purchasers may not want to participate in the BCD Project.The activities of the BPMC regarding the BCD Project are authorized as Optional Project Work under the Power Sales Agreement. Purpose of Resolution No.2017-02:Resolution No.2017-02,and Attachment 1 to Resolution No.2017-02 Battle Creek Diversion Project Framework,set forth the terms and conditions under which participation in the costs and benefits of the BCD Project as Optional Project Work under the Power Sales Agreement will be managed by the BPMC. Purpose of First Amendment to Resolution No.2017-02:The First Amendment to Resolution 2017-02;Battle Creek Diversion Project is made to:1)clarify the time when a Purchaser is required to provide notice to the BPMC regarding participation in the Battle Creek Project;2) clarify the amounts that a Non-Participating Purchaser providing a Call-Back Notice must reimburse the Participating Purchasers then participating in the BCD Project;and 3)allow for the sale or transfer of the rights of a Purchaser between any Purchaser irrespective of whether the Purchaser is a Participating Purchaser or a Non-Participating Purchaser. Definitions:!n addition to the definitions contained in Power Sales Agreement,the following definitions are used as part of this Resolution 2017-02 and Attachment 1: "Non-Participating Purchaser”means a Purchaser that is not participating in the BCD Project. "Participating Purchaser”means a Purchaser participating in the development of the BCD Project. RESOLUTION NO.2017-02 WHEREAS,Chugach Electric Association,Inc.("Chugach”),Golden Valley Electric Association,Inc.("GVEA”),Homer Electric Association,Inc.("HEA”),the Municipality of Anchorage d/b/a Municipal Light and Power ("ML&P”),Matanuska Electric Association,Inc. ('MEA'),and the City of Seward ("Seward”),are the purchasers of the power generated by Bradley Lake Project under the Power Sales Agreement (hereinafter referred to jointly as the "Purchasers”and individually as a "Purchaser'); {00031493.4}Page 1 of 4 -Resolution 2017-02;Battle Creek Diversion Project WHEREAS,the Purchasers along with the Alaska Energy Authority ("AEA”)constitute the BPMC; WHEREAS,the BPMC has authorized preliminary work comprised of completing design, environmental,and bid-related documents on the BCD Project as Optional Project Work under the Power Sales Agreement; WHEREAS,the BCD Project is designed to supplement the water available for the Bradley Lake Project and the BCD Project will be using the facilities of the Bradley Lake Project,the BPMC will oversee and manage all aspects of the use of facilities of the Bradley Lake Project under the BPMC's authority provided by the Power Sales Agreement; WHEREAS,all Purchasers support the development of the BCD Project; WHEREAS,AEA is now moving forward with obtaining financing of the BCD Project; WHEREAS,not all Purchasers may want to participate in the development and resulting benefits of the BCD Project at this time; WHEREAS,Purchasers desire an arrangement under which a Purchaser not wishing to participate in the BCD Project now can preserve the ability to participate in the BCD Project at a later date; WHEREAS,the Participating Purchasers wish to hold harmless the Non-Participating Purchasers from incurring any costs associated with the development of the BCD Project; WHEREAS,the Participating Purchasers shall reimburse the Non-Participating Purchasers for any amounts previously advanced by a Non-Participating Purchasers; WHEREAS,the Participating Purchasers wish to provide an opportunity for the Non- Participating Purchasers to participate in the BCD Project later so long as the Non-Participating Purchasers reimburse the Participating Purchasers for an equitable portion of the reasonable costs incurred to develop the BCD Project prior to the time their respective participation begins; WHEREAS,the development and financing of the BCD Project will be required to have no effect on the Bradley Lake Project Power Revenue Bond Resolution ("Bond”)and related bond covenants associated with the Bradley Lake Project; WHEREAS,this Resolution No.2017-02 along with the Power Sales Agreement and the BPMC Bylaws provide the authorization for the BPMC to manage the allocation of costs and benefits of the BCD Project including the determination of the equitable costs to be paid by a Non- Participating Purchaser to a Participating Purchaser should the Non-Participating Purchaser choose to participate in the BCD Project at a later date; WHEREAS,approval of the BCD Project as Optional Project Work under the Power Sales Agreement will require the affirmative vote of at least four (4)representatives of the Purchasers, whose percentage shares of the output from the Bradley Lake Project are greater than fifty-one percent (51%),plus the affirmative vote of the AEA;and, WHEREAS,approval for the financing of the BCD Project as Optional Project Work under the Power Sales Agreement will require the affirmative vote of members whose percentage {00031493.4}Page 2 of 4 -Resolution 2017-02;Battle Creek Diversion Project shares of the output from the Bradley Lake Project are equal to or exceed eighty percent (80%) of project capacity and annual project costs. NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE BPMC,that the costs and benefits of the BCD Project shall be managed and allocated in accordance with this Resolution No.2017-02 and Attachment 1 to this Resolution No.2017-02,Battle Creek Diversion Project Framework,as part of the BPMC process for determining Annual Project Costs for the Bradley Lake Project;and, BE IT FURTHER RESOLVED BY THE BPMC,that the BCD Project is approved as Optional Project Work under the Power Sales Agreement and this Resolution No.2017-02 and the terms and conditions set forth in Attachment 1 to this Resolution No.2017-02;and, BE IT FURTHER RESOLVED BY THE BPWC,that the above Recitals be incorporated and made part of to this Resolution No.2017-02;and, BE IT FURTHER RESOLVED BY THE BPMC,that the right to the capacity of the BCD Project shall initially be allocated to all Purchasers in accordance with their respective shares of Bradley Lake Project capacity (hereinafter referred to as their "BCD Share”). BE IT FURTHER RESOLVED BY THE BPMC,that Purchasers will have until financing terms and bid results are known before deciding whether to participate and obtain their respective right to the capacity in the BCD Project;and, BE IT FURTHER RESOLVED BY THE BPMC,that the costs and benefits of the BCD Project should not affect the rights,duties,and obligations of the Purchasers as set forth in the Power Sales Agreement and Bond;and, BE IT FURTHER RESOLVED BY THE BPMC,that the costs and benefits associated with the BCD Project shall be allocated by the BPMC to only those Purchasers choosing to participate in the BCD Project (i.e.,Participating Purchasers);and, BE IT FURTHER RESOLVED BY THE BPMC,that Purchasers wishing to participate in the BCD Project shall expressly notify the BPMC of their election to participate in the BCD Project, and the percentage level of their BCD Share at which it would like to participate in the BCD Project;and, BE IT FURTHER RESOLVED BY THE BPMC,that a Participating Purchaser and a Non- Participating Purchaser shall have the unfettered right to arrange for the sale or transfer of its respective BCD Share to another Participating Purchaser or Non-Participating Purchaser and the BPMC shall honor such arrangement in the allocation process for BCD Shares;and, BE IT FURTHER RESOLVED BY THE BPMC,that any Purchaser failing to expressly notify the BPMC (or notifying the BPMC that it does not wish to participate in the BCD Project) December 6,2017 shall be deemed to be choosing to not participate in the BCD Project and that Purchaser's share of the BCD Project (i.e.,its respective BCD Share)shall be reallocated by the BPMC between the Participating Purchasers;and, BE IT FURTHER RESOLVED BY THE BPMC,that a Non-Participating Purchaser having its BCD Share reallocated shall continue to have its ability to participate in the BCD Project without restriction subject to the notice requirements in this Resolution 2017-02;and, {00031493.4}Page 3 of 4 -Resolution 2017-02;Battle Creek Diversion Project BE IT FURTHER RESOLVED BY THE BPMC,that the Non-Participating Purchasers will not bear any costs or suffer any adverse effect due to the BCD Project;and, BE IT FURTHER RESOLVED BY THE BPMC,the BCD Project will be charged four percent (4%)of the Bradley Lake annual O&M or an amount to be determined by a study of the impacts of the BCD Project to the Bradley Lake Project.The results of the study will be approved by the affirmative vote of members whose percentage shares of the output from the Bradley Lake Project are equal to or exceed eighty percent (80%)of Bradley Lake Project capacity and Annual Project Costs;and, BE IT FURTHER RESOLVED BY THE BPMC,that the Non-Participating Purchasers have no restriction to participate at a later date but must provide notice of their intent to become a Participating Purchaser one year in advance of the start of the Project Water Year,June 1°; and, BE IT FURTHER RESOLVED BY THE BPMC,that the Non-Participating Purchasers choosing to participate in the BCD Project at a later date shall contribute an equitable portion of the reasonable costs incurred to develop the BCD Project which amount shall be determined by the BPMC at the time the Non-Participating Purchaser chooses to participate in the BCD Project with such reasonable development costs to include only the Non-Participating Purchaser's pro- rata share of AEA cash calls and Interest During Construction (IDC)paid up front by the Participating Purchasers and adjusted for the time value of money using a discount rate equal to the long-term financing cost for the BCD Project net the credit from the Clean Renewable Energy Bonds (CREBS);and, BE IT FURTHER RESOLVED BY THE BPMC,that any changes to the terms and conditions of this Resolution 2017-02 and Attachment 1 that directly affect the rights and obligations of the Participating Parties to receive their respective benefits from the BCD Project shall require the unanimous consent of the Participating Parties. Dated at Anchorage Alaska,this 18 day of December 2017. Chair Attest: Secretary {00031493.4}Page 4 of 4 -Resolution 2017-02;Battle Creek Diversion Project