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Home My WebLink AboutBPMC Resoultions as of 2018RESOLUTION OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.2018 -03 Authorizing the Second Amendment to the Second Amended and Restated O&M Agreement Introduction:The Bradley Lake Project Management Committee ("BPMC')is in the process of developing a new O&M Agreement governing the terms and conditions under which the Bradley Lake Hydroelectric Project ("Project”)will be operated.The currently effective O&M Agreement is set to terminate on December 31,2018.Additional time is needed by the BPMC to finalize the terms and conditions under which the Operator shall perform its duties at the Project. Purpose of Resolution No.2018-03:Resolution No.2018-03,authorizes the Alaska Energy Authority ("Authority”)to enter a Second Amendment with the Operator,Homer Electric Association,Inc.("HEA”),to extend the provisions of the current O&M Agreement governing the current term and notice of termination of the O&M Agreement for a period of three (3)additional months,and provides that the compensation to be paid to the Operator during the period January 1,2019 through March 31,2019 is in accordance with the compensation criteria and rates specified in Exhibits A ("Compensation”)and A-1 ("Calculation(s)of Compensation Payment')to the Second Amendment. RESOLUTION NO.2018-03 WHEREAS,the Bradley Lake Project Power Sales Agreement (the "Power Sales Agreement”) provides that the BPMC shall arrange for the operation and maintenance of the Project and Project Related Facilities; WHEREAS,the BPMC is authorized under its Bylaws adopted pursuant to the terms of the Power Sales Agreement to approve agreements for the operation and maintenance of Project and Project related facilities; WHEREAS,to provide for the operation and maintenance of the Project and Project Related Facilities,the BPMC entered the Master Maintenance and Operating Agreement with the Authority under which the Authority shall enter contracts necessary to perform services for,or operation and maintenance of,the Project and Project Facilities; WHEREAS,the Authority and HEA entered the Second Amended and Restated Operation and Maintenance Agreement for Bradley Lake Hydroelectric Project effective July 1,2008 (the "O&M Agreement”),to inter alia,provide that HEA would continue as Operator and operate and maintain the Project in accordance with the terms and conditions of the O&M Agreement; WHEREAS,the BPMC authorized the Authority and HEA to enter the First Amendment to The Second Amended and Restated Operation &Maintenance Agreement for Bradley Lake Hydroelectric Project ("First Amendment')on June 15,2016; Page 1 of 2--BPMC Resolution 2018-03:Authorizing Second Amendment to the Second Amended and Restated O&M Agreement WHEREAS,the First Amendment extended the provisions of the O&M Agreement governing the current term and notice of termination of the O&M Agreement for a period of six (6)months to January 1,2019; WHEREAS,the BPMC has decided that additional time Is required to handle issues by and between BPMC Participating Utilities and has authorized the Authority to enter a Second Amendment to The Second Amended and Restated Operation &Maintenance Agreement for Bradley Lake Hydroelectric Project ("Second Amendment')with HEA on October 25,2018 (Second Amendment attached hereto); WHEREAS,the Second Amendment extends the provisions of the O&M Agreement governing the current term and previously presented notice of termination of the O&M Agreement for a period of three (3)months through March 31,2019 and provides that the compensation to be paid to the Operator during the period January 1,2019 through March 31,2019 is in accordance with the compensation criteria and rates specified in Exhibits A ("Compensation”)and A-1 (Calculation(s)of Compensation Payment')to the Second Amendment. NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE BPMC,that additional time is needed by the BPMC to finalize the terms and conditions under which the Operator shall perform its duties at the Project;and, BE IT FURTHER RESOLVED BY THE BPWNC,that a period of three (3)months should be enough time to finalize the terms and conditions under which the Operator shall perform its duties at the Project;and, BE iT FURTHER RESOLVED BY THE BPMC,that the compensation to be paid to the Operator during the period January 1,2019 through March 31,2019 shall be in accordance with the compensation criteria specified in Exhibits A ('Compensation”)and A-1 ("Calculation(s)of Compensation Payment')to the Second Amendment;and, BE IT FURTHER RESOLVED BY THE BPMC,that the Authority is authorized by the BPMC to enter a Second Amendment with the Operator,HEA,to extend the provisions of the current O&M Agreement governing the current term and notice of termination of the O&M Agreement for a period of three (3)additional months (until March 31,2019),and to provide that the compensation to be paid to the Operator during the period January 1,2019 through March 31,2019 shall be in accordance with the compensation criteria and rates specified in Exhibits A ('Compensation')and A-1 ("Calculation(s)of Compensation Payment')to the Second Amendment;and, BE IT FURTHER RESOLVED BY THE 8PMC,that the above Recitals be incorporated and made part of to this Resolution No.2018-03. Dated at Anchorage Alaska,this 25th day of October 2018. CP BargeChairDilAttest: Y Secretary Page 2 of 2 BPMC Resolution 2018-03:Authorizing Second Amendment to the Second Amended and Restated O&M Agreement SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT This SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT ("Second Amendment”)dated effective as of October 25,2018,is entered into by and between the Alaska Energy Authority ("Authority”)and Homer Electric Association,Inc.("HEA”). WITNESSETH WHEREAS,the Authority is a public corporation of the State of Alaska duly created,organized,and existing pursuant to AS 44.83,and authorized by law to sell electric power generated by the Bradley Lake Hydroelectric Project ("Project”); WHEREAS,the Authority is authorized under AS 44.83.396 to enter agreements for the operation and maintenance of power projects owned by the Authority with a qualified utility; WHEREAS,the Bradley Lake Project Power Sales Agreement (the "Power Sales Agreement”) provides that the Bradley Lake Project Management Committee ("BPMC”)shall arrange for the operation and maintenance of the Project and Project Related Facilities; WHEREAS,the BPMC is authorized under its Bylaws adopted pursuant to the terms of the Power Sales Agreement to approve agreements for the operation and maintenance of Project and Project Related Facilities; WHEREAS,to provide for the operation and maintenance of the Project and Project Related Facilities,the BPMC entered the Master Maintenance and Operating Agreement with the Authority under which the Authority shall enter contracts necessary to perform services for,or operation and maintenance of,the Project and Project Facilities; WHEREAS,the Authority and HEA entered the Second Amended and Restated Operation and Maintenance Agreement for Bradley Lake Hydroelectric Project effective July 1,2008 (the "O&M Agreement”),to inter alia,provide that HEA would continue as Operator and operate and maintain the Project in accordance with the terms and conditions of the O&M Agreement; WHEREAS,the Authority,before executing a contract or contract amendment for operation or maintenance of the Project or Project related facilities,must submit the contract or amendment to the BPMC for its review and approval under the Master Maintenance and Operation Agreement; WHEREAS,the BPMC authorized the Authority and HEA to enter the FIRST AMENDMENT TO THE SECOND AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT ("First Amendment”)on June 15,2016; WHEREAS,the First Amendment extended the provisions of the O&M Agreement governing the current term and notice of termination of the O&M Agreement for a period of six (6)months to January 1,2019; WHEREAS,the BPMC has decided that additional time is required to handle issues by and between BPNC Participating Utilities and authorized the Authority and HEA to enter this Second Amendment on October 25,2018; SECOND AMENDMENT TO O&M AGREEMENT PAGE 1 of 2 WHEREAS,the Second Amendment extends the provisions of the O&M Agreement governing the current term and previously presented notice of termination of the O&M Agreement for a period of three (3)months through March 31,2019 and provides that the compensation to be paid to the Operator during the period January 1,2019 through March 31,2019 is in accordance with the compensation criteria and rates specified in the attached Exhibit A ("Compensation”)and Exhibit A- 1 ('Calculation(s)of Compensation Payment”);and, WHEREAS,the BPMC has reviewed and approved this Second Amendment. NOW,THEREFORE,THE PARTIES AGREE AS FOLLOWS: 1.Section 2(b)of the O&M Agreement shall be amended to read as follows: Except as expressly provided in this section,the term of this Agreement shall be five (5) years from the Effective Date and shall be automatically renewed for successive five-year terms until terminated as provided herein and subject to the termination rights set forth in Section 2(c)and Section 7(d).Notice of termination by either party shall be given two years in advance of the end of any term;provided,however,that the current,(or second)term of this Agreement shall be extended to March 31,2019,and the date for which termination notice shall be given shall be correspondingly extended to March 30,2017. 2.Section 10(d)of the O&M Agreement shall be amended to read as follows: Subject to the availability of funds,the Authority shall reimburse the Operator for all costs under thisAgreement.For the period January 1,2019 to March 31,2019,the compensation to be paid to the Operator shall be in accordance with the compensation criteria and rates specified in Exhibit A and Exhibit A-1 to the Second Amendment to the Second Amended and Restated Operation &Maintenance Agreement for Bradley Lake Hydroelectric Project, dated October 25,2018. 3.Except as amended in this Second Amendment,the terms and conditions of the O&M Agreement remain in full force and effect. IN WITNESS WHEREOF,the Parties have caused this Second Amendment to be executed the day and year first above written. HOMER ELECTRIC ASSOCIATION,INC. py EE FZBradleyP.Janorsthke General Manager ALASKA ENERGY AUTHORITY By MAANnetReiser Executive Director SECOND AMENDMENT TO O&M AGREEMENT PAGE 2 of 2 RESOLUTION No.2018-01 OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Battle Creek Diversion Proiect Share Allocation Process Introduction:The Bradley Lake Project Management Committee ("BPMC')is involved a project which will 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”).The activities of the BPMC regarding the BCD Project are authorized as Optional Project Work under the Power Sales Agreement. Purpose of Resolution No.2018-01:Resolution 2018-01 amends the voting requirements for the BPMC to accept the results of the study that will address the O&M impacts of the BCD Project on the Bradley Lake Project and clarifies the methodology to be used by the BPMC to allocate BCD Project shares of any Non-Participating Purchaser that has not been otherwise sold or transferred. Resolution No.2018-01 WHEREAS,the BPMC has authorized the development and financing of the BCD Project through the adoption of Resolution No.2017-01 (June 28,2017),Resolution No.2017-02 (October 13,2017),First Amendment to Resolution No.2017-02 (December 1,2017),Second Amendment to Resolution No.2017-02 (December 6,2017),and Resolution No.2017-03 (December 16,2017)(jointly hereinafter referred to as the "Earlier BCD Project Resolutions'); WHEREAS,the BPMC voting requirements for adopting the results of the study of the impacts of the BCD project to the Bradley Lake Project in Earlier BCD Project Resolutions was that the results of the study were to be approved by the affirmative vote of members whose percentage shares of the output from the Bradley Lake Project are equal or exceed eighty percent (80%)of the Bradley Lake Project capacity and Annual Project costs; WHEREAS,the BPMC wishes to change the voting requirements for adopting the results of the study of the impacts of the BCD project to the Bradley Lake Project from the voting requirements set forth in the Earlier BCD Project Resolutions to a voting requirement in accordance with the BPMC voting requirements for Optional Project Work (i.e.,the affirmative vote of at least four representatives of the Purchasers,whose percentages shares of Project capacity are greater than 51%plus the affirmative vote of the representative of the Authority); and, WHEREAS,the BPMC wishes to clarify the calculation and methodology for reallocation of the BCD Project Shares of any Non-Participating Purchaser that has not otherwise sold or transferred in accordance with the manner which such shares have been reallocated. Page 1 of 2-BPMC Resolution No.2018-01 NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE BPMC,that the voting requirements for adopting the results of the study of the impacts of the BCD project to the Bradley Lake Project shall be the same as the BPMC voting requirements for Optional Project Work (i.e., the affirmative vote of at least four representatives of the Purchasers,whose percentages shares of Project capacity are greater than 51%plus the affirmative vote of the representative of the Authority);and, BE IT FURTHER RESOLVED BY THE BPMC,that the methodology to be used by the BPMC to allocate BCD Project shares of any Non-Participating Purchaser that has not been otherwise sold or transferred shall be as attached in Exhibit A to this Resolution No.2018-01; and, BE IT FURTHER RESOLVED BY THE BPMNC,that,except as expressly set forth herein, the BPMC does not intend or desire any other changes to the Earlier BCD Project Resolutions by the adoption of this Resolution No.2018-01. Dated at Anchorage Alaska,this 20"day of July 2018. A.2 Len >Ld OA Chair Attest:W <Lno Secretary Va Page 2 of 2--BPMC Resolution No.2018-01 Exhibit A To RESOLUTION NO.2018-01 OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Reallocation of BCD Shares Exhibit A Page 1 of 2 The Reallocation Process: The methodology for allocating BCD Shares of any Non-Participating Purchaser that has not been otherwise sold or transferred is,as follows:the respective percentage of original shares of Bradley Lake Project capacity held by each Participating Purchaser shall be divided by the total percentage of Participating Purchasers ("Allocation Percentage”).The Allocation Percentage shall be multiplied by the percentage of original shares of Bradley Lake Project capacity held the total of all Non-Participating Purchasers that have not otherwise sold or transferred their BCD Shares to calculate the percentage of the reallocated amount of the Non-Participating BCD Shares ("Reallocated BCD Share').The Reallocated BCD Share for each Participating Purchaser shall be added to the BCD Share for that Participating Purchaser to achieve the total amount of percentage participating in the BCD Project.Please see Exhibit 1 for an example of the specific calculation under this reallocation methodology.The Participating Purchasers may allocate their BCD Share and/or the redistributed BCD Shares from the BCD Pool by agreement. Example of Reallocation Process [Note:This example,using the data associated with Chugach Electric Association,Inc., illustrates the reallocation process with the data from the BPMC's 2018 BCD Share allocation process.Please see "Battle Creek Allocation Worksheet”prepared by Alaska Energy Authority at Page 2 of 2 of this Exhibit.] Step 1 -The respective percentage of original shares of Bradley Lake Project capacity held by each Participating Purchaser shall be divided by the total percentage of Participating Purchasers ("Allocation Percentage'). Allocation Percentage =30.40 /57.20 =.53147 Step 2 -The Allocation Percentage shall be multiplied by the percentage of original shares of Bradley Lake Project capacity held by the total of all Non-Participating Purchasers that have not otherwise sold or transferred their BCD Shares to calculate the percentage of the reallocated amount of the Non-Participating BCD Shares ("Reallocated BCD Share'). Reallocated BCD Share =(.53147)X GVEA's BCD Share (16.9)=8.98 Step 3 -The Reallocated BCD Share for each Participating Purchaser shall be added to the BCD Share for that Participating Purchaser to achieve the total!amount of percentage participating in the BCD Project ("Final BCD Share Allocation'). Final BCD Share Allocation (%)=8.98 +30.4 =39.38% ALASKA ENERGY AUTHORITY Battle Creek Allocation December 13,2017 Battle Creek Share re-Battle Creek distributionto Allocation of Bradley Percent HEA from GVEA Share Power Purchaser Shared ML&P12/13/17 Chugach Electric 30.40%30.40%8.98% Municipality of Anchorage 25.90%0.00%0.00% Homer Electric 12.00%37.90%3.55% Matanuska Electric 13.80%13.80%4.08% Golden Valley Electric 16.90%0.00%0.00% City of Seward 1.00%1.00%0.30% 100.00%83.10%16.90% Battle Creek participation prior to Dec 13th: Non-participating percent total 42.80% Participating percent total 57.20% 100.00% Battle Creek participation Dec 13th: Non-participating percent total 42.80% Participating percent total 57.20% 100.00% Exhibit A Page 2 of 2 Gross 39.38% 41.45% 17.88% 1.30% 100.00% a eg RESOLUTION OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE FIRST AMENDMENT 10 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;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. 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'); WHEREAS,the Purchasers along with the Alaska Energy Authority ("AEA”)constitute the BPMC; {00031493.2}Page 1 of 4 -Resolution 2017-02;Battle Creek Diversion Project 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 shares of the output from the Bradley Lake Project are equal to or exceed eighty percent (80%)of project capacity and annual project costs. {00031493.2}Page 2 of 4 Resolution 2017-02;Battle Creek Diversion Project 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 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 whetherto participate and obtain their respective right to the capacity in the BCD Project;and, BE IT FURTHER RESOLVED BY THE BPWMC,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 withtheBCDProjectshallbeallocatedbytheBPMCtoonlythosePurchaserschoosingtoparticipateintheBCDProject(i.e.,Participating Purchasers);and, BE JT 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 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;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)byDecember6,2017 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, 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, {00031493.2}Page 3 of 4 -Resolution 2017-02;Battle Creek Diversion Project 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 Purchasershavenorestrictiontoparticipateatalaterdatebutmustprovidenoticeoftheirintenttobecome 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 ProjectshallrequiretheunanimousconsentoftheParticipatingParties. Dated at Anchorage Alaska,this 1%t day of December 2017. Sec Chair Attest:$e EL ,Secretary Lo {00031493.2}Page 4 of 4 -Resolution 2017-02;Battle Creek Diversion Project RESOLUTION OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE 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. 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'); 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; {00029961 .1}Page 1 of 4 -Resolution 2017-02;Battle Creek Diversion 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 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 BPMC,that the above Recitals be incorporated and made part of to this Resolution No.2017-02;and, {00029961.1}Page 2 of 4 Resolution 2017-02;Battle Creek Diversion Project BE IT FURTHER RESOLVED BY THE BPMWC,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 (tentatively November 8,2017)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 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;and, BE IT FURTHER RESOLVED BY THE BPMNC,that any Purchaser failing to expressly notify the BPMC (or notifying the BPMC that it does not wish to participate in the BCD Project)by November 30,2017 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, 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, {00029961.1}Page 3 of 4-Resolution 2017-02;Battle Creek Diversion Project BE IT FURTHER RESOLVED BY THE BPMNC,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 including 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 13th day of October 2017. PRA AOEChair Attest:4 Secretary {00029961.1}Page 4 of 4 -Resolution 2017-02;Battle Creek Diversion Project 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 contro!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'). 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. {00029962.1}Page 1 of 4 --Attachment 1 to Resolution 2017-02 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 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. 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 shail 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 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 {00029962.1}Page 2 of 4 -Attachment 1 to Resolution 2017-02 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 ail 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 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 {00029962.1}Page 3 of 4 -Attachment 1 to Resolution 2017-02 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. {00029962.1}Page 4 of 4 -Attachment 1 to Resolution 2017-02 RESOLUTION OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE 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. 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'); 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; {00029961.1}Page 1 of 4-Resolution 2017-02;Battle Creek Diversion 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 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 BPWC,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 BPWMC,that the above Recitals be incorporated and made part of to this Resolution No.2017-02;and, {00029961.1}Page 2 of 4 -Resolution 2017-02;Battle Creek Diversion Project 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 (tentatively November 8,2017)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 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;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)by November 30,2017 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, 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, {00029961.1}Page 3 of 4 -Resolution 2017-02;Battle Creek Diversion Project BE !T 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 including 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 13th day of October 2017. RA AEEChair Secretary Attest:Zu rr Law,c oo {00029961.1}Page 4 of 4-Resolution 2017-02;Battle Creek Diversion Project 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'). 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. {00029962.1}Page 1 of 4 Attachment 1 to Resolution 2017-02 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 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. 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 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 {00029962.1}Page 2 of 4 -Attachment 1 to Resolution 2017-02 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 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 {00029962.1}Page 3 of 4 -Attachment 1 to Resolution 2017-02 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. {00029962.1}Page 4 of 4 -Attachment 1 to Resolution 2017-02 RESOLUTION NO.2017-01 CONFIRMING RESOLUTION OF THE BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE BATTLE CREEK DIVERSION PROJECT WHEREAS,Utilities of the Bradley Lake Project Management Committee (BPMC)are currently discussing the financing and contractor procurement for the proposed West Fork Battle Creek Diversion Project (Project). WHEREAS,Utilities that are interested in paying a share of Project expenses and receiving their energy share in proportion to their expense are the Purchasing Utilities. WHEREAS,it is intended that the project,if financed by Purchasing Utilities and successfully constructed,will increase the Bradley Lake Hydropower Project annual energy for Purchasing Utilities. WHEREAS,the BPMC utilities will have until final financing is in place to make a decision on participating in the Battle Creek Project.WHEREAS,any Purchaser that chooses not to initially take their respective share of Battle Creek energy may buy their respective share back at some point in the future. WHEREAS,Chugach Electric has recently completed a like project (Stetson Creek)and the BPMC desires to leverage that expertise for the benefit of all BPMC members. NOW THEREFORE,BE IT RESOLVED the BPMC authorizes and supports the efforts of Purchasing Utilities desiring to develop the Battle Creek Diversion Project to work with Alaska Energy Authority to finance and bid the Project in 2017. ADOPTED the 28"day ofJune,2017. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Lou B.Burge ,Cory Borgeson,Chairman ATTEST:MSBY:7TTT Michael E.Lamb,Secretary IV. BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE Resolution 14-11 RESOLUTION RESOLVING THE DISPUTED ISSUES BETWEEN THE DESIGNATED UTILITIES AND HOMER ELECTRIC ASSOCIATION,INC. A. B. B. C. Table of Contents The Disputed Issues Arise under the Bradley Lake Agreement ..........ccssscssecssseccsersccsesssesersecsssessssessnsssssessscesseeasonsesceensosserasensenses The BPMC Has Authority to Consider and Resolve Issues Arising Under the Bradley Lake Agreements ...............csssccsssssetessceesetseeeneeees The Bradley Lake Agreements Were Not Modified, Amended,or Terminated By the Expiration of the Lease and Chugach Is Still Entitled to Operate, Maintain,Repair,Dispatch,and Wheel Project Energy Over the S/Q Line ....ccccccescssssesseensenensceesenscsesensensencsensesssessesssesssessscsesersneesseensesoenes HEA Will Be Permitted Some Additional Compensation for the Use of Its System Associated With the Transmission of Project Energy North of the Soldotna Substation.............ccesccsssessesssessessseesseesses RESOLUTION Resolution 14-11 Resolving Dispute between Utilities Foe e meen nena ee eee eese EEE ee DESEO OHH OO ROS OO HOEOOHEROEDHESESEDEDEOEETEODOSEESES ONO ESOE SEES SES DES SESE EES ES EES OSES OD CeO C ee meee rere reece renee reece ee Dee ee eee EEO EOE EDO EEO E EDO OE DESH SESE ESSE ESSER SED OSU DE DHE DEH AS OE OSES DEEE Bem e meee ener e nace se ae as OOO EO EDOD EOE OEEEOOEOE DESEO ONOEHOHEDESESOSESES ONSEN EE EOSED EES OOS HEA?'S POSItiONn 0.0...eescccsecesececescceessscesccesescesesesssesseceeseeessssesscecssesesssseeasesessesensesenses The Designated Utilities'POSITION ............cecessssstecseeessccecsteceeeccessccesesseneeseneeceateeaacs FINDINGS OF FACT AND CONCLUSIONS OF LAW A. CeO e rere reer cree rseresceccoescecenceseseseeeee POO errr een eee ee eee reese ene ese OO HOO SEO EOEOOOEED ESO ONSOEOUONOSSESEREEO ESSE EESED ERED ESSER OTROS OSEESOOESSD Page 1 of 18 BY THE BPMC: I.SUMMARY On February 7,2014,we found that this Bradley Lake Project Management Committee ("BPMC”)has authority to consider and decide on their merits the disputed issues between the Designated Utilities!and Homer Electric Association,Inc.("HEA”),regarding the continuing effect of the Bradley Lake Agreements and bonding documents?after the expiration of the Lease? and whether HEA is entitled to any additional compensation for Chugach's continued use of certain electrical facilities north of the Soldotna Substation for the purpose of wheeling energy from the Bradley Lake Hydroelectric Project ("Project”)under the terms of the Bradley Lake Agreements.*Our analysis in support of our finding on authority is contained herein. Now,after having provided all parties with the opportunity to fully advance evidence,and brief and argue their positions with regard to the disputed issues,we find that (1)the Bradley Lake Agreements were not modified,amended,or terminated by the expiration of the Lease;(2)the Chugach Electric Association,Inc.("Chugach”),Golden Valley Electric Association, Inc.("GVEA”),Matanuska Electric Association,Inc.("MEA”),and the Municipality of Anchorage d/b/a Municipal Light &Power (""ML&P”). The Bradley Lake Agreements include (1)the Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”),(2)the Agreement for the Wheeling of Electric Power and for Related Services ("Services Agreement”),(3)the Agreement for the Sale of Transmission Capability,dated December 8,1987,and the Amendment to Agreement for Sale of Transmission Capability,dated March 7,1989 ("Transmission Sharing Agreement”)(hereinafter "Bradley Lake Agreements”or "Agreements”);and (4)Alaska Power Authority Power Revenue Bond Resolution ("Bond Resolution”). Agreement for the Lease of Facilities,executed by and between Chugach and HEA in September 1985. 4 See Transcript of February 7,2014,BPMC Meeting at 104:15-106:6. Resolution 14-11 Resolving Dispute between Utilities Page 2 of 18 Bradley Lake Agreements continue to provide Chugach with the contractual right and obligation to operate,maintain,repair,dispatch,and wheel Project energy over the electrical facilities owned by HEA from the Soldotna Substation north to the Quartz Creek Substation;and (3)HEA is being adequately compensated for Chugach's continuing operation,maintenance,repair,dispatching, and wheeling of Project energy over the electrical facilities owned by HEA from the Soldotna Substation north to the Quartz Creek Substation but will receive additional compensation as a reasonable resolution of the disputes.° II.BACKGROUND The Project was made possible through a series of integrated contracts referred to as the Bradley Lake Agreements and bonding covenants.Under the Bradley Lake Agreements,among other things,power is sold and transmitted from the Project across Project facilities to the Bradley Junction,where it then enters the transmission system of Alaska Electric and Energy Cooperative, Inc.("AEEC”),°a wholly owned HEA asset.From Bradley Junction,Project energy flows north along AEEC's transmission line running from Bradley Junction to the Soldotna Substation ("Soldotna Segment”).The transmission of Project energy across the Soldotna Segment is governed by the Transmission Sharing Agreement.Under the Transmission Sharing Agreement, Chugach,GVEA,ML&P,and MEA contributed to the cost of constructing the Soldotna Segment in exchange for secure transmission capacity on the Soldotna Segment. HEA raised other technical disputes regarding Chugach's performance under the Bradley Lake Agreements in HEA's Statement Regarding Dispute Resolution Procedures filed with the BPMC on January 23,2014.Those disputes are not addressed in this Resolution and will be considered and resolved by the BPMC through a separate resolution. A single-member generation and transmission cooperative owned by HEA. Resolution 14-11 Resolving Dispute between Utilities Page 3 of 18 From the Soldotna Substation,Project energy then flows north through AEEC's transmission line running from the Soldotna Substation to the Quartz Creek Substation ("S/Q Line”).For the past 25 years,Chugach has operated,maintained,repaired,dispatched,and wheeled Project energy north of the Soldotna Substation through certain electrical facilities, including the S/Q Line,pursuant to the Services Agreement,'which continues in effect for another 25 years.®There is no provision in the Services Agreement that refers to the Lease or that suggests the expiration of the Lease will impact the rights and obligations of any party to the Services Agreement or any of the Bradley Lake Agreements. The Lease was associated with Chugach's wholesale power sales to HEA,and the Lease expired on January 1,2014.HEA believes that,when the Lease expired on January 1,2014, Chugach lost the right and the obligation to operate and maintain the electrical facilities north of the Soldotna Substation owned by HEA (including the S/Q Line).The Designated Utilities disagree.The Designated Utilities believe that,despite the expiration of the Lease,the Services Agreement provides Chugach with the right and the obligation to operate and maintain all electrical facilities north of the Soldotna Substation used to wheel Project energy (including the S/Q Line). On December 12,2013,the BPMC passed Resolution 2013-02,preliminarily finding that the disputed issues are within the BPMC's authority to resolve and beginning the dispute resolution process by appointing a Dispute Resolution Committee to address the disputed issues raised by HEA and the Designated Utilities.The Dispute Resolution Committee scheduled and held five 7 See Services Agreement at 7-8. 8 See Services Agreement at 3,28-29. 9 See Lease at 2. Resolution 14-11 Resolving Dispute between Utilities Page 4 of 18 meetings at the offices of the Alaska Energy Authority ("AEA”)to address the issues identified in BPMC Resolution 2013-02.!°On January 24,2014,the Dispute Resolution Committee asked all interested parties to file briefs addressing three issues:(1)whether the BPMC has the authority to address the underlying disputed issues;(2)whether Chugach has the right and obligation to continue operating,maintaining,and repairing the electrical facilities used to wheel Project energy from the Soldotna Substation north under the terms of the Services Agreement;and (3)whether HEA is entitled to any additional compensation for Chugach's continuing use of certain of HEA's electrical facilities north of the Soldotna Substation used for wheeling Project energy. On January 27,2014,the BPMC passed Resolution 2014-02 requiring that "[a]ll Project participants shall act in good faith to maintain the status quo and permit Chugach to continue to dispatch,operate,maintain,and repair,the S/Q Line under the terms of the Services Agreement and the other Bradley Lake Agreements during the pendency of the dispute.”On February 4,2014, the Designated Utilities!!and HEA'both filed briefs addressing the issues identified in Resolution 2013-02.On February 7,2014,based upon consideration of the arguments presented by both the Designated Utilities and HEA,the BPMC found that it has authority to consider and decide the disputed issues on their merits.!*>_The supporting analysis for the BPMC's decision on authority is detailed below.On April 11,2014,the Dispute Resolution Committee made specific findings regarding the disputed issues in Resolution 14-09.Those findings have been considered by the 10 Those meetings were held on the following dates:January 24,2014;January 27,2014; February 7,2014;April 11,2014;and April 17,2014. Designated Utilities'Brief on Disputes with Homer Electric Association,Inc. ("Designated Utilities'Br.”). Position Statement of Homer Electric Association,Inc.("HEA's Br.”). '3 See Transcript of February 7,2014,BPMC Meeting at 104:15-106:6. Resolution 14-11 Resolving Dispute between Utilities Page 5 of 18 BPMC and are incorporated into the findings in this Resolution.On April 17,2014,the Dispute Resolution Committee passed Resolution 14-10 declaring that the parties had reached an impasse and recommended that the BPMC move forward with formal dispute-resolution procedures.On April 17,2014,the BPMC approved the Dispute Resolution Committee's Resolutions 14-09 and 14-10.Now,in accordance with the dispute-resolution obligations under the Services Agreement and the BPMC's Bylaws,the BPMC has determined to decide the disputed issues on their merits.'4 14 Certain matters were referred to the Bradley Lake Operations and Dispatch Committee ("O&D Committee”).The technical and operational information provided by the O&D Committee in response has been duly considered by the BPMC and is incorporated into this Resolution. Resolution 14-11 Resolving Dispute between Utilities Page 6 of 18 Il.THE PARTIES'POSITIONS A.HEA's Position. HEA asserts that the BPMC does not have the authority to consider or decide the disputed issues on their merits.'>HEA further asserts that the BPMC's authority derives from the Power Sales Agreement and that the Power Sales Agreement does not give the BPMC authority to resolve the underlying disputed issues.'°Specifically,HEA argues that the BPMC does not have the authority to consider or resolve the issue of compensation to HEA for wheeling Bradley power.!” HEA argues that "[nJo provision in any of the [Bradley Lake Agreements]speaks to”the compensation issue.!®Instead,HEA states that the ultimate decision regarding compensation will be made by the Regulatory Commission of Alaska ("RCA”)or by a court.!? Moreover,HEA's position is that Chugach's right to access and transmit Project energy over HEA's facilities arose entirely from the Lease,not the Bradley Lake Agreements.??HEA asserts that the "expiration of both the [Lease]and the HEA-[Chugach]power sales agreement” terminated Chugach's right to receive power at HEA's Soldotna Substation and to operate any of HEA's transmission facilities.'HEA explains that upon the expiration of the Lease,HEA began operating as an independent load-balancing authority and assumed the responsibility of providing 1S See HEA's Br.at 2. 16 See HEA's Br.at 2. 17 See HEA's Br.at 2. '8 HEA's Br.at 2. 19 HEA's Br.at 2. 20 See HEA's Br.at 3. 21 HEA's Br.at 3. Resolution 14-11 Resolving Dispute between Utilities Page 7 of 18 transmission services between Bradley Junction and Quartz Creek.”Finally,HEA argues that the Services Agreement does not require HEA to maintain the December 31,2013,status quo.”? B.The Designated Utilities'Position. The Designated Utilities assert that the disputed issues arise out of the Bradley Lake Agreements,and the status quo must be maintained until the disputes are resolved.74 The Designated Utilities argue that the BPMC has the authority to consider and decide the disputed issues on their merits.Specifically,the Designated Utilities argue that the Power Sales Agreement creates and defines the BPMC's broad rights and obligations with respect to the management, operation,and improvement of the Project,and the Power Sales Agreement requires the BPMC to adopt procedures for resolving disputes that arise under the Bradley Lake Agreements.”>The Designated Utilities assert that,pursuant to the Power Sales Agreement,the BPMC adopted the Bradley Project Management Committee Bylaws ("Bylaws”),which contain specific procedures for dispute resolution.”°The Designated Utilities further argue that the Bylaws'dispute-resolution procedures give the BPMC the authority to decide,on their merits in accordance with Article 12 and Section 5.10 of the Bylaws by majority vote,those issues the BPMC determines are within its authority to consider.”'The Designated Utilities point out that the Services Agreement similarly provides that all disputes arising thereunder are subject to resolution in a manner consistent with 22 See HEA's Br.at 4. 23 See HEA's Br.at 4. 4 See Designated Utilities'Br.at 1-7;see also Tr.67:18-24 (Feb.7,2014,Dispute Resolution Committee Meeting). 25 See Designated Utilities'Br.at 6. 26 See Designated Utilities'Br.at 6. 27 See Designated Utilities'Br.at 6. Resolution 14-11 Resolving Dispute between Utilities Page 8 of 18 the BPMC's adopted dispute-resolution procedures.”®The Designated Utilities,therefore, conclude that pursuant to the Power Sales Agreement,the Bylaws,and the Services Agreement, the BPMC has the authority to (1)determine whether it has authority to consider the disputed issues,and (2)to resolve,on their merits by a majority vote,those issues the BPMC determines are within its authority to resolve.” Moreover,the Designated Utilities argue that the Services Agreement and the Lease are unrelated agreements and that the termination of the Lease did not terminate Chugach's rights and obligations under the Services Agreement to operate,maintain,and repair the electrical facilities north of the Soldotna Substation,including the S/Q Line,for wheeling Project energy.2°The Designated Utilities assert that Chugach's rights and obligations with regard to the S/Q Line are governed by the Services Agreement,not the Lease.*!Further,the Designated Utilities assert that HEA has been and is still being fairly compensated for the use of its facilities to wheel Project energy north as a part of the "net economic benefits”all Project Participants recognized and receive under the Bradley Lake Agreements.*? 28 See Designated Utilities'Br.at 6. 29 See Designated Utilities'Br.at 6-7. 30 See Designated Utilities'Br.at 2-5. 31 See Designated Utilities'Br.at 2-5. 32 See Designated Utilities'Br.at 7. Resolution 14-11 Resolving Dispute between Utilities Page 9 of 18 IV.FINDINGS OF FACT AND CONCLUSIONS OF LAW A.The Disputed Issues Arise Under the Bradley Lake Agreements. The BPMC finds that the disputed issues between the Designated Utilities and HEA are essentially a disagreement over Chugach's and HEA's relative rights and obligations with regard to electrical facilities owned by HEA and operated by Chugach to dispatch and wheel Project energy under the Services Agreement.The BPMC finds that this dispute is governed by the terms of the Services Agreement and the Bradley Lake Agreements.Further,the BPMC finds that there exists a dispute as to whether HEA is entitled to any additional compensation for the use of HEA's electrical facilities north of the Soldotna Substation for wheeling Project energy.The BPMC finds that this dispute is also governed by the terms of the Services Agreement and the other Bradley Lake Agreements. B.The BPMC Has Authority to Consider and Resolve Issues Arising Under the Bradley Lake Agreements. Upon consideration of the Bradley Lake Agreements,the Bylaws,and the arguments put forth by both the Designated Utilities and HEA,the BPMC finds that it has authority to consider and resolve the disputed issues on their merits by a majority vote.*>The BPMC finds that the disputed issues between the Designated Utilities and HEA concern Chugach's continuing contractual rights and obligations to operate,maintain,repair,dispatch and wheel Project energy over the electrical facilities north of the Soldotna Substation and are within the BPMC's authority to address and resolve under both the Power Sales Agreement and the Services Agreement. 33.Tf the resolution of such a dispute also involves an amendment to any of the Bradley Lake Agreements,then such an amendment would also have to be made consistent with the language for amendment of the Bradley Lake Agreements. Resolution 14-11 Resolving Dispute between Utilities Page 10 of 18 The Power Sales Agreement and the Services Agreement place a broad range of rights and obligations upon the BPMC.**Section 13(c)of the Power Sales Agreement requires the BPMC to oversee the "management,operation,maintenance,and improvement”of the Project and requires the BPMC to "[a]rrange for the operation and maintenance of the Project,and the scheduling,production,and dispatch of Project power.”This language requires the BPMC to address operation and management issues as well as issues associated with the scheduling and dispatch of power.The current disputes between the Designated Utilities and HEA concern each of these areas of the BPMC's authority.Further,Section 13(b)requires the BPMC to adopt "procedural rules”for "dispute resolution.” Similarly,Section 10(b)of the Services Agreement expressly incorporates and designates the BPMC as the entity responsible for resolving disputes under the Services Agreement. Specifically,the Services Agreement provides: At the meetings referred to in Section 10(a),the Parties shall also review performance under this Agreement,including difficulties encountered under the Agreement by any of the Parties and allegations (if any)of failure of any Party to perform the Agreement in good faith in accordance with its terms or intent. The Parties agree that any further procedures for dispute resolution under this Agreement shall be entrusted (if the Authority concurs)to good faith negotiation and adoption by the [BPMC],with Chugach's affirmative vote required for adoption of such procedures.*° This language requires the BPMC to address difficulties encountered with,and the failure of any Party to perform in accordance with,the terms of the Services Agreement.The current disputes between the Designated Utilities and HEA concern each of these areas of the BPMC's authority. 34 See Power Sales Agreement at 19-23;see also Services Agreement at 18. 35 Services Agreement at 18. Resolution 14-11 Resolving Dispute between Utilities Page 11 of 18 The BPMC's authority over the issues in dispute between the Designated Utilities and HEA is also consistent with the exemption of the Bradley Lake Agreements from any regulatory oversight under AS 42.05.431(c).Absent such an exemption,the rights and responsibilities of utilities over electrical facilities and rates would be resolved by the RCA.In the case of the Bradley Lake Agreements,however,the Legislature exempted all such matters from the RCA and permitted them to be addressed and resolved by the industry through the specialized experience and expertise of the BPMC. This ruling on the authority of the BPMC is required under Article 12 of the Bylaws entitled "Procedures for Dispute Resolution.”Article 12.2 of the Bylaws states that "in the event the authority of the [BPMC]to act is at issue,the [BPMC]shall first make a finding as to its authority.” Once such a finding is made,the BPMC has the authority to decide,on their merits,those issues the BPMC determines are within its authority to consider.Finally,with regard to these particular disputes,Article 5.10.2 of the Bylaws provides that "the act of a majority of votes taken during a meeting at any time when a quorum is present,shall be an act of the [BPMC],and binding on the members.””° The BPMC,therefore,concludes that (1)the disputed issues between the Designated Utilities and HEA arise under the Bradley Lake Agreements;and (2)the Power Sales Agreement, the Services Agreement,and the Bylaws provide the BPMC with the authority and the responsibility to resolve the disputed issues between the Designated Utilities and HEA. Cc,The Bradley Lake Agreements Were Not Modified,Amended,or Terminated by the Expiration of the Lease,and Chugach Is Still Entitled to Operate, Maintain,Repair,Dispatch,and Wheel Project Energy Over the S/Q Line. 36 Emphasis added. Resolution 14-11 Resolving Dispute between Utilities Page 12 of 18 Upon consideration of the Bradley Lake Agreements and the evidence and arguments put forth by both the Designated Utilities and HEA,the BPMC finds that Project energy enjoys priority status for transmission services from the Project north to the Project Participants.The expiration of the Lease did not modify,amend,or terminate the Services Agreement or the priority status that Project energy enjoys thereunder.Instead,transmission services across the S/Q Line continue to be governed by the Services Agreement.The Services Agreement requires Chugach to operate,maintain,repair,dispatch and wheel Project energy over the electrical facilities from the Soldotna Substation north.*”And,the Services Agreement requires Chugach to perform those 38servicesfor50years.-°The shorter term of the Lease is never mentioned in the Services Agreement.°?Significantly,the Services Agreement does not limit Chugach's rights or obligations to operate,maintain,repair,dispatch and wheel Project energy over HEA's facilities north of the Soldotna substation to the term of the Lease.Instead,the Services Agreement requires Chugach to exercise such rights and obligations throughout the 50-year term of the Services Agreement without any qualification or limitation relating to the Lease.Notably,the Services Agreement was executed two years after the Lease.*°Thus,if the parties had intended that the expiration of the Lease would terminate Chugach's rights and obligations under the Services 37 See Services Agreement at 2 ("At the request of any Wheeling Utility,Chugach will provide wheeling,storage,and energy purchase services to such Utility for that Utility's Bradley Lake Energy in accordance with the provisions of this Agreement.”);see also Services Agreement at 7-8 ("Chugach will in good faith and at all times:...operate, maintain,and repair the electrical facilities used to perform the services provided hereunder....”). 38 See Services Agreement at 3,28-29. 39 The Lease expired on January 1,2014.See Lease at 2. 40 The Lease was approved by the Commission in Order U-85-013(3),June 4,1985.The Services Agreement was executed on Dec.8,1987.Services Agreement at 1. Resolution 14-11 Resolving Dispute between Utilities Page 13 of 18 Agreement,they would have expressly qualified or limited those rights and obligations to the term of the Lease.Further,such a limitation would not be reasonable to imply,given the Services Agreement's express requirement that Chugach operate,maintain,repair,dispatch and wheel Project energy over HEA's facilities north of the Soldotna substation for 50 years,the length of time the bonds would be outstanding.Finally,GVEA,MEA,and ML&P were not parties to the Lease between Homer and Chugach and,thus,expiration of the Lease could not be deemed to affect GVEA's,MEA's,and ML&P's rights under the Services Agreement. Additionally,the Services Agreement can only be amended,renegotiated,or terminated at an earlier date by unanimous agreement.*!As such,the Chugach delivery point for Project energy may only be changed from the Soldotna Substation to the Quartz Creek Substation as a "successor facility”through the "written consent of all Parties.”4?HEA's attempts to unilaterally terminate, amend,or renegotiate the Services Agreement through its Tariff Filings and actions impeding Chugach's ability to operate,maintain,repair,dispatch and wheel Project energy over the S/Q Line are improper. The BPMC,therefore,concludes that the expiration of the Lease,which was neither referenced in nor related to the Bradley Lake Agreements,does not affect the continuing rights and obligations under the Services Agreement or the priority status Project energy enjoys thereunder. Instead,HEA must act in good faith to honor its commitments under the Services Agreement and allow Chugach to continue operating,maintaining,repairing,dispatching,and wheeling Project energy over HEA's facilities north of the Soldotna Substation. 41 See Services Agreement at 3-4. 42 See Services Agreement at 3.As the Designated Utilities point out,at least ten sections of the Services Agreement would have to be amended in order to effectuate such a change in delivery point.See Designated Utilities'Br.at 2,n.5. Resolution 14-11 Resolving Dispute between Utilities Page 14 of 18 D.HEA Will Be Permitted Some Additional Compensation for the Use of Its System Associated With the Transmission of Project Energy North of the Soldotna Substation. The BPMC finds that the parties to the Services Agreement and the Transmission Sharing Agreement anticipated that the Project would produce "net economic benefits”for all the parties,including HEA.®Specifically,all parties received the benefit of being able to purchase cheap power from the Project.Further,HEA received contribution from the other Project Participants to build the Soldotna Segment.*4 HEA was designated as the operator of the Project and receives compensation for its services provided as such.HEA's system is more reliable as a result of having the Project located on the southern edge of HEA's system.HEA receives the ongoing benefit of Chugach operating and dispatching Project energy at less than Chugach's actual costs of providing such services.And,HEA is benefited as a result of its right to pay for the scheduled dispatch of its Project power on an energy-delivered basis as opposed to an energy- reserved basis.The BPMC finds that,in exchange for those benefits,HEA committed its system to be used for the transmission of Project energy to the Project Participants in accordance with the Bradley Lake Agreements.Thus,HEA is adequately compensated under the Bradley Lake Agreements for the use of HEA's system and is entitled to no additional compensation. Nonetheless,in the interest of reaching a resolution among the Project Participants,the BPMC orders that HEA is to receive additional payments from the other Project Participants for the continuing use of HEA's facilities north of the Soldotna Substation throughout the term of the Services Agreement.While HEA is not entitled to any additional compensation under the controlling Bradley Lake Agreements,the BPMC holds that permitting HEA some additional 43°Services Agreement at 1;Transmission Sharing Agreement at 1. 44 Transmission Sharing Agreement at 2-3. Resolution 14-1] Resolving Dispute between Utilities Page 15 of 18 compensation would be the most efficient and reasonable resolution of the disputes.Such a resolution,while providing HEA with additional compensation,preserves the structure and terms of the Bradley Lake Agreements by maintaining and continuing Chugach's responsibility and obligation to operate,maintain,repair,dispatch,and wheel Project energy over HEA's facilities north of the Soldotna Substation.Such a resolution also provides the most efficient continuing means to dispatch Project energy to the Project Participants. The amount of additional compensation shall consist of both a fixed and a variable component.The fixed component is to be an amount of Three Hundred Thousand Dollars ($300,000)per year,which provides additional compensation to HEA to resolve the disputes concerning the Project Participants'continuing use of HEA's transmission facilities from the Soldotna Substation north under the Bradley Lake Agreements.The variable component is to consist of reasonable costs incurred by Chugach in fulfilling its responsibilities under the Services Agreement to maintain and repair HEA's transmission system from the Soldotna Substation north when such maintenance is performed by or through HEA's own efforts.Chugach has the continuing obligation under the Services Agreement to authorize and approve all such variable maintenance costs.Such fixed and variable amounts are consistent with the maximum compensation HEA has recovered historically from Chugach through the formula elements set forth in the Bradley Lake Agreements and represent a reasonable remedy under the circumstances of these disputes.These fixed and variable payments are effective and required from January 1, 2014,until the expiration of the Services Agreement. Resolution 14-11 Resolving Dispute between Utilities Page 16 of 18 V.RESOLUTION THE BPMC FURTHER RESOLVES: 1.As discussed in the body of this Resolution,the BPMC has the jurisdiction and obligation to resolve the disputes at issue. 2.As discussed in the body of this Resolution,the expiration of the Lease had no effect on the operation of the Services Agreement. 3.As discussed in the body of this Resolution,Chugach will continue to operate in accordance with the rights and obligations agreed to in the Services Agreement.Accordingly, Chugach will continue to operate,maintain,repair,dispatch,and wheel Project energy over HEA's facilities north of the Soldotna Substation in accordance with the terms of the Services Agreement. 4.As discussed in the body of this Resolution,HEA is violating BPMC Resolution 14-02 by not maintaining the status quo while this dispute is being resolved by the BPMC. 5.HEA shall take all reasonable steps to provide Chugach with the information and physical capability (where HEA cooperation is needed)to continue to perform its responsibilities in the same manner as Chugach did prior to January 1,2014. 6.HEA shall act in good faith to provide such cooperation as Chugach may from time to time request to allow Chugach to fulfill its responsibilities to operate,maintain,repair,dispatch, and wheel Project energy over HEA's facilities north of the Soldotna Substation under the Services Agreement,as those responsibilities have been clarified in the body of this Resolution. 7.HEA shall amend its tariff filings designated TA355-32 and TA356-32 ('""HEA's Tariff Filings”)with the RCA to expressly provide that HEA's Tariff Filings shall not apply to any and all services or rates covered by the Bradley Lake Agreements,as those services and rates have been interpreted and more fully identified in the body of this Resolution.Additionally,such amendment shall specifically and expressly provide that (a)HEA's Tariff Filings shall not apply Resolution 14-11 Resolving Dispute between Utilities Page 17 of 18 to any services associated with the transmission of Project energy;(b)HEA's Tariff Filings shall not affect the priority status that Project energy currently enjoys under the Bradley Lake Agreements:and (c)HEA's Tariff Filings shall not apply to or require compensation for the use of HEA's facilities associated with the transmission of Project energy.HEA shall file such an amendment to its Tariff Filings in accordance with this Resolution of the BPMC within 15 days from the date of this Resolution. 8.HEA is to submit its request for variable component cost recovery to the BPMC in accordance with terms announced in section IV.D.of this Resolution within 15 days from the date of this Resolution. 9.Chugach is to submit appropriate payments to HEA,consistent with compensation terms announced in section IV.D.of this Resolution,within 30 days of the date of this Resolution. 10._-_All parties are entitled to seek immediate judicial enforcement of the terms of this Resolution before the Superior Court for the State of Alaska,Anchorage District. DATED AND EFEEG#IVE this 9 dayof_Moay ,2014.vw RGY 4 ",J .©s -2.%o DtTA:¢oo ¢t45E2iSEALB=By abhor Ect:Evans \ 1978 =hair %mw)\?2 ft,tay enLfliika-th -adSaraFisher-Goad Secretary Resolution 14-11 Resolving Dispute between Utilities Page 18 of 18 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE DISPUTE RESOLUTION COMMITTEE RESOLUTION NO.14-09 FINDINGS OF COMMITTEE REGARDING POWER DELIVERY ISSUES BACKGROUND: The Bradley Lake Project Management Committee (BPMC)appointed a Dispute Resolution Committee to address matters raised by Chugach Electric Association (Chugach)by letter dated January 7,2014.The Dispute Resolution Committee held three meetings at Alaska Energy Authority (AEA)offices in Anchorage to address the issues raised by Chugach.Position papers were presented by Homer Electric Association (HEA)and by counsel jointly representing Chugach,Golden Valley Electric Association,Matanuska Electric Association,and Municipal Light &Power (collectively "Designated Utilities”).AEA participated in the meetings.All of these parties also had counsel present.Seward Electric participated in the Dispute Resolution Committee without counsel. Certain matters were referred by the Dispute Resolution Committee to the BPMC Operations and Dispatch (O&D)Committee.The information provided by the O&D Committee in response has been duly considered by the Dispute Resolution Committee and is incorporated into these findings. Having discharged its duties under the Agreement for the Wheeling of Electric Power and for Related Services ("Services Agreement'),the BPMC Dispute Resolution Committee makes the following findings: WHEREAS,the BPMC has established a Dispute Resolution Committee to address specific disputes related to the transmission of Bradley Lake power from Bradley Junction to Quartz Creek as raised by both HEA and Chugach;and WHEREAS,the BPMC O&D Committee has presented requested technical and operational information to the Dispute Resolution Committee;and WHEREAS,the BPMC Dispute Resolution Committee has considered the issues as presented by both the Designated Utilities and HEA. NOW THEREFORE,the BPMC Dispute Resolution Committee finds that: 1.The transmission of Bradley Lake power from Bradley Lake north to Quartz Creek from Bradley Junction is currently the highest priority use of the existing Bradley Junction to Soldotna and Soldotna to Quartz Creek transmission line segments. 2.All utilities receiving power from Bradley Lake have contracted for Chugach to dispatch all Bradley Lake power. 3.The Soldotna-Quartz Creek transmission line segment formerly leased to Chugach by HEA remains the only path to move Bradley Lake power from Soldotna to Quartz Creek and this transmission line segment presently is not used for transmission to HEA's native distribution load beyond Sterling substation. 4.The expiration of the lease between HEA and Chugach for the Soldotna-Quartz Creek transmission line segment does not in any way alter the contractual relationship between all parties that are signatory to the Services Agreement of the priority for transmission of Bradley Lake power. 5.HEA has received compensation for use of the Soldotna-Quartz Creek transmission line segment for the transmission of Bradley Lake power to all purchasers located north of Soldotna under the Bradley Lake Agreements. 6.In the interest of reaching an equitable resolution among the Project Participants, however,the BPMC should order that HEA is to receive payments from the other Project Participants for the continuing use of HEA's Soldotna-Quartz Creek transmission line segment.The BPMC should require the amount of those payments to be in an equitable amount given the differing positions among the Project Participants and the actual costs of continuing use. 7.HEA's alteration of the load-balancing area components and parameters necessary to allow the priority transmission of Bradley Lake power have resulted in system inefficiencies that have diminished the contractual priority for the delivery of Bradley Lake power. 8.All parties should conform and conduct their actions to ensure that Bradley Lake power retains its contractually-agreed-to priority along the designated transmission line segments necessary to deliver that power and capacity to all purchasers. 9.The BPMC should act in a timely manner to require payments consistent with paragraph 6 above to be made to HEA for the use of its Soldotna-Quartz Creek transmission line. Such payments should be required on a retroactive and moving forward basis effective January 1,2014. These findings and resolutions conclude and dispose of the complaint filed by the Designated Utilities and responded to by HEA and others concerning Bradley Lake power transmission. Dated at Anchorage,Alaska,this 11 day of April,2014. .YU..Dispute ReSolution Committee Chairman Sara Fisher-Goad Secretary RESOLUTION 14-09 -FINDINGS OF COMMITTEE PAGE 2 OF 2 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE INTRODUCTION: The Bradley Lake Project Management Committee (BPMC)appointed a Dispute Resolution Committee at its January 15,2014,meeting to address matters raised by Resolution No.2013-02 and the various concerns regarding the transmission of energy generated by the Bradley Lake Project that have been raised by Homer Electric Association,Inc.(HEA)and the Designated Utilities.'|.The BPMC determined that the disputes arise under the Agreement for the Wheeling of Electric Power and for Related Services (Services Agreement)and/or the Amendment to Agreement for Sale of Transmission Capability (Transmission Sharing Agreement).Counsel for the BPMC advised that the BPMC did have authority to use the BPMC procedures for dispute resolution to resolve the matters arising under both the Services Agreement and the Transmission Sharing Agreement.The BPMC determined that both the Services Agreement and the Transmission Sharing Agreement provide the BPMC with the authority to use its procedures for dispute resolution.”This Resolution 14-10 of the Dispute Resolution Committee sets forth the findings,conclusions,and recommendations of the Dispute Resolution Committee. DISPUTE RESOLUTION COMMITTEE PROCESS AND ACTIVITIES: At the meeting held on January 15,2014,the BPMC agreed unanimously to adopt an initial process for examining claims and reaching resolution under which all parties would meet and attempt to resolve the disputes through a negotiated effort up to and including mediation.?The BPMC appointed a Dispute Resolution Committee to conduct that settlement process.The Dispute Resolution Committee scheduled and held five additional meetings at the offices of the Alaska Energy Authority (AEA)in Anchorage to address the issues identified in BPMC Resolution No.2103-02.4 In addition to discussions concerning the issues,position papers were requested by the Dispute Resolution Committee and subsequently presented by HEA and by the Designated Utilities.AEA participated in all of the scheduled meetings.All of these parties also had counsel present at some of the scheduled meetings.Seward Electric participated in the Dispute Resolution Committee without counsel.A BPMC "Members-only”meeting was also hosted by ML&P on February 20,2014.Two members of the Dispute Resolution Committee also met numerous times with representatives of HEA prior to and during the time period which the Dispute Resolution Committee was active.Counsel for the BPMC interviewed two of the individuals that participated in the drafting of the various underlying documents that concern the contractual arrangements and accommodations reached regarding the power generated and wheeled from the Bradley Lake Project (the "Bradley Lake Agreements”),Certain matters were referred by the Dispute Resolution Committee to the BPMC Operations and Dispatch Committee (O&D Committee).The O&D Committee made two separate presentations to the Dispute Resolution Committee.The information provided by the O&D Committee in response was discussed and duly considered by the Dispute Resolution Committee and is incorporated into the findings in this Resolution 14-10. ?Chugach Electric Association,Inc.(Chugach),Golden Valley Electric Association,Inc.(GVEA),Matanuska Electric Association,Inc.(MEA),and City of Anchorage,Municipal Light &Power (ML&P). 2 See Section 10(b)of the Services Agreement and Section 14 of the Transmission sharing agreement. 3 The Members were clear that the process would not waive any rights that a party may have under any agreements or the law. 4 The meetings of the Dispute Resolution Committee were held on the following dates:January 24,2014;January 27, 2014;February 7,2014;April 11,2014;and April 17,2014. FINDINGS AND CONCLUSIONS:. After consideration of the information that has come before it,the discussions and presentation held by and between the various parties,and a review of the Bradley Lake Agreements,the BPMC Dispute Resolution Committee makes the following findings and conclusions: 10. 11. The Bradley Lake Agreements were negotiated and written to achieve a series of mutual beneficial arrangements which would provide benefits to the Railbelt Utilities and assure the success of the Bradley Lake Project and repayment of the bonds issued by the State to develop the Bradley Lake Project. The Parties that entered into the Services Agreement and the Transmission Sharing Agreement,along with the Alaska Energy Authority (AEA),constitute the membership of the BPMC. The Bradley Lake Agreements formalize the arrangements by and between the Railbelt Utilities and AEA regarding all aspects of the power generated and transmitted from the Bradley Lake Project. The Services Agreement provides Chugach,as Dispatcher of power generated by the Bradley Lake Project,considerable flexibility to operate and maintain its generation and transmission system and to schedule and use its resources in the manner that Chugach deems necessary or prudent.® The legislative history concerning the Bradley Lake Project and the exemption from regulatory oversight granted by the State evidences that all signatories to the Bradley Lake Agreements considered and agreed that there would be benefits flowing to all parties from the contractual arrangements and that all matters associated with the power generated by and transmitted from Bradley Lake Hydroelectric Project would be under the purview of the BPMC and its members. The Services Agreement entered into on December 8,1987,and the Transmission Sharing Agreement entered into on March 7,1989,each provide the BPMC with the contractual authority to use the procedures for dispute resolution that were negotiated and adopted by the BPMC to address disputes under the respective agreements. The BPMC unanimously adopted procedures for dispute resolution as part of the BPMC's Bylaws on December 1,1993. All procedures for dispute resolution to be used by the BPMC must adhere to the negotiated and adopted procedures for dispute resolution set forth in Article 12 of the BPMC Bylaws. The BPMC unanimously agreed to adopt an initial settlement process for examining claims and reaching resolution under which all parties would meet and attempt to resolve the disputes up to and including mediation. The BPMC appointed the Dispute Resolution Committee to conduct that settlement process. HEA provided the Dispute Resolution Committee with a Statement Regarding Dispute Resolution Procedures which outlined its concerns with the extent of the BPMC's authority and presented HEA's Statement of Disputes.HEA was willing to participate in the dispute resolution process but reserved 5 AEA was formerly known as the Alaska Power Authority. 6 See,e.g.,Section 7(c)of the Services Agreement. Res.14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 2 of5 12. 13. 14, 15. 16. 17. 18. 19. 20. 2. all of its rights "...to have any dispute that may arise in the context of the BPMC dispute process resolved by the appropriate judicial or regulatory authority.” The Designated Utilities stated that both the BPMC and its Dispute Resolution Committee clearly have the requisite authority to address issues at dispute between the parties. Both HEA and the Designated Utilities presented a Position Statement to the Dispute Resolution Committee.' HEA identified specific disputes regarding the activities of the Dispatcher of power generated by the Bradley Lake Project and the insufficiency of its compensation for line losses resulting from the flow of the power generated from Bradley Lake Project flowing over HEA's transmission system. The Designated Utilities consider HEA in violation of the Bradley Lake Project Agreements because HEA has taken unilateral actions to inappropriately gain operational control of the electric facilities used to wheel power generated by the Bradley Lake Project northward which is contrary to the Services Agreement. The Dispute Resolution Committee met both formally and informally in an effort to reach resolution of the disputed issues. The Dispute Resolution Committee has made every reasonable attempt to meet and discuss all relevant issues with HEA,the Designated Utilities,and the other BPMC members. All Members of the BPMC have representatives that actively participate on the O&D Committee. The O&D Committee provided the Dispute Resolution Committee with the technical and operational expertise pertaining to the analyses of the various issues raised by HEA and the Designated Utilities. The O&D Committee issued three written reports responding to specific questions from the Dispute Resolution Committee.® The O&D committee has reported to the Dispute Resolution Committee that the O&D Committee has a general consensus on the following issues: a.Dual control with coordination of a transmission segment is technically possible,but not practical because dual load balancing authorities (LBA)would not be balanced. b.Line Losses can be calculated for any transmission line segment without regard to the LBA that controls the line; c.While it is technically possible the O&D Committee considers it operationally impractical to have a LBA established just for Soldotna to Quartz Creek line segment (SQ line); d.While it is technically possible the O&D Committee considers it operationally impractical to establish an LBAfor just the SQ line operation and assign it to HEA or Chugach for dispatchpurposes; e.HEA has one distribution load connected to the SQ line made up of 3 MW of peak load requirements for the Sterling Substation; 7 See Minutes of BPMC Special Meeting dated February 7,2014.8 The O&D Committee issued a report titled "Bradley Lake O&D Committee Response to BPMC Chairman's Questions” dated February 27,2014,and a report titled "Bradley O&D Committee Responses To The BPMC Investigation and Discussion Questions”dated March 21,2014.See Minutes of the BPMC Special Meetings dated April 11,2014 and April 17,2014. Res.14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 3 of 5 f.The O&D Committee does not believe the line losses attributable to the line that serves the Sterling Substation load are significant; g.All parties support dynamic scheduling of Bradley Lake Project power; h.Since the beginning of 2014,Chugach is dispatching Bradley Lake Project power in a manner that provides load following and frequency matching of HEA's customer loads; i.There remains a dispute between the parties regarding LBA boundaries; j.All parties developed and agreed upon a PSS/E model which defines the losses for each transmission line segment; k.All parties agreed that the PSS/E model accurately represents the losses for each line segment; 1.All Parties agreed that HEA is adequately compensated for line losses by over generation of the Bradley Lake Project;and m.Current operating procedures need to be updated to properly address spill mitigation procedures and ponding needed to accommodate dynamic scheduling. 22.The Services Agreement and the Transmission Sharing Agreement provide for parties to continue to perform their obligations pending resolution of any dispute.° 23.The lease between HEA and Chugach of certain transmission facilities has expired since the execution of the Service Agreement and the Transmission Sharing Agreement. 24.HEA has unilaterally changed some of the long standing arrangements for accommodating the flow of power from the Bradley Lake Project. 25.The Dispute Resolution Committee has discussed and considered the issues related to transmission of power generated by the Bradley Lake Project from Bradley Junction to Quartz Creek as raised by both HEA and the Designated Utilities under the Bradley Lake Agreements generally,and more specifically the Services Agreement and the Transmission Sharing Agreement.'® 26.Not all issues in dispute are capable of resolution through the Dispute Resolution Committee's settlement process. 27.A poll of the BPMC members regarding their respective views on whether the mediation efforts on these issues are at an impasse was taken by the Chair of the Dispute Resolution Committee the results of which has caused the Chair of said committee to acknowledge there is an impasse in the mediation efforts. 28.The examination process which the BPMC authorized the Dispute Resolution Committee to execute has run its course and the ability to achieve further resolution through the Dispute Resolution Committee's settlement process is not viable. WHEREFORE,THE BPMC DISPUTE RESOLUTION COMMITTEE RESOLVES THAT: BEIT RESOLVED:The BPMC should require all parties to conform and conduct their actions to ensure that power generated by the Bradley Lake Project retains its contractually-agreed-to priority along the designated transmission line segments necessary to deliver that power to all purchasers. BE IT FURTHER RESOLVED:All parties to the Services Agreement and the Transmission sharing agreement should act to keep the status quo and continue to perform their obligations under the respective ®See Section 12(c)of the Services Agreement and Section 16(c)of the Transmission Sharing Agreement. 10 The Dispute Resolution Committee's specific findings regarding the disputed issues are described in Resolution 14-09. Res.14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 4 of 5 agreements in a manner which they have performed such obligations over the past twenty plus years until all disputes are resolved. BE IT FURTHER RESOLVED:The BPMC should adopt a resolution effectuating the agreement reached by and between the parties that HEA and Chugach are to be compensated for line losses resulting from Bradley Lake Project power transmission by over generation of the Bradley Lake Project. BE IT FURTHER RESOLVED:The BPMC should effect a resolution requiring the Bradley participants to resolve the remaining LBA technical issues between HEA and Chugach,the transmission service provider,in accordance with the Operating and Reliability Standards previously adopted by the BPMC. BE IT FURTHER RESOLVED:The BPMC should,as part of its resolving the outstanding disputes, allow HEA to receive compensation for the costs associated with the transmission of Project power beyond Soldotna Substation.Any such amount should be equitably distributed by and between the Project Participants in accordance with their respective share of participation. BE IT FURTHER RESOLVED:The BPMC should,as part of its resolving the outstanding disputes,act in a timely manner on any compensation request by HEA and find that any adjustment to compensation paid to HEA is effective with service beginning January 1,2014. BE IT FURTHER RESOLVED:Given that the mediation efforts are at an impasse,the Dispute Resolution Committee recommends that the BPMC,as a whole,move forward and: A.Declare further settlement efforts of the BPMC authorized Dispute Resolution Committee to resolve the remaining issues of Soldotna to Quartz Creek transmission compensation and the Bradley Lake power delivery point are at impasse and that the dispute Resolution Committee's continued effort to reach a negotiated resolution of these issues is no longer viable;and B.Determine whether the BPMC desires to move the dispute resolution process from the Dispute Resolution Committee's settlement process to one of the more formal dispute resolution procedures provided for under Article 12 of the BPMC's Bylaws including either arbitration under Section 12.4 of the BPMC Bylaws,or BPMC consideration and resolution of the disputed issues in accordance with the procedural rules for decision-making responsibilities under the BPMC procedures for dispute resolution referenced in Section 12.2 and accordingly,Section 5.10.2 of the BPMC Bylaws. Dated at Anchorage,Alaska,this 17th day of April,2014. ommittee Chairman Sara Fisher-Goad,Secretary Res.14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 5 of 5 RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.2014-02 Maintain the Status Quo During the Pendency of the Dispute WHEREAS,on December 8,1987,the Alaska Power Authority ("APA”),Chugach Electric Association,Inc.("Chugach”),Golden Valley Electric Association,Inc.("GVEA”),the Municipality of Anchorage d/b/a Municipal Light and Power (""ML&P”),the City of Seward d/b/a Seward Electric System ("Seward”),and Alaska Electric Generation &Transmission Cooperative,Inc.(""AEG&T”),and additional parties Homer Electric Association,Inc.("HEA”) and Matanuska Electric Association,Inc.("MEA”)entered into the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”)with the Alaska Energy Authority ("Authority”)(collectively,"Project participants”);and WHEREAS,Chugach,HEA,GVEA,MEA,ML&P,Seward,and AEG&T also entered into the Agreement for the Wheeling of Electric Power and for Related Services ("Services Agreement”)with Chugach;and WHEREAS,HEA,Chugach,GVEA,ML&P,and AEG&T also entered into the Agreement for the Sale of Transmission Capability ("Transmission Agreement”)with HEA;and WHEREAS,the Authority issued Power Revenue Bonds under the Power Revenue Bond Resolution ("Bond Resolution”);and WHEREAS,the Power Sales Agreement,the Services Agreement,the Transmission Agreement,and the Bond Resolution ("Bradley Lake Agreements”),among others,collectively set forth the arrangements,responsibilities,and obligations necessary to secure the benefits of the Bradley Lake Hydroelectric Project ("Project”)for all the Project participants;and WHEREAS,pursuant to Section 13 of the Power Sales Agreement,the Project Management Committee ("PMC”)has been formed for the purposes and with the responsibilities specified by the Bradley Lake Agreements including,without limitation,the responsibility to address disputes arising under the Bradley Lake Agreements;and WHEREAS,HEA entered into the Agreement for the Lease of Facilities ("Lease”)with Chugach wherein Chugach agreed to lease and operate HEA's transmission line running between the Soldotna Substation and the Quartz Creek Substation ("'S/Q Line”);and WHEREAS,the Lease expired on January 1,2014,and there is a dispute as to the impact the expiration of the Lease may have,if any,on the continuing rights and responsibilities of Chugach to dispatch,operate,maintain,and repair the S/Q Line under the Services Agreement and the other Bradley Lake Agreements ("dispute”);and WHEREAS,Section 12(c)of the Services Agreement provides that "pending resolution of any dispute,each Party shall continue to perform its obligations under this Agreement” requiring the status quo be maintained during the pendency of the dispute;and WHEREAS,on December 12,2013,the BPMC passed Resolution No.2013-02 resolving,in relevant part,that the status quo be maintained by stating "Chugach shall continue to operate and maintain the S/Q Line in accordance with Chugach's responsibilities and obligations under the Services Agreement pending the resolution of the dispute”;and WHEREAS,HEA may have continued to make unilateral changes to its facilities and practices that adversely impact Chugach's ability to continue to operate and maintain the S/Q Line during the pendency of the dispute;and WHEREAS,HEA's continued unilateral changes put at risk the ongoing safety,security, and reliability of wheeling Project energy over the S/Q Line and may result in irreparable harm to personnel,Project participants,and utility customers reliant upon a safe,secure,and reliable transmission system for the delivery of Project energy. NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE BPMC AS FOLLOWS: BE IT RESOLVED:All Project participants shall act in good faith to maintain the status quo and permit Chugach to continue to dispatch,operate,maintain,and repair the S/Q Line under the terms of the Services Agreement and the other Bradley Lake Agreements during the pendency of the dispute. BE IT FURTHER RESOLVED:HEA shall not make any further changes to its facilities or practices that adversely impact Chugach's continuing rights and responsibilities to dispatch, operate,maintain,and repair the S/Q Line during the pendency of the dispute. BE IT FURTHER RESOLVED:Any further unilateral changes put at risk the ongoing safely,security,and reliability of wheeling Project energy over the S/Q Line and may result in irreparable harm to personnel,Project participants,and utility customers reliant upon a safe, secure,and reliable transmission system for the delivery of Project energy. BE IT FINALLY RESOLVED:Pursuant to the Bradley Lake Agreements and this resolution,any Project participant may seek injunctive or other relief from the Superior Court of Alaska for the Third Judicial District to enforce the obligation of all Project participants to maintain the status quo and permit Chugach to continue to dispatch,operate,maintain,and repair the S/Q Line under the terms of the Services Agreement and the other Bradley Lake Agreements during the pendency of the dispute. DATED at Anchorage,Alaska,this 27"day of J anuary,2014. eaMornExarChair \how bishe bm Secretary RESOLUTION 2014-02-MAINTAIN STATUS QUO PAGE 2 OF 2 CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.2014-01 Telemetry of Bradley Lake into Chugach Load Balancing Area 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.(Chugach),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. ("HEA”),and Matanuska Electric Association,Inc.(as used herein collectively,the "Purchasing Utilities"),and the Alaska Energy Authority (the "Authority"),the Project Management Committee (the "Committee")has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement;and WHEREAS,pursuant to section 13 (c)(ii)(A)the committee is required to arrange...” for the operation and maintenance of the Project,and the scheduling,production,and dispatch of the Project power...”;and WHEREAS,as of December 31.2013,HEA began transition from a net requirements customer of Chugach (via the tri-partite agreement)operating within Chugach's Load Balancing Area;and, WHEREAS,on January 1,2014,HEA began operating its own Load Balancing Area (LBA)and take on the duties of a Load Balancing Authority;and, WHEREAS Chugach Electric will remain the Project Dispatcher;and, WHEREAS,HEA is the Operator of the Project Power Plant and through various agreements the Project transmission lines south of Quartz Creek;and, WHEREAS,the Project facilities must telemetered out of the HEA LBA and into the Chugach LBA;and, WHEREAS,it is in the best interest of the Project and the interconnected Railbelt grid to accurately account for and allocate electrical losses;and, WHEREAS,the following LBA interchange configuration will minimize the magnitude of required Project loss adjustments,and simplify real and reactive power energy accounting. NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination:The Committee has determined that it is in the best interests of the interconnected Railbelt grid,the Purchasing Utilities and their respective customers or members that Project facilities south of Quartz Creek be telemetered out of the HEA LBA and into the CEALBA with the LBA boundary defined by following interchange points: e Bradley Lake MOD 2425 (real and reactive interchange with Diamond Ridge line) Soldotna 115 -69 kV transformer (real and reactive interchange ) Soldotna 115 kV line to Diamond Ridge (real and reactive interchange ) Soldotna 115 kV line to Bernice Lake (real and reactive interchange ) Soldotna LM 6000 generator (real and reactive interchange) Sterling Substation T-1 (Sterling real and reactive ) Quartz Creek Breaker 442 (Quartz to Soldotna 69 kV line) CEA,the Project dispatcher,will continue to schedule energy and capacity,for the participants delivered to CEA,at HEA's Soldotna Substation,as currently defined in the Bradley Lake "Agreement for the Wheeling of Electric Power and for Related Services. DATED at Anchorage,Alaska,this 27"day of January,2014. Rea Mcp EenChairC\\ neGSecretary RES 2014-01 LOAD BALANCING BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RESOLUTIONS RESOLUTION NUMBER |_RESOLUTION DESCRIPTION G7 /Costin ne Aese et.Ou of BRAC Me lectin fo Forward. Bong:Foreitese here Sop «Patil J fa fR-P8k -Mo +#Appretia "Rselutit.Vere:2-7-7] 7 Ke placement of th BPMC Cozrce2002-OF wf 0/0 -ol Consen Tens Opal Opppreutas.."Kesolution freSkSele g leoth "frags Bread , 2)DikeJ G-3-do10 H#_BOIO-O2 Cn fir min e Keakuton o)BPMC AT INS.+o"Patt CAnuk Diunsin CaderF-Y-d0o1Oo det RO 3 COL Homer élécatre ten fe line,_LG 3-03 he epkon ay Ka\belb een alo)J Stantard¢20 (3 -Of AAssat:sm of Dy nawue-D ched uk wc,201 %-Ob6 Charge cf O peeYoabhe rm = 20 (4 - Cl Te le metry of Bre cdley Lake ato CEA lor balancing ores2014--C2 Hamtawn Stetus gue checing gh 5 piste Alo A ge boo Ory 1a rh -ptlee terOEKEPeers|Bradley lake project[BF MTOM rad \N RESOLUTION OF THE Ar BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.2013-02 HEA Tariff Filing WHEREAS,on December 8,1987,Chugach Electric Association,Inc.("Chugach”), Golden Valley Electric Association,Inc.("GVEA”),the Municipality of Anchorage d/b/a Municipal Light and Power ("ML&P”),the City of Seward d/b/a Seward Electric System ("Seward”),and Alaska Electric Generation &Transmission Cooperative,Inc.("AEG&T”),and Additional Parties Homer Electric Association,Inc.("HEA”)and Matanuska Electric Association,Inc.("MEA”),entered into the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”)with the Alaska Power Authority ("Authority”)(collectively "Project participants”);and WHEREAS,HEA,GVEA,MEA,ML&P,Seward,and AEG&T also entered into the Agreement for the Wheeling of Electric Power and for Related Services ("Services Agreement”) with Chugach;and WHEREAS,Chugach,GVEA,ML&P and AEG&T also entered into the Agreement for the Sale of Transmission Capability ("Transmission Agreement”)with HEA;and WHEREAS,the Authority issued Power Revenue Bonds under the Power Revenue Bond Resolution ("Bond Resolution');and WHEREAS,the Power Sales Agreement,the Services Agreement,the Transmission Agreement,and the Bond Resolution ("Bradley Lake Agreements”),among others,collectively set forth the arrangements,responsibilities,and obligations necessary to secure the benefits of the Bradley Lake Hydroelectric Project ("Project”)for all the Project participants;and WHEREAS,pursuant to Section 13 of the Power Sales Agreement,the Project Management Committee ("PMC”)has been formed for the purposes and with the responsibilities specified by the Bradley Lake Agreements including,without limitation,the responsibility to address disputes arising under the Bradley Lake Agreements;and WHEREAS,the State of Alaska has enacted into law provisions (AS 42.05.431(c)(1)) that exempt the Bradley Lake Agreements,and amendments to those agreements,from review or approval of the Regulatory Commission of Alaska ("RCA”)until all long-term debt for the Project is retired;and WHEREAS,HEA entered into the Agreement for the Lease of Facilities ("Lease”)with Chugach wherein Chugach agreed to lease and operate HEA's transmission line running between the Soldotna Substation and the Quartz Creek Substation ("S/Q Line”);and WHEREAS,the Lease expires on January 1,2014,and HEA will take over Chugach's responsibilities and obligations for O&M on the S/Q Line under the Bradley Lake Agreements; and WHEREAS,HEA has refused to operate the S/Q Line consistent with the terms and obligations of the Bradley Lake Agreements or Chugach's responsibilities and obligations under the Services Agreement that HEA will undertake;and WHEREAS,on November 15,2013,HEA submitted to the RCA tariff filings TA355-32 (relating to transmission and ancillary services on the S/Q Line)and TA356-32 (relating to line losses from the transmission of energy from the Project ("Project energy”)across the S/Q Line) (collectively "HEA's tariff filings”),which ignore and are inconsistent with HEA's obligations under the Bradley Lake Agreements;and WHEREAS,HEA's tariff filings attempt to unilaterally and detrimentally restructure the Bradley Lake Agreements and disregard the relevant statutes and jurisdictional structure for the resolution of disputes under the Bradley Lake Agreements;and WHEREAS,if approved,HEA's tariff filings would improperly put at risk the security and reliability of the transmission system over which Project energy is wheeled to the Project participants;and WHEREAS,if approved,HEA's tariff filings would improperly subvert the priority status that Project energy is entitled to be given over the S/Q Line for transmission purposes under the Bradley Lake Agreements;and WHEREAS,if approved,HEA's tariff filings would improperly and significantly increase the cost of delivering Project energy to all other Project participants;and WHEREAS,if approved,HEA's tariff filings would undermine the assurances and commitments made to the Project bond holders by the Authority through the Bond Resolution. NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE PMC AS FOLLOWS: BE IT RESOLVED:HEA's tariff filings raise a dispute concerning the wheeling of Project energy under the terms of the Bradley Lake Agreements that is within the primary jurisdiction and authority of the PMC to resolve. BE IT FURTHER RESOLVED:HEA's tariff filings ignore the PMC's role in resolving disputes relating to the wheeling of Project energy,violate the relevant statutes and terms of the Bradley Lake Agreements,put at risk the security and reliability of the transmission system over which Project energy is wheeled to the Project participants throughout the Railbelt,improperly subvert the priority status of Project energy over the S/Q Line,improperly increase the costs of delivering Project energy,and violate the assurances made to Project bond holders. BE IT FURTHER RESOLVED:The PMC will take all necessary and appropriate action to require Chugach to continue to operate the S/Q Line and to request that the RCA reject HEA's Res 2013-02 HEA Tariff Filing Page 2 of 3 tariff filings until the dispute over the terms and conditions for the operation of the S/Q Line for the transmission of Project energy may be properly and fully addressed by the PMC. BE IT FURTHER RESOLVED:The PMC will take all necessary or appropriate action to ensure that the relevant statutes and the terms of the Bradley Lake Agreements are upheld including,without limitation,those terms that require the operator of the S/Q Line to operate it in a manner consistent with the terms of the Bradley Lake Agreements. BE IT FURTHER RESOLVED:The PMC will take all necessary or appropriate action to ensure that Project energy will continue to be delivered on an uninterrupted,priority basis along the S/Q Line to the Project participants who rely on that energy. BE IT FURTHER RESOLVED:Chugach shall continue to operate and maintain the S/Q Line in accordance with Chugach's responsibilities and obligations under the Services Agreement pending the resolution of the dispute between HEA and the other Project participants. BE IT FURTHER RESOLVED:All Project participants will participate in good-faith negotiations in an effort to resolve the dispute regarding the S/Q Line to protect the priority of Project energy,and to ensure reliable,low-cost transmission service across the S/Q Line consistent with the Bradley Lake Agreements. BE IT FURTHER RESOLVED:If the dispute concerning the wheeling of Project energy over the S/Q Line has not been resolved within 90 days from the date of this Resolution, the Committee will adopt formal dispute resolution procedures,pursuant to Section 10(b)of the Services Agreement,to effectuate a final resolution of the dispute. BE IT FURTHER RESOLVED:That all Project participants will immediately designate representatives with the necessary authority to resolve the dispute and will enter into good-faith negotiations to resolve the dispute in a manner that is consistent with the Bradley Lake Agreements. BE IT FINALLY RESOLVED:During the good-faith negotiation period,all Project Participants will share relevant information in response to reasonable requests and will negotiate with each other in a manner that effectuates the intent and purpose of the Bradley Lake Agreements. DATED at Anchorage,Alaska,this 12 day of December,2013. Bio eZ acon 8<\Chair (SEAL) ATTEST f GZAvShueadSecretary Res 2013-02 HEA Tariff Filing Page 3 of 3 CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.2013-03 Adoption of Railbelt Reliability Standards WHEREAS,pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("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 herein collectively,the "Purchasing Utilities"),and the Alaska Energy Authority (the "Authority"),the Project Management Committee (the "Committee")has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement;and WHEREAS,pursuant to section 13 (c)(ii)(A)the committee is required to arrange...” for the operation and maintenance of the Project,and the scheduling,production,and dispatch of Project power...”;and, WHEREAS,Article 3 and Article 9 of the Alaska Intertie Agreement,dated December 23,1985 ("1985 Agreement”),provided that the Intertie Operating Committee ("IOC”)would be responsible for operating the interconnected Railbelt system and for developing operating procedures and standards practices with respect to such operations.The Intertie Management Committee ("IMC”)has assumed these responsibilities under the Amended and Restated Alaska Intertie Agreement,dated November 18,2011 ("2011 Amended Agreement”).Further,that through Addendum No.|to the 1985 Agreement entitled "Reserve Capacity and Operating Reserve Responsibility”(incorporated as Exhibit H of the 2011 Amended Agreement)the Utility Participants of that agreement would be responsible for reserve requirements for the interconnected system;and, WHEREAS,the IMC (and previously the IOC)has essentially been the Railbelt reliability coordinator for the interconnected Railbelt grid for over 25 years;and, WHEREAS,there has always been close coordination between the IOC/IMC and the Committee;and, WHEREAS,Section 3.1 of the 2011 Amended Agreement provides that the IMC shall determine the operating policies and procedures for handling the obligations and responsibilities for providing Reserve Capacity and Operating Reserves for the Intertie;and, WHEREAS,the IMC has the authority to adopt operating policies and procedures, reliability standards,and enforcement mechanisms,for the Intertie;and, WHEREAS,the IMC has adopted the "Intertie Management Committee's Railbelt Operating and Reliability Standards,updated October 1,2013,”as the Reserve Capacity and Operating Reserves for the Intertie and as the operating policies and procedures,reliability standards,and enforcement mechanisms,with one modification made at the request of the Alaska Energy Authority ("AEA”)respecting the Alaska Intertie assets and 2011 Amended Agreement: The "sanctions”portions of the enforcement mechanisms in the "Intertie Management Committee's Railbelt Operating and Reliability Standards,updated October 1,2013,” shall not become effective for purposes respecting the Alaska Intertie assets and 2011 Amended Agreement until separately approved by the IMC. WHEREAS,the IMC intends to submit these reliability standards as an informational filing to the Regulatory Commission of Alaska ("RCA”). WHEREAS,the IMC has requested that the RCA exercise the authority granted to it under AS 42.05.321 and other applicable authority and to enter an order 1.Finding that the approval of these standards will serve the public convenience and necessity; 2.Formally approving the standards and finding that they are just and reasonable;and 3.Providing for mechanisms and processes for periodic review of the standards. NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination.The Committee has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that the Intertie Management Committee's "Railbelt Operating and Reliability Standards,updated October 1,2013”be adopted and applied as required to all applicable Project assets,facilities and activities;and, BE IT FURTHER RESOLVED BY THE COMMITTEE,that the Committee desires that the Operator of the Project to abide by and follow the "Railbelt Operating and Reliability Standards, updated October 1,2013”in all aspects of the operation of the Project and deliver of energy from the Project;and, BE IT FURTHER RESOLVED BY THE COMMITTEE,that AEA and the Operator make the necessary amendments to the Project Operation and Maintenance Standards and/or Work Rules RES 2013-03 -RELIABILITY STANDARDS PAGE 2 OF3 to accommodate and effectuate this purpose and objective of this Resolution as soon as practicable and report to the Committee when the Operator is complying with the purpose and objective of this Resolution. DATED at Anchorage,Alaska,this 12"day of December,2013. Chair N\ Fecretary / RES 2013-03 -RELIABILITY STANDARDS PAGE 3 OF 3 CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.2013-04 Adoption of Dynamic scheduling 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 herein collectively,the "Purchasing Utilities"),and the Alaska Energy Authority (the "Authority"),the Project Management Committee (the "Committee")has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement;and WHEREAS,pursuant to section 13 (c)(ii)(A)the committee is required to arrange...” for the management,operation,maintenance and improvement of the Project”... WHEREAS,Bradley lake is within the Chugach Load Balancing Area (LBA);and, WHEREAS,dynamic scheduling provides the capability for parties outside of the Chugach LBA to dispatch there Bradley shares in Real time through the Chugach SCADA/EMS System;and, WHEREAS,dynamic scheduling of the Project will provide each of the purchasers maximum flexibility in efficiently using their respective shares of the Projects energy and capacity;and, WHEREAS,Chugach,as the Project dispatcher,has the technical capabilities within its existing SCADA/EMS master station to implement dynamic scheduling; NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination.The Committee has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that dynamic scheduling be implemented for the Project.To that end,the Committee directs the Operations and Dispatch Subcommittee to work closely with Chugach to develop a scope,schedule,and budget for the implementation of master station dynamic scheduling as quickly as is reasonably practical.This review shall include recommended changes to existing contracts (i.e.,the Bradley Lake Hydroelectric Project Allocation and Scheduling Procedures agreement and the Agreement for Bradley Lake Resource Scheduling)and any applicable standards necessary to allow dynamic scheduling without violation of the documents.The review must also include methods to apportion losses caused on all of the Purchasing Utilities when a Participant changes their dispatched amount.And further,the Operations and Dispatch Subcommittee will develop a budget amendment for this project and submit this amendment to the Committee at the next quarterly Committee meeting. ATED at Anchorage,Alaska,this 23"day of December,2013.wetter DRGy|'ek ERG:Vin,SF oppor.BoFOSeal:9?Brershe Zoank2":SKiag is:Chair \ow;"41978,|",oo :ACTON)Sena L p>A-)"4 'Secretary RESOLUTION 2013-04 DYNAMIC SCHEDULING CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.2013-06 Change of Project Operator 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 herein collectively,the "Purchasing Utilities"),and the Alaska Energy Authority "AEA" ),the Project Management Committee (the "Committee")has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement;and WHEREAS,pursuant to section 13 (c)(ii)(A)the committee is required to arrange...”for the operation and maintenance of the Project,and the scheduling,production,and dispatch of the Project power...”;and WHEREAS,to provide for the operation and maintenance of the Project and Project Related Facilities,the Committee entered into a Master Maintenance and Operating Agreement ("Master M&O Agreement”)with the AEA to establish a contract administration and budgeting procedure for contracting for the operation and maintenance of the Project and Project Related Facilities,and the related services,facilities,and equipment;and, WHEREAS,the Committee is authorized under Master M&O Agreement and the Committee Bylaws (adopted pursuant to the terms of the Power Sales Agreement),to approve contracts for the operation and maintenance of Project facilities;and, WHEREAS,the Committee approved the contract between AEA and Homer Electric Association,Inc.("HEA”),for HEA to provide O&M services pursuant to the "Second Amended and Restated Operation and Maintenance Agreement for Bradley Lake Hydroelectric Project Between Homer Electric Association,Inc.and Alaska Energy Authority”dated effective July 1, 2008 ("Project O&M Agreement”);and, WHEREAS,the Committee no longer believes it is in the best interests of the Project that HEA be utilized to provide the services of Operator under the Project O&M Agreement;and, WHEREAS,the terms of the services of require that the Operator be provided with timely notice that the Project O&M Agreement will be terminated;and, WHEREAS the Committee desires to provide HEA with sufficient notice of its intention to not utilize the services of HEA; WHEREAS,the Committee has adopted this Resolution to acknowledge its intent to not renew HEA as Operator under the Project O&M Agreement pursuant to its authority under the Master M&O Agreement. NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE COMMITTEEas follows: Committee Determination.The Committee has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that the services of HEA as Operator of the Project not be extended beyond the current term which under the terms of the Project O&M Agreement ends on July 1,2018. NOW THEREFORE,IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: That AEA is directed to immediately provide notice to HEA that the Project O&M Agreement will not be automatically renewed without a cost benefit analysis and management review being performed. BE IT FURTHER RESOLVED BY THE COMMITTEE that AEA notify the Committee when the notice has been provided to HEA that its services as Operator under the Project O&M Agreement will not be automatically renewed without a cost benefit analysis and management review being performed and therefore could conclude July 1,2018. BE IT FURTHER RESOLVED BY THE COMMITTEE that AEA notify the Committee when AEA and HEA are to meet to discuss the arrangements necessary for the orderly takeover of duties of the Operator in accordance with Section 18 (a)of the Project O&M Agreement. DATED at Anchorage,Alaska,this 23"day of December,2013. ' .enenaes,BooMeiankChairMy "Pr reay yaw Lb Log/Secretary RES 2013-06 CHANGE OF PROJECT OPERATOR BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RESOLUTIONS RESOLUTION NUMBER RESOLUTION DESCRIPTION RESOLUTION NO.2010-02 CONFIRMING RESOLUTION OF THE BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RELATING TO THE BATTLE CREEK DIVERSION PROJECT WHEREAS,The Bradley Lake Project Management Committee (BPMC)is currently evaluating the feasibility of a diversion structure at Battle Creek to increase the water available for hydroelectric generation at Bradley Lake.The Alaska Energy Authority (AEA)is currently accepting grant applications for renewable energy projects, which includes hydroelectric energy,under Round IV of the Renewable Energy Grants program.Chugach Electric Association (CEA)is willing to apply for a $500,000 grant with a $500,000 match paid by the utilities on behalf of the BPMC if authorized to do so. WHEREAS,it is intended the project,if feasible and successfully constructed,will be transferred to AEA for management by the BPMC as part of the Bradley Lake Project. NOW THEREFORE,BE IT RESOLVED the BPMC authorizes CEA,on behalf of the BPMC,to apply for an AEA Round IV Renewable Energy grant for the Battle Creek Diversion project in the amount of $500,000 with a match of $500,000 paid by the utilities in proportion to their participatory shares in the Bradley Lake Project. ADOPTED this 14"day of September,2010. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Basobhu EscurdBradleyWwns,Chairman ATTEST:4 KZweE.Carey,Secretary// CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.2010-01 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 herein collectively,the "Purchasing Utilities"),and the Alaska Energy Authority (the "Authority"),the Project Management Committee (the "Committee")has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement;and WHEREAS,the Authority and the Purchasing Utilities have reviewed a proposal prepared by Merrill Lynch,Pierce,Fenner &Smith Incorporated (the "Underwriters")to proceed with a Bond Purchase Agreement for the sale of an additional series of Bonds ("Sixth Series")to refund the outstanding principal amount of the Fifth Series Bonds;and WHEREAS,the Committee has duly considered whether it is in the best interests of the Purchasing Utilities and their respective customers or members to issue the Sixth Series,and whether the Authority and the Purchasing Utilities should proceed with finalizing the necessary documents that will enable the Authority to enter into the Bond Purchase Agreement for the Sixth Series. NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: 1.Committee Determination.The Committee,has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members to issue the Sixth Series bonds. 2.Consent to Proceed.The Committee hereby consents to the Authority and the Purchasing Utilities'representatives proceeding with the completion of a Bond Purchase Agreement and the necessary documents in support of a Bond Purchase Agreement for the Sixth Series.The Committee and its designated representatives shall continue with the timely review and completion of such documents. 3.Pricing of Bonds and Closing.So long as the Bond Purchase Agreement and the supporting documents ("Financing Documents")are in a final form such that the Purchasing Utilities will realize lower Annual Project Costs as that term is defined in Section 8(a)of the Power Sales Agreement,Mike Cunningham is authorized on behalf of PAGE 1--CONSENTING AND APPROVING RESOLUTION OF THE BPMC the Committee to provide final approval of the Financing Documents,compensation and other matters related to the Closing of the Sixth Series. 4.Opinion of Counsel.McDowell,Rackner &Gibson PC as Special Counsel to the Purchasing Utilities,is hereby directed to execute and deliver on behalf of the Purchasing Utilities an opinion regarding the enforceability of the Power Sales agreement.Payment for these services shall be considered a cost of the refunding transaction. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE oy Beatle Gow Name:Bovey uans Title:Crrairynn,"Bradley Lake Rreheck Warren ermrents Commtter Attachments PAGE 2--CONSENTING AND APPROVING RESOLUTION OF THE BPMC SECRETARY'S CERTIFICATE I,BRYAN CAREY,Secretary of the Project Management Committee for the Bradley Lake Hydroelectric Project (the "PMC")HEREBY CERTIFY that attached hereto is a true, complete and correct copy of the Resolution of the Board of Directors of the PMC duly adopted at its meeting on June 3,2010,consenting to the refunding of Fifth Series bonds by the Alaska Energy Authority's Power Revenue Refunding Bonds,Sixth Series (Bradley Lake Hydroelectric Project). IN WITNESS WHEREOF,|have hereunto set my hand this 3 day of June,Z0/0 . Z.5 LABRYANCAREY,Secretary PAGE 3--CONSENTING AND APPROVING RESOLUTION OF THE BPMC RESOLUTIONS RESOLUTION NO.97-1 CONFIRMING RESOLUTION OF THE BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RELATING TO FORWARD BOND PURCHASE AGREEMENT WHEREAS,the Bradley Lake Project Management Committee adopted the Approving Resolution of Bradley Lake Hydroelectric Project,Project Management Committee on December 9,1997 ("Approving Resolution');and WHEREAS,the Alaska Energy Authority ("Authority”)intends to enter into the Forward Delivery Bond Purchase Agreement with Goldman Sachs &Co.agreeing to interest costs on Refunding Bonds pursuant to such Agreement;and WHEREAS,the purpose of this resolution is to confirm and ratify the Approving Resolution and the actions to be taken by the Authority to execute the Forward Bond Purchase Agreement; NOW,THEREFORE,BE IT RESOLVED by the Bradley Lake Project Management Committee that the actions to be taken by the Authority to execute the Forward Bond Purchase Agreement with Goldman Sachs &Co.are approved, confirmed and ratified. ADOPTED this 12"day of December,1997. PROJECT MANAGEMENT COMMITTEE Caseeee BD eaatet ATTEST: Secretary Same deavpent.Volorie had Signed He.top Copy in theMeetingbeenue.Dens LUXSoutof”the office -he was ov she telecercterence +had delegated Volorie ws his Aedine rep wah ilehewosovtofHeoffice.When he veturned +,the office ve yeceived the Stgoud Copy ofshevesolvtionaudDennisSlavedthatCopy.DL hee enclosed a Copy of both. se RESOLUTION NO.97-_1_ CONFIRMING RESOLUTION OF THE BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RELATING TO FORWARD BOND PURCHASE AGREEMENT WHEREAS,the Bradley Lake Project Management Committee adopted the Approving Resolution of Bradley Lake Hydroelectric Project, Project Management Committee on December 9,1997 ("Approving Resolution");and WHEREAS,the Alaska Energy Authority ("Authority")intends to enter into the Forward Delivery Bond Purchase Agreement with Goldman, Sachs &Co.agreeing to interest costs on Refunding Bonds pursuant to such Agreement;and WHEREAS,the purpose of this resolution is to confirm and ratify the Approving Resolution and the actions to be taken by the Authority to execute the Forward Bond Purchase Agreement; NOW,THEREFORE,BE IT RESOLVED by the Bradley Lake Project Management Committee that the actions to be taken by the Authority to execute the Forward Bond Purchase Agreement with Goldman Sachs &Co. are approved,confirmed and ratfied. ADOPTED this 12th day of December,1997. PROJECT MANAGEMENT COMMITTEE Attest: Secretary LGH\1087!gh.doc ALASKA INDUSTRIAL DEVELOPMENT =AND EXPORT AUTHORITY «x @@E™ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 MEMORANDUM TO:AIDEA/AEA Staff FROM:Dennis V.McCrohan,P.E.IwvliasDeputyDirector-Project Development and Operations DATE:December 11,1997 SUBJECT:Delegation of Authority During my absence from the office Friday,December 12,1997,Valorie Walker is hereby designated as Acting Deputy Director -Project Development and Operations. This Delegation of Authority is in effect until my return. DVM:sd h:all\sdean\delegation of auth CC:D.Randy Simmons,Executive Director Valorie F.Walker,Deputy Director-Finance James A.McMillan,Deputy Director-Credit Robert G.Poe,Business Development Manager Keith A.Laufer,Finance and Legal Affairs Manager Ronald E.Miller,HCCP Procurement Manager Stanley E.Sieczkowski,Operations Manager John E.Wood,Project Manager Karl Reiche,Projects Development Manager Elaine McCambridge,Accountant V Curtis Sullivan,Procurement Manager 2002 Iruipel ye fiteg ad AOb2 RESOLUTION #2002-01 72 (alo BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Replacement of the Bradley Lake Governor Resolved that the Bradley Lake Project Management Committee ("BPMC”) requests that AEA direct HEA,under the existing O&M contract between AEA and HEA, to perform the engineering,design,and scoping work related to the proposed governor repair project (the "Work”)in accordance with the attached memorandum dated May 3, 2002,as amended May 8,2002,from HEA to the BPMC. Resolved further,that such Work is deemed to be Required Project Work |pursuant to the PSA and that all costs and liabilities of AEA with respect to such Work are hereby determined to be Annual Project Costs in accordance with Section 8(a)(iv)of the PSA. Resolved further,that the Work shall be submitted to the BPMC and that the implementation of any governor repairs determined necessary and the award of any vendor contracts related to such repairs will require subsequent action by the BPMC. DATED at Anchorage,Alaska,this 8"day of May,2002. Chair (SEAL) ATTEST +(oeSecretary Attachment:Memorandum dated May 3,2002 May-03-02 Vis20am =From-HOMER.WC 9072353323 T-893 =P.02/03 F055 HOMER ELECTRIC ASSOCIATION,INC.MEMORANDUM A serH |TO:Bradley Lake Project Management ComminceArtCopoulos,Preseer-Managery AEADaveCalvert,Seward Wayne Carmony,MEA Gene Bjornstad,CEA -Steve Haagenson,GVEA Michael Scqtt,AML&P FROM:N orm Story J biae ae -SUBJECT:Bradley Lake Hy rroelectric Project LZroor Replacement DATE:May 3,2002 The following details the proposed contractual and administrative relationships involved in thereplacementoftheBradleyLakeGovernor.So ie"Contractual db}niBeAllworkwillbeperformedundertheexistingHEA-AEA O&M contract.This-withrelieve+the-”This will]maintain the project in its originally'developed risk posture.The RFP and vendar selection will be run through HEA purchasing andprocurement.Vendor selection will be reviewed by the project subcommittee prior to notification andaward,Additional personnel added to facilitate the project will be hired through contract with HEA.The need for additional personnel will be reviewed by the project subcommittee prior to selectiongoingforward.These additional positions are currently envisioned |TO be an On-site project supervisorandadocumentationandschedulingspecialist. "Administrative --_Normal admunisrrative functions will be retained.A'project subcommirneewill beformed toprovideadditionalsupporttotheprojectandprovidecontrolfortheBPMC.The project subcommittee willhavethefollowingmembets:. _A representative of Homer Electric Association,Inc. --a -A Tepresentative of Anchorage Municipal Light and Power,chairman. -A project technical lead.-,tht Hg,Yh owmrtor Compan net THETheprojectsubcommitteewillprovideweeklyreviewoftheprojectstatus,ensurethefunctional specificanonis being met,the scheduleis being met,ensure the budget is kept,and previde a monthly report to the BPMC.The anached organizational chart graphically represents therelationshipsdetailedabove.Yis priviced F IGMINLS\MEMOS\2002\oradley governor.wpd cc:Larry Hude,Ater Wynne =Chores.to be mene.° 'Way-03-02 1:20am From-HOMER =2C -9072353323 O Bradley Lake Hydreelectri¢Project Govarnor Replacement Organizational Chart :, T8383 P.03/03 0 F-085 -[project(HEA |subcommittee 7 May.16.2002 8:39AM AIDEA/AEA NOUSIYFe k ;;; sf pected.HOMER ELECTRIC ASSOCIATION,INC.Coupe _MEMORANDUM em iE (P_DATE:May 8,2002 ic Gals |\Y Ic i TO:Bradley Lake Project Management Committee MAY 15 2002 Art Copoulos,AEA JIDEAJAEADaveCalvert,Seward Wayne Carmony,MEA Gene Bjarnstad,CEA Steve Haagenson,GVEA wee .._.AMichael yw AML&PFROM:Norm Story "pate SUBJECT:REVISED BRADLEY LAKE HYDROELECTRIC PROJECTGOVERNORREPLACEMENT The following details the revised proposed contractual and administrative relationships involved in the replacement of the Bradley Lake Governor as discussed in today's meeting. "ContractualAllworkwill be performed under the existing HEA-AEA O&M contract.This will maintain theprojectinitsoriginallydevelopedriskposture.The RFP and vendor selection will be run throughHEApurchasingandprocurement.Vendor sclection will be reviewed by the project subcommittee 'prior to notification and award.Additional personnel added to facilitate the project will be hired through contract with HEA.The need for additional personnel will be reviewed by the project subcomunittee prior to selection going forward.These additional positions are currently envisioned 'to be an on-site project supervisor and a documentation and scheduling specialist. -|-----Administrative:-Nomnal administrative functions will be retained.A project subcommittee will be formed to 'provide additional support to the project and provide control for the BPMC.The project subcommittee will have the following members: A representative of Homer Electric Association,Inc. A representative of Chugach Electric Association,Inc. A representative of Anchorage Municipal Light and Power,chairman. -A project technical lead. The project subcommittee will provide weekly review of the project status,monitor compliance that the functional specification is being met,the schedule is being met,the budget is kept,and aOmonthlyreporttotheBPMCisprovided.The attached organizational chart graphically representstherelationshipsdetailedabove. F:\GM\NLS\MEMOS\2002\bradIcy.governor.rev.wpd ce:Larry Hittle,Aler Wynne O May.16.2002 8:33AM AIDEA/AEA Bradley Lake Hydroelectric Project Governor Replacement Organizational Chart No.U8/Y py,Ss (HEA project - subcommittee | |Vendor ALASKA ENERGY AUTHORITY RESOLUTION NO.89-13 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF $105,001,142 POWER REVENUE BONDS,FIRST SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT) BE IT RESOLVEDby the Board of Directors of theAlaskaEnergyAuthorityonthe7thdayofSeptember,1989,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 101.Short Title.This Resolution may hereafter be cited by the Authority,and is hereinafter sometimes referred to as the "First Series Resolution". 102.Definitions.(a)All defined terms contained in the Resolution shall have the same meanings,respectively, in this First Series Resolution:as such defined terms are given in Section 102 of the Resolution. (b)In addition,as used in this Firat Series Resolution,unless the context shall otherwise require,the following terms shall have the following respective meanings: "Accreted Value"shall have the meaning such defined term is given in Section 204. "Bonds"or "First Series Bonds"means the Bonds of the Authority of the Series authorized by this First Series Resolution and herein designated "Power Revenue Bonds,First Series". "Capital Appreciation Bonds”means the Bonds maturing on July 1,2005,July 1,2006 and July 1,2007. "Current Interest Bonds”means the Serial Bonds and the Term Bonds. "Serial Bonds”means any Current Interest Bonds maturing on or before July 1,2004. "Term Bonds"means any Current Interest Bonds maturing on July 1,2009,July 1,2016,July 1,2017 and July 1,2021. 103.Authority for this Resolution.This First Series Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE IT Authorization,Terms and Issuance 201.Authorization,Principal Amount,Description and Series.In order to provide funds necessary for the purpose specified in Section 203 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 the aggregate principal amount of $105,001,142.The Authority is of the opinion and hereby determines that the issuance of the Bonds in said amount is necessary to provide sufficient funds to be used and expended for the purposes specified in Section 202 of the Resolution.The Bonds of such Series shall be designated and entitled "Power Revenue Bonds,First Series (Bradley Lake Hydroelectric Project)".The Bonds shall consist eof §27,210,000 principal amount of Serial Bonds,$74,735,000 principal amount of Term Bonds and §9,810,000 maturity amount of Capital Appreciation Bonds ($3,056,142 initial principal amount)and shall be issued in fully registered form. 202.Purposes.The purposes for which the Bonds are being issued are to provide and deposit funds for deposit in the Renewal and Contingency Reserve Fund,the Capital Reserve Fund,the Interest Account of the Debt Service Fund,and the Construction Fund,including,without limitation,refunding of a portion of the Variable Rate Demand Bonds,all to the extent and subject to the limitations and in the amounts provided in the Resolution and in Article II hereof.All amounts deposited in the account in the Construction Fund for the Project shall be expended to pay Costs of Issuance of the Bonds,to the extent permitted by the Code,and the balance shall be applied RESOLUTION NO.89-13 A16356JF Page 2. by the Authority to the purchase or redemption of Variable Rate Demand Bonds.The deposit in the Capital Reserve Fund shall be an amount equal to Maximum Aggregate Debt Service.In addition to the deposits required by Section 203 of the Resolution, $12,907,240.12 of the proceeds of the Bonds shall be deposited in the Interest Account of the Debt Service Fund and a further amount as determined by an Authorized Officer,not in excess of the amount permitted to be deposited pursuant to the Code, together with the deposit to the Capital Reserve Fund,shall be deposited in the Renewal and Contingency Reserve Fund.The deposit in the Renewal and Contingency Reserve Fund is determined to be necessary in connection with the issuance of the Bonds. 203.Issue Date and Form.The Current Interest Bonds shall be dated September 1,1989.The Capital Appreciation Bonds shall be dated as of the date of their delivery.The Bonds shall be issued in the form of separate, single,authenticated,fully registered Bonds and upon issuance,the ownership of such Bonds shall be registered in the registry books kept by the Trustee in the name of Cede & Co.,as nominee for The Depository Trust Company,the Bond Depository as provided in Subsection 305(3)of the Resolution. 204.Maturities and Interest Rates.(a)The Current Interest Bonds shall be issued in the denomination of $5,000 or any integral multiple thereof,shall mature on July 1 in the following years,and the Current Interest Bonds maturing in each such year shall mature in the principal amount and bear interest from the date thereof,payable on January 1,1990,and semiannually thereafter on January 1 and July 1 in each year, at the rates set opposite such year in the following table: RESOLUTION NO.89-13 A16356JF Page 3. Principal Amount Years Maturing Rates 1992 $1,175,000 6.20% 1993 1,485,000 6.30 1994 1,580,000 6.40 1995 1,680,000 6.50 1996 1,790,000 6.60 1997 1,905,000 6.70 1998 2,035,000 6.90 1999 2,175,000 6.90 2000 2,325,000 7.00 2001 2,490,000 7.00 2002 2,665,000 7.10 2003 2,850,000 7.10 2004 3,055,000 7.10 2009 6,780,000 7.25 2016 32,805,000 7.25 2017 6,140,000 7.60 2021 29,010,000 6.25 (b)The Capital Appreciation Bonds shall be issued in maturity amounts of $5,000 or any integral multiple thereof and bear interest from their date accrued and compounded semiannually on January 1 and July 1 of each year commencing January 1,1990.The Capital Appreciation Bonds maturing on July 1,2005 shall be issued in the initial principal amount of $1,090,545,the Capital Appreciation Bonds maturing on July Il, 2006 shall be issued in the initial principal amount of $1,017,068.10,and the Capital Appreciation Bonds maturing on July 1,2007 shall be issued in the initial principal amount of $948,528.90.The Accreted Value of the Capital Appreciation Bonds in each year shall be set forth in a certificate of an Authorized Officer filed with the Trustee prior to the delivery of the Bonds and the Accreted Value in each such year shall be fixed so that the initial principal amount of the Bonds stated is correct if interest accrues on such initial principal amount at a rate of seven and one tenth percent (7.10%)per annum compounded on January 1,1990 and on each July 1 and January 1 thereafter. RESOLUTION NO.89-13 A1l6356JF Page 4. The Capital Appreciation Bonds are not subject to redemption prior to maturity. 205.Denominations,Numbers and Letters.Bonds shall be numbered and lettered in such manner as an Authorized Officer of the Authority shall determine prior to delivery thereof, 206.Redemption.The Current Interest Bonds maturing on or after July 1,2000 (other than the Bonds maturing in July 1,2021)are subject to redemption,either as a whole or in part,on any date (which date shall be determined by the Authority or selected by the Trustee,subject to the provisions of,and in accordance with,the Resolution and when so determined or selected shall be deemed and is hereby set forth as a redemption date)on and after July 1,1999,and prior to their respective maturities,upon notice as provided in Article IV of the Resolution,at the respective Redemption Prices (expressed as percentages of the principal amount of such Bonds to be so redeemed)set opposite such period in the following table,plus in each case interest accrued to the redemption date: Redemption Prices Period {Expressed as a (Both Dates Inclusive)Percentage) July 1,1999 -June 30,2000 102 July 1,2000 -June 30,2001 101 July 1,2001 and thereafter 100 207.Redemption.The Current Interest Bonds maturing on July 1,2021 are subject to redemption,either as a whole or in part,on any date (which date shall be determined by the Authority subject to the provisions of,and in accordance with,the Resolution and when so determined shall be deemed and is hereby set forth as a redemption date)on and after July 1,1999,upon notice as provided in Article IV of the Resolution,at the Redemption Price equal to the principal amount thereof to be redeemed,plus in each case interest accrued to the redemption date. 208.Sinking Fund Installments.The Term Bonds maturing on July 1,2009 shall be subject to redemption in part by operation of the Principal Account through application of Sinking Fund Installments as provided in Subsection 507(2)of RESOLUTION NO.69-13 A16356JF Page 5. the Resolution on July 1,2008 as herein provided in each case at a Redemption Price equal to the principal amount of each Bond or portion thereof to be redeemed,together with interest accrued to the redemption date.There shall be due and the Authority shall at any and all events be required to pay on July 1 of each of the years set forth in the following table the amount set opposite each such year in said table and said amount is hereby established as and shall constitute a Sinking Fund Installment for the retirement of the Term Bonds maturing in 2009,provided,however,that the amount set opposite 2009 in said table shall be payable at the stated maturity date of the said Term Bonds and shall not constitute a Sinking Fund Installment: Year Sinking Fund Installments 2008 3,270,000 2009 3,510,000 209.Sinking Fund Installments.The Term Bonds maturing on July 1,2016 shall be subject to redemption in part by operation of the Principal Account through application of Sinking Fund Installments as provided in Subsection 507(2)of the Resolution on July 1,2010 and on each July 1 thereafter as herein provided in each case at a Redemption Price equal to the principal amount of each Bond or portion thereof to be redeemed,together with interest accrued to the redemption date.There shall be due and the Authority shall at any and all events be required to pay on July 1 of each of the years set forth in the following table the amount set opposite each such year in said table and said amount is hereby established as and shall constitute a Sinking Fund Installment for the retirement of the Term Bonds maturing in 2016,provided, however,that the amount set opposite 2016 in said-table shall be payable at the stated maturity date of the said Term Bonds and shall not constitute a Sinking Fund Installment: RESOLUTION NO.89-13 A16356JF Page 6. Year Sinking Fund Installments 2010 $3,760,000 2011 4,035,000 2012 4,325,000 2013 4,640,000 2014 4,980,000 2015 5,340,000 2016 5,725,000 210.Sinking Fund Installments.The Term Bonds maturing on July 1,2021 shall be subject to redemption in partbyoperationofthePrincipalAccountthroughapplicationofSinkingFundPaymentsasprovidedinSubsection507(2)of the Resolution on July 1,2018 and on each July 1 thereafter as herein provided in each case at a Redemption Price equal to the principal amount of each Bond or portion thereof to be redeemed,together with interest accrued to the redemption date.There shall be due and the Authority shall at any and all events be required to pay on July 1 of each of the years set forth in the following table the amount set opposite each such year in said table and said amount is hereby established as and shall constitute a Sinking Fund Installment for the retirement of the Term Bonds maturing in 2021,provided, however,that the amount set opposite 2021 in said table shall be payable at the stated maturity date of the said Term Bonds and shall not constitute a Sinking Fund Installment: Year Sinking Fund Installments 2018 $6,605,000 2019 7,020,000 2020 7,460,000 2021 7,925,000 211.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 301.Sale of Bonds.Provisions are made for the sale of the Bonds pursuant to a proposed Bond Purchase RESOLUTION NO.89-13 Al6356JF Page 7. Agreement between the underwriter named therein,John Nuveen & Co.Incorporated (the "Underwriter"),and the Authority (the "Bond Purchase Agreement")which Bond Purchase Agreement shall be in substantially the same form and content as the Bond Purchase Agreement presented to and part of the records of this meeting.The form and content of the Bond Purchase Agreement be,and the same hereby are,in all respects authorized, approved and confirmed,and the Chairman or Vice Chairman or the Executive Director be,and each of them hereby is, authorized,empowered and directed to execute and deliver the Bond Purchase Agreementfor and on behalf of the Authority totheUnderwriterforthesaleoftheBondssubstantiallyinthe form and content presented to and made a part of the records of this meeting,but with such changes,modifications,additions, and deletions therein as shall to them seem necessary, desirable or appropriate,the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications,additions or deletions thereto from the form, and after the execution and delivery of the Bond Purchase Agreement,the Chairman,Vice Chairman and the Executive Director are hereby authorized,empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Bond Purchase Agreement as executed. 302.Approval of Official Statement.The distribution of a final Official Statement,as presented to and made part of the records of this meeting,which is in substantially the form and content of the Preliminary Official Statement approved by resolution of the Board on August 16, 1989,and the use thereof by the Underwriter in connection with the offering of the Bonds,is hereby ratified,confirmed and approved. 303.Investment Agreements.The Chairman or Vice Chairman or the Executive Director be,and each of them hereby is authorized and empowered to execute and deliver appropriate investment agreements with financial institutions providing for investment of proceeds of the Bonds and amounts to be transferred from other funds of the Authority to secure the Bonds in such form and on such terms and conditions as they deem appropriate. 304.Delivery of Bonds.The Chairman,Vice Chairman,Executive Director and such other pergon or persons as may be designated by the Executive Director are specifically Gesignated as Authorized Officers as defined in the Resolution RESOLUTION NO.89-13 A16356JF Page 8. 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 Underwriter,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 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 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 Bond Purchase Agreement of the Authority with respect to the Bonds. ARTICLE IV Variable Rate Demand Bonds 401.Tender of Variable Rate Demand Bonds.John Nuveen &Co.Incorporated is authorized on behalf of the Authority to purchase Variable Rate Demand Bonds (Bradley Lake Hydroelectric Project),up to $85 million in principal amount. The Variable Rate Demand Bonds shall be purchased by The Bank of New York,as the Paying Agent under the Indenture securing the Variable Rate Demand Bonds (or by John Nuveen &Co. Incorporated on behalf of the Paying Agent)pursuant to Section 2.02(1)and Section 10.06 of the Indenture.Variable Rate Demand Bonds up to $85 million in principal amount not purchased prior to delivery of the Bonds shall be redeemed pursuant to Section 3.01(A)(1)of the Indenture within 90 days of the date of delivery of the Bonds. RESOLUTION NO,89-13 Al16356JF Page 9. ARTICLE V Trustee 501.Security Pacific Bank Washington,N.A.is appointed Trustee and Paying Agent pursuant to Sections 901 and 902 of the Resolution. ARTICLE VI Insurance Commitment 601.Insurance Commitment.The commitment of Bond Investors Guaranty Insurance Company to provide insurance of the Bonds specified therein in the form presented to and made a part of the records of this meeting is authorized and approved on behalf of the Authority and the Executive Director is authorized to execute and deliver the commitment on behalf of the Authority. ARTICLE VII Book -Entry 701.The Bonds shall be issued in book-entry form pursuant to paragraphs 3-8 of Section 305 of the Resolution. The Bond Depository shall be The Depository Trust Company. ARTICLE VIII Effective Date 801.This Resolution shall take effect immediately. Supplemental Resolution approved and adopted by Alaska Energy Authority on September 7,1989. ALASKA ENERGY AUTHORITY By airman RESOLUTION NO,89-13 A16356JF Page 10. ALASKA ENERGY AUTHORITY RESOLUTION NO.90-10 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE,SALE AND DELIVERY OF $60,259,015.10 POWER REVENUE BONDS,SECOND SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT), AND DETERMINING RELATED MATTERS BE IT RESOLVED by the Board of Directors of the Alaska Energy Authority on the 25th day of July,1990,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 \ 101.Short Title.This Resolution may hereafter be cited by the Authority,and is hereinafter sometimes referred to,as the "Second Series Resolution". 102.Definitions.(a)All defined terms contained in the Resolution shall have the same meanings,respectively, in this Second Series Resolution as such defined terms are given in Section 102 of the Resolution. (b)In addition,as used in the Second Series Resolution,unless the context shall otherwise require,the following terms shall have the following respective meanings: "Accreted Value"shall have the meaning such defined term is given in Section 204. "Bond Insurer"shall mean Municipal Bond Investors Assurance Corporation,a stock insurance company incorporated under the laws of the state of New York,and any successor thereto. "Bonds"or "Second Series Bonds"means the Bonds of the Authority of the Series authorized by this Second Series Resolution and herein designated "Power Revenue Bonds,Second Series". "Capital Appreciation Bonds"means the Bonds maturing on July 1,2006,2007,2008,2009 and 2010.= "Current Interest Bonds"means the Serial Bonds and the Term Bonds. "Municipal Bond Insurance Policy”shall mean the municipal bond insurance policy issued by the Bond Insurer pursuant to the commitment to provide insurance approved in Section 701. "1985 Indenture"means the Indenture dated as of October 1,1985,securing the Variable Rate Demand Bonds. "Serial Bonds"means any Current Interest Bonds maturing on or before July 1,2005. "Term Bonds"means any Current Interest Bonds maturing on July 1,2013 and July 1,2021. 103.Authorj for thi -This Second Series Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization,Terms and Issuance 201.uthorizati Prine Amount riptio and Series.In order to provide funds necessary for the purposes specified in Section 203 of the Resolution,inaccordancewithandsubjecttotheterms,conditions and limitations established herein and in the Resolution,a Series of Power Revenue Bonds is hereby authorized to be issued in theaggregateprincipalamountof$60,259,015.10.The Authority isoftheopinionandherebydeterminesthattheissuanceoftheBondsinsaidamountisnecessarytoprovidesufficientfunds to be used and expended for the purposes specified in Section 202 of the Resolution.The Bonds of such Series shall be designated and entitled "Power Revenue Bonds,Second Series(Bradley Lake Hydroelectric Project)".The Bonds shall consistof$20,105,000 principal amount of Serial Bonds,$36,820,000 principal amount of Term Bonds and $11,520,000 maturity amountofCapitalAppreciationBonds($3,334,015.10 initial principal amount)an@ shall be issued in fully registered form. 202.Purposes.The purpose for which the Bonds are being issued is to pay the Cost of Acquisition and ConstructionoftheProject,including,without limitation,to provide funds for deposit in the Renewal and Contingency Reserve Fund,the Capital Reserve Fund,the Interest Account of the Debt ServiceFund,the Operating Reserve Account of the Operating Fund,and the Construction Fund,and the refunding of the balance of the Outstanding Variable Rate Demand Bonds,all to the extent and RESOLUTIONNO.90-10Page2 A21174EW subject to the limitations and in the amounts provided in theResolutionandinArticleIIhereof.The amount deposited in the account in the Construction Fund for the Project shall be expended to pay Costs of Issuance of the Bonds,to the extent permitted by the Code.The amount necessary of the proceeds oftheBondsshallbeappliedbytheAuthoritytotheredemption of all the Variable Rate Demand Bonds Outstanding.In addition to the deposits required by Section 203 of the Resolution,$4,321,837 of the amount of the proceeds of the Bonds set forth in the Certificate of Authorized Officer referred to in Section 401 shall be deposited in the Interest Account of the Debt Service Fund.The provisions of Section203oftheResolutionshallbecompliedwithasfollows: (a)A deposit shall be made from Bond proceeds into the Capital Reserve Fund in an amount which shall cause the amount deposited in said Fund from Bond proceeds to equal,but not exceed,the Capital Reserve Requirement which is determined to be the lesser of (i)ten percent of the original purchase price of the Bonds,(ii)125%of the average amount ofprincipalandinterestonallBondsscheduledtoaccrue during each 12 month period following the date of issuance of the Bonds and (iii)the maximum amount of principal and interest on the Bonds scheduled to accrue during any consecutive twelve month period following the date of issuance of the Bonds. (b)Further amounts from other than Bond proceeds shall be deposited in the Operating Reserve Account and in the Renewal and Contingency Reserve Fund in an amount which shall cause the amount in the Operating Reserve Account to equal the Operating Reserve Account Requirement and in an amount whichshallcausetheamountintheRenewalandContingencyReserveFundtoequaltheRenewalandContingencyReserveRequirement. The source for such payments shall be specified in the Certificate of Authorized Officer referred to in Section 401. (c)The amounts of the proceeds of the Bonds to be deposited in the Funds or Accounts or applied to the purposesetoutinthissectionshallbespecifiedintheCertificate of Authorized Officer referred to in Section 401. 203.Issue Date and Form.The Current InterestBondsshallbedatedJuly15,1990.The Capital Appreciation Bonds shall be dated as of the date of their delivery.The Bonds shall be issued in the form of a separate,single, authenticated,fully registered Bond for each maturity and uponissuance,the ownership of such Bonds shall be registered intheregistrybookskeptbytheTrusteeinthenameofCede& Co.,aS nominee for The Depository Trust Company,the Bond Depository as provided in Subsection 305(3)of the Resolution. RESOLUTION NO.90-10 Page 3 A21174EW 204.Maturities and Interest Rates.(a)The Current Interest Bonds shall be issued in the denomination of $5,000 or any integral multiple thereof,shall mature on July 1 in the following years,and the Current Interest Bonds maturing in each such year shall mature in the principal amount and bear interest from the date thereof,payable on January 1,1991,and semiannually thereafter on January 1 and July 1 in each year,at the rates set opposite such year in the following table: Principal Amount Years Maturing Rates 1992 $780,000 6.10% 1993 985,000 6.20 1994 1,045,000 6.30 1995 1,115,000 6.40 1996 1,185,000 6.50 1997 1,265,000 6.60 1998 1,345,000 6.70 1999 1,435,000 6.80 2000 1,535,000 6.90 2001 1,635,000 6.95 2002 1,750,000 7.00 2003 1,875,000 7.05 2004 2,005,000 7.10 2005 2,150,000 7.15 2013 7,425,000 7.20 2021 29,395,000 7.25 (b)The Capital Appreciation Bonds shall be issued in maturity amounts of $5,000 or any integral multiple thereof and bear interest from their date accrued and compounded semiannually on January 1 and July 1 of each year commencing January 1,1991,and shall be issued in the initial principal amounts,shall accrete interest at the rates and shall mature on July 1 of the years shown in the following table: (to two places Initial Principal after the decimal) Xear Amount interest Rate 2006 $763,231.60 7.10 2007 711,807.05 7.10 2008 663,840.00 7.10 2009 617,757.00 7.10 2010 577,379.45 7.10 The Accreted Value of the Capital Appreciation Bonds in eachyearshallbesetforthinacertificateofanAuthorized RESOLUTIONNO,90-10Page4 A21174EW Officer filed with the Trustee prior to the delivery of theBondsandtheAccretedValueineachsuchyearshallbefixed so that the initial principal amount of the Bonds stated iscorrectifinterestaccruesonsuchinitialprincipalamount at a rate(to two places after the decimal)of Seven and One-Tenth percent (7.10%)per annum compounded on January 1,1991 and on each July 1 and January 1 thereafter. The Capital Appreciation Bonds are not subject toredemptionpriortomaturity. 205.enonj ons a ers.Bonds shall be numbered and lettered in such manner as an Authorized Officer of the Authority shall determine prior to delivery thereof. 206.Redemption.The Current Interest Bonds maturing on or after July 1,2001 are subject to redemption, either as a whole or in part,on any date (which date shall be determined by the Authority or selected by the Trustee,subject to the provisions of,and in accordance with,the Resolution and when so determined or selected shall be deemed and is hereby set forth as a redemption date)on and after July 1,2000,and prior to their respective maturities,upon notice asprovidedinArticleIVoftheResolution,at the respectiveRedemptionPrices(expressed as percentages of the principal amount of such Bonds to be so redeemed)set opposite such period in the following table,plus in each case interest accrued to the redemption date: Redemption Prices Period (Expressed as a (Both Dates Inclusive)Percentage) July 1,2000 +June 30,2001 102 July 1,2001 -June 30,2002 101 July 1,2002 and thereafter 100 207.SinkingFundInstallments.The Term BondsmaturingonJuly1,2013 shall be subject to redemption in partbyoperationofthePrincipalAccountthroughapplicationofSinkingFundInstallmentsasprovidedinSubsection507(2)of the Resolution on July 1,2011 and on each July 1 thereafter as herein provided in each case at a Redemption Price equal to theprincipalamountofeachBondorportionthereoftoberedeemed,together with interest accrued to the redemptiondate.There shall be due and the Authority shall in any and all events be reguired to pay on July 1 of each of the years set forth in the following table the amount set opposite eachsuchyearinsaidtableandsaidamountisherebyestablished N O- Page 5 . ;A21174EW as and shall constitute a Sinking Fund Installment for theretirementoftheTermBondsmaturingin2013,provided, however,that the amount set opposite 2013 in said table shall be payable at the stated maturity date of the said Term Bonds and shall not constitute a Sinking Fund Installment: ear ki a ts 2011 $2,305,000 2012 2,470,000 2013 2,650,000 208.inki u st e +The Term Bonds maturingon July 1,2021 shall be subject to redemption in partbyoperationofthePrincipalAccountthroughapplicationofSinkingFundInstallmentsandprovidedinSubsection507(2)of the Resolution on July 1,2014 and on each July 1 thereafter as herein provided in each case at a Redemption Price equal to the principal amount of each Bond or portion thereof to be redeemed,together with interest accrued to the redemption date.There shall be due and the Authority shall at any and all events be required to pay on July 1 of each of the years set forth in the following table the amount set opposite each such year in said table and said amount is hereby established as and shall constitute a Sinking Fund Installment for the retirement of the Term Bonds maturing in 2021,provided, however,that the amount set opposite 2021 in said table shall be payable at the stated maturity date of the said Term Bonds and shall not constitute a Sinking Fund Installment: Year i sta s 2014 '$2,835,000 2015 3,045,000 2016 3,265,000 2017 3,505,000 2018 3,760,000 2019 4,030,000 2020 4,320,000 2021 4,635,000 209.No Redemption of Bonds fromConstructionFundMoneys.The Bonds shall not be subject to redemption pursuanttosubsection503(8)of the Resolution. ARTICLE III Sale and Delivery of Bonds s (0)-10 Page 6 ; A21174EW 301.Sale of Bonds.Provisions are made for the sale of the Bonds pursuant to a proposed Bond Purchase Agreement between the underwriter named therein,John Nuveen &Co.Incorporated (the "Underwriter"),and the Authority (the "Bond Purchase Agreement")which Bond Purchase Agreement shall be in substantially the same form and content as the Bond Purchase Agreement presented to and part of the records of this meeting.The form and content of the Bond Purchase Agreement be,and the same hereby are,in all respects authorized, approved and confirmed,and the Chairman or Vice Chairman or the Executive Director be,and each of them hereby is, authorized,empowered and directed to execute and deliver the Bond Purchase Agreement for and on behalf of the Authority to the Underwriter for the sale of the Bonds substantially in the form and content presented to and made a part of the records of this meeting,but with such changes,modifications,additions,and deletions therein as shall to them seem necessary,desirable or appropriate,the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications,additions or deletions thereto from the forn, and after the execution and delivery of the Bond PurchaseAgreement,the Chairman,Vice Chairman and the ExecutiveDirectorareherebyauthorized,empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Bond Purchase Agreement as executed. 302.Vv.of icial S .The distribution of the Preliminary Official Statement of the Authority in the form presented to and made a part of therecordsofthismeetingisapproved.As of its date the Preliminary Official Statement is deemed final by the Authority for purposes of Security and Exchange Commission Rule 15c2-12(b)(1).The distribution of a final Official Statement, which is in substantially the form and content of the Preliminary Official Statement,and the use thereof by theUnderwriterinconnectionwiththeofferingoftheBonds,is hereby ratified,confirmed and approved. 303.Investment Agreements.The Chairman or Vice Chairman or the Executive Director be,and each of them hereby is authorized and empowered to execute and deliver appropriateinvestmentagreementswithfinancialinstitutionsprovidingfor investment of proceeds of the Bonds and amounts to betransferredfromotherfundsoftheAuthoritytosecure the Bonds in such form and on such terms and conditions as they deem appropriate. 304.DeliveryofBonds.The Chairman,¥YiceChairman,Executive Director and such other person or personsasmaybedesignatedbytheExecutiveDirectorarespecifically RESOLUTIONNO.90-10Page7 A21174EW designated as Authorized Officers as defined in the Resolutionandtheyherebyareseverallyauthorized,after execution of the Bonds,to deliver the Bonds to the Trustee for authentication under the Resolution,and,upon authenticationanduponreceiptofthebalanceofthepurchasepriceoftheBonds,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 Underwriter,and to receive the proceedsofsaleoftheBondsandgiveawrittenreceiptthereforon behalf of the Authority,to apply said proceeds and the other moneys required to be transferred or deposited in accordancewiththetermsoftheResolutionandthisResolutionandin 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 oftheAuthority,all acts and things that constitute conditionsprecedenttotheauthenticationanddeliveryoftheBondsorthatareotherwiserequiredorconvenienttobedoneand performed by or on behalf of the Authority prior to orsimultaneouslywiththedeliveryoftheBonds.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 andpursuanttothetermsoftheResolution,and in accordance withthetermsandconditionsoftheBondPurchaseAgreementofthe Authority with respect to the Bonds. ARTICLE IV Variable Rate Demand Bonds 401.Redem no jabl ate ds.The balance of the Outstanding Variable Rate Demand Bonds shall be redeemed pursuant to Section 3.01(A)(1)of the 1985 Indenture within 90 days of the date of delivery of the Bonds.Amounts held in Funds and Accounts under the 1985 Indenture shall be applied to the redemption of the Variable Rate Demand Bonds andotherwiseasmaybespecifiedinaCertificateofanAuthorized Officer of the Authority filed with the Trustee on the date of delivery of the Bonds. ARTICLE V 501.ed t ce -A Scheduled Maintenance Fund,to be held by the Trustee,is hereby established.Amounts may be paid into the ScheduledMaintenanceFundbytheAuthorityoutofamountsreceived for that purpose from the Purchasers.The Trustee shall makepaymentsfromtheScheduledMaintenanceFundandapplyamountsintheScheduledMaintenanceFundtopaymentofitemsof maintenance,renewal,repair and rehabilitation of the Project, Page 8 A21174EW as specified in a requisition of the the Authority inaccordancewithabudgetadoptedbyvoteoftheCommittee.ForpurposesoftheResolutionthisFundshallbeconsideredasifestablishedbySection502oftheResolutionandamountsinthe Scheduled Maintenance Fund shall be,and the same are,included in the pledge effected in Section 501 of the Resolution, provided,that amounts in the Scheduled Maintenance Fund shallbeappliedtothepaymentofprincipaloforinterestonthe Bends only after all other pledged amounts have been so applied. ARTICLE VI Paying Agent 601.Security Pacific Bank Washington,N.A.is appointed Paying Agent for the Second Series Bonds pursuant to Section 902 of the Resolution. ARTICLE VII Bond Insurance 701.Insurance Commitment.The commitment of Municipal Bond Investors Assurance Corporation to provideinsuranceoftheBondsspecifiedthereinintheformpresented to and made a part of the records of this meeting is authorized and approved on behalf of the Authority and the ExecutiveDirectorisauthorizedtoexecuteanddeliverthecommitment on behalf of the Authority. 702.Provisions Relative to Bond Insurer.For so long as the Bond Insurer maintains the Municipal Bond Insurance Policy: (a)Copies of any amendments made to the documents executed in connection with the issuance of the Bonds which are consented to by the Bond Insurer shall be sent to Standard & Poor's Corporation.(b)The Bond Insurer shall receive notice of theresignationorremovalofthePayingAgentandtheappointment of a successor thereto. (c)The Bond Insurer shall receive copies of all notices required to be delivered to Bondowners and,on anannualbasis,copies of the Authority's audited financial statements and annual budget.(d)Any notice that is required to be given to anowneroftheBondsortothePayingAgentpursuanttothe Resolution shall also be provided to the Bond Insurer.All notices required to be given to the Bond Insurer under theResolutionshallbeinwritingandshallbesentbyregisteredorcertifiedmailaddressedtoMunicipalBondInvestors =}(e)= Page 9 A21174EW Assurance Corporation,113 King Street,Armonk,New York 10504 Attention:Surveillance. 703.Payment Procedure Pursuant to Municipal Bondsu. As long as the Municipal Bond Insurance Policy is infullforceandeffect,the Authority and the Paying Agent agree to comply with the following provisions:(a)In the event that,on the second business day,and again on the business day,the Paying Agent has notreceivedsufficientmoneystopayallprincipalofand interest on the Bonds due on the second following or following,as the case may be,business day,the Paying Agent shall immediatelynotifytheBondInsureroritsdesigneeonthesamebusinessdaybytelephoneortelegraph,confirmed in writing byregisteredorcertifiedmail,of the amount of the deficiency.(b)If the deficiency is made up in whole or in part prior to or on the interest payment date,the Paying AgentshallsonotifytheBondInsureroritsdesignee. (c)In addition,if the Paying Agent has notice that any Bondholder has been required to disgorge payments ofprincipalorinterestontheBondstotheAuthorityoritstrusteeinbankruptcyorcreditorsorotherspursuanttoa final judgment by a court of competent jurisdiction that suchpaymentconstitutesavoidablepreferencetosuchBondholderwithinthemeaningofanyapplicablebankruptcylaws,then the Paying Agent shall notify the Bond Insurer or its designee ofsuchfactbytelephoneortelegraphicnotice,confirmed in writing by registered or certified mail.(ad)The Paying Agent is hereby irrevocably designated,appointed,directed and authorized to act as attorney-in-fact for owners of the Bonds as follows:(i)If and to the extent there is a deficiency in amounts required to pay interest on the Bonds,the Paying Agent shall (x)execute and deliver to Citibank,N.A.,or its successors under the Policy (the "Insurance Trustee"), in form satisfactory to the Insurance Trustee,an instrument appointing the Bond Insurer as agent for suchownersinanylegalproceedingrelatedtothepaymentof such interest and an assignment to the Bond Insurer of theclaimsforinteresttowhichsuchdeficiencyrelatesand which are paid by the Bond Insurer,(y)receive asdesigneeoftherespectiveowners(and not as PayingAgent)in accordance with the tenor of the Policy paymentfromtheInsuranceTrusteewithrespecttotheclaimsfor interest so assigned and (z)disburse the same to such respective owners;and(ii)If and to the extent there is a deficiency inamountsrequiredtopayprincipaloftheBonds,the PayingAgentshall(x)execute and deliver to the Insurance Trustee in form satisfactory to the Insurance Trustee an N Q- Page 10 A21174EW instrument appointing the Bond Insurer as agent for such owners in any legal proceeding relating to the payment ofsuchprincipalandanassignmenttotheBondInsurerof any of the Bonds surrendered to the Insurance Trustee orsomuchoftheprincipalamountthereofashasnot previously been paid or for which moneys are not held by the Paying Agent and available for such payment (but suchassignmentshallbedeliveredonlyifpaymentfromtheInsuranceTrusteeisreceived),(y)receive as designee of the respective owners (and not as Paying Agent)in accordance with the tenor of the Policy payment thereforfromtheInsuranceTrusteewithrespecttotheinterest so assigned and (z)disburse the same to such respective owners. (e)Payments with respect to claims for interest on and principal of Bonds disbursed by the Paying Agent fromproceedsofthePolicyshallnotbeconsideredtodischarge theobligationoftheAuthoritywithrespecttosuchBonds,and the Bond Insurer shall become the owner of such unpaid Bonds and Claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this section or otherwise. (f)Irrespective of whether any such assignment is executed and delivered,the Authority and the Paying Agent hereby agree for the benefit of the Bond Insurer that:(i)they recognize that to the extent the Bond Insurer makes payments,directly or indirectly (as by paying through the Paying Agent),on account of principaloforinterestontheBonds,the Bond Insurer will besubrogatedtotherightsofsuchownerstoreceivetheamountofsuchprincipalandinterestfromtheAuthority, with interest thereon as provided and solely from the sources stated in the Resolution and the Bonds,and (ii)they will accordingly pay to the Bond Insurertheamountofsuchprincipalandinterest(includingprincipalandinterestrecoveredundersubparagraph (ii)of the first paragraph of the Policy,which principal and interest shall be deemed past due and not to have beenpaid),with interest thereon as provided in the ResolutionandtheBonds,but only from the sources and in the manner provided therein for the payment of principal of andinterestontheBondstoowners,and will otherwise treat the Bond Insurer as the owner of such rights to the amount of such principal and interest. ARTICLE VIII Book -Entry 801.The Bonds shall be issued in book-entry form Page 11 A21174EW pursuant to paragraphs 3-8 of Section 305 of the Resolution. The Bond Depository shall be The Depository Trust Company. ARTICLE IX Amendment 901.Section 1002 of the Resolution permits an amendmentoftheResolution,effective upon the consentof the Trustee,to make a change which does not in the sole opinion of the Trustee materially and adversely affect the rights of theBondholders.Pursuant to this provision,Section 502 of the Resolution is amended as follows: 502.EstablishmentofFundsandAccounts.[1]ThefollowingFundsandAccounts,each to be held by the Trustee, are hereby established: (1)Construction Fund, (2}Debt Service Fund,which shall consist of an Interest Account and a Principal Account, (3)Capital Reserve Fund, (4)Renewal and Contingency Reserve Fund[;)},[and] (5)Excess Investment Earnings Fund[.], [2.The following funds,each to be held by theAuthority,are hereby established:] {(1)](6)Revenue Fund,and {(2)]{2)Operating Fund,which shall include therein an Operating Reserve Account. ARTICLE X Effective Date 10.01.This Resolution shall take effect immediately. QO.90-10 Page 12 A21174EW Supplemental Resolution approved and adopted by Alaska Energy Authority on July 25,1990. ALASKA ¥Y AUTHORITY Secretary RESOLUTIONNO,90-10Page13 A21174EW hy, SETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT dated as of December '7,1997,.is entered . into by and among the CHUGACH ELECTRIC ASSOCIATION,INC.,the GOLDENVALLEYELECTRICASSOCIATION,INC.,the MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT AND POWER,the CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM,the ALASKA ELECTRIC GENERATION &TRANSMISSION COOPERATIVE, INC.,the HOMER ELECTRIC ASSOCIATION,INC.,and the MATANUSKA ELECTRICASSOCIATION,INC.(collectively,the "Purchasers"and the ALASKA ENERGYAUTHORITY(the "Authority"). Section 1,PURPOSE. (A)The parties to this Settlement Agreement are the Authority and thePurchasers.The Authority and each of the Purchasers have full power and authority toenterintothisSettlementAgreement.- (B)The parties to this Settiement Agreement have previously entered into a Power Sales Agreement dated as of December 8,1987,(the "Power Sales Agreement"): The aforesaid parties wish to resolve certain matters relating to the Power Sales Agreement.It is the intention of said parties and the purpose of this Settlement Agreement to hereby resolve such matters. (C)The construction of the Bradley Lake Hydroelectric Project,as defined inthePowerSalesAgreement(the "Project")is substantially complete. (D)The amounts remaining in the Construction Fund as stated in Section 3(A) and Exhibit A of this Agreement are adequate to pay (1)the estimated cost of the remaining work to be completed with respect to the Project as stated in Exhibit A,except for the control system modifications,and (2)a portion of the cost of the contro!system modifications referred to in Exhibit A. Section 2,AGREEMENT AS TO BOND ISSUANCE AMOUNT. (A)Under the terms of the Power Sales Agreement,the Purchasers are obligated to purchase from the Authority,and the Authority is obligated to sell to the Purchasers,electricity generated by the Project,as defined in the Power Sales Agreement.The Power Sales Agreement establishes the amount of the Purchasers' payment obligations for the purchase of electricityin part by the amount of debt serviceonbondsissuedtofinancetheProject.The Power Sales Agreement contains a limitation on the maximum principal amount of bonds which may be used to establish the Purchasers'payment obligations.The Authority has issued its Alaska Energy Authority AEA/Bradiey Lake Forward Refunding,1997 Settlement Agreement . AFFO5A48/5378.0809 (BLSA.agr 12/4197).Page 1 Power Revenue Bonds in two separate series and in an aggregate principal amount of $165,260,157 (the "Bonds").There is a question of whether the principal amount of Bonds originally issued was in excess of the maximum amount which may be used to establish the Purchasers'payment obligations. (B)The parties hereby agree not to challenge in any court of law,the following facts,conclusions,and interpretations:(i)that the issuance of the Bonds in the aggregate initial principal amount of $165,260,157 (the "Bond Principal Amount")is within the maximum principal amount authorized by Section 8(a)(i)of the Power Sales Agreement;(ii)that the annual payment obligations of the Purchasers will be determined taking into account the debt service obligations with respect to the entire principal amount of Bonds;and (iii)that the Bond Principal Amount.is,and has always been, within "Recoverable Construction Costs"as defined in the Power Sales Agreement. Section 3,CONSTRUCTION COMPLETION. (A)The Authority issued the Bonds pursuant to its Power Revenue Bond Resolution adopted September 7,1989,(the "Power Revenue Bond Resolution"). Proceeds of the Bonds were deposited in the Construction Fund established by the Power Revenue Bond Resolution (the "Construction Fund")to be used for the purposes of the Construction Fund.Amounts in the Construction Fund were to be used to pay for "Costs of Acquisition and Construction"(as defined in the Power Revenue Bond Resolu- tion).The Power Revenue Bond Resolution contains certain provisions relating to the disbursal of amounts remaining in the Construction Fund after final completion of theProject.The Purchasers and the Authority have reached an agreement with respect to the typeof work remaining to be done for the Project to be finally completed and theappropriatedisbursalofmoneyremainingintheConstructionFundaftersuchfinal completion.That agreement is set forth in (C)and (D)of this Section,and it is the desire of the parties to this Settlement Agreement to hereby confirm such agreement and,further,to agree that the sole source of payment by the Authority for such final completion is the amount remaining in the Construction Fund and that there is no further recourse against the Authority for payment of the costs of final completion of the Project. (B)Attached hereto,and hereby incorporated by reference,as Exhibit A is a "punch list"of matters relating to work still to be completed with respect to the Project. The punch list includes a statement of the amount of money currently estimated for the completion of each of these matters with the exception of the control system.The balance remaining in the Construction Fund is as stated in Exhibit A as at the date set forth therein,and no disbursements shall be made from the Construction Fund except as provided herein.Any work and expenditures needed for the control system modifications in excess of the amounts remaining in the Construction Fund as determined by the PMC will be "Required Project Work"as defined in the PSA,subject to the provisions of Section 13(c)(ii)(f)and 13(e).It is the intention of the parties hereto AEA/Sradiey Lake Forward Refunding,1997 Settlement Agreement AFFOSA48/5379.0809 (BLSA.agr 12/4/97)Page 2 that the work described in this Section 3(B),including work to be done with respect to the contro!system modifications,will be done by one or more of the Purchasers pursuant to an agreement to be éntered into between the Authority and the Purchasers. (C)The parties hereto agree not to challenge in any court of law,the following facts,conclusions,and interpretations:that (a)the total amount (the "Punch List Amount")indicated in the punch list for the matters listed therein is the entire amount necessary for the full and final completion of the Project for all purposes of the Power Sales Agreement,(b)there are no other matters beyond the matters listed in the punch list that are necessary for the full and final completion of the Project for all purposes of the Power Sales Agreement,and (c)each of the matters listed on the punch list is a Cost of Acquisition or Construction.The parties further agree that the Authority may,in its discretion,determine to leave the amounts indicated in the punch list in the Construction Fund-to be used to pay said Costs of Acquisition or Construction in accordance with the Power Revenue Bond Resolution or establish a separate escrow fund for such amounts and for-such purpose.Should the matters fisted on the punch list be completed or accomplished for an amount less than the total amount set forth in the punch list and,as a result,there remains money in the Construction Fund following completion of all matters on the punch list,the excess money shall remain in,or be returned to,the Construction Fund for disbursal in accordance with the Power Revenue Bond Resolution,the Power Sales Agreement,and the remainder of this Settlement Agreement.Expenditure for the matters listed on the punch list of the lesser of (i)the total amount set aside on the punch list for such matters,or such lesser amount as may be necessary for the completion of all such matters,or (ii)the entire amount on deposit _in the Construction Fund as of the date hereof,together with any interest earnings thereon,shall be deemed by the parties to be complete satisfaction of the Authority's covenant contained in Section 6(d)of the Power Sales Agreement to construct and complete the Project regardless of any change in circumstances known or unknown, heretofore or hereafter arising,and there shall be no obligation whatsoever on the part of the Authority to expend amounts from any source other than the amounts described in this Section 3(C). (D)If,following expenditure of the amounts described in (C)of this Section from the Construction Fund,there remain any additional amounts in the Construction Fund,the Authority agrees to use 1/2 of such remaining amount to make interest payments with respect to the Bonds.The parties hereto agree that the Authority maytransfertotheStateofAlaskaallamountsremainingintheConstructionFundafter payment of the Punch List Amounts and after payment of interest on the Bonds as aforesaid.The parties hereto further agree to treat any such transfer,together with any transfers of money from the Construction Fund to the State of Alaska that may have occurred prior to the date of this Settlement Agreement,as a proper transfer in accordance with the terms of the Power Sales Agreement and the Power Revenue Bond Resolution. AEA/Bracley Lake Forward Refunding,1997 Settlement Agreement APFOSA48I5378,0809 (BLSA.agr 12/4/97)Page 3 Section 4.NO MODIFICATION OR AMENDMENT.Nothing in this Agreement is intended to modify or amend the provisions of the Power Sales Agreement. Section 5.APPLICABLE LAW.The parties to this Agreement agree that they will not challenge any provision of this Agreement as being not permitted by applicable law. Section 6,EXECUTION OF COUNTERPARTS.This Settlement Agreement may be executed in several counterparts each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.EFFECTIVE DATE.This Settlement Agreement is effective on the date of Closing (as that term is defined in the Forward Delivery Bond Purchase Agreement dated October 30,1997,between the Alaska Energy Authority and Goldman,|Sachs &Co.),but only if the date of Closing occurs on or before April 1,1998.if the date of Closing does not occur on or before April 1,1998,this Agreement shall not take effect but,instead,shall be null and void of no effect whatsoever. IN WITNESS WHEREOF,the parties have caused this Settlement Agreement to be executed the day and year first above written., ALASKA ENERGY AUTHORITY GOLDEN VALLEY ELECTRIC 'ASSOCIATION,INC. By: Its: .MUNICIPALITY OF ANCHORAGE CHUGACH ELECTRIC ASSOCIATION,d/b/a MUNICIPAL LIGHT AND POWERINC.: } By: By:Its: Its: CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM By: Its: AEA/Bradiey Lake Forward Refunding,1997 Settement Agreement AFFOSA4S/5379.0608 (BLSA.agr 12/4/97)Page 4 Section 4.NO MODIFICATION OR AMENDMENT.Nothing in this Agreement is intended to modify or amend the provisions of the Power Sales Agreement. Section 5.APPLICABLE LAW.The parties to this Agreement agree that they will not challenge any provision of this Agreement as being not permitted by applicable law. Section 6.EXECUTION OF COUNTERPARTS.This Settlement Agreement maybeexecutedinseveralcounterpartseachofwhichshallbeanoriginalandallofwhich shall constitute but one and the same instrument. Section 7.EFFECTIVE DATE.This Settlement Agreement is effective on the date of Closing (as that term is defined in the Forward Delivery Bond Purchase Agreement dated October 30,1997,between the Alaska Energy Authority and Goldman, Sachs &Co.),but only if the date of Closing occurs on or before April 1,1998.If the date of Closing does not occur on or before April 1,1898,this Agreement shall not take effect but,instead,shall be null and void of no effect whatsoever. IN WITNESS WHEREOF,the parties have caused this.Settlement Agreement tobeexecutedthedayandyearfirstabovewritten. ALASKA ENERGY AUTHORITY GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. By:; D.RANDY SIMMONS -By: Its:_Executive Director Its: MUNICIPALITY OF ANCHORAGE. CHUGACH ELECTRIC ASSOCIATION,d/b/a MUNICIPAL LIGHT AND POWER INC.: . .By:oy ogee aElts:__Gene anager \\ CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM By: Its: AEA Bradiey Lake Forward Refunding,1997 Seftfement Agreement AFFOSAA8/5379.0800 {BLSA.agr 12/4/97)Page 4 Section 4.NO MODIFICATION OR AMENDMENT.Nothing in this Agreement is intended to modify or amend the provisions of the Power Sales Agreement. Section 5.APPLICABLE LAW.The parties to this Agreement agree that they will not challenge any provision of this Agreement as being not permitted by applicable law., Section 6.EXECUTION OF COUNTERPARTS.This Settlement Agreement may be executed in several counterparts each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7,EFFECTIVE DATE.This Settlement Agreement is effective on the date of Closing (as that term is defined in the Forward Delivery Bond Purchase © Agreement dated October 30,1997,between the Alaska Energy Authority and Goldman, Sachs &Co.),but only if the date of Closing occurs on or before April 1,1998.If the date of Closing does not occur on or before April 1,1998,this Agreement shall not take effect but,instead,shall be null and void of no effect whatsoever.. IN WITNESS WHEREOF,the parties have caused this Settlement Agreement to be executed the day and year first above written.; ALASKA ENERGY AUTHORITY GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. ,yh,At,D.RANDY SIMMONS By:cA r Its:_Executive Director Its:ETMUNICIPALITYOFANCHORA CHUGACH ELECTRIC ASSOCIATION,d/b/a MUNICIPAL LIGHT AND POWER INC. By: By:;Its: Its: CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM By: Its: AEA/Bradiey Lake Forward Refunding,1997 Settiement Agreement AFFO5A48/5379,0800 {BLSA agr 12/4/07)Page 4 Section 4.NO MODIFICATION OR AMENDMENT.Nothing in this Agreement is intended to modify or amend the provisions of the Power Sales Agreement. Section 5.APPLICABLE LAW.The parties to this Agreement agree that they will not challenge any provision of this Agreement as being not permitted by applicable law. Section 6.EXECUTION OF COUNTERPARTS.This Settlement Agreement may be executed in several counterparts each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.EFFECTIVE DATE.This Settlement Agreementis effective on the date of Closing (as that ten J Y)Jefined in the Forward Delivery Bond PurchaseAgreementcifcoppeeeeees,between the Alaska Energy Authority and Goldman,Sachs &Co),but 'only if tifthe date of Closing occurs on or before April 1,1998.If thedateofClosingdoesnotoccuronorbeforeApril1,1998,this Agreement shall not take'effect but,instead,shall be null and void of no effect whatsoever. IN WITNESS WHEREOF,the parties have caused this Settlement Agreement tobeexecutedthedayandyearfirstabovewritten. ALASKA ENERGY AUTHORITY GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. By: D.RANDY SIMMONS By: Its:_Executive Director Its: | MUNICIPALITY OF ANCHORAGE CHUGACH ELECTRIC ASSOCIATION,d/b/a MUNICIPAL LIGHT AND POWER INC. By: By:Its: Its:; _CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM By: Its: AEA/Bradiey Lake Forward Refunding,1997 Settlement Agreemant AFFOSA48/5379.0609 (BLSA agr 12/4/97)Page 4 Section 4.NO MODIFICATION OR AMENDMENT.Nothing in this Agreement is intended to modify or amend the provisions of the Power Sales Agreement. Section 5.APPLICABLE LAW.The parties to this Agreement agree that they will not challenge any provision of this Agreement as being not permitted by applicable law. Section 6.EXECUTION OF COUNTERPARTS.This Settlement Agreement may be executed in several counterparts each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.EFFECTIVE DATE.This Setilement Agreement is effective on the date of Closing (as that term is defined in the Forward Delivery Bond Purchase Agreement dated October 30,1997,between the Alaska Energy Authority and Goldman, Sachs &Co.),but only if the date of Closing occurs on or before April 1,1998.If the date of Closing does not occur on or before April 1,1998,this Agreement shall not take effect but,instead,shall be null and void of no effect whatsoever. _IN WITNESS WHEREOF,the parties have caused this Settlement Agreement to be executed the day and year first above written. ALASKA ENERGY AUTHORITY GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. By:. D.RANDY SIMMONS By: Its:_Executive Director Its: MUNICIPALITY OF.ANCHORAGE CHUGACH ELECTRIC ASSOCIATION,d/b/a MUNICIPAL LIGHT AND POWER INC. By: By:Its: its:CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM AEA/Bradiey Lake Forward Refunding,1997 Setdement Agreement , AFPOSAS5/5379,0608 (BLEA.agr 12/4/97}Page 4 ALASKA ELECTRIC GENERATION & TRANSMISSION COOPERATIVE,INC. ey:ultets Kaufrer-Its:LSTSIE raw.)PY)ean HOMER ELECTRIC ASSOCIATION, INC. By: Its: MATANUSKA ELECTRIC ASSOCIATION,INC. By: Its: AEAradley Lake Forward Refunding,1997 Set@ement Agreement AFFOSA48/5370.0809 (BLSA.agr 12/4/97)Page 5 ALASKA ELECTRIC GENERATION & TRANSMISSION COOPERATIVE,INC. By: Its: HOMER ELECTRIC ASSOCIATION, INC. By: Its: MATANUSKA ELECTRIC ASSOCIATION,INC. By: Its: AEA/Bradiey Lake Forward Refunding,1997 Settlement Agreement :AFFOSA4Q/6379.0809 (BLEA agr 12/4/97)Page 5 ALASKA ELECTRIC GENERATION & TRANSMISSION COOPERATIVE,INC. By: Its: HOMER ELECTRIC ASSOCIATION, INC.. By: Its: MATANUSKA ELECTRIC ASSOCIATION,INC. By:Laue .Connerslis:Geveteg LnnwaAcent AEA/Bradiey Lake Forward Refunding,1997 Settlement Agreement AFFOSA48/5378.0809 (BLSA agr 12/4/97)Page 5 EXHIBIT A ALASKA ENERGY AUTHORITY BRADLEY LAKE FINAL CONSTRUGTION LIST REPORT OF ACTIVITY,AS OF S/aneaT Ty)(8)(3)Ly P)"(C)(b)*Cate |sanamne |2082 1 rermon |ssITEMtoCompletaReallocationastmateEaThre8/487 to Complete Fish Study/Mitigetion 290,000.00 (70,000)770,c0o fd 194,108.80 108,004.50 Fah Water SCADA -Construction 200,000.00 (100,000)190,000 ce 3,483.53 96,510.47 Moose Mlgation Fund 200,000.00 (14,7838)165,216 188,780.18 (875.16) Diversion Tunnel 30,000,00 (48,000)8,000 %1,620.88 3,149.14 Powerhouse FioorPaint 426,000.00 4120,000)6,000.00 SVC Speres 176,000.00 (80,000)149,000.00 Equipment 30,000,00 (18,000)|12,897.82 Misp Enginearing 50,000.00 (10,000)40,000,009 Fishweter Bypass Clesnup 100,000.00 228,000 25,608.77 ADIT Access Modification 25,000.00 (7,000)6,203.23 Building Roof Modification 100,509,60 (85,000)48,000.00 Alfetd Rood Access 85,000.00 (89,000)5415.56 Gold Weather Modification 30,000.00 (25,000)4,705.47 Rip Rap Upstream FaceofLet Dam 475,000.00 :175,000,00 Approved Workordank unfinighed at 3/96 154,000,00 1.246 56,816.77 Penstock Condensation "28,000.00 (25,000)- Govemvor Sptred Inatability Gludy 50,900,00 $3,000 148,000.00 Systom Anslysie Equip at SVCa 250,000.00 (100,000)160,600,00 Contingency 212,000.00 78,844 280,844.00 'Transfer trip schemes -O'd invoices :170,500 18,274.64 AEA Operating Coats 0,600.00 40,000 18,641.00 Brown&Root Retsinage 402,058.00 -102,668.00 interest on Ratainage 100,009.00 -100,000.00 Previously approved punchiigt 7,508,058 6137)|468,066.18 Congol Byatem Modifications 970,480 970,400.00 i 2,655,558 074,285 |ETE ©The total remaining amount funded by AEA Js [Imited to the balance avaliable In the Bradley Laka Unallocated ConstructionFund.All smeurtsin of the Construction Fund Balance wil be the responsibility ef the PMG.The belsnce oftheConetructionFundasof8/4/97,Including incerest received through 8/31/97,wes $2,316,546,This balance isavaliabletofundthehemsIncludedoniheaboveconstructionlist. *Actual cost to complete each item will very.The finds avellable in the Fund may bereallocatedinaccordancewithFundadministrativeprecedures. Watlelsinelbradiay\BLCONSTode,10/24/97,1:37 PM BRADLEY LAKE HYDROELECTRIC PROJECT MASTER MAINTENANCE AND OPERATING AGREEMENT THIS AGREEMENT dated as of Day £4,1994,is entered into by andamongtheALASKAENERGYAUTHORITY(the "Authority”)and the BRADLEY PROJECT MANAGEMENT COMMITTEE ("BPMC"),(collectively the "Parties”). WITNESSETH: WHEREAS,the Authority is a public corporation of the State of Alaska duly created,organized and existing pursuant to AS 44.83; WHEREAS,the Authority has constructed the Bradley Lake Hydroelectric Project (the "Project"),together with Project Related Facilities needed to interconnect the Project with the Bradley Lake Purchasers,and certain related facilities and equipment; WHEREAS,the Authority is the owner of the Project,the Project Related Facilities,and the related facilities and equipment; WHEREAS,facilities and equipment owned,leased and/or operated by certain Bradley Lake Purchasers are needed to enable the Authority and the Bradley Lake Purchasers to fully utilize electric energy and capacity from the Project; WHEREAS,the Bradley Lake Purchasers are all signatories to the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement"); WHEREAS,the BPMC was formed pursuant to the terms of the Power Sales Agreement and is made up of a representative of each of the Bradley Lake Purchasers and the Authority and is delegated certain obligations related to the administration of the Project; WHEREAS,the Power Sales Agreement provides that the BPMC shall arrange for the operation and maintenance of the Project and Project Related Facilities and adopt an annua!budget of Project Costs;and 1 -MASTER MAINTENANCE AND OPERATING AGREEMENT WHEREAS,the Parties desire to establish a contract administration and budgeting procedure for contracting for the maintenance and operation of the Project,the Project Related Facilities,and the related services,facilities and equipment,and for the lease and/or use of other facilities and equipment in a manner consistent with the requirements of the Power Sales Agreement; NOW,THEREFORE,the parties agree as follows: Section 1.Definitions and Abbreviations.For the purposes of this Agreement,the following definitions and abbreviations apply: (a)Agreement means this Agreement governing the administration and budgeting for operation and maintenance of the Project. (b)Annual Project Budget means the budget for the Project and Project Related Facilities as adopted or in effect for a particular Fiscal Year, and as amended or supplemented from time to time pursuant to the applicable provisions of the Power Sales Agreement. {c)Authority or AEA means the Alaska Energy Authority,an agency of the State of Alaska. {d)Bradley Lake Hydroelectric Project or Project means the Project described in Exhibit C to the Power Sales Agreement. (e)Bradley Project Management Committee or BPMC means the committee composed of the Authority and the Parties established in Section 13 of the Power Sales Agreement. (f)Bradley Lake Purchasers means Chugach Electric Association, Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage d/b/a Municipal Light &Power,the City of Seward d/b/a Seward Electric System,Alaska Electric Generation &Transmission Cooperative,Inc.,Homer Electric Association,Inc.,and Matanuska Electric Association,Inc. (g)Contracts means those agreements entered into by the Authority with Contractors to perform services for,or operation or maintenance of,the Project or Project Related Facilities,including any amendments thereto. (h)Contractors means those entities retained pursuant to this Agreement to perform operation or maintenance of the Project or Project 2 -MASTER MAINTENANCE AND OPERATING AGREEMENT Related Facilities pursuant to this Agreement.Contractors may include Bradley Lake Purchasers. (i)Fiscal Year means that twelve (12)month period defined in the Power Sales Agreement. (j)Power Sales Agreement means the Agreement for the Sale and Purchase of Electric Power by and among the Authority and Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage d/b/a Municipal Light &Power,the City of Seward d/b/a Seward Electric System,Alaska Electric Generation &Transmission Cooperative,Inc., Homer Electric Association,Inc.,and Matanuska Electric Association,Inc., dated December 8,1987,as may be modified or amended by the parties thereto. (k)Project Related Facilities means the transmission and other facilities and equipment owned by AEA and used to interconnect Bradley Lake Purchasers with the Project,to deliver power from the Project to the Bradley Lake Purchasers,and any other facilities and equipment hereafter constructed or acquired and designed to enhance the stability or reliability of that power. (I)Prudent Utility Practices for the purposes of this Agreement,shall have the meaning provided in Section 1(x)of the Power Sales Agreement. Section 2.Term. (a)This Agreement shall become effective when it is executed by the Parties. {b)This Agreement will remain in effect until the termination of the Power Sales Agreement or until the Authority ceases its legal existence, unless the rights,powers and duties of the Authority are transferred to a successor entity with substantially the same expertise within the intendment of Prudent Utility Practices,powers and duties as the Authority. 3 -MASTER MAINTENANCE AND OPERATING AGREEMENT Section 3.Project Operation and Maintenance. (a}Subject to the provisions of this Agreement,the Authority shall enter into any Contracts necessary to perform services for,or operation and maintenance of,the Project or Project Related Facilities. (b)All Contracts shall be subject to the Master Contract Provisions set forth herein.Each Contract shall contain a specific clause providing that it is subject to the provisions of this Agreement. (c)Prior to executing any Contracts,the Authority shall present those Contracts to the BPMC for its review and approval. (d)When executed,all Contracts shall be included as exhibits to this Agreement. {e)All Contracts,other than those required by emergency conditions,shall be planned for,considered,and approved by the BPMC in the development of the Annual Project Budget or at regular meetings of the BPMC designated in advance by the BPMC Chairman. (f)|The Authority and each Contractor shall be responsible for preparing plans and budgets for each Contract executed pursuant to this Agreement for submission to the BPMC for review and approval as part of the preparation of the Annual Project Budget. (g)Except as provided by Section 13(e)of the Power Sales Agreement,the Authority shall obtain BPMC approval of any work to be performed by a contractor either through a specific line item in the Annual Project Budget or separate BPMC approval in accordance with BPMC procedures. Section 4.Relationship to Power Sales Agreement. This Agreement implements the terms of the Power Sales Agreement,- and in no way is intended to modify the terms of the Power Sales Agreement. 4 -MASTER MAINTENANCE AND OPERATING AGREEMENT Section 5.Third Party Beneficiaries. (a)The Parties intend that the BPMC is the representative of the Purchasers and is a third party beneficiary of all Contracts with the legal right to enforce any Contracts. (b)The BPMC,pursuant to BPMC procedures,may designate one or more of the Purchasers to represent the BPMC in any action to enforce its third party rights hereunder. Section 6.Dispute Resolution. In the event that the Authority and the BPMC cannot agree on the terms and conditions of a particular Contract,either Party may request mediation of the dispute,by providing written notice to the other Party within twenty (20)days of the BPMC meeting at which the dispute occurs. If a dispute is mediated,that mediation shall be conducted under the Commercial Mediation Rules of the American Arbitration Association.The BPMC shall be responsible for arranging the mediation and both the Authority and the BPMC shall be parties to the mediation.Mediation shall be completed within ninety (90)days of the date notice of the request for mediation is given. If mediation is unsuccessful,either Party may proceed to arbitration or litigation as provided for in the Power Sales Agreement. Section 7.Master Contract Provisions. All Contracts shall include the general provisions set forth in Exhibit A, together with specific provisions applicable to that Contract,and shall follow substantially the form set forth in Exhibit A. Section 8.General Provisions. (a}Amendments.Any amendments or modifications to this Agreement must be in writing and signed by the Parties. (b)Conduct in Accord with Applicable Law.The Parties agree that at all times during the term of this Agreement,they shall conduct themselves in accord with all applicable laws and permits,and they will undertake no action contrary to such codes,laws,or permits.The laws of the State of 5 -MASTER MAINTENANCE AND OPERATING AGREEMENT Alaska shall govern this interpretation and application of this Agreement and the actions of the parties hereunder. (c)Exclusivity of Contract.All terms and provisions of this Agreement will be incorporated in writing into this Agreement setting forth the full intent of the parties. (d)Notice and Communication.Any notice or demand involving this Agreement shall be sent to the appropriate Party by registered or certified mail.Notice to the Authority shall be addressed to the Executive Director. Notice to the BPMC shall be addressed to the Chairman of the Bradley PMC. {e)Prudent Utility Practices.All actions of the Parties under this Agreement shall conform to Prudent Utility Practices. (f)Successors and Assigns.This Agreement shall be binding upon and inure to the benefit of the successors,legal representatives or assigns of the Parties.However,this Agreement may not be assigned by any Party without the written consent of the other Party.If the Authority discontinues its current legal existence,this Agreement will be terminated and the obligations of the Authority hereunder will automatically be assigned to the BPMC,without the need for consent by the Contractor,unless the rights, powers and duties of the Authority are transferred to a successor entity with substantially the same expertise within the meaning of Prudent Utility Practices,powers and duties as the Authority. {g)Waiver Not Continuing.Any waiver at any time by any party to this Agreement of its rights with respect to any default of the other party hereto,or with respect to any other matter arising in connection with this Agreement,shall not be considered a waiver with respect to any subsequent default,right or matter.Any delay short of the statutory period of limitations in asserting or enforcing any right shall not be deemed a waiver of such right. (h)Section Headings.The section headings of this Agreement are for convenience only,and do not purport to,and shall not be deemed to, define,limit or extend the scope or intent of the section to which they pertain. (i)Severability.In the event that any provision of this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid 6 -MASTER MAINTENANCE AND OPERATING AGREEMENT or unenforceable,the remainder of the Agreement shall be unaffected by such adjudication and all the remaining provisions of the Agreement shall remain in full force and effect as if such provision so adjudicated to be invalid had not been included herein. (j)Representations and Warranties.Each Party represents that it is duly authorized to execute this Agreement and to perform its obligations under this Agreement.Approval of this Agreement by the BPMC shall provide sufficient authority for the Chairman of the BPMC to execute the Agreement. IN WITNESS WHEREOF,the parties have caused this Agreement to be executed the day and year first above written. BRADLEY PROJECT MANAGEMENT COMMITTEE Date:I>/7 _,1994 »Anal lh,NormanL.Story Chairman ALASKA ENERGY AUTHORITY ,1994 By:\}li WA A5 'lL William R.Snell Executive Director 7 -MASTER MAINTENANCE AND OPERATING AGREEMENT EXHIBIT A MASTER CONTRACT PROVISIONS (a)Independent Contractor.Unless otherwise agreed to by the Parties,each Contractor entering into a Contract shall perform solely as an independent contractor. (b}Annual Planning and Budget.The Authority shall prepare,or cause the Contractor to prepare,the initial plans and budgets to be submitted to the BPMC for the operation or maintenance service in the Annual Project Budget. (c)Subcontracting.A Contractor may subcontract work on the operation or maintenance of the Project or Project Related Facilities to the extent authorized in the Annual Budget or with the written approval of the Authority and the BPMC,which shall not be unreasonably withheld. (d)Invoices.A Contractor shall submit complete written invoices to the Authority for payment with cost summaries and support documents as reasonably requested by the Authority and BPMC. (e)Payment and Dispute Resolution.The Authority shall expeditiously arrange for payment of all invoices,and shall work with the Contractor to promptly resolve any disputed billings. (f)Accounts,Records,and Audits.In keeping records for work performed under a Contract,the Contractor shall utilize the accounting system required of public utilities and licensees by the Federal Energy Regulatory Commission for electric plants.Contractors shall make their records available as required.The Contractor shall retain copies of all invoices,payroll records,and other supporting documents sufficient for an audit of all expenditures,for three (3)years following the close of each Fiscal Year. A Contractor will furnish the Authority with operating and financial statements related to work performed under a Contract as may be reasonably requested by the Authority.If receipt of those statements is unreasonably delayed,the Authority may,with its own staff or agents, perform all work necessary to collect the data reasonably necessary,but only -1- at such times and in such a manner as will not unreasonably interfere with Contractor's operations under a Contract. (g)Insurance, (1)During the term of the Contract,the Contractor shall purchase and maintain insurance covering injury to persons or property suffered by the Authority or a third party,as a result of errors or omissions or operations by a Contractor or by its subcontractor which arise both out of and during the course of the Contract.The Contractor shall require all subcontractors providing services directly or indirectly under a Contract to provide the same insurance as required of the Contractor.Coverage shall also provide protection against injuries to all employees of the Contractor and the employees of any subcontractor engaged in work under a Contract. Copies of all required insurance policies shall be furnished to the Authority prior to beginning work under a Contract.These policies will show evidence of coverage and provide for ninety (90)days notice of written cancellation, non-renewal for material change in the coverage. (2)The Contractor shall purchase insurance adequate to cover its operations performed in connection with the work under the Contract. Specifically,each Contractor shall maintain Worker's Compensation Insurance and Comprehensive General Liability Insurance,including Comprehensive General Liability Broad Form Insurance,Automobile Liability Insurance,Owned Aircraft Insurance (where applicable),and Owned Watercraft (where applicable),in amounts acceptable to the Authority and consistent with the Power Sales Agreement. (3)The obligation to obtain and maintain insurance coverage pursuant to this Section shall be subject to the general availability of such coverage under reasonable terms and conditions.If one or more of the required insurance coverages is not available under reasonable terms and conditions,the Contractor shall,under the guidance and direction of the BPMC and Division of Risk Management,use its best efforts to obtain substantively equivalent insurance coverage acceptable to the BPMC,the Authority,and the Division of Risk Management. (4)'If,after utilizing its best efforts,the Contractor is unable to obtain the required insurance coverage under reasonable terms and conditions,as reasonably determined by the Contractor,the Contractor shall request a waiver of the relevant insurance requirement.The request shall -2- outline steps taken by the Contractor to obtain such insurance and shall disclose quotations received for coverage.To the extent the waiver will not materially affect the safe and prudent operation of the Project,the Authority and BPMC,after consulting with the Division of Risk Management,will not unreasonably withhold approval of the requested waiver.Failure to furnish satisfactory evidence of insurance or failure to maintain the policy without complying with this subsection shall result in a material breach of this Agreement. (h)Indemnity.The Authority,to the extent permitted by applicable law and subject to the availability of funds,and each Contractor (as "Indemnitor")agrees to and shall indemnify and defend the other,its officers,employees,and agents (as "Indemnitee")for tort liability for all claims for damages and injuries of any character or nature whatsoever arising from the sole negligence of the Indemnitor,including its officers, employees or agents in relation to performance under this Agreement. Indemnitor agrees to assume the defense thereof and to pay all expenses (including attorney's fees)connected therewith.For purposes of this section,"sole negligence"shall include acts or omissions of the Indemnitor,_ its officers,employees,or agents,or any combination thereof,and situations where such acts or omissions,in combination with the negligence of third parties combines to cause injury or damage to persons or property.It shall not include situations where the acts or omissions of the Indemnitor,its officers,employees,or agents combines with the negligence of Indemnitee to cause such injury,which situations shall be governed by the provisions of the subsection below relating to concurrent negligence. Each party agrees that liability (including costs of defense and attorney's fees)for claims arising from the concurrent negligence of both Parties shall be apportioned according to the respective percentage of fault attributable to each Party as determined by agreement or by the trier of fact. (i)Amendments.Any amendment or modification to a Contract must be in writing and signed by the Contractor and the Authority and approved by the BPMC. (j}|Conduct in Accord with Applicable Law.The Contractor and the Authority agree that at all times during the term of a Contract,they shall conduct themselves in accord with all applicable laws and permits,and they will undertake no action contrary to such laws or permits.The laws of the -3- State of Alaska shall govern this interpretation and application of the Contract and the actions of the parties thereunder. (k)Prudent Utility Practices.For the purposes of this Agreement, Prudent Utility Practices shall have the meaning provided in Section 1(x)of the Power Sales Agreement. (I}Contract Hours and Safety Standards.All Contracts are subject to all applicable provisions of state and federal law concerning work hours and safety standards. (m)Equal Employment Opportunity.All Contracts are subject to all applicable provisions of state and federal law concerning Equal Employment Opportunity. (n)Exclusivity of Contract.All terms and provisions agreed to between the Authority and any Contractor will be incorporated into a written Contract setting forth the full intent of the parties. {(o)Notice and Communication.Any notice or demand involving a claim of default,breach of a Contract,or notice of a dispute shall be sent to the appropriate party by registered or certified mail.Notice to the Authority shall be addressed to:the Executive Director,Alaska Energy Authority,480 West Tudor,Anchorage,Alaska 99503. (p)Section Headings.The section headings of a Contract are for convenience only,and do not purport to,and shall not be deemed to,define, limit or extend the scope or intent of the section to which they pertain. (q)Severability.In the event that any provision of a Contract shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,the remainder of the Contract shall be unaffected by such adjudication and all the remaining provisions of the Contract shall remain in full force and effect as if such provision so adjudicated to be invalid had not been included herein. (r)Successors and Assigns.A Contract shall be binding upon and inure to the benefit of the successors,legal representatives or assigns of the Contractor and the Authority.However,a Contractor may not assign a Contract or any part thereof without the written consent of the Authority and the BPMC.If the Authority discontinues its current legal existence,its -4- obligations under a Contract will automatically be assigned to the BPMC, without the need for consent by the Contractor,unless the rights,powers and duties of the Authority are transferred to a successor entity with substantially the same expertise within the meaning of Prudent Utility Practices,powers and duties as the Authority. {(s)Waiver Not Continuing.Any waiver at any time by any party to a Contract of its rights with respect to any default of the other party hereto, or with respect to any other matter arising in connection with that Contract, shall not be considered a waiver with respect to any subsequent default, right or matter.Any delay short of the statutory period of limitations in asserting or enforcing any right shall not be deemed a waiver of such right. (t)Third Party Beneficiaries.The BPMC,as representative of the Purchasers,is a third party beneficiary of this Contract,with the legal right to enforce the provisions hereof.In any action by the BPMC for damages, the Contractor shall have the right to assert against the BPMC any defense which it could have asserted against the Authority.The raising of any such defense by the Contractor shall not affect any right of a purchaser or the BPMC under the Master Operating Agreement or Power Sales Agreement. RLS\BLM&O.k (3/14/94) BRADLEY LAKE HYDROELECTRIC PROJECT TRANSMISSION FACILITIES MAINTENANCE AGREEMENT BETWEEN ALASKA ENERGY AUTHORITY AND HOMER ELECTRIC ASSOCIATION,INC. This agreement (hereinafter referred to as Agreement),is made and entered into this26th_day of August,1996,by and between ALASKA ENERGY AUTHORITY,apubliccorporationoftheStateofAlaska,hereinafter "Authority”,and HOMER ELECTRIC ASSOCIATION,INC.,an electric cooperative corporation of the State of Alaska,hereinafter "HEA”. -WITNESSETH WHEREAS,the Authority has constructed Project Transmission Facilities in order to interconnect the Bradley Lake Hydroelectric Project with railbelt utilities. WHEREAS,the 'Authority is the owner of the Bradley Lake Hydroelectric Project,including the Project Transmission Facilities between the substation at the BradleyLakePowerHouseandBradleyJunction; WHEREAS,the Authority,with the approval of the BPMC,contracts with'qualifi edutilities(as defined by AS 44.83.425(3))for the operation and maintenance of the.Bradley Lake Hydroelectric Project,the operation and maintenance of the PowerTransmissionFacilitiesbetweenthesubstationattheBradleyLakePowerHouseandBradleyJunctionandfortheDispatchofPowerfromtheProject; -WHEREAS,the Authority has presently contracted the Operation and Maintenance oftheBradleyLakeHydroelectricProjectwithHEAundertheBradleyO&M Agreement,WHEREAS,the Authority desires to contract for the maintenance of the ProjectTransmissionFacilities;, WHEREAS,HEA isa qualified utility and a signatory to the Power Sales Agreement; Transmission Facilities Maintenance Agreement'Page 1 : WHEREAS,HEA owns,operates and maintains transmission facilities on the Kenai Peninsula'and the HEA is willing to maintain a defined portion of the ProjectTransmissionFacilities,and WHEREAS,pursuant to the Power Sales Agreement,the BPMC has approved thetermsofthisAgreement,NOW THEREFORE,IN CONSIDERATION of the mutual covenants herein containedthePartiesheretoagreeasfollows: SECTION 1_DEFINITIONS The terms used in this Agreement shall be as defined in the Power Sales Agreement, except as specified below.For the purposes of this Agreement,the followingdefinitionsandabbreviationsapply: "A."Agreement"means this Agreement. B."Bradley O&M Agreement”means the Operation &Maintenance Agreement ForBradleyLakeHydroelectricProjectbyandbetweentheAuthorityandHEA dated February 11,1994. LC."BPMC”means the Bradley Lake Project Management Committee. D."Master Operating Agreement”means the Bradley Lake Hydroelectric Project Master Maintenance and Operating Agreement dated May 24,1994,by andamongtheAuthorityandtheBPMC. E."Party"or "Parties"rheans the signatories to this Agreement. F."Power means electric energy or electric capacity,or both,except where the . -context requires a distinction,in which case electric energy is expressed in_kilowatt hours,and electric capacityis expressed |in kilowatts.G."Power Sales Agreement'means the Bradley Lake Power Sales Agreement, dated December 8,1987,among the Authority;the Municipality of Anchorage (d.b.a.Municipal Light and Power (ML&P));the City of Seward (d.b.a.Seward Electric System (SES));the Chugach Electric Association,Inc.(Chugach);the. Golden Valley Electric Association,Iric:(GVEA);the Alaska Electric Generationand.Transmission Cooperative,Inc.(AEG&T),the Matanuska Electric Association,Inc.(MEA);and the Homer Electric Association,Inc:(HEA). Transmission F acilities Maintenance AgreementPage2 "Project Transmission Facilities'.mean the transmission facilities and equipment owned by the Authority interconnecting the Fritz Creek and Soldotna transmission lines:owned by the HEA with the Bradley Lake 'Hydroelectric generation plant owned by the Authority.Project TransmissionFacilitiesincludethe115kVswitchingstationatBradleyJunctionandapproximately20milesoftwoparallel,single circuit,115 kV transmission linesfromtheoverheadlineattachmentpointonthedeadendstructureadjacentto 'the transformer at the Bradley Lake Power Plant and are described by ExhibitsAandB. SECTION 2 EFFECTIVE DATE AND TERMINATION - A..Effective Date. 'This Agreement will.become effective on the date set forth above and.will continue in effect until terminated as provided for in Section 2B of this Section. Termination. Either Party may terminate this Agreement by: 1.Delivering written notice to the other Party at least 6 months prior totheendoftheFiscalYear,or OO 2.Delivering written notice to the other Party of a material breach of the . Agreementby the other party;and if the other Party fails to rectify the material breach within 90 days afierreceiving notice of the breach,bygivingnoticeofterminationtotheotherParty,or 3.Delivering written:'notice to the cither Party as provided in Section5.B.3.All liabilities accruing under .this Agreement prior to itsterminationwillbeandareherebypreserveduntilsatisfied. SECTION 3 PREVIOUS CONTRACTS AND AGREEMENTS,INCORPORATION OFEXHIBITAOFTHEMASTEROPERATINGAGREEMENT Nothing in this Agreement is intended to alter the rights and obligations of the Authority and the Purchaser(s)under the Power Sales Agreement.This Agreement issubjecttothetermsoftheMasterOperatingAgreementbetweentheAuthorityandthe BPMC.Except for paragraphs (0)Notice and Communications and (t)Third Party Transmission Facilities Maintenance Agreement Page 3 Beneficiaries,the provisions of Exhibit A,Master Contract Provisions,of the Master Operating Agreement are expressly incorporated by reference in this Agreement. Paragraphs (0)and (t)are modified and included below as Sections 12 and 13.In the event the terms of this Agreement and the Power Sales Agreement or Master Operating Agreement are found to be in conflict,the terms of the Power Sales - Agreement will have first priority with the Master Operating Agreement having second priority. SECTION 4_MAINTENANCE OF TRANSMISSION FACILITIES UA General Responsibilities. HEA will maintain the Project Transmission Facilities consistent with the- *guidelines set by the manufacturer,unless otherwise directed by the Authority,'and consistent with Prudent Utility Practice,National Electric Safety Code and : other applicable codes,federal and state laws,regulations,requirements andstandards.In their performance of this Agreement,the Parties will comply withthetermsandprovisionsofthePowerSalesAgreement. B.Specific Responsibility for Maintaining the Project Transmission Facilities. HEA will: 1.-Coordinate all maintenance schedules and provide.maintenance-schedules,budgets and récords in accordance with the provisions ofthisAgreement;as directed by the Authority; Develop written maintenance procedures,maintenance training,and preventive maintenance programs; -Conduct scheduled inspections required by the annual maintenance plan agreed upon by the Parties under Section 5 of this Agreement and issue an inspection report of findings and recommendations to the Authority within 20 working days of completing all inspections; Except as provided in Section 7,modify Authority equipment only upon Authority approval prior to any changes being made,and provide notification and description of all changes HEA has made to Project Transmission Facilities.Within 45 days after alteration or _teplacement,HEA will provide to the.Authority "as built?mylar Transmission Facilities Maintenance Agreement Page 4 drawings showing all alterations or replacements to ProjectTransmissionFacilities;; : 5._Make available for inspection by the Authority's or BPMC's representative,upon reasonable notice,all maintenance records maintained in conjunction with or related to this agreement; 6..Subject to the provisions of 4 B._4 above,upon discovery ornotificationandassoohasreasonablypossible,take all actions reasonably necessary to protect equipment,personnel,and the general public from hazards,which arise from equipment failure (e.g., electrical faults,vandalism,and mechanical failure);repair and reportdamagedfacilities,and notify the Authority as soon as reasonablypossibleaftereachequipmentfailureorrepair, C.Responsibility of Project Transmission Facilities Owner. 1.In.accordance with the provisions of 5.B,the Authority will coordinate and submit for adoption in accordance with the Power Sales Agreement, -an Annual Project Budget sufficient to satisfy the Project TransmissionFacilitiesmaintenancecostsbudgetedandapprovedinadvancebythe BPMC. 2.The.Authority will pay HEA for the costs of labor,materials,supplies, .equipment,training and'administration,incurred in performing its-responsibilities hereunder,as provided in Sections 6,7 and 8 of.thisAgreement; D.Prior Authorization. ca en Except in emergencigs as provided in Section 7 or as approved under the- annual maintenance plan and budget,HEA will secure written authorizationfromtheBPMCtomakealterationsorreplacementstoProjectTransmissionFacilities. SECTION 5 MAINTENANCE PLAN,SCHEDULE AND BUDGETS A.Maintenance Plan and schedule Requirements. 1.HEA will develop annually a plan and schedule for maintenance of the Project Transmission Facilities.This plan and schedule will be used Transmission Facilities Maintenance Agreement -Pages 2. for planning and tracking maintenance activities and as the basis for budget submittals to the Authority. The plan and schedule will run from July first to June thirtieth of each Fiscal Year. 'Annual Transmission Facilities Budget. 1.After the effective date of this Agreement,and in accordance with schedules provided by the Authority,HEA will prepare and submit each year to the Authority and the BPMC a draft Annual Transmission Facilitiés Budget for the following Fiscal Year as provided in Section 5 D.The draft budget will be prepared in a format and schedule providedtotheAuthoritybytheBPMC. The draft Annual Transmission Facilities Budget will be based upon prudent estimates and anticipated operation and maintenance requirements and expenditures,and reflect appropriate accounting andbudgetaryprinciplesforutilities. HEA 'will perform its duties inva manner consistent with the AnnualTransmissionFacilitiesBudgetexceptasprovidedinSections7and8 below.If HEA makes a determination during any Fiscal Year ihat it cannot perform its obligations under this Agreement without an increase in the expenditures authorized under Annual Project Budget,HEA will 'report such finding to the Authority and the BPMC and will submit a revised budget for the Authority's and the BPMC's review.and approval. In the event the revised budget is not adopted by the BPMC and the Authority,or in the event the Authority,pursuant to Section 13(e)does not authorize and agree.to fund such expenditures,and HEA determinesthatitcannotperformitsobligationsunderthisAgreement,HEA may terminate this Agreement upon 90 days written notice to the Authority. Three Year Major Maintenance and Improvements Plan and.Budaet.- Annually HEA will prepare and submit a three year plan and budget for -proposed major maintenance and improvements,(e.g.,major equipment replacement)and other projects deemed by HEA to be required to insure continued safe and economical operation of the Project.Transmission Facilities that are not included in that Fiscal Years proposed annual maintenance plan or require more than one year to complete.The three year plan will be revised annually and submitted together with the proposed annual maintenance plan. Transmission Facilities Maintenance Agreement Page 6 Budget and Plan Submittal. HEA will submit the annual maintenance plan,schedule and budget,and the three year plan and budget to the Authority no later than November 1 for the next Fiscal Year.The plans,schedules and budgets may be modified through negotiations between HEA and the Authority,subject to approval by BPMC. SECTION 6_INVOICES AND PAYMENT A.mTThe ordinary costs of performing under this Agreement wiil be initially paid byHEA. HEA will prepare an invoice identifying the actual and reasonablé costs incurred in a format mutually agreeable to the Authority and HEA.The invoice will be furnished to the Authority by the fifteenth (15)of the month following themonthinwhichthecostsareincurred.All such invoices will be subject to auditandapprovalbytheAuthority,such approval will not be unreasonably bewithheld: Subject td the availability of funds,the Authority will reimburse HEA for all costsreasonablyincurredandproperlyinvoicedandapprovedunderthisAgreement. Any amounts owed by the Authority to HEA will be paid by the Authority within©thirty (30)days of receipt of an appropriate invoice from HEA.Any amounts not paid within thirty (30)days will accrue simple interest at the legal rate ofinterestatthetimepaymentwasdue,and will continue until paid by the Authority. The Authority will authorize payment for the full amount of HEA charges.pending the resolution of any cost dispute,except for those costs expressly .disapproved in writing.Within thirty-(30)days after HEA submits a disputedinvoicecostscharge,the.Authority will notify HEA in writing of the amount in dispute and the basis for the dispute.If the Parties cannot settle the dispute informally,or by agreement through the BPMC either Party may file an action intheAlaskaSuperiorCourtfortheThirdJudicialDistricttoobtainadecision tesolving such disputé and to obtain any other remedy permitted by law. Pendingfinal resolution of any such dispute the Parties will continue to perform |under this Agreement. Transmission Facilities Maintenance Agreement Page 7 SECTION 7_EMERGENCY EXPENDITURES A.An emergency-is an unforeseen Circumstance cr the resulting state that requires immediate action to protect or preserve the Project Transmission Facilities,personnel,or public health and safety. B.HEA will take such actions as it reasonably believes are necessary in an 'emergency.If,in the reasonable judgment of HEA,the emergency requiresHEAtoincurcostspriortoobtainingwrittenapprovalfromtheAuthority,HEAwillnotifytheAuthorityandtheBPMCwithin72hoursafterdiscoveryofthe ) emergency. SECTION 8 EXTRAORDINARY MAINTENANCE AND EQUIPMENT REPLACEMENT When HEA learns of an equipment failure or other contingency which,in HEA's judgment,necessitates incurring an extraordinary maintenance and .equipment replacement cost,HEA will promptly notify.the Authority of the circumstances.ExceptasprovidedinSection7,HEA will obtain the Authority's written approval prior toincurringanextraordinarymaintenanceandequipmentreplacementcost.Except in.- emergency.circumstances HEA will incur no extraordinary maintenance and equipment replacement cost for which the approval of.the Authority has beer requested and expressly denied in writing., :" 7SECTION9AUTHORIZEDREPRESENTATIVE The Parties will each designate orie representative to carry out the provisions of this | Agreement.Within 30 days after execution of this Agreement,each Party will notify the other Partyin writing of its designated representative.Either Party may changeitsrepresentativeatanytimeandwillpromptlyprovidewrittennoticeofsuchchangetotheotherParty. SECTION 10 FORCE MAJEURE A.No Party to the Agreement shall be liable to the other Party for,or beconsideredtobeinbreachofordefaultunderthisAgreementonaccountof, any delay in performance or any delay or failure to deliver,receive or accept delivery of energy due to any of the following events: Transmission Facilities Maintenance Agreement Page 8 1.Any cause or condition beyond such Party's reasonable control which such Party is unable to:overcome by the exercise of reasonable diligence,including but not limited to:fire,flood,earthquake,volcanic activity,wind,drought and other acts of the elements;court order and act of civil,military or governmental authority;riot,insurrection,sabotage and war;breakdown of or damage to facilities or equipment;.electricaldisturbanceoriginatinginortransmittedthroughsuch:Party's electric ,system or any electric system with which such Party's system is inter-'connected;and,any act or omission of any person or entity other than -such Party,or Party's contractors or suppliers of any type or anyone acting on behalf of such Party.Strikes,lockouts,and other labordisturbancesshallbeconsidered'Force Majeure events and nothing inthisAgreementshailrequireeitherPartytosettlealabordisputeagainst its best judgment;provided,that during any labor dispute each Party shall make all reasonable efforts under the circumstances,including,to the extent permitted by law and collective bargaining agreements,the _use of replacement personnel and or management personnel and/orotherpersonnelundertheprovisionsofamutualaidagreement-to ensure,if possible,the continued ability of the Parties to carry out their - obligations under this Agreement,or 2.Any action taken by such Party which is reasonably necessary'or prudent to protect the operation,performance,integrity,reliability or stability of the Project-or of such Party's electric systern or any electricsystemwithwhichsuchParty's electric system is interconnected, whether such actions occur automatically or manually. B.In the event of any delay excused under this section,the time for performance thereby delayed shall be extended by a period of time reasonably necessary to compensate for such delay.No cost adjustment shall be allowed,only timeextensionsasappropriate.Nothing contained in this paragrach shall require. any Party to settle any strike,lockout or other labor dispute.Each Party shall give the other Party prompt written notice of any delay which-the Party giving notice considers to be an excusable delayof its performance. SECTION 11.DISPUTE RESOLUTION Pending resolution of a disputed matter,the Parties will continue performance of theirrespectiveobligationspursuanttothisAgreement.If the Parties cannot reach timely” mutual agreement on any matter in the administration of this Agreement,HEA will,to the extent necessary for its continued performance,make a determination of such Transmission Facilities Maintenance Agreement Page 9 matter without prejudice to the rights of the other Parties.Such determination will not constitute a waiver of any other remedy belonging to either Party. SECTION 12,NOTICES Notice to the Authority will be addressedto:Executive Director,Alaska Energy Authority,480 West Tudor Road,Anchorage,Alaska 99503-6690.Notices to HEA 'will be addressed to:General Manager,Homer Electric Association,Inc., P.O.Box 169,Homer,Alaska 99603.The foregoing designations of the name oraddresstowhichnoticesordemands:are to be directed may be changed at any time -by written notice given by one Party to the other Party.Any notice or request not otherwise provided for in this Agreement will be given insuchmannerasthePartiesagree. SECTION 13_THIRD PARTY BENEFICIARIES Fhis Agreement gives.n o rights or benefits toanyone other than the Parties,HEA and the Authority,and the BPMC as a third party beneficiary.The BPMC is the only thirdpartybeneficiary.In any action by the BPMC for damages HEA shall have the right to assert against the BPMC any defense which it could have asserted against theAuthority.The raising of any such defense by HEA shall not affect any right 'of a' Purchaser or the BPMC under the Master Operating Agreement or Power SalesAgreement. IN WITNESS WHEREOF,the Parties hereto have caused this Agreement to beexecutedbytheirauthorizedofficersorrepresentativesandtheircorporatesealstobehereuntoaffixedasofthedayandyearfirstabovewritten. ALASKA ENERGY AUTHORITY ,Mi Oot_frleshie Phinlen Transmission Facilities Maintenance Agreement Page 10 HOMER ELECTRIC ASSOCIATION,INC. By (le shinIts:Ce A AE WHewna er Transmission Facilities Maintenance Agreement Page 11 STATE OF ALASKA oo), ..)ss. THIRD JUDICIAL DISTRICT) The foregoing Agreement was acknowledged before me this 26th day of August, 1996,by William R.Snell ,the Executive Director of the Alaska Energy Authority,an Alaska corporation,on behalf of the corporation. Notary Public in and for Alaska -;My commission expires:>whew ZS: STATE OF ALASKA ) )ss. THIRD JUDICIAL DISTRICT ) The foregoing Agreement was acknowledged:before me this 20th day of August, 1996,by Norman L.Story _,the General Manager of the Homer Electric Association,Inc.,an Alaska corporation,on behalf of the corporation. Naw &Goo Notary Public in and for'AlaskaMycommissionPreaca 13,1PG7:"5 (/ Transmission Facilities Maintenance Agreement Page 12 {sDaoh™ss ye I . TDNhs PL OEE BT hse %0%00%oN -101B EXHIBITAat)eet -2 bee on cones 2 °we sagem 00 ° eM (o™=(=E Fe bene *¢ mate D masa mai ©osm > . com x we we v °° tad rce?we - orve-ae JO RADLEY LanepaterPaBRADLEYJUNCTION 2 rang mt me pm |oat 7 7 =*x 2 2_. -.oo ceo orp te ee tame 'ot ©\-0 Osta (ORR (OnE nab 2 \0 Se-° worn -;Pern.meds 3 ayn Me °.a what .. EXER peorron WM rN ec . "Pere-vIA GB . 0-30GH8-VI4 OD rk acoWOOK POKw8.BayPm60M pAtat tg ' .OROCT FACULTIES : BRADLEY LAKE HYDAOELECTAIC PROECTsee.at sone egsxalBier |ENEROY Asheny/240V woo MAIN ONE LINE DIAGRAM pee ad Sette on [Exteart F |PLATE 17 .+HOS-F-04-2018-Rad ¥29794 an EXHIBIT B | BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT TRANSMISSION FACILITIES DESCRIPTION As described in Exhibit A of the Operation and Maintenance Agreement for: Bradley Lake Project at page A-9: 2.12 Transmission Line Two parallel and separate single circuit 115 kV transmission lines,eachabout20mileslong,connect to the substation at the powerhouse and carrythepowergeneratedtotheFritzCreek-Soldotna 115 kV Transmission Line owned by Homer Electric Association,Inc.The point of connection for these two lines is designated as the Bradley Junction. The Bradley Lake transmission line towers are guyed,X-configuration towers manufactured of Corten type steel.The conductor is 556 kemil,42/19 Aluminum/Steel "Special Dove.": COUNTERPART ]of 21 BRADLEY LAKE HYDROELECTRIC PROJECT AGREEMENT FOR THE SALE AND PURCHASE OF ELECTRIC POWER ("POWER SALES AGREEMENT") by and among THE ALASKA POWER AUTHORITY, An Agency Of The State Of Alaska, ("Seller"), and The CHUGACH ELECTRIC ASSOCIATION,INC., The GOLDEN VALLEY ELECTRIC ASSOCIATION,INC., The MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT AND POWER, The CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM, andTheALASKAELECTRICGENERATION&TRANSMISSION COOPERATIVE,INC., ("Purchasers") and The HOMER ELECTRIC ASSOCIATION,INC., and The MATANUSKA ELECTRIC ASSOCIATION,INC., {Additional Parties) Index Of Sections Section Re [4 itals eo °°e °e e e e °e eo e .e ty ..««s . 11. 16. 17. 18. 19, 20. 21. 22. Definitions a Term Of Agreement .....0 ©©»©«©©©© Exhibits .2 6 6 ee ee wee ewe eee ewe Electric Service To Be Furnished ........ Electric Power Reserves For The Project .... Obligations Under Bond Resolution;.- Completion Of Project ....2.«©©««we « Payment Obligation .2...2.2 »«©©©©we we ow Annual Project Costs ..2.2.2 6 2 ee eee Obligations In The Event Of Default ...... Purchasers'Systems ...2.«©©©«©«©»©@ Bond Resolution .....+.+«©«©©©6 oe so Purchasers'Consent To Supplemental Resolutions To Construct The Project ...««©«»««©©«« Establishment Of The Committee .....2 ««« End Of The Project ....2.«©©«©©we we ew RecordS ..«e «©«+«©©«=©©©©©oe ew ww Inspection Of Facilities ....«««©«©we «©« Covenants To Maintain Integrity Of Agreement .. _Assignment .2.2.2 2 2 2 ©©©©©ww we ew ww Notices,Computation Of Time And Holidays ... Applicable Law e .s e ry e o s e e e e e a e eo e Availability Of Information ...2.«««»e « Severability ...2.2.«©«©«©«©«©©©©©©wo Section 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. Remedies Cumulative ..... Waiver Not Continuing .... Section Headings .....se- Multiple Copies ......s Covenant To Act In Good Faith No Third Party Beneficiaries . Excess Payments ...+««« Special Arrangements Regarding Capitalization Of Certain Costs Of Purchasers Efforts To Obtain Intertie .. Exhibit "A",Bond Resolution Exhibit "B",Delivery Point AEGET . Exhibit "C",Description Of The Project Exhibit "D",Purchasers'Percentage Shares Of Project Capacity And Of Annual Project Costs Exhibit "E",Form Of Certain Supplemental Bond Resolutions POWER SALES AGREEMENT THIS AGREEMENT dated as of December 8,1987,isenteredintobyandamongtheALASKAPOWERAUTHORITY(the "Authority")and the CHUGACH ELECTRIC ASSOCIATION,INC.,the GOLDEN VALLEY ELECTRIC ASSOCIATION,INC.,the MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT AND POWER,the CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM,and the ALASKA ELECTRIC GENERA- TION &TRANSMISSION COOPERATIVE,INC.(individually a "Purchas-er,"and collectively the "Purchasers"),and the HOMER ELECTRIC ASSOCIATION,INC.,and the MATANUSKA ELECTRIC ASSOCIATION,INC. (as additional Parties with some,but not all,of the rightsandresponsibilitiesofPurchasers). WITNESSET H: The Authority recites,agrees,represents and cove nants as follows: (1)The Authority is a public corporation of the State of Alaska duly created,organized and existing pursuant to AS 44.83; (2)The Authority is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and the regulations and by-laws of the Authori- ty,to enter into this Agreement and to comply fully with the terms hereof; (3)The Authority desires to fulfill its legisla-tively established duty of providing residentea of the State of Alaska with long-term,stable,and economic sources of powerandanadequate,economic,and reliable long-term supply of power;and (4)The Authority's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other resolution,contract,ag- reement,bond,note,mortgage,or other obligation of the Auth- ority,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Authority is subject at the time the Authority executes this Agreement. Each Cooperative Purchaser (as hereinafter defined) and the Homer Electric Association,Inc.("HEA")and the Mata- nuska Electric Assocation,Inc.("MEA")recites,agrees,repre- sents and covenants as follows:: (1)The Purchaser is a duly organized and constitut- ed electric cooperative under the laws of the State of Alaska and is currently a borrower from the Rural Electrification Ad- ministration,United States Department of Agriculture,under the Rural Electrification Act of 1936 (7 U.S.C.§901 et sSeq.); BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page l (2)The Purchaser is authorized,and has taken all steps necessary pursuant to its articles of incorporation andby-laws and applicable laws and regulations,to enter into this Agreement and to comply fully with the terms hereof; (3)The Purchaser performs the functions of a utili- ty and is a wholesale power customer eligible to purchase power produced from a project pursuant to AS 44.83;and (4)The Purchaser's execution and performance ofthisAqreementwillnotconflictwith,violate,or constitute an event of default under any other resolution,contract,ag- reement,bond,note,mortgage,or other obligation of the Pur- chaser,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Purchaser is subject at the time the Purchaser executes this Agreement. Each Municipal Purchaser (as hereinafter defined)re- cites,agrees,represents and covenants as follows: (1)The Purchaser is a duly organized and constitut- ed municipal corporation under the Constitution and laws of the State of Alaska; {2}The Purchaser is authorized,and has taken all steps necessary pursuant to the Constitution and laws of theStateofAlaskaandotherapplicablelawsandregulations,and pursuant to its charter and ordinances,to enter into this Ag-reement and to comply fully with the terms hereof; (3)he Purchaser performs the functions of a utili- ty and is a wholesale power customer eligible to purchase powerproducedfromaprojectpursuanttoAS44.83;and (4)The Purchaser's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other charter,ordinance,resolu-tion,contract,agreement,bond,note,mortgage,or other obli-gation of the Purchaser,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Pur-chaser is subject at the time the Purchaser executes this Ag- reement. NOW,THEREFORE,the parties agree as follows: Section 1.Definitions.For the purposes of this Agreement,the following definitions apply: (a)"Act"or references to AS 44.83 mean Title 44,Chapter 83 of the Alaska Statutes (AS 44.83)as thesamemaybeamendedorsupplementedfromtimetotime. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 2 {(b)"Agreement"means this Power Sales Agree- ment. (c)"Annual Payment Obligation"means the total amount payable by a Purchaser in or for a Fiscal Year pur-suant to this Agreement. (d)"Annual Project Budget"means the budgetfortheProjectasadoptedorineffectforaparticularFiscalYear,and amended or supplemented from time totime,pursuant to Section 13, (e)"Annual Project Costs"shall have the mean- ing given it in Section 8 of this Agreement. (£)"Authority"means the Alaska Power Authori- ty as established by the Act,and any successor agencythereto. (gq)"Bond Resolution"means (i)the documentattachedasExhibit"A",or a resolution adopted by theAuthoritysubstantiallyintheformofExhibit"A",as supplemented and amended from time to time in a manner consistent with Section 11 of this Agreement and with the provisions of the Act,or (ii)a further bond resolution, consistent with Section 11,adopted in connection with the issuance of bonds to refund the Bonds. (h)"Bonds"means bonds,notes or other evi- dences of indebtedness (including refunding bonds)issued pursuant to the Bond Resolution,the proceeds of which are used to pay or reimburse Costs of Acquisition and Con- struction and Required or Optional Project Work, (i)"Committee"means the Project Management Committee established pursuant to Section 13, {j)"Consultant"means an independent indivi- dual or firm (i)of nationwide and favorable reputation, having demonstrated expertise in the field or the matter or the item referred to it under various specific pro-visions of this Agreement,and (ii)approved by the Auth- ority and the Committee in accordance with rules of pro- cedure to be adopted by the Committee to govern such ap- proval,which approval shall not be unreasonably withheld. (k)"Cooperative Purchasers"means Chugach Electric Association,Inc.,Golden Valley Electric Associ- ation,Inc.,and Alaska Electric Generation &Transmission Cooperative,Inc.The term "Cooperative Purchasers"in cludes Homer Electric Association,Inc.,and Matanuska Electric Association,Inc.,only to the extent specified in Section 30 of this Agreement. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 3 (1)"Cost of Acquisition and Contruction"means the Cost of Acquisition and Construction (as defined in Section 101 of the Bond Resolution)of the Project;pro-vided,that for purposes of this Agreement the Cost ofAcquisitionandConstructionoftheProjectshallnotin- clude the Cost of Acquisition and Construction of CapitalImprovements(as defined in Section 101 of the Bond Res- olution). (m)"Date of Commercial Operation"means the date on which engineers retained for this purpose by the Authority have reasonably declared that the Project is fully available to be operated at not less than.ninety megawatts (90 MW),and its output can be scheduled on a commercial basis. (n)"Debt Service"means amounts that the Auth- ority is required to set aside for the payment of princi- pal of,premium,if any,sinking fund payments,and inter- est on the Bonds,as the same are scheduled to become due under the Bond Resolution,and not by reasonof any accel-eration. (o)"Delivery Point"means the Bradley Junction facilities,as identified and further described in Exhibit B. (p)"Electric power"or "power"means electric energy or electric capacity or both.Where the context ofthisAgreementrequiresadistinction,electric energy is specified and/or expressed in kilowatthours or megawatt- hours and electric capacity is specified and/or expressed in kilowatts or megawatts. (q)"Excess Payment Amount"means the amounts,if any,computed as provided in Section 29 and included in _Annual Project Costs. (r)"Fiscal Year"means that twelve-month peri- od starting July 1 of a calendar year through and includ-ing June 30 of the succeeding calendar year.The initialFiscalYearforpurposesofthisAgreementisthatportion of the twelve-month period starting on the Date of Commer= cial Operation through and including the following June30.If the portion of the period is shorter than 90 daysthepartiesshalldeterminetheinitialFiscalYear,whichmustendonaJune30andmaynotbelongerthan456days. The last Fiscal Year for purposes of this Agreement shall be that portion of the twelve-month period between the endofthelastfull(i.e.,twelve month)Fiscal Year and the expiration of this Agreement. (s)"Municipal Purchaser"means the Municipali-=-ty of Anchorage ad/b/a/Municipal Light and Power,and the BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 4 City of Seward d/b/a Seward Electrical System. (t)"Optional Project Work"means Project re-pairs,renewals and replacements,improvements,better- ments,additions,or expansions that do not constitute Required Project Work. (u)"Percentage Share"means the fraction,ex-pressedas a percent and set forth for each Purchaser inExhibitDasthatExhibitmaybeamendedfromtimeto time,used to compute the amount of each Purchaser's en- titlement to Project Capacity and obligation to pay Annual Project Costs. (v}"Project"means the Bradley Lake Hydroelec- __tric Project as described in Exhibit Cc. (w)"Project Capacity"means the amount ofelectriccapacitycapableofbeingproducedbytheProject (including capacity attributable to Required or Optional Project Work)at any and all times from the Date of Com- mercial Operation until the termination of this Agreement(or any renewal thereof)under the operating conditions that exist during such times,including periods when the Project may be not operating or inoperable or the opera- tion thereof is suspended,interrupted,interfered with, reduced,or curtailed,in each case in whole or in part for any reason whatsoever,after corrections for station and Project use,and depletions required under any federal license for the Project. (x)"Prudent Utility Practice"shall mean at a particular time any of the practices,methods and actsengagedinorapprovedbyasignificantportionofthe electric utility industry at such time,or which,in theexerciseofreasonablejudgmentinlightoffactsknownat such time,could have been expected to accomplish the de- sired results at the lowest reasonable cost consistent with good business practices,reliability,safety and rea- sonable expedition.Prudent Utility Practice is not re- quired to be the optimum practice,method or act to the exclusion of all others,but rather to be a spectrum of possible practices,methods or acts which could have beenexpectedtoaccomplishthedesiredresultatthelowestreasonablecostconsistentwithreliability,safety and expedition.Prudent Utility Practice includes due regardformanufacturers'warranties and the requirements of gov-= ernmental agencies of competent jurisdiction and shall apply not only to functional parts of a Project,but alsotoappropriatestructures,landscaping,painting,signs,lighting and other facilities.In evaluating whether anymatterconformstoPrudentUtilityPractice,the parties shall take into account (i)the nature of the parties BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 5 hereto under the laws of the State of Alaska and their statutory duties and responsibilities,and (ii)the ob- jective of integrating Project Capacity with the generat- ing resources of the Purchasers,including resources available under contract,to achieve optimum utilization of the resources and achieve efficient and economical op-eration of each Purchaser's System.For purposes of thisAgreement,"national standards for the industry"means Prudent Utility Practice. (y)"Purchaser"means,as of any particular time,such of the Municipality of Anchorage d/b/a Munici-pal Light and Power,Chugach Electric Association,Inc., Golden Valley Electric Association,Inc.,the City of Seward as have executed this Agreement,and the Alaska Electric Generation &'Transmission Cooperative,Inc.("AEG&T).The term "Purchaser"includes Homer Electric Association,Inc.,and Matanuska Electric Association, Inc.,only to the extent specified in Section 30 of this Agreement. {z)"Purchaser's System"means a Purchaser's electric utility system for the distribution,transmis- sion,and generation of electrical power and which is owned and operated by the Purchaser.If Purchaser's elec- tric utility system is combined with other utilities of the Purchaser,then "Purchaser's System"includes only those facilities,activities,and revenues properly alloc- able to Purchaser's electric utility service."Purchas-er's System"does not include the Project,regardless of whether the Purchaser operates the Project under a separ-ate agreement with the Authority. (aa)"Purchaser's Water Allocation"means the number of acre feet of water from the Project allocated for generation purposes by the Committee to a Purchaser from time to time,based on that Purchaser's Percentage Share. (bb)"Railbelt"means the geographic areaservedbythePurchasers.| (cc)"Railbelt Energy Fund"means a fund cre- ated by the legislature,the use of which is intended onlyforapprovedpowersupplyandtransmissionprojectsinthe Railbelt. (dd)"REA"means the Rural Electrification Ad- ministration,an agency of the United States Department ofAgriculture. (ee)"Recoverable Construction Cost"means an amount equal to $175,000,000 less one half the amount,if BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 6 any,by which $350,000,000 exceeds the Cost of AcquisitionandConstruction,plus the principal amount of additional Bonds (if any)issued pursuant to Section 31. (££)"Renewal and Contingency Reserve Fund"means the Renewal and Contingency Reserve Fund established pursuant to Section 502 of the Bond Resolution. (gq)"Required Action"means an action that must be taken in order for the Authority to comply withfederalorstatelaw,the orders of licensing and regula-tory agencies,the Bond Resolution,or this Agreement. (hh)"Required Project Work"means repairs,maintenance,renewals,replacements,improvements or bet- terments required by federal or state law,a licensing orregulatoryagencywithjurisdictionovertheProject,orthisAgreement,or otherwise necessary to keep the Projectingoodandefficientoperatingcondition,consistent with (1)sound economics for the Project and the Purchasers,and (2)national standards for the industry. (ii)"Revenue Fund"means the Revenue Fund est- ablished pursuant to Section 502 of the Bond Resolution. (jj)"Trustee"means the trustee appointed pur- suant to Article IX of the Bond Resolution,or that Trust- ee's successor or successors and any other corporationwhichmayatanytimebesubstitutedinthatTrustee's place under the Bond Resolution. Section 2.Term Of Agreement. {a)Effectiveness.This Agreement shall become effective on the first date when (i)the Agreement has been executed and delivered by all Purchasers and by the Authority,and (ii)each Purchaser has obtained all nec- essary approvals of this Agreement and of all transmission and/or services agreements for the transmission of Project power to the Purchasers.An approval shall not be con- sidered "necessary"for purposes of this Section 2(a}un- less,prior to or contemporaneously with delivery of thisAgreement,the person or entity from which such approval must be obtained has been identified to the other partiesinwritingbythePurchaserrequiringsuchapproval.It is the intent of each Purchaser to take all steps rea- sonably within its power to obtain all necessary approvalsfromitsgoverningbodynolaterthanDecember1,1987. (b)Commencement of payment obligations.The payment obligations of each Purchaser under this Agreement shall commence on the Date of Commercial Operation;pro-vided,that the Purchasers shall be obligated to pay those Committee costs referenced in the last sentence of Section BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 7 13(a)regardless of whether the Date of Commercial Opera- tion occurs. (c)Termination.This Agreement shall termi- nate (i)50 years after the Date of Commercial Operation,or (ii)when no Bonds are OutstaridingundértheBondRes=olution and all payment obligations under this Agreement (other than any payment obligations under Section 29)have been satisfied or provided for,whichever occurs later; provided,that if the Date of Commercial Operation doesnotoccurbeforeJanuary1,1996,then this Agreement shall terminate on January 1,1996.The parties may mu- tually agree to terminate or to renew this Agreement prior to termination,subject,however,to the written approvaloftheAdministratorofREAifsuchwrittenapprovalis. then required,and the terms and conditions of covenants and agreements between the Authority and holders of Bonds.If such approval is then required,no amendment of thisAgreementshalltakeeffectwithoutthewrittenapproval of the Administrator of REA, (d)Renewal.Any Purchaser may renew this Ag- reement on the same terms and conditions as provided here- in for successive additional terms (such terms to equal forty (40)years or,if shorter,the remaining useful lifeoftheProject),upon written notice to the Authority by the Purchaser given no less than six and no more than twenty-four months prior to the end of the term of thisAgreement.Purchasers electing to renew this AgreementshallbeentitledtohavetheirPercentageSharesadjusted pro rata,based on their Percentage Shares as set forth in Exhibit D as that Exhibit exists twenty-four months prior to the end of the initial term of this Agreement,so that the adjusted Percentage Shares of the Purchasers renewing - this Agreement total one hundred percent (100%).No re- newing Purchaser shall be required to accept the entirety of the Percentage Share to which that Purchaser becomes entitled,but if the Percentage Shares of all renewing Purchasers do not total one hundred percent,the Authority may sell to any other utility that is a qualified purchas-er of power under the Act any remaining Percentage Share or portion thereof upon the same terms and conditions ap plicable to the renewing Purchasers,if the Authority rea-sonably determines that such utility is able to carry outtheobligationsofaPurchaserunderthisAgreementand that such sale to such utility will not adversely affect the tax exemption of interest on any Bonds Outstanding under the Bond Resolution that originally were issued on a tax-exempt basis.The Authority shall not be obligated torenewthisAgreementif,after reasonable notice to the renewing Purchasers,Percentage Shares that total one hun- dred percent have not been sold to such Purchasers or tootherqualifiedutilitypurchasers. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 8 Section 3.Exhibits.The following exhibits are incorporated by reference into this Agreement:: (a)Exhibit "A",Bond Resolution, (b)Exhibit "B",Delivery Point, (c)Exhibit "C",Description of the Project, (ad)Exhibit "D",Purchasers'Percentage Shares of Project Capacity and of Annual Project Costs,and (e)Exhibit "E",Form Of Certain Supplemental Bond Resolutions. "Section 4.Electric Service To Be Furnished. (a)Sale _and purchase.The Authority hereby sells,and each Purchaser hereby purchases,that Purchas- er's Percentage Share of Project Capacity (together withassociatedenergy)from the Project in accordance with this Agreement.The actual delivery (if any)of electric capacity and associated energy to Purchasers from the Pro- ject shall be made in accordance with scheduling proce-dures adopted by the Committee. (b)Available Power.The Authority shall atalltimes,except when prevented by a cause or event not-within the control of the Authority,make power available to the Purchasers from the Project in an amount egual to the amount the Purchasers may schedule from the Project, within the limitations imposed by available Project capab- ility,available water,and the scheduling procedures ad- opted by the Committee. (c)Required Project Work.The Authority shall make or cause to be made all Required Project Work,pro- vided that funds are legally available to the Authority for this purpose.The costs of Required Project Work shall be included in Annual Project Costs in the manner set forth in Section 8(a)(iv).The Authority shall give reasonable notification to all Purchasers prior to making or causing to be made any Required Project Work.Alterna-tive methods (if any)of carrying out and funding Required.Project Work shall be subject to approval by the CommitteeunderrulesofproceduretobeadoptedpursuanttoSection 13.; BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 9 (d)Optional Project Work.The Authority shall not make or cause to be made Optional Project Work unlesssuchOptionalProjectWorkisapprovedbytheCommittee. Any Optional Project Work shall be at the expense of the benefitted Purchaser(s),as determined in advance by the Committee,in proportion to the value of the benefit con- ferred upon each such Purchaser.If such Optional ProjectWorkhasanadverseimpactwpontheoperationsorfinances of a Purchaser as determined by the Committee,the bene- fitted Purchaser(s)shall compensate the adversely affect- ed Purchaser(s)for the increased costs and reduced.bene- fits resulting from such impact.In the event the Pur- chasers are unable to agree as to how any increased costs or compensation will be apportioned,or as to the amount of any increased costs or appropriate compensation,the parties shall submit the question to dispute resolution in accordance with the dispute resolution procedures adopted by the Committee under Section 13. Section 5.Electric Power Reserves For The Project (a)Need for reserves.The parties recognize that (i)electric power from the Project may be unavail- able periodically because of generation and transmission outages,repairs,maintenance,inspections,testing,and similar events,and (ii)under the Alaska Intertie Agree- ment or otherwise,each Purchaser is responsible for main- taining (or contracting for the use of)generation re- serves in amounts sufficient to protect its own loads in the event that Project power is unavailable. (b)Reserve procedures.Promptly after its establishment,the Committee shall adopt and implement procedures under which,in as cost effective a manner as possible: (i)the Authority shall have the right to require the operation of specific amounts of generat- ing capacity owned by a Purchaser and made available to the Authority,and to use the power produced by such operation to provide reserves to requesting Pur- chasers for some or all Project power,to the extent such capacity would otherwise be idle or its output would otherwise not be needed by the owner of that capacity to enable that Purchaser to meet its ownloadsortomakepowersalestootherutilities; -(Li)the additional costs incurred by any Purchaser in making such capacity available to the Authority and in operating the same for the Authority shall be computed equitably and reimbursed promptly to such Purchaser by the Authority;and BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 10 (iii)the costs of so reimbursing any Pur-chaser shall be included in Annual Project Costs. (c)Alternative reserves.Nothing in Section 5(b)shall: (i)relieve any Purchaser of the responsi-bility set forth in Section 5(a)(ii); (ii)require any Purchaser to make reserve capacity available to the Authority under Section 5(b)(i);or (iii)require any Purchaser to avail it- self of reserve power available from the AuthorityunderSection5(b)(i),or to bear any of the costs of such power if the Purchaser does not avail itself of such power,if the Purchaser chooses and is able to rely upon its own reserves to meet its loads when Project power is unavailable. Section 6.Obligations Under Bond Resolution;Com- pletion of Project. (a)Assignment orpayment to Trustee.The par-ties recognize and agree that (i)the Authority may assignitsrightstoreceivepaymentsunderthisAgreementassecurityforthepaymentoftheBondstotheTrusteeunder the Bond Resolution for the benefit of the holders of the Bonds,and (ii)the Authority may direct that amounts pay-able to it under this Agreement be paid directly to the'Trustee, (b)Project funding.The Authority shall issue Bonds,or otherwise obtain funds (including appropria-tions),sufficient to pay or reimburse the Cost of Acqui- sition and Construction.Annual Project Costs shall in- clude Debt Service on Bonds issued to pay the Cost of Ac- quisition and Construction in an aggregate principal amount up to but not exceeding the Recoverable Construc- tion Cost.The Authority may estimate the Recoverable Construction Cost and issue Bonds at any time in amounts up to the amount of such estimate.As soon as practicable after the Date of Commercial Operation,the Authority shall adjust (and re adjust when necessary)Annual ProjectCoststoreflectactualRecoverableConstructionCost. (c)Covenants of the Authority.The AuthoritycovenantsthatitwillnotcauseratesforProjectPower to increase by reason of any bond resolution,covenant or agreement contained in any trust indenture or trust agree-ment entered into by the Authority in connection with a power project other than the Project,nor on account ofanyinadequacyinitsactualorprojectedaggregate BRADLEY LAKE PROJECT POWER SALES AGREEMENT )Page li revenues,other than revenues from the Project,nor will the Authority include in Annual Project Costs debt service payable on debt incurred for any purpose except in respect of the Project as provided herein. (d)Project completion and operation.The Authority agrees to use its best efforts to complete theProjectexpeditiouslyandinaccordancewithsoundengin-eering practice and with the provisions of the Bond Reso- lution.The Authority shall also use its best efforts consistent with Prudent Utility Practice to construct and complete,and to operate and maintain the Project (or to arrange for such operation and maintenance)to provide power at the lowest reasonable cost to the Purchasers in a manner that is compatible with the Purchasers'Systems andconsistentwiththeAct,the Bond Resolution,and this Ag- .-reement,. (e)Best efforts byCommittee members.To the extent that the cost of Project power is or may be affect- ed by actions of the Committee under Section 13,each Purchaser in its capacity as a member of the Committee agrees to use its best efforts consistent with Prudent Utility Practice to assist in assuring that the Project provides power at the lowest reasonable cost to the Pur- chasers in a manner that is compatible with the Purchas-= ers'Systems and consistent with the Act,the Bond Resolu- tion,and this Agreement. Section 7.Payment Obligation. (a)Payment Obligation.Each Purchaser agrees to pay its Percentage Share of Annual Project Costs for each Fiscal Year.The procedures for determining the amount of and for making such payments are set forth in Section 13 of this Agreement. (b)Purchaser's Obligations.Each Purchaser shall make payments in the amounts and at the times re- quired by this Agreement notwithstanding a suspension or reduction in the amount of power supplied by the Project. Such payments shall not be subject to any reduction,by offset or otherwise.The parties intend and interpret the foregoing two sentences to mean that the obligation to make such payments shall be absolute and unconditional andunaffectedbyanyinterruption,interference,or curtail- ment in whole or in part of power supplied by the Project. In the event that (i)the Project is no longer operable, or its operation is interrupted or curtailed for any rea-son whatsoever in whole or in part,and (ii)the Authority does not restore the Project to full operation within a reasonable time,then the Purchasers may upon reasonable notice to the Authority and at their own expense take such action as they deem necessary to so restore the Project. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 12° The taking of such action by the Purchasers shall not al-ter each Purchaser's obligation to pay its Percentage Share of Annual Project Costs. Me Section 8.Annual Project Costs (a)Annual Project Costs defined.Annual Pro- ject Costs means all of the costs resulting from the own- ership,operation,maintenance of and renewals and re- placements to the Project,properly incurred or paid dur- ing each Fiscal Year,including: (i)Amounts required to be set aside by the Authority for the payment of Debt Service on Bonds issued to pay the Cost of Acquisition and Con-= struction in an aggregate principal amount up to but not exceeding the Recoverable Construction Cost; "(ii)Amounts required to be set aside for the payment of Debt Service on other Bonds and debt service on other obligations approved in accordance with Sections 11 and 13; (1ii)Amounts required to restore the funds established under the Bond Resolution to the levels required by the Bond Resolution to be main- tained therein; (iv)Amounts which may be required to pay for Required Project Work,to the extent that such costs are not covered by insurance or Bond proceeds or by the Renewal and Contingency Reserve Fund; (v)Other amounts determined by the Com- mittee to be necessary or appropriate to supplement and to be paid into the Funds established under the Bond Resolution; (vi)Excess Payment Amounts,if any,com- puted in accordance with Section 29; (vii}All other costs of producing and de- livering Project power (excluding depreciation)not accounted for by the payments out of funds and re- serves specified in the foregoing sections and prop-'erly chargeable to the Project under the Uniform Sys-tem of Accounts,less any credits against said costs by reasonof revenues from sources other than the di-rect sale of power to Purchasers,and also less anycreditsforinterestearnedduringconstructionand available for Project purposes;provided,that income from interest earned on reserve funds shall be used at least annually to accumulate and maintain saidreservefundsintheamountsrequiredundertheBond BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 13 Resolution or in such greater amounts as may be de-termined by the Committee,or to reduce Annual Pro- ject Costs.Such other costs shall include: (A)Project operating and maintenancecosts,in accordance with the Annual BudgetadoptedinaccordancewithSection13; (B)Costs of Project-related insur- ance,and,to the extent permitted with respect to each Purchaser under Section 5,the costs of electric power reserves for the Project; (C)Project-specific administrative and general expenses of the Authority,such as costs of safety inspections and investigations;(D)Costs of 'the Committee,whetherincurredbytheAuthorityorincurredbyaPur- chaser on behalf of the Committee:and (E)Such other Project costs as the \,Committee may from time to time approve for in- /*clusion in Annual Project Costs in accordance with procedures to be adopted by the Committee. (b)Proceeds of a taking.Any payment received by the Authority as a result of a taking of the whole or any portion of the capacity,facilities,available water, or output of the Project by any state or federal govern- ment agency shall be used by the Authority,after consult- ation with the Committee,to (i)reduce Annual Project Costs,(ii)retire Bonds,or (iii)reimburse the State of Alaska for a portion of the State's capital contribution to the Project (recognizing the separate sources of Pro- ject funding under Section 6(b)),whichever of these usesorcombinationofsuchusesshallbeequitableandproper under the circumstances existing at the time of the tak-ing. Section 9.Obligations In The Event Of Default. {a}Enforcement.Upon failure of a Purchaser:.to perform any obligation herein,the Authority may bringanysuit,action or proceeding at law or in equity -("Suit"),including mandamus,injunction and action for specific performance,as may be necessary or appropriate.to enforce any covenant,agreement or obligation of thisAgreementagainstthatPurchaser.The Authority may bring_such Suit (i)thirty days after giving the Purchaser a written demand for performance,in the case of default by the Purchaser on any obligation other than a payment obli-- gation,and (ii)immediately,in the case of default bythePurchaseronanypaymentobligation.Each Purchaser BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 14 shall continue to make payments in the event of any dis- pute regarding performance of any obligation by any party under this Agreement or in the event of any dispute undertheBondResolution,and this obligation of continued pay- ment pending resolution of disputes shall be immediately enforceable by any party upon application to any court of competent jurisdiction. (b)Additional rights and remedies.In addi- tion to the Authority's rights under Section 9(a),if a Purchaser has for any reason suspended or reduced,or has failed to make or has been prevented from making,payments required under this Agreement,the Authority may terminate or suspend the delivery of power to that non-paying Pur-chaser if,after consulting with the other Purchasers,the Authority reasonably determines that such termination or suspension is more effective than other available alterna- tives in minimizing adverse impacts on such other Purchas- ers. (i)If the Authority so terminates or sus-pends deliveries,the Authority shall: (A)offer to other Purchasers,on terms and conditions applicable to other power sold under this Agreement,any power not deliv- ered to the non-paying Purchaser,and if neces- sary allocate such power pro rata on the basis of Percentage Shares among Purchasers accepting such offer;' (B)offer any power not sold under Section 9(b)(i)(A)to any qualified utility (in- cluding the other Purchasers)on terms and con- ditions deemed favorable by the Authority after consultation with the Committee;and (Cc)if the Authority projects that the amounts to be deposited into the Revenue Fund will nonetheless be insufficient to pay Annual Project Costs,increase every other Purchaser's Percentage Share of Annual Project Costs and Project Capacity pro rata to the extent and for the period necessary to compensate for such in- sufficiency;provided,that no Purchaser's Per-centage Share shall be increased by more than twenty-five (25)percent above the amount setforthinExhibitDwithoutthewrittenconsent of that Purchaser. (ii)If the Authority determines that the process of offering power to others under Sections9{b)(i)(A)or (B)would delay exercise of the Author-ity's rights under Section 9(b)(i)(C),and that as a BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page i5 result the Authority will be unable to make depositswhenrequiredundertheBondResolution,the Authori- ty may exercise its rights under (C)immediately andtaketheactionsrequiredunder(A)and (if neces- sary)under (B)as soon as practicable thereafter. No exercise by the Authority of any of its rights (oranyfailurebytheAuthoritytoexerciseanyofitsrights)under this Section 9(b)shall relieve anynon-paying Purchaser of any payment obligation underthisAgreementorrelievesuchPurchaserofanylia- bility for damages resulting from non-payment.Inparticular,sales of power under Section 9(b)(i)(A)and (B)are intended to reduce the financial impact of any Purchaser's non-payment on other,paying Pur-chasers.Such sales are not intended to,nor shall they,reduce the payment obligations of the non- paying Purchaser or the damages for which such non- paying Purchaser may be liable. (iii)To the extent that the AuthorityusesProjectreservefundstopermitittomaketime- ly payments under the Bond Resolution following non- payment by a Purchaser,the amount needed to replen- ish such reserve funds shall be added to the Annual Payment Obligation of the non-paying Purchaser,and if the non-paying Purchaser fails to make payment of its Annual Payment Obligation as so increased,the Authority may exercise any of the rights available to it under this Section 9(b). (c)Litigation.If Purchasers'Percentage Shares are increased pursuant to Section 9(b)(i)(C),then the Authority shall,and any other Purchaser(s)may,im- mediately initiate and diligently pursue litigation in any court of competent jurisdiction to compel full and timely payment by the non-paying Purchaser,to recover amounts needed to compensate Purchasers whose Percentage Shares have been increased,and to obtain such other relief as shall be fair and equitable.The same or similar litiga- tion against any non-paying Purchaser may also be initi- ated and pursued by the Authority and/or by any paying Purchaser if in response to any non-payment the AuthoritytakesactionpursuanttoSections9(b)(i)(A)or (B). (a)Default by the Authority.In the event of any default by the Authority under any covenant,agreementorobligationunderthisAgreementwithrespecttoaPur-chaser,that Purchaser may,upon thirty (30)days writtennoticetotheAuthority,bring any suit,action or pro- ceeding,at law or in equity,including mandamus,injunc-tion and action for specific performance,as may be neces- Sary or appropriate to enforce any covenant,agreement orobligationofthisAgreementagainsttheAuthority.No BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 16 payment obligation of a Purchaser under this Agreement issubjecttooffset,however.; Section 10.Purchasers'Systems. (a}Character of expense.The amounts payableunderthisAgreementareoperatingexpensesofeachPur- chaser's System,and are valid and binding obligations ofeachPurchaser,payable only from the gross revenues ofsaidPurchaser's System as a cost of purchased electric power,and not payable from any taxes. {b)Purchasers'rate covenants.In order to afford,permit,and make timely payments as specified in this Agreement,each Purchaser agrees that it will estab- lish,charge and collect rates,fees,and charges withrespecttothat Purchaser's System in accordance with ap-plicable law to provide revenues sufficient to meet its obligations under this Agreement and sufficient to pay,- together with any other funds or monies available there for,any and all other amounts payable from or which con- stitute or may constitute a charge and lien upon such rev- enues including,but not limited to,amounts sufficient to meet obligations to service debt incurred by the PurchasertofinancethePurchaser's System. (c)Operation and maintenance of Purchasers' Systems.Each Purchaser covenants and agrees that it will operate and maintain its System in good repair,workingorderandcondition,and in accordance with Prudent Utili- ty Practice. (d)Limitation on certain contracts.Each Pur- chaser covenants and agrees not to enter voluntarily into any contract or agreement to take or to take or pay for power,other than this Agreement,payable from the rev- enues of the Purchaser's System on a parity with or super- ior to the payment of its obligations under this Agree- ment,except that a Purchaser may enter into such a con- tract or agreement of not to exceed two years'duration under which the Purchaser's payment obligation is on a parity with the payment of its obligations under this Ag- reement.The limitations of this Section 10(d)shall not apply to contracts or agreements creating obligations on aparitywithobligationsunderthisAgreementifawritten opinion from a Consultant is rendered that (i)the con- tract or agreement is reasonably expected to contribute to the conduct of the business of the Purchaser's System in an efficient and economical manner consistent with Prudent Utility Practice,and (ii)the contract or agreement will not impair the ability of the Purchaser to raise revenues sufficient to meet its obligations under this Agreement. BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 17 Section 11.Bond Resolution, (a)Amendment or supplementation of Bond Reso- lution.Except as provided in Section 12,the Authority will not amend or supplement the Bond Resolution in any manner,or adopt a new Bond Resolution in connection with the refunding of the Bonds,which would materially ad-versely affect the ability of a Purchaser to fulfill the terms of this Agreement or impose any increased burden or obligation,financial or otherwise,on a Purchaser,with- out the consent of the Purchaser,unless: (i)the Committee has approved the Auth- ority's proposed action by a resolution adopted by the affirmative vote of members whose Percentage Shares equal or exceed eighty percent (80%)of Pro- ject Capacity and of Annual Project Costs;or (ii)the Committee by majority vote of the Purchasers requests that Required Project Work be paid for out of the proceeds of Bonds,and such Work is projected to cost in excess of the amount of money then available in the Renewal and Contingency Reserve Fund established pursuant to the Bond Resolution, plus available insurance proceeds,in which event,if such Bonds can then be legally issued and can be sold,the Authority shall issue such Bonds,payable from the Revenues of the Project (as defined in the Bond Resolution),to pay the portion of such costs which exceed insurance proceeds,if any,and to re- store said Reserve Fund to its required level. (b)Tnsurance,The Authority will maintain physical loss insurance to the extent required by the Bond Resolution,and the Authority will consult with the Com- mittee as provided in Sections 12 and 13 with respect tothedispositionofproceedsofsaidinsurancereceivedasaconsequenceofphysicaldestructionorimpairmentoftheProject,including but not limited to disposition for the purpose of redemption of Bonds,replacement of the Pro-ject,or replacement of power.The Committee shall advisetheAuthorityfromtimetotimeastotheappropriateex-tent of insurance coverage. (c)Information.The Authority shall provide each Purchaser a copy of any report,certificate,letter,or other communication which the Authority is required to furnish to the Trustee under the Bond Resolution or that the Trustee furnishes to the Authority. Section 12.Purchasers'Consent To Supplemental Bond Resolutions To Construct The Project.The Purchasers hereby consent to the adoption by the Authority of supplemental BondResolutionspursuanttoSection1ll(a),as necessary to comply BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 18 with the Authority's obligation to finance and construct the Project pursuant to Section 6(b)and the Authority's obligation under Section 6(d)to use its best efforts to complete the Pro- ject expeditiously and in accordance with sound engineering practices and with the provisions of the Bond Resolution.The Authority shall consult with the Purchasers regarding the pro-visions to be included in such supplemental Bond Resolutions, and shall use its reasonable best efforts to comply with the requests of the Purchasers with respect thereto.Unless other-wise approved in accordance with Section 11(a)(i),such supple mental Bond Resolutions shall: (a)provide that the total amounts required for the payment of Debt Service when due shall be,on an an-= nual basis,as nearly equal as practicable; (b)provide that the final maturity of Bonds issued pursuant to such supplemental Bond Resolutions shall not-be earlier than twenty-five (25)years from the date when the first of such Bonds is issued; (c)be substantially in the form attached here- to as Exhibit E,except to the extent that the Authority finds that modifications are necessary to sell the Bonds on a tax-exempt basis;and (ad)be adopted no earlier than January 1,1989. Section 13.Establishment Of The Committee.| (a)Formation and composition of the Committee. The parties aqree that a Project Management Committee ("Committee")shall be established on January 15,1988,or on such earlier date as may be agreed to by the parties. The Committee shall consist of the Authority and the Pur- chasers (including as Purchasers for this purpose both Homer Electric Association,Inc.,and Matanuska Electric Association,Inc.,for themselves and for AEG&T as a Pur- chaser represented by and through those utilities).No Committee member shall obtain an additional vote through merger with,acquisition of,or assignment from any otherCommitteemember,and AEG&T shall have no direct vote,but shall be represented by and through Homer Electric Associ-ation,Inc.,and Matanuska Electric Association,Inc., each of which shall be entitled to vote as a Purchaser member for purposes of Committee procedure.Each Commit-tee member entitled to vote shall name one representative to serve on the Committee and one designated alternate for that representative.Each such member shall notify all other members in writing of the names,addresses,and tel- ephone numbers of its representative and designated al-ternate.After it is established,the Committee shall meet not less than once each quarter.Costs of the Com- mittee (other than costs incurred by the Authority)which BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 19 are incurred prior to the Date of Commercial Operation shall be borne by the Purchasers in accordance with the Percentage Shares of each. (b)Adoption of rules of procedure.The Com- mittee shall adopt,by the affirmative vote of a majorityofthePurchasersandtheaffirmativevoteoftheAuthori- ty,procedural rules governing the conduct of the Commit- tee's affairs.Such rules shall address,among other mat-ters,procedures for the periodic selection of Committee officers,the conduct of Committee meetings,dispute res-olution,the approval (including possible pre-approval)ofConsultants,and modification of the Committee's procedur- al rules,and,to the extent not otherwise specified in this Agreement,such rules shall also specify the applic- able voting requirements for approval of matters to be decided by the Committee.Committee approval of opera-tions and maintenance arrangements for the Project,the sufficiency of the annual budget and wholesale powerrates,and the undertaking of Optional Project Work shall require the affirmative vote of a majority of the Purchas- ers and the affirmative vote of the Authority. (c)Committee responsibilities;approval by the Authority. (i)As the legal owner and licensee of the Project,the issuer of Project debt,and the agency charged by statute with various duties affecting or affected by the Project,the Authority has certainnon-delegable rights,duties,and responsibilities with respect to the Project.Subject to such non- Gelegable rights,duties,and responsibilities,the Committee shall be responsible for the management, operation,maintenance,and improvement of the Pro- ject,in recognition that as take-or-pay purchasers of Project Capacity after the Date of Commercial Op- eration,the Purchasers have substantial long-term financial interests in,and service and planning re- sponsibilities affected by,the Project. (ii)The Committee shall take the follow- ing actions,subject to the provisions of the BondResolution,federal and state law,the requirements of licensing and regulatory agencies,and the rights 'of the Authority and the Purchasers under other pro- -visions of this Agreement: (A)Arrange for the operation and maintenance of the Project,and the scheduling, production,and dispatch of Project power; (B)Establish procedures for the use of each Purchaser's Water Allocation in a manner BRADLEY LAKE PROJECT POWER SALES AGREEMENT -Page 20 consistent with the needs and desires of other Purchasers and the capabilities of the Project; {C)Adopt in each Fiscal Year (and revise as necessary or prudent during such Fisc- al Year)a budget of Annual Project Costs for that Fiscal Year,which budget shall be in an amount estimated by the Committee to be suffic- ient to pay all Annual Project Costs; (D)Establish for each Fiscal Year the estimated Annual Payment Obligation of each Purchaser,together with a schedule for each Purchaser of equal monthly payments that such Purchaser shall be required to make during that Fiscal Year,which payment schedule shall be (I) designed to recover such estimated Annual Pay- ment Obligation from that Purchaser during the Fiscal Year,and (II)revised during such Year to reflect any revisions to the budget of Annual Project Costs for that Fiscal Year; (E)Determine after the conclusion of 'each Fiscal Year the actual Annual Project Costs for that Fiscal Year,the actual Annual Payment Obligation of each Purchaser for that Fiscal Year,and the amount of any additional payment required from (or the amount of any refund to be returned to)each Purchaser to ensure that the total of all payments received from each Pur- chaser for each Fiscal Year is equal to that Purchaser's actual Annual Payment Obligation for that Fiscal Year; (F)Evaluate and select among altern- ative methods (if any)of carrying out and fund- ing (including through issuance of bonds)Re- quired Project Work; (G)Adopt provisions to evaluate and approve Optional Project Work,and to determine the compensation (if any)to be provided in ac- cordance with Section 4(d)of this Agreement if the Committee approves any such Optional Project Work; (H)Adopt procedures consistent withSection13(f)for the resolution of disputes that may arise between or among the PurchasersandtheAuthorityconcerningtheinterpretation of this Agreement,the obligations created bythisAgreement,or the performance of such ob- ligations; BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 21 (I)Make an initial determination of "customary"insurance within the meaning ofSection714oftheBondResolutionanddetermine the appropriate amount of,and obtain,insurance for or related to the Project,in addition tosuchinsuranceasmayberequiredbytheBondResolution; (J)Adopt maintenance schedules for the Project that do not interfere unreasonably with the operations of the Purchasers; (K)Adopt and implement procedures relating to electric power reserves for the Pro-ject in accordance with Section 5;and (L)Consider the need for and approve any additional amount to be added to the Renewal ana@ Contingency Reserve Fund over and above the Renewal and Contingency Reserve Requirement pro- vided under the Bond Resolution. (iii)If and when no Bonds are outstanding under the Bond Resolution,and the Bond Resolution is therefore no longer effective,the Committee shall provide for the establishment of such accounts and the taking of such actions as may be necessary to manage the Project. -(d)Payment obligation unimpaired.Notwith- standing any Committee action or inaction under this Ag- reement,each Purchaser's obligation to make the monthly Payments necessary to pay its Purchaser's Percentage Share of Debt Service,costs of operation and maintenance,and all other amounts to be paid by Purchasers under this Ag- reement shall be absolute and unimpaired. (e)The Authority's ability to take Required Action.In the event the Committee fails to take any oftheactionssetforthinSection13(c)(ii)(C)-(E)in a timely fashion,or fails to take any other action whichtheAuthoritybelievestobeaRequiredAction,and as a result the Authority determines that it will be unable tomeetanyofitsobligationsimposedbystatute,by theBondResolution,by this Agreement,or by any licensing or regulatory agency,then the Authority may (i)adopt a bud-'get of Annual Project Costs,(ii)estimate the Annual Pay-ment Obligation of each Purchaser,(iii)require each Pur-.'chaser to make payments on the basis of such estimated Annual Payment Obligation,and (iv)take such other actionastheAuthoritydeemsnecessarytomeetsuchobligations. Failure of the Committee to adopt an Annual Project Budget by the ninetieth (90th)day prior to the beginning of aFiscalYearshallpermittheAuthoritytoadoptanAnnual BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 22 Project Budget pursuant to this subsection,All actions and determinations under this Section 13(e)shall be taken and made in accordance with Prudent Utility Practice. (£)Purchasers'duties and rights of review.Each Purchaser shall make payment as required by the Auth-ority as a result of any action taken by the AuthorityunderSection13(e),but such payment shall not constituteawaiverofanyPurchaser's rights under this Agreement. Any Purchaser may seek review of such action in accordancewiththedisputeresolutionproceduresadoptedbytheCom-mittee,or may seek to enforce this Agreement judiciallyinaccordancewithSection9(d)if no applicable disputeresolutionprocedureshavebeenadopted. Section 14.End Of Project (a)Authority's declaration.The AuthorityshalldeclaretheProjectended,and the Authority's ob-ligations to make power available to the Purchasers and to operate and maintain (or to assure the operation and main- tenance of)the Project shall also end,if and when (i) such a declaration is required under Section 14(b),or(ii)the Project can no longer be operated in accordance with Prudent Utility Practice. (b)Consultant's report.The Authority shallmakethedeclarationdescribedinSection14(a)if all of the following conditions are met: (i)the Project cannot be operated at full capacity in a manner consistent with Prudent UtilityPracticeabsentrepairs,modifications,or additions ("Repairs")to the Project;. (ii)a Consultant retained by the Commit- tee concludes that such Repairs are not cost- effective in comparison with other power supply alt- ernatives then available to the Purchasers;and (iii)Committee members who are Purchasers and whose Percentage Shares total eighty percent (80%)vote that such Repairs should not be undertak- en, {c)Consequences of Authority's declaration.After the Authority has declaredthe Project ended,eachPurchasershallcompleteitspaymentobligationforPro- ject Capacity and associated energy delivered to such Pur- chaser before the Project ended,and shall do so by payingitsPercentageShareofAnnualProjectCostsuntilall Bonds have been paid or provision has been made for the payment of the Bonds in accordance with the Bond Resolu-tion;provided,that from the date on which the Authority BRADLEY LAKE PROJECT POWER SALES AGREEMENT .Page 23 declares the Project ended,Annual Project Costs shall nolongerinclude(except with Committee approval)costs oth- er than those set forth in Sections 8(a)(i),8(a)(ii), 8(a)(iii),8(a)(vii)(C),and 8(a)(vii)(D). Section 15.Records.In addition to meter records, the parties shall keep log sheets and other records as may be needed for the purposes of this Agreement.In keeping books of account,each Purchaser will,to the extent that different rules are not prescribed by this Agreement or by federal and state laws or agencies,follow the system of accounts pre- scribed for public utilities and licensees by the Federal Ener- gy Regulatory Commission,except that as long as a Purchaser isaborrowerfromREAthenitshallfollowthesystemofaccounts prescribed by REA for its electric borrowers. Section 16.Inspection Of Facilities.For purposes of this Agreement,each party may,but shall not be obligated to,inspect any other party's facilities relating to the Pro- ject at any time upon reasonable notice,but such inspection orfailuretoinspectshallnotrendertheinspectingparty,itsofficers,agents or employees,liable or responsible for any injury,loss,damage,or accident resulting from defects insuchelectricinstallation,or for violation of this Agreement. Section 17.Covenants To Maintain Integrity Of Ag- reement. {a}Retail rate approval.Each Purchaser will affirmatively and promptly pursue all administrative and judicial remedies necessary to secure Alaska Public Utili-ty Commission approval of retail rates required to meet the terms of this Agreement where Commission approval is reguired. (b)Compliance with law.Each Purchaser will take all necessary steps to comply with applicable federal and state laws and regulations,licenses and permits re- lating to the use and operation of the Purchaser's System. (c)Sales,mergers,and assignments.No Pur- chaser shall abandon,sell,mortgage,lease or otherwise dispose of the Purchaser's System or any assets of that System (including by sale to or merger with any other utility),or assign this Agreement or any interest there-under to any assignee or successor in interest,unless: (1)such disposal or assignment accords with the terms of any of the Purchaser's covenants or agreements with the holders of the Purchaser's bonds,notes or other evidences of indebtedness relating to the abandonment,sale,mortgage,lease or other dis- position of property of the Purchaser's System;and BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 24 (2)such disposal or assignment is: (A)consented to in writing by a maj- ority of the Committee,including the Authori- ty's representative;or (B})made to another utility that is already a Purchaser under this Agreement and is able to meet the obligations resulting from the disposal or assignment;or (C)limited to assets that the Pur- chaser determines to be surplus to the needs of that Purchaser's System,but the depreciated value of assets so disposed of or assigned in any given year shall not exceed five percent (5%)of the depreciated value of the assets of the Purchaser's System prior to the disposal or assignment;or (D)evaluated by a Consultant and that Consultant certifies that,taking into ac- count the other obligations of the Purchaser or of the assignee or successor in interest (as the case may be),the Purchaser or the assignee or successor in interest will have (A)substantial-ly the same or greater ability to produce suf- ficient revenues to meet its payment obligations as would the Purchaser absent the transaction, and (B)the ability to perform all obligations under this Agreement. Any assignee of this Agreement must assume in writing alloftheassigningPurchaser's obligations hereunder,mustpayanyamountsdueandowingfromtheassigningPurchaserhereunder,and (unless the assignee is already a Purchas-er)must provide the Authority and the Purchasers with an opinion of counsel that this Agreement is enforceable against the assignee. (ad)Status of Bonds.The parties will not take any action,including entry into power sales agreements,which would cause the interest on any Bond which is orig- inally issued on a tax-exempt basis to become taxable un-der the Internal Revenue Code of 1986,as the same may beamendedfromtimetotime. (e)Licenses and permits.The parties will take all necessary steps within their control to comply with applicable federal and state laws and regulations,and to obtain and thereafter comply with all applicable licenses and permits relating to the use and operation oftheProject,including without limitation,the FederalEnergyRegulatoryCommissionlicenseapplicabletothe BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 25 Project.The Authority will take all necessary steps tocausetheFederalEnergyRegulatoryCommissionlicenseto be renewed,if necessary,so that it is in effect during the term of this Agreement or any renewal hereof. Section 18.Assignment. (a)Assignment generally.This Agreement shall inure to the benefit of,and shall be binding.upon therespectivesuccessorsandassignsofthepartiestothis Agreement;provided,that this Agreement or any interesthereinmaybetransferredorassignedbyaPurchaseronlyinaccordancewiththeprovisionsofSection17(c). (b)Specific rights and transactions.Notwith- standing Sections 17(c)and 18(a): (1)A Cooperative Purchaser shall have the right to assign its assets,including its rights un-der this Agreement for security purposes to REA,ortoalenderorguarantorinconnectionwithloansto such Cooperative Purchaser where the proceeds of such loans are used to refinance obligations of such Coop- erative Purchaser to REA or the Federal Financing Bank under Section 311 of the Rural Electrification Act or otherwise;provided,however,that (A)neitherREAnoranysecuredlenderorguarantorexercising any rights,powers or privileges with respect to this Agreement under any mortgage,deed of trust or other security agreement shall be entitled to exercise the rights of the Cooperative Purchaser under this Agree- ment unless the obligations of such Cooperative Purchaser hereunder shall have been performed,(B)no such assignment shall in any way relieve such Cooper- ative Purchaser of any obligations hereunder,and (C) no assignment shall be permitted hereunder if such assignment would adversely affect the tax exemptionofinterestonanyBondsOutstandingundertheBond Resolution that originally were issued on a tax- exempt basis. (2)<A Purchaser's agreement to resell pow- er from the Project shall not be deemed a transfer or assignment of this Agreement,but neither shall anysuchresaleofProjectpowerrelievethePurchaserof any payment obligation under this Agreement. Section 19.Notices,Computation Of Time And Holi- days.Any notice required by this Agreement to be given to anypartyshallbeeffectivewhenitisreceivedbysuchparty,andincomputinganyperiodoftimefromsuchnotice,such periodshallcommenceat12:01 p.m.prevailing time at the place of receipt on the date of receipt of such notice.Whenever thisAgreementcallsfornoticetoornotificationbyanypartythe BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 26 same (unless otherwise specifically provided)shall be in writ- ing directed to the Authority's executive director or a Pur- chaser's general manager.If the date for making any payment or performing any act is a day on which banking institutions are closed in the place where payment is to be made or a legalholiday,payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day when banking institutions are closed in such place. Section 20.Applicable Law.The laws of the State of Alaska (including without limitation the equal opportunity laws set forth in AS 18.80.220,as the same may be amended from time to time)shall govern the interpretation and application of this Agreement and the actions of the parties hereunder. Section 21.Availability Of Information.The par- ties shall make available to each other,for inspection and copying during business hours,all books,records,plans and other information relating to any calculation or determination to be made pursuant to this Agreement. Section 22.Severability. (a)Severability generally.If any section, paragraph,clause or provision of this Agreement or anyagreementreferredtointhisAgreementshallbefinally adjudicated by a court of competent jurisdiction to he invalid or unenforceable,the remainder of this Agreement shall be unaffected by such adjudication and all the re- maining provisions of this Agreement shall remain in full force and effect as if such section,paragraph,clause or provision or any part thereof so adjudicated to be invalid had not been included herein. (b)Correction and substitution.If any sec- tion,paragraph,clause or provision of this Agreement oranyagreementreferredtointhisAgreementshallbefi-nally adjudicated by a court of competent jurisdiction to pe invalid or unenforceable,then and in such event the parties agree that they shall exercise their best effortstocorrectsuchinvalidationandsubstituteappropriate agreements and contractual arrangements to achieve the intent of this Agreement. {c)References to REA.From and after the time any Cooperative Purchaser is no longer indebted to REAunderanymortgageorothersecurityagreementwithREA,'all references to REA and required approvals of the Admin- istrator of REA provided for in this Agreement shall be of no further force and effect with respect to that Coopera- tive Purchaser. Section 23.Remedies Cumulative.No remedy confer- red upon or reserved to the parties hereto is intended to be BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 27 exclusive of any other remedy or remedies available hereunder or now or hereafter existing at law,in equity,by statute or otherwise,but each and every such remedy shall be cumulative and shall be in addition to every other such remedy. Section 24.Waiver Not Continuing.Any waiver at any time by either party to this Agreement of its rights with respect to any default of the other party hereto,or with re- spect to any other matter arising in connection with this Ag-reement,shall not be considered a waiver with respect to anysubsequentdefault,right or matter. Section 25.Section Headings.The section headings in this Agreement are for convenience only,and do not purportto,and shall not be deemed to,define,limit or extend the scope or intent of the section to which they pertain. Section 26.Multiple Copies.This Agreement shallbeexecutedinseveralcounterparts,each of which shall be an original,but all of which shall constitute one and the same instrument.. Section 27.Covenant To Act In Good Faith.In order to permit this Agreement,throughout its term,to be fully ef- fective in accordance with the original intent of the parties, each party agrees that it shall at all times act in good faith in performing its obligations and in'exercising its rights under this Agreement. Section 28.No Third Party Beneficiaries.Notwith- standing that the operation of this Agreement may and is in-tended to confer benefits on third parties who are not signa- tories to this Agreement,this Agreement.shall be enforceable only in accordance with its provisions expressly governing en- forcement.In promising performance to one another under this Agreement,the parties intend to create binding legal obliga-tions to and rights of enforcement in (a)one another,and (b) such assignees or successors in interest of the parties as may enjoy a right to enforce this Agreement by virture of provis- ions of this Agreement that expressly create such a right in such assignees or successors in interest.By entering into this Agreement,the parties expressly do not intend to create any obligation or promise any performance to any other thirdparty,nor have the parties created for any other third party any right to enforce this Agreement. Section 29.Excess Payments. (a)Payments in Recognition of Efforts to Ob- tain Intertie.In recognition of the Railbelt Energy Council's commitment to continue efforts to obtain a sat- isfactory transmission intertie between Fairbanks and theKenaiPeninsula,and the Railbelt Energy Council's recog- nition of the importance of such an intertie to the well- BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 28 being of the Railbelt region and the Purchasers'ratepay-ers,and in anticipation of legislative funding of such an intertie,the Purchasers agree to make the payments de- scribed below in excess of actual debt service required for retirement of Bonds issued to pay Recoverable Con- struction Costs.The Purchasers'obligations to make pay- ment under this Section 29 are not contingent upon the success of such continued efforts to obtain a satisfactorytransmissionintertiebetweenFairbanksandtheKenaiPen- insula. (b)Calculation of Excess Payment Amount.Sub- ject to the limitations set forth in Sections 29(e)and 29(£),upon the retirement of all Bonds issued to pay Re- coverable Construction Costs (and of all Bonds issued to refund such Bonds)and the consequent reduction of Debt Service includable in Annual Project Costs,there shall be added to and included in Annual Project Costs an amount (the "Excess Payment Amount")calculated as follows: (i)The average annual Debt Service on such retired Bonds,less (ii)any debt service included in Annual Project Costs that is associated with bonds or other debt issued to fund Required Project Work. In no event shall the Excess Payment Amount be negative. (c)Payment of Excess Payment Amount.Each Purchaser shall pay its Percentage Share of the Excess Payment Amount as part of that Purchaser's Annual Payment Obligation so long as that Purchaser continues to purchase Project power under this Agreement or any renewal thereof. (d)Disposition of Payments,All Excess Pay- ment Amounts received from Purchasers,and all additional charges paid pursuant to Section 29(b),shall be paid to the Authority for deposit into the Railbelt Energy Fund. (e)Limitation.Notwithstanding any other pro- vision of this Section 29,no Purchaser's Annual Payment Obligation shall include a charge with respect to any Ex- cess Payment Amount in excess of four cents ($0.04)per kilowatthour of Project power delivered to such Purchaser. (f)Duration.The provisions of this Section 29 shall not serve to extend the term of this Agreement or any renewal thereof,and shall cease to be effective upontheexpirationorterminationofthisAgreement(as thesamemaybeextendedthroughanyrenewalthereof). BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 29 Section 30.Special Arrangements Regarding AEG&T, (a)Contracts acknowledged.The parties recog-nize that Homer Electric Association,Irc.("HEA")and Matanuska Electric Association,Inc.("MEA"),have previ- ously entered into contracts with the Alaska Electric Gen- eration &Transmission Cooperative,Inc.("AEG&T"),and that under such contracts AEG&T is to sell and HEA and MEA are to buy electric power in amounts necessary to meet the full requirements of HEA and MEA,such power to be gen- erated by AEG&T or to be purchased by AEG&T from other suppliers.Under this Agreement,therefore,AEG&T is a Purchaser on behalf of HEA and MEA,and AEG&T's payment obligations are secured by HEA's and MEA's respective ob- ligations to provide at all times the monies necessary for the performance of AEG&T's payment obligations,as more fully described in Section 30(b). (b)Treatment of HEA and MEA as Purchasers for certain purposes.HEA and MEA shall have ail the rights and obligations of individual Purchasers and/or Coopera- tive Purchasers with respect to Sections 2(a),4(d),6(e), 8(a)(vii)(D),10,13(c),13(d),15,17,18,31,and 32,. unless the context otherwise requires.If AEG&T at any time fails to meet its payment obligations under this Ag- reement,then to the extent of such failure by AEG&T and for so long as such failure continues,HEA and MEA shall each be obligated to meet directly its respective share of AEG&T's payment obligations in the same manner as if HEA and MEA were individual Purchasers obligated to make pay- ment in accordance with Section 7 and Section 9.All rights and remedies available to the Authority and/or to the other Purchasers against AEG&T shall also be available to the Authority and the other Purchasers against HEA andMEAtotheextentoftherespectiveindividualshareof HEA and/or MEA,as applicable.For purposes of this Sec- tion 30(b),HEA's share shall be a Percentage Share of Project Capacity equal to 12.0 percent,and MEA's shareshallbeaPercentageShareofProjectCapacityequalto 13.8 percent. (c)Arrangements among HEA,MEA,and AEG&T.In accordance with the provisions of Section 30(a)and sub- ject to the provisions of Section 30(b),AEG&T as a Pur-chaser hereunder shall act on behalf of HEA and MEA for purposes of power deliveries,billing,payment,notifica tion,and other communications under this Agreement. AEGS&T shall be,on behalf of HEA and/or MEA,the Purchaser from the Authority and the re-seller to HEA and/or MEA of power to be taken by HEA and/or by MEA under this Agree-ment.Further,AEG&T will receive,on behalf of HEA and/or MEA,all billings and other communications under BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 30 this Agreement,and AEG&T will be required to pay suchbillsforandonbehalfofHEAand/or MEA from funds made available to AEG&T by HEA and/or MEA for this purpose. Section 31.Capitalization Of Certain Costs Of Pur- chasers. (a)Promptly after the Committee is formed,and before the Authority first issues Bonds,the Purchaser members of the Committee shall determine by the affirma- tive vote of members whose Percentage Shares equal or ex- ceed eighty percent (80%)of Project Capacity and of An- nual Project Costs: (i)whether and to what extent the costs borne by the Purchasers pursuant to the last sentence of Section 13(a}should be capitalized through issu- ance of additional Bonds,with the costs of debt ser- vice on those additional Bonds to be added to Annual Project Costs;and (ii)whether and to what extent the costs incurred by the individual Purchasers in conjunction with this Agreement prior to the Date of Commercial Operation should be capitalized and reimbursed through issuance of additional Bonds,and whether and to what extent the costs of debt service on those additional Bonds should be added to Annual ProjectCostsandallocatedamongPurchaserseitherinac- cordance with their respective Percentage Shares or in some other manner. (b)If the Purchasers provide the Authority with a written determination that additional Bonds should be issued for either or both of the foregoing purposes, then notwithstanding any other provision of this Agree- ment,the Authority shall issue additional Bonds in the requisite principal amount,allocate the proceeds of such additional Bonds among the appropriate Purchasers in ac- cordance with such written determination,and include the costs of debt service on such additional Bonds in Annual Project Costs;provided,that the Authority shall not beobligatedtoissuesuchadditionalBondsunlesstheAuth-ority is réasonably able to do so in conjunction with theissuanceofotherBonds;and provided further,that the allocation among Purchasers of the costs of debt service on additional Bonds issued for the purpose set forth in Section 31(a)(ii)shall be made in the manner specified in such written determination. Section 32.Efforts To Obtain Intertie.The Pur-chasers recognize the importance of the completion of a satis-factory high-capacity Fairbanks to Kenai Peninsula transmission BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 31 intertie,and of full $218 million funding for the Project,andagreetocontinueallreasonableeffortstoobtainsufficient state funding for such transmission intertie and Bradley Lake. IN WITNESS WHEREOF,the parties have caused this Ag- reement to be executed the day and year first above written. THE ALASKA POWER AUTHORITY BY, As ALASKA ELECTRIC GENERATION &TRANSMISSION COOPERATIVE,INC. ormseslintaval YitLloa) CHUGACH ELECTRIC ASSOCIATION,INC. =f dlsAsDrarishtank- HOMER ELECTRIC ASSOCIATION,INC. By VERE4 Lit Lor7oC As ALA:at BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 32 GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. MW he aAsCun.Wee, \ MATANUSKA ELECTRIC ASSOCIATION,INC. m Kaen haMa THE MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT AND POWER By As Dora. THE CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM wr (onl ParasAsAshfmasagete BRADLEY LAKE PROJECT POWER SALES AGREEMENT Page 33 EXHIBIT B Delivery Point The Delivery Point of the Project and the point at which the Purchasers accept delivery shall be at the point where the 115 kV Project transmission lines connect to a 115 kV switching station (included within the Project)at Bradley Junction on the Fritz Creek Soldotna transmission line to be built by the Hom- er Electric Association,Inc. POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT B --Page l EXHIBIT C Description Of The Project The Bradley Lake Hydroelectric Project site is located on the Kenai Peninsula,about 105 miles south of Anchorage and 27 miles northeast of Homer,Alaska.Bradley Lake,with an exist- ing elevation of 1,080,is situated in the Kenai Mountain Range. A Project Location Map is attached. The proposed development includes raising the existing Bradley Lake level 100 feet by constructing a diversion tunnel, dam,spillway and outlet facility at the lake outlet.An 18,760 foot long,11 foot diameter concrete lined power tunnel will connect the reservoir intake works with a two 45 MW (nominal rating)unit powerhouse located just above sea level on the northeast shore of Kachemak Bay. A substation containing step-up transformers will be locat- ed at the power plant.Project transmission facilities include approximately 20 miles of two parallel,single circuit,115 kv transmission lines to connect the power plant to a 115 kV switch- ing station at Bradley Junction (which is also included within the project).The switching station will connect to a 115 kv transmission line (not included in the project)which will transmit power between Fritz Creek and Soldotna on the Kenai Peninsula.The Project also includes the Middle Fork Diversion consisting of a small diversion structure and excavated channel which diverts the upper Middle Fork flows into Bradley Lake,andtheconstructionofasmalldiversionworksattheheadwatersoftheNukaRiverwhichdivertsflowsfromNukaGlacierintoBradley Lake. The project site is remote and will be designed to be operated as an unattended plant,but will require on-site main- tenance personnel.A supervisory control and data acquisition (SCADA)system will be provided.Site access is by water or airborne transportation.To support construction,operations and maintenance of the Project,a barge basin,airstrip,con- struction camp,permanent housing facilities,and approximatelytenmilesofaccessroadwillberequired. Provisions for adding a third 45 MW turbine-generator will 'be included in the Project. A Project Location Map and general plan are attached. POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT C --Page 1 11. 12. 13. 14. Dam Spillway Power Tunnel Diversion Steel Liner/ Penstock Middle Fork Nuka Diversion Powerhouse Turbines Generators Transmission Barge Dock Access Roads Airstrip PROJECT DATA Concrete-faced,rock fill,610 feet long,125 feet high,362,000 cubic yards rock fill,10,800 cubic yards concrete. Ungated concrete ogee section,175 feet long. 11-foot nominal diameter,fully con- crete lined,18,760 feet long. 2i-foot horseshoe tunnel,440 feet long. Steel ll-foot diameter,2,400 feet long tapering to 9 foot diameter manifold with 6 1/2 foot diameter branches. Excavated channel and river diversion structure. 9 foot high gravel fill dike. Above ground,steel superstructure,160 feet long,80 feet wide,92 feet high. 2 each Pelton,vertical shaft. 2 each;63 MVA with nominal output of 45 MW, 115 kV,steel pole,2 parallel single circuits,20 Line miles long,with 115 kV switching station at Bradley Junction. Sheetpile cellular structure,granular fill. 10.8 miles gravel surfaced. Gravel surfaced,2,400 feet long x 75 feet wide. POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT C -=Page 2 |7 a¢fn|BRALR LY JUNCTION !; 7 .'f 'tots .aAi53h ' [Lepore se"5 <:bree BEL Tene aSSOCIADION 4 ,.FRLECREEASRDOTAAY|DRANTUNESION LIE etme wy ;4pQ' 1m RoutE Q .YY ov 108 :,. ::r .wartArowl rae <Fecnities Ha . . weRtond AREA STRUCTION =o”POWER ',os,came 8 Tee S,ineix©svaoma .\.: " 'ARE \BRAMLEY LARE $on,;. aneeas ™ aw”OAM SITE 4 ".1 r onan '. ; 4 Moony 3 Teurorany =|7 Cons TRUT TION || ACCESS ROAD Pa :_ OvUARRY . NG ne|=oteSS: ™,'we,enatmes @ AeA r 'Me,ve PA OVER 1 :Oreers ; we,ty 8h Lo,fom o a ¢, vimacaa %od -4 is : 2 i 7 Exhibit D Purchasers'Percentage Shares Of Project Capacity And Of Annual Project Costs PURCHASER PERCENTAGE SHARE Alaska Electric Generation & Transmission Cooperative,Inc.25.8 Chugach Electric Association,Inc.30.4 Golden Valley Electric Association,Inc.'16.9 Municipality of Anchorage,d/b/a Municipal Light and Power 25.9 City of Seward,d/b/a Seward Electric System 1.0 100.00% POWER SALES AGREEMENT FOR BRADLEY LAKE ENERGY EXHIBIT D --Page 1 Exhibit E ALASKA POWER AUTHORITY RESOLUTION NO. A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE OF $ POWER REVENUE BONDS,FIRST SERIES -BE IT RESOLVED by the Board of Directors of the Alaska Power Authority on the _.day of ,1g F that pursuant to the General Bond Resolution adopted on ,19 ,Chereinafter referred to as the "Resolu- tion"),this Supplemental Resolution is adopted as follows: ARTICLE I Definitions and Authority 101.Short Title.This Resolution may hereafter be cited by the Authority,and is hereinafter sometimes referred to as the "First Series Resolution". 102.Definitions.(a)All defined terms contained in the Resolution shall have the same meanings,respectively, in this First Series Resolution as such defined terms are given in Section 102 of the Resolution. (b)In addition,as used in this First Series Resolution,unless the context shall otherwise require,the following terms shall have the following respective meanings: "Bonds"or "First Series Bonds"means the Bonds of the Authority of the Series authorized by this First Series Resolution and herein designated "Power Revenue Bonds,First Series"., "Series Bonds"means any First Series Bond maturing on or before . (c)Unless the context shall otherwise indicate, words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders, words importing the singular number shall include the plural number and vice versa,and words importing persons shall include firms,associations,partnerships (including limited partnerships),trusts,corporations and other legal entities, including public bodies,as well as natural persons. The terms "hereby","hereof","hereto","herein", "hereunder",and any similar terms,as used in this Series Resolution,refer to this Series Resolution and such terms when used in the form of bond herein refer to said bond. 103.Authority for this Resolution.This First Series Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization,Terms and Issuance 201.Authorization,Principal Amount,Description and Serfes.In order to provide funds necessary for the purpose specified in Section 203,in accordance with and subject to the terms,conditions and limitations established | herein and in the Resolution,a Series of Power Revenue Bonds is hereby authorized to be issued in the aggregate principal amount of §-The Authority is of the opinion and hereby determines that the issuance of the Bonds in saidamountisnecessarytoprovidesufficientfunds.to be used andexpendedforthepurposespecifiedinSection203.In addition to the title "Power Revenue Bond",the Bonds of such Series shall bear the additional designation "First Series"and each as so designated shall be entitled "Power Revenue Bond,First Series".The Power Revenue First Series Bonds shall consist of $s :«Csprincipal amount of Serial Bonds and $_ principal amount of Term Bonds and shall be issued in fully registered form. 202.Purposes.The purposes for which the _ Series Bonds are being issued are to provide funds for deposit in the Renewal and Contingency Reserve,Capital Reserve Fund, Operating Reserve Account,and Construction Fund,respectively, all to the extent and subject to the limitations and in the amounts provided in the Resolution and in Article III hereof. 203.Issue Date.The First Series Bonds shall be dated ,except as otherwise provided in the Resolution in the case of Bonds issued on or subsequent to 204.Maturities and Interest Rates.The Series Bonds shall mature on the anniversary of their date in RESOLUTION NO. . Page 2.A7802FJG the following years and the Bonds maturing in each such year shall mature in the principal amount and bear interest from the date thereof,payable semi-annually on the first day of each month commencing 6 months and 12 months from date,at the rates set opposite such year in the following table: Amount Interest Amount Interest Years Maturing -Rates_Years §Maturing __Rates_ 205.Denominations,Numbers and Letters.The First Series Bonds maturing in each year shall be issued in denomina- tions of $5,000,or any whole multiple thereof not exceeding the aggregate principal amount of First Series Bonds maturing in such year,in the case of fully registered Bonds.The First Series Bonds shall be lettered A and numbered separately from 1 consecutively upwards in such order as the Trustee in its discretion shall determine. 206.Paying Agents.y in ,and ,are hereby appointed the Paying Agents for the Series Bonds pursuant to Section 902 of the Resolu- tion. 207.Redemption at the Election of the Authority and Terms.The Bonds maturing and thereafter shall alsobesubjecttoredemption,either as a whole or in part,and in such amount or amounts of such maturity or maturities as the Authority shall elect,on any date (which date shall be deter-mined by the Authority or selected by the Trustee,subjecttotheprovisionsof,and in accordance with,the Resolution and when so determined or selected shall be deemed and is hereby set forth as the redemption date)on and after ' and prior to their respective maturities,upon notice as provided in Article IV of the Resolution,at the respective Redemption Prices (expressed as percentages of the principal .amount of such Bonds to be so redeemed)set opposite such period in the following table,plus in each case interest accrued to the redemption date: RESOLUTION NO. Page 3.A7802FJG Redemption Prices Period (Expressed as a (Both Dates Inclusive)Percentage) 208.Sinking Fund Payments.The Term Bonds shall be subject to redemption in part by operation of the Principal Account through application of Sinking Fund Payments as provid- ed in subsection 507(2)of the Resolution on and on each 1 thereafter as herein provided in each case at a Redemption Price equal to the principal amount of each Bond or portion thereof to be redeemed,together with interest accrued to the redemption date.There shall be due and the Authority shall at any and all-events be required to pay on 1 of each of the years set forth in the following table the amount set opposite each such year in said table and said amount is hereby established as and shall constitute a Sinking Fund Payment for the retirement of the Term Bonds, provided,however,that the amount set opposite in said table shall be payable at the stated maturity date of the Term Bonds and shall not constitute a Sinking Fund Payment: Year Sinking Fund Payments 209.Selection by Lot.If less than all of the First Series Bonds of a like maturity are to be redeemed,the particular Bonds of such maturity to be redeemed shall be selected by lot in accordance with Section 404 of the Resolu- tion. RESOLUTION NO. Page 4.A7602FIG ARTICLE IIT Disposition of Proceeds 301.Deposits.Upon receipt of the proceeds of sale of the First Series Bonds,there shall be deposited (a)in the Capital Reserve Fund to equal the Capital Reserve Fund Require-ment immediately after delivery of the First Series Bonds,(b)in the Interest Account the amountof accrued interest on theFirstSeriesBondsfromtheirdatetothedateofdelivery thereof and payment therefor,(c)in the Renewal and Contingen- cy Reserve Fund the amount necessary to cause the amount in theFundtoequaltheRenewalandContingencyReserveRequirement,and (d)in the Operating Reserve Account $. 302.Construction Fund.After the deposits referred to in Section 301 hereof have been made,the balance of the > proceeds of sale of the First Series Bonds shall be deposited in the First Series Bonds Account of the Construction Fund. ARTICLE IV Effective Date 401.This Resolution shall take effect immediately. RESOLUTION NO. Page 5.A7802EJG .PLEO;FILEN LOPY ro 3-14 SYA Lt RESOLUTION NO.88-1 : A RESOLUTION of the Bradley Project ManagementCommittee,established pursuant to Section 13 of the Bradley Agreement for the Sales and Purchase of Electric Power ("the Power Sales Agreement")establishing Bylaws for the operation of the Committee. WHEREAS,the Bradley Project Management Committee is composed of the representatives of the seven utilities that will purchase the power produced from the Bradley Lake Project and theAlaskaPowerAuthority; WHEREAS,the Bradley Project Management Committee is charged in the Power Sales Agreement with the operation and administration of the Bradley Lake Hydroelectric Facility;and WHEREAS,it is necessary to provide rules and regulations for the day-to-day operation of the Bradley ProjectManagementCommittee. NOW,THEREFORE,BE IT RESOLVED,by the Bradley Project Management Committee established pursuant to Section 13 of the Power Sales Agreement that the following Bylaws be adopted as the Bylaws of the Bradley Project Management Committee and that these _Bylaws shall be binding on all members of the Bradley Project Management Committee. ADOPTED by the Bradley Project Management Committee at a regular meeting of said Committee held this 21st day BRADLEY PROJECT MANAGEMENT COMMITTEE (Namhe ) (Chairman) ATTEST: By:(LheJd Bactte(Name)- (Secretary) EGWder272 10/19/88 ATTACHMENT 2 DRAFT 08/16/93 11:29am BRADLEY LAKE PROJECT MANAGEMENT COMMITTEERESOLUTIONNO.93- A RESOLUTION AMENDING ARTICLE 6.2 OF THE BRADLEY PROJECT MANAGEMENT COMMITTEE BYLAWS WHEREAS,the Agreement for the Sale and Purchase of Electric Power of the Bradley Lake Hydroelectric Project §13(b)allows the Bradley Lake Project Management Committee (Committee)to adopt procedural rules governing the conduct of the Committee's affairs; WHEREAS,the Committee adopted Bylaws which specify the manner in which the Committee will act and section 6.2 states that the Committee may not delegate its decision-making duties to any special purpose committee; WHEREAS,the Committee finds it necessary to amend its Bylaws to allow the special purpose committees to make decisions when properly instructed and authorized by the Committee. NOW,THEREFORE BE IT RESOLVED that the Committee hereby amends section 6.2 of the Bylaws as follows: 6.2 Powers.The Committee may delegate its decision-making duties to a special purpose committee. 6.2.1 Authorization.Special purpose committees may only act upon Committee matters when authorized to do so by the Committee. 6.2.1 Voting Requirements.Decisions made by a special purpose committee shall be by affirmative vote of a majority of the members of a special purpose committee. 6.2.2 Decisions Reviewable.The Committee may affirm,modify or reject any decisionofaspecialpurposecommittee. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE By: Chairman BY: Secretary DATE: ) BRADLEY iwAKE PROJECT MANAGEMENT COMMITTEE RESOLUTION 93 -11 A RESOLUTION of the Bradley Lake Project Management Committee (BPMC)regarding the authority of the Budget Subcommittee to adjust budgets for annual Project costs as defined under Section 8 (a)(vii)of the Bradley Lake Power Sales Agreement (PSA). WHEREAS the BPMC is authorized by the Bradley Lake Power Sales Agreement to adopt budgets for annual operating and maintenance (O&M)costs as defined under Section 8 (a)(vii)of the PSA for the operation of the Bradley Lake Hydroelectric Project and to make amendments to the budget from time to time;and WHEREAS the Budget Subcommittee of the BPMC is charged with researching and preparing the O&M budget and amendments thereto;and WHEREAS the Budget Subcommittee may meet on shorter notice and with more frequency than the BPMC;and : WHEREAS the BPMC has determined that periodic minor O&M budget adjustments may benecessaryforsmoothandefficientoperationoftheprojectandBPMC;and NOW,THEREFORE BE IT RESOLVED that the BPMC authorizes the Budget Subcommittee to make budget adjustments within line items of the adopted budget;and BE IT FURTHER RESOLVED that the BPMC further authorizes the Budget Subcommittee to increase the adopted total O&M budget up to ten percent (10%)of the initially adopted total amount when necessary to meet unforeseen operating expenditures;and BE IT FURTHER RESOLVED that nothing in the authorization changes duties and responsibilities of the parties established by the Bradley Lake Power Sales Agreement;and BE IT FURTHER RESOLVED that the Budget Subcommittee shall report such changes to the BPMC at the BPMC's next scheduled meeting. ADOPTED by the Bradley Lake Project Management Committee at a regular meeting of the Committee held July 22,1993. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE ane Buhl BharBrentN.Petrie,Secretary DATE:NRA ZA,[4%3dburgerword\minutes\pmc\res9 3-11 / ALASKA ENERGY AUTHORITY POWER REVENUE BOND RESOLUTION Adopted:September 7,1989 101. 102. 103. 104. i05. 201. 202. 203. 204. 205. 301. 302. 303. 304. 305. 306. 307. 308. ALASKA ENERGY AUTHORITY POWER REVENUE BOND RESOLUTION Table of Contents* ARTICLE I Definitions and Statutory Authority Definitions.......Cee wee eee ee mee eee tte et eee eens Interpretation...ccc eee ence ce www cer cnc we eer eeeAuthorityforthisResolution......wee eee ee Resolution to Constitute Contract........enc eww ees Obligation of Bonds.........cee ween enw ween n nce vane ARTICLE II Authorization and Issuance of Bonds Authorization of Bonds.....ccc cee eee eee ee eer ee wee General Provisions for Issuance of Bonds.......00.5. Project Issue.........-.08.Cee mee eee eee enw enews Additional Bonds...2...ccc ccc ccc ee er te ewe Refunding Bonds...2...---cece ccc r cee crc eee erences ARTICLE III General Terms and Provisions of Bonds Medium of Payment;Form and Date;Letters And Numbers...cece ccccecervcecesessanscarvescese LEGendS...ce cree cece esc er nv eer ec een ete ween eeene Execution and Authentication.......emcee e wweeeee Exchange of BondsS.....ccc cere ner n cere erect ensvcen Negotiability,Transfer and Registry.............. Regulations With Respect to Exchanges andTYaNSfErS...wc cee cv venrcvvreev aes e nen eseeeneevees Bonds Mutilated,Destroyed,Stolen or Lost........ Temporary Bonds.......seccccccvore veeeen c crew coon 15 16 18 19 19 *The Table of Contents is not part of this Resolution. ARTICLE IV Redemption of Bonds Page 401.Privilege of Redemption and Redemption Price......26 402.Redemption at the Election or Direction of the Authority........00 cee eeeete eee neee eee aceees oe 26 403.Redemption Otherwise Than at the Authority's Election or Direction......ween ee cease eee neces :27 404.Selection of Bonds to be Redeemed...........cccee 27405.Notice of Redemption........ccc cnvenscanrenvreraces 27406.Payment of Redeemed Bonds..........0.¢wee eee rec ees 28 ARTICLE V Establishment of Funds and Application Thereof 501.Pledge of Revenues and Other Funds..........ceeeee 284502.Establishment of Funds and Accounts.......ceeecone 30 503.Construction Fund.........anew ee ecees spe eeceene eee 30 504.Revenues and Revenue Fund.........ea eeee weeew eeee 36 505.Operating Fund.........s.16-cece e weer cece wee enees aoe 36 506.Payments Into Certain Funds........eee newer ec ew eee 36 507.Debt Service Fund...........ee eweenee eee e ee ees o.39508.Capital Reserve Fund..we mem ewww cee eeee sees 40509.Renewal and Contingency Reserve Fund ene ee eee eens 41 510.Excess Investment Earnings Fund......seemenee eee 42S11.Cancellation and Destruction of Bonds.......eee nee 42 ARTICLE VI Depositories of Moneys,Security for Deposits and Investment of Funds 601.Depositories.......seer ccc eee eee ere we aee eee eae oe 42 602.Deposits.........seees deve enes ae avec eens eens 43603.Investment of Certain Funds atc eee enc eens ec eweee ees 44 604.Valuation and Sale of Investments.......2.eee 00%ae 44 ARTICLE VII Particular Covenants of the Authority 7Ol.Payment of BondS.......csc cere ener csnenveves eee eee 45 702.Extension of Payment of Bonds............4.6.cece eee 45 703.Offices for Servicing BondS.....cccnccecsnsvcvcves 46 TABLE OF CONTENTS Page 2 A16355CM 704 Further ASBULANCE...ccc ecw ewer eer sce renee eesaees 46 705.Power to Issue Bonds and Pledge Revenues and Other Funds.........0.eee meeneeercereerseeee 46706.Power to Fix and Collect Rates,Fees and Charges..47 707.Creation of Liens;Sale and Lease of Property.....47 708.Consulting Engineer.....rn cee eee 48 7O9.Annual Budget.......cece anserevvereccercvetes oe nees 48 710.Limitations on Operating Expenses and Other Of0)-5 ot -rs cee eee ere meer een neee 49711.Acquisition and Construction of Project and Its Operation and Maintenance.............eee eee 49 712.Rates,Fees and Charges........ccc cc cee wee eee reas 50 713.Power Sales Agreement.........emcee eee nee eee 51 714.Insurance...sce ceeersanese cane teeoee eee eae e anne 52715.Reconstruction;Application of Insurance PKOCCEMdS.2.cece ween cee meee eee eee eee e esac ennns 54 716.Maintenance of Capital Reserve Fund........0.e008:55 717.Accounts and Reports.....ccc ev enn ae cane nvccesencee 56 718.Tax Covenants...ccc cece ccc nee nec eee amen ec eeaens 58719.Payment of Taxes and ChargeS.......-.ccereresevces 59 720.Pledge of the State.....ccc cc eee eee eee 59 721.Waiver of Laws.........eter ew ee rece eee ee nec enee 60 722.Special Provisions Relating to BIG...........eee0-60 7Z3.General...ccc ccc ce wcrc ener eres mecca snes enenescsees 61 ARTICLE VIII Remedies of Bondholders 801.Events of Default...ccc cccncccnce vce nssraceanvsves 62 802.Account and Examination of Records After Default...cc cccaeccccencsccas eee nereeeereeees 63803.Application of Revenues and Other Moneys .After Default.....cc ccc ccc cc ec cee awe treet e weno 63 804.Appointment of Receiver...1...ccc cern nnn er nc cencvne 65 805.Proceedings Brought by Trustee.............-5ceeeae 65806.Restriction on Bondholder's Action.........cc0000%66 807.Remedies Not Exclusive.........ccceeeve sees eeeenes 66 808.Effect of Waiver and Other Circumstances..........67 809.Notice of Default......rr 67 ARTICLE IX Concerning the Fiduciaries 901.Trustee;Appointment and Acceptance of Duties.....67 902.Paying Agents;Appointment and Acceptance ofDuties...cc cccraaceee sceetme ree nee nee enne aeee 67 903.Responsibilities of Fiduciaries.............a eenee 68 TABLE OF CONTENTS Page 3 A16355CM 904.Evidence on Which Fiduciaries May Act.............68 905.Compensation......-cesseees eee ecweewee eee ce nee 69 906.Certain Permitted Acts........cc ee cee cee ee eens 69 907.Resignation of Trustee........sec e ert cere c er ere ves 69 908.Removal of Trustee.........0050 ecco ev eee eesrcetes 70 909.Appointment of Successor Trustee;Financial Qualifications of Trustee and Successor Trustee......eectteneeeeee ene ee eee eee ewe neeees 70 910.Transfer of Rights and Property to Successor Trustee...ccc eee as nace ervccerucs eee cece etre wee 71911.Merger or Consolidation.weer meme eee eee ees oe 71 912.Adoption of Authentication......ccc we eee eee eens 72 913.'Resignation or Removal of Paying Agent and Appointment of Successor........ec cece eee ee eens 72 ARTICLE X Supplemental Resolutions 1001.Supplemental Resolutions Effective Upon Filing With the Trustee.....ccc cc eee tee ee ee tenes 72 1002.Supplemental Resolutions Effective Upon Consent of Trustee.....Ce meeee eee eee eee eee eee tees 74 1003.Supplemental Resolutions Effective With Consent of Bondholders......ceeeveues Cee ee wren ee wee eeee 74 1004.General Provisions.......ese eee eee eee nere enue 74 1005.Amendments Prior to Delivery of Bonds.............75 ARTICLE XI L1O1.Mailing....1.ec cc ee ee eee ee eee eee eens 76 1102.Powers of Amendment.........Seeeceree eee reneaenes 76 1103.Consent of Bondholders.....cc ccc eee ee ee wenn 77 1104.Modification by Unanimous Consent............2-..0.78 1105.Exclusion Of BondS......ccc sewer n cence c scenes cece 79 1106.Notation on Bonds.........cceeees eee tweeeeewane 79 ARTICLE XII Miscellaneous 1201.Defeabance..ccccsrsr are ccccesesencecueevertscccas eae 791202.Evidence of Signatures of Bondholders and Ownership of Bonds.............reecereece ewene 82 1203.Moneys Held for Particular Bonds........vere eeeeee 82 1204.Preservation and Inspection of Documents......seas 83 1205.No Recourse on the Bonds........seem verre ec ceece oe 83 TABLE OF CONTENTS Page 4 A16355CM 1206.Severability of Invalid Provisions......ee meee ence 83 1207.Holidays.......cece nee seme mene nro ccc vass oe eeee 83 1208.NoticeB..ccc ccna r ecw n ence reer ence savers seses cones 83 ARTICLE XIII Bond Form and Effective Date 1301.Form of Bonds and Trustee's Certificate of Authentication...ccc cents serene nee r eer nnennveece 841302.Effective Date....ccc crac ence vere n eee seas aeensense 89 TABLE OF CONTENTS Page 5 A16355CM ALASKA ENERGY AUTHORITY POWER REVENUE BOND RESOLUTION BE IT RESOLVED by the Board of Directors of the Alaska Energy Authority,as follows: ARTICLE I Definitions and Statutory Authority 101.Definitions.The following terms shall,for all purposes of this Resolution,have the following meanings: "Accountant's Certificate"shall mean a certificate signed by a firm of independent certified public accountants of recognized national standing,selected by the Authority,which may be the firm of accountants which regularly audits the books of the Authority. "Act"shall mean Title 44,Chapter 83 of the Alaska Statutes (AS 44.83)as the same may be amended or supplemented from time to time. "Additional Bonds"shall mean Bonds authenticated and delivered pursuant to Section 204. "Aggregate Debt Service"for any period shall mean,as of any date of calculation,the sum of the amounts of Debt Service for such period with respect to all Series. "Annual Budget"shall mean the annual budget,as amended or supplemented,adopted or in effect for a particular Fiscal Year as provided in Section 709. "Annual Project Costs"shall have the meaning given it in Section 8 of the Power Sales Agreement. "Authority"shall mean the Alaska Energy Authority organized and existing under the Act. "Authorized Officer of the Authority"shall mean the Chairman of the Board of Directors,Vice Chairman of the Board of Directors,Executive Director,Secretary or Treasurer or any officer or employee of the Authority authorized to performspecificactsordutiesbyresolutiondulyadoptedbytheBoard BOND RESOLUTION Page 1 A16355CM of Directors.Whenever chief financial officer is used in this Resolution it shall mean a person designated as such by the Executive Director. "BIG"shall mean Bond Investors Guaranty Insurance Company and its successors. "Board of Directors"shali mean the Board of Directors of the Authority. "Bond”or "Bonds"shall mean any bond or bonds,note or notes,or evidence of indebtedness or evidences of indebted- ness,as the case may be,authenticated and delivered under and pursuant to,and entitled to the benefit and security of,this Resolution. "Bond Depository”means a Bondholder acting as a central securities depository as provided in Section 305. "Bondholder"or "Holder of Bonds"shall mean any person who shall be the registered owner of any Bond or Bonds. "Bond Registrar"shall mean the Trustee or any other bank or trust company organized under the laws of any state of the United States of America or any national banking association appointed by the Authority to perform the duties of Bond Regis- trar enumerated in Section 703. "Bond Year"shall mean each period of 12 calendar months ending on each July 1. "Capital Improvements"shall mean (a)repairs, maintenance,renewals,replacements,improvements or betterments required by federal or state law,a licensing or regulatory agency with jurisdiction over the Project,or the Power Sales Agreement,or otherwise necessary to keep the Project in good and efficient operating condition,consistent with (1)sound economics for the Project and the Purchasers and (2)national standards for the industry,which Capital Improvements consti- tute Required Project Work under the Power Sales Agreement;or (b)repairs,renewals and replacements,improvements,better- ments,additions or expansions which Capital Improvements do not constitute Required Project Work,but which in each case are approved by the Committee as Optional Project Work pursuant to the Power Sales Agreement.For purposes of this Resolution, "national standards for the industry”shall mean Prudent Utility Practice. "Capital Reserve Fund"shall mean the Capital Reserve Fund established in Section 502. BOND RESOLUTION Page 2 A16355CM "Capital Reserve Requirement"shall mean (i)an amount equal to the lesser of Maximum Aggregate Debt Service or ten per cent of the proceeds of Bonds;or (ii)such other lesser amount as is required in order to maintain the tax-exempt status of the Bonds. "Code"shall mean the Internal Revenue Code of 1986, as amended. "Committee”shall mean the Project Management Commit- tee established in the Power Sales Agreement. "Construction Engineer"means an independent engineer or engineering firm or corporation having a nationwide and favorable reputation and demonstrated experience in the field of construction engineering and construction management at the time retained by the Authority to perform the acts and carry out the duties provided for such Construction Engineer in this Resolu- tion. "Construction Fund"shall mean the Construction Fund established in Section 502. "Consulting Engineer"means an independent engineer or engineering firm or corporation having a nationwide and favorable reputation and demonstrated experience in the field of consulting engineering for power systems at the time retained by the Authority pursuant to Section 708 to perform the acts and carry out the duties provided for such Consulting Engineer in this Resolution. "Cost of Acquisition and Construction"shall mean all costs and expenses of planning,designing,acquiring,con- structing,installing and financing the Project or a Capital Improvement,placing the Project or a Capital Improvement in operation,and obtaining governmental approvals,certificates, permits and licenses with respect thereto,heretofore or hereaf- ter paid or incurred by or on behalf of the Authority or by any Purchaser which has heretofore entered into a contract or con- tracts with the Authority with respect to construction or acqui- sition of the Project or a Capital Improvement.Such costs shall include amounts required to be paid to any other party which are applied or are to be applied under agreement to the payment of items of Cost of Acquisition and Construction.The Cost of Acquisition and Construction shall include,but shail not be limited to: (1)Costs of preliminary investigation and develop- ment,the performance or acquisition of feasibility and planning studies,the securing of regulatory approvals,as well as costs for land and land rights,water and water rights,engineering, BOND RESOLUTION Page 3 A16355CM contractors'fees,labor,materials,equipment,utility services and supplies,accounting,legal and financing fees and expenses; (2)Working capital and reserves in such amounts as -shall be required during construction of the Project or a Capi- tal Improvement and to place the Project or a Capital Improve- ment in operation and such additional amounts of working capital and reserves as are required by this Resolution; (3)Interest accruing in whole or in part on Bonds prior to and during construction and for such additional period as the Authority may reasonably determine to be necessary for the placing of the Project or a Capital Improvement or any facility thereof in operation in accordance with the provisions of this Resolution; (4)Amounts,if any,required by this Resolution or a Supplemental Resolution to be paid from the proceeds of Bonds issued to finance the Cost of Acquisition and Construction into any Funds or Accounts established pursuant to this Resolution; (S)The payment of principal,premium,if any,and interest when due (whether at the maturity of principal or at the due date of interest or upon redemption)on any bond antici- pation note or other note or evidence of indebtedness issued in anticipation of Bonds for the purpose of financing the Cost of Acquisition and Construction of the Project or a Capital Im- provement,including,without limitation,the Variable Rate Demand Bonds; (6)Training and testing costs incurred by the Authority which are properly allocable to acquisition and con- struction; (7)All costs of insurance applicable to the period of construction; (8)The cost of restoring and repairing in accordance with Prudent Utility Practice all public or private property damaged or destroyed in the construction of the Project or a Capital Improvement,or the amount required by law to be paid by the Authority as adequate compensation for such damages,or amounts required by law or Prudent Utility Practice to be paid with respect to the restoration,relocation,removal,recon- struction or duplication of property made necessary or caused by the construction and installation of such Project or a Capital Improvement to the extent such costs are not otherwise paid out of the proceeds of insurance; BOND RESOLUTION Page 4 A16355CM (9)Legally required or permitted federal,state and local taxes and payments in lieu of taxes applicable to the period of construction; (10)All other costs incurred by or on behalf of the Authority and properly allocable to the acquisition and con- struction of the Project or a Capital Improvement;and (11)Costs of Issuance. "Costs of Issuance”shall mean any item of expense payable or reimbursable,directly or indirectly,by the Authori- ty and related to the authorization,offering,sale,issuance and delivery of Bonds,including,but not limited to,printing costs,costs of preparation and reproduction of documents,fil- ing and recording fees,initial fees and charges of any Fiduci- ary,legal fees and disbursements,fees and disbursements of the Consulting Engineer,fees and disbursements of other consultants and professionals,costs of credit ratings,fees and charges for preparation,execution,transportation and safekeeping of Bonds, application fees and premiums on municipal bond insurance, credit facility charges and costs and expenses relating to the refunding of Bonds or other obligations issued to finance or refinance the Project or a Capital Improvement,including,but not limited to,the refunding of the Variable Rate Demand Bonds and any obligations of the Authority outstanding at the time of adoption of this Resolution,the proceeds of which were applied to pay the Cost of Acquisition and Construction of the Project. "Counsel's Opinion"or "Opinion of Counsel"shall mean an opinion of counsel of nationwide recognized standing in the field of municipal bonds,selected by the Authority and not objected to by the Trustee in writing within 5 days after written notice of selection. "Date of Commercial Operation”shall have the meaning ascribed thereto in the Power Sales Agreement. "Debt Service”for any period shall mean,as of any date of calculationand with respect to any Series,an amountequaltothesumof(i)interest accruing during such period onBondsofsuchSeries,except to the extent that such interest is to be paid from deposits in the Interest Account in the Debt Service Fund made from Bond proceeds and (ii)that portion of each Principal Installment for such Series which would accrue during such period if such Principal Installment were deemed toaccruedailyinequalamountsfromthenextprecedingPrincipalInstallmentduedateforsuchSeries(or,if there shall be no such preceding Principal Installment due date,from a date one year preceding the due date of such Principal Installment orfromthedateofissuanceoftheBondsofsuchSeries,whichever BOND RESOLUTION Page 5 A16355CM Gate is later).Such interest and Principal Installments for such Series shall be calculated on the assumption that no Bonds of such Series Outstanding at the date of calculation will cease to be Outstanding except by reason of the payment of each Principal Installment on the due date thereof.For purposes of this definition (x)interest and Principal Installments with respect to interest accreting on compound interest or zero coupon or like interest paying Bonds shall be deemed to accrue in the 12 months immediately prior to the final maturity of such Bonds;and (y)the Authority may determine that interest will accrue on variable rate Bonds at a rate equal to the actual rate during a prior period. "Debt Service Fund"shall mean the Debt Service Fund established in Section 502. "Depository"shall mean any bank or trust company organized under the laws of any state of the United States of America or any national banking association selected by the Authority and approved in writing by the Trustee as a depository of moneys and securities held under the provisions of this Resolution,and may include the Trustee;provided that,if the Trustee shall fail to so approve,it shall deliver to the Authority a statement of its reasons for such failure. "Event of Default"shall have the meaning given to such term in Section 801. "Excess Investment Earnings”shall mean that amount determined by the Authority to be required to be rebated to theUnitedStatesGovernmentpursuanttotheCode. "Excess Investment Earnings Fund”shall mean the Excess Investment Earnings Fund established in Section 502. "Federal Obligation"shall mean any direct obligation of,or any obligation the full and timely payment of principal of and interest on which is guaranteed by,the United States of America. "Fiduciary”or "Fiduciaries"shall mean the Trustee, the Bond Registrar,the Paying Agents,or any or all of them,as may be appropriate. "Fiscal Year"shall mean the twelve-month period commencing on July 1 cf each year and including June 30 of the succeeding calendar year. "Fund"or "Funds"shall mean,as the case may be,each or all of the Funds established in Section 502. BOND RESOLUTION Page 6 A16355CM "Insurance Trustee"shall mean Bankers Trust Company. "Insured Bonds”shall mean the Bonds insured by theMunicipalBondInsurancePolicy. "Interest Account”shall mean the Interest Account in the Debt Service Fund established in Section 502. "Investment Securities"shall mean and include any of the following securities,if and to the extent the same are at the time legal for investment of the Authority's funds: (1)Federal Obligations; (11)obligations of the Government National Mortgage Association,the Federal National Mortgage Asso- ciation to the extent that such obligations are guaranteed by the Government National Mortgage Association,the Federal Financing Bank,the Federal Intermediate Credit Banks,Federal Banks for Cooperatives,Federal Land Banks, Federal Home Loan Banks,Farmers Home Administration and Federal Home Loan Mortgage Association; (iii)new housing authority bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States of America;or project notes issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America; (iv)direct and general obligations of any state of the United States of America,to the payment of the principal of and interest on which the full faith and credit of such state is pledged,provided that at the time of their purchase under this Resolution such obligations are rated not less than Aa or AA or their equivalents byMoody's Investors Service,Inc.and Standard &Poor's Corporation,or their successors; (v)certificates of deposit,whether negotiable or nonnegotiable,issued by any bank or trust company organized under the laws of any state of the United States of America or any national banking association (including any Fiduciary),provided that such certificates of deposit shall be purchased directly from such a bank,trust company or national banking association and shall be either (1) BOND RESOLUTION Page 7 A16355CM continuously and fully insured by the Federal Deposit Insurance Corporation,or (2)continuously and fully secured by Qualified Collateral,which shall have a market value (exclusive of accrued interest)at all times at least equal to 100%of the principal amount of such certificates of deposit and shall be lodged with the trust department of the Trustee or with a Federal Reserve Bank or branch,as custodian,by the bank,trust company or national banking association issuing each such certificate of deposit required to be so secured; (vi)repurchase agreements with banks which are members of the Federal Reserve System or with government bond dealers recognized as primary dealers by the Federal Reserve Bank of New York that are secured by Federal Obligations or the obligations referred to in paragraph (ii)(herein called "Other Obligations"),having a current market value at least equal to 100%of the amount of the repurchase agreement,marked to market weekly,and which Federal Obligations or Other Obligations shall have been deposited in trust by such bank or dealer with the trust department of the Trustee or with a Federal Reserve Bank or branch,or with another third party custodian approved bytheTrustee,by such bank or dealer and by the Authority,as collateral security for such repurchase agreements; (vil)"commercial paper"rated either A-1 or P-1, or corporate bonds or notes,in each case issued by a United States corporation,rated in one of the two highestratingcategoriesbyStandard&Poor's Corporation and Moody's Investors Service Inc. (viii)investment agreements with any corporation, including banking or financial institutions,the corporate debt of which is rated,at the time of investment,"Aa”or better by Moody's Investors Service,Inc.and "AA"or better by Standard &Poor's Corporation or secured in the same manner as repurchase agreements in paragraph (vi); (ix)guaranteed investment contracts or similar funding agreements issued by insurance companies,the corporate debt of which,at the time of investment,israted"Aa"or better by Moody's Investors Service,Inc.and"AA"or better by Standard &Poor's Corporation,or Bests and the contract is pari passu with senior debt,or the contract is rated in one of the two highest ratingcategoriesbyStandard&Poor's Corporation and Moody's Investors Service,Inc.or Bests;and (x)units of a taxable government money market fundconsistingofobligationsguaranteedbythefullfaithand BOND RESOLUTION Page 8 A16355CM credit of the United States of America and repurchase agreements secured as provided in paragraph (vi). "Maximum Aggregate Debt Service”shall mean,as of any date of calculation,the greatest amount of Aggregate Debt Service payable in any unexpired Bond Year. "Municipal Bond Insurance Policy"shall mean the municipal bond insurance policy issued by BIG simultaneously with the delivery of Insured Bonds,insuring the payment of the principal of and interest on all of the Insured Bonds in accordance with the terms thereof. "Operating Expenses”shall mean (i)the Authority's operation,maintenance,administrative and general expenses of the Project,and shall include,without limiting the generality of the foregoing,costs of investigations,insurance,ordinary repairs of the Project which do not entail the acquisition and installation of a unit of property (as generally prescribed by the Federal Energy Regulatory Commission),fuel costs,rents, engineering expenses,legal and financial advisory expenses, Committee expenses,refunds for overpayments by Purchasers, Salaries and required Project employee costs,any taxes or payments in lieu of taxes pursuant to the Act or otherwise pursuant to law,(ii)any other current expenses or obligations required to be paid by the Authority under the provisions of this Resolution or by law,all to the extent properly allocable to the Project,or required to be incurred under or in connec- tion with the performance of the Power Sales Agreement,and (iii)the fees and expenses of the Fiduciaries.Operating Expenses includes all the items listed in Section 8(a)of the Power Sales Agreement under the definition of Annual Project Costs except the items listed under Section 8(a)(i),(ii)and (iv).Operating Expenses shall not include any costs or expens- es for new construction or any allowance for depreciation. "Operating Fund"shall mean the Operating Fund estab- lished in Section 502. "Operating Reserve Account"shall mean the Operating Reserve Account established in Section 502. "Operating Reserve Account Requirement"shall mean zero until the earlier of the Date of Commercial Operation or the date of retirement of all of the Variable Rate Demand Bonds and thereafter shall mean an amount equal to 20 %of the Operating Expense component of the Annual Budget as calculatedannually,or such other amount as may be determined pursuant to the Power Sales Agreement. BOND RESOLUTION Page 9 A16355CM "Optional Project Work"shall have the meaning given it in Section 1 of the Power Sales Agreement. "Outstanding”,when used with reference to Bonds, shall mean,as of any date,Bonds theretofore or thereupon being authenticated and delivered under this Resolution except: (i)Bonds cancelled by the Trustee at or prior to such date; {ii)Bonds (or portions of Bonds)for the payment or redemption of which moneys equal to the principal amount or Redemption Price thereof,as the case may be,with interest to the date of maturity or redemption date,shall be held in trust under this Resolution and set aside for such payment or redemption (whether at or prior to the maturity or redemption date),provided that if such Bonds (or portions of Bonds)are to be redeemed,notice of such redemption shall have been given as in Article IV provided oer provision satisfactory to the Trustee shall have been 'made for the giving of such notice; (iii)Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and deliv- ered pursuant to Article III or Section 406 or Section 3106;and (iv)Bonds deemed to have been paid as provided in subsection 2 of Section 1201. "Paying Agent"shall mean any bank or trust company organized under the laws of any state of the United States of America or any national banking association designated as paying agent for the Bonds of any Series,and its successor or puccessors hereafter appointed in the manner provided in this Resolution. "Power Sales Agreement"shall mean the Power Sales Agreement for the purchase and sale of Project capacity (togeth- er with associated energy)dated as of December 8,1987 between the Authority and the Purchasers as the same may be amended. "Principal Account"shall mean the Principal Account in the Debt Service Fund established in Section 502. "Principal Instaliment"shall mean,as of any date of calculation and with respect to any Series,so long as any Bonds thereof are Outstanding,(i)the principal amount of Bonds of such Series due on a certain future date for which no Sinking Fund Installments have been established,or (ii)the unsatisfied balance of any Sinking Fund Installments due on a certain future BOND RESOLUTION Page 10 A16355CM date for Bonds of such Series,plus the amount of the sinking fund redemption premiums,if any,which would be applicable upon redemption of such Bonds on such future date in a principal amount equal to said unsatisfied balance of such Sinking Fund Installments,or (111)if such future dates coincide as to different Bonds of such Series,the sum of such principal amount of Bonds and of such unsatisfied balance of Sinking Fund In- stallments due on such future date plus such applicable redemp- tion premiums,if any. "Project"shall mean the Bradley Lake Hydroelectric Project,as the same is described on Exhibit C to the Power Sales Agreement. "Project Capacity”means the amount of electric capacity capable of being produced by the Project (including capacity attributable to Required or Optional Project Work)at any and all times from the Date of Commercial Operation until the termination of the Power Sales Agreement (or any renewal or replacement thereof)under the operating conditions that exist during such times,including periods when the Project may be not operating or inoperable or the operation thereof is suspended, interrupted,interfered with,reduced,or curtailed,in each case in whole or in part for any reason whatsoever,after corrections for station and Project use,and depletions required under any federal license for the Project. "Prudent Utility Practice"shall mean at a particular time any of the practices,methods and acts,engaged in or approved by a significant portion of the electric utility indus- try at such time,or which,in the exercise of reasonable judg- ment in the light of the facts known at such time,could have been expected to accomplish the desired result at the lowest reasonable cost consistent with good business practices,reli- ability,safety and reasonable expedition.Prudent Utility Practice is not required to be the optimum practice,method or act to the exclusion of all others,but rather to be a spectrum of possible practices,methods or acts which could have been expected to accomplish the desired result at the lowest reason- able cost consistent with reliability,safety and expedition.Prudent Utility Practice includes due regard for manufacturers' warranties and requirements of governmental agencies of compe- tent jurisdiction and shall apply not only to functional parts of the Project,but also to appropriate structures,landscaping, painting,signs,lighting and other facilities.In evaluating whether any matter conforms to Prudent Utility Practice,there shall be taken into account (i)the nature of the Authority and Purchasers under the laws of the State of Alaska and their statutory duties and responsibilities and (ii)the objective of integrating the Project with the generating resources of the Purchasers,including resources available under contract,to BOND RESOLUTION Page 11 A16355CM achieve optimum utilization of the resources and efficient and economical operation of each Purchaser's electrical system.For purposes of this Resolution,"national standards for the indus- try”shall mean Prudent Utility Practice. "Purchasers"shall mean the entities defined as Purchasers in the Power Sales Agreement. "Qualified Collateral"shall mean: (1)Obligations described under items (i),(ii) and (iii)of the definition of Investment Securities; (ii)direct and general obligations of any state of the United States of America which are rated not less than AA or Aa or their equivalents by Standard &Poor's Corporation and Moody's Investors Service,Inc., respectively,or their successors. "Redemption Price”shall mean,with respect to any Bond,the principal amount thereof plus the applicable premium, if any,payable upon redemption thereof pursuant to such Bond or this Resolution. "Refunding Bonds”shall mean all Bonds,whether issued in one or more Series,authenticated and delivered on original issuance pursuant to Section 205,and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to Article IJI or Section 406 or Section 1106. "Renewal and Contingency Reserve Fund"shall mean the Renewal and Contingency Reserve Fund established in Section 502. "Renewal and Contingency Reserve Requirement"shall mean zero until the earlier of the Date of Commercial Operation or the date of retirement of all of the Variable Rate Demand Bonds,and thereafter shall mean an amount equal to $5,000,000. "Required Project Work"shall have the meaning given it in Section 1 of the Power Sales Agreement. "Resolution"shall mean this Resolution as from time to time amended or supplemented by Supplemental Resolutions in accordance with the terms hereof. "Revenue Fund"shall mean the Revenue Fund established in Section 502. "Revenues"shall mean (1)all revenues,income,rents and receipts,derived or to be derived by the Authority from,or BOND RESOLUTION Page 12 A1l6355CM attributable to the ownership and operation of,the Project, including all revenues attributable to the Project or to payment of the costs thereof including,without limitation,all revenues received or to be received by the Authority under the Power Sales Agreement or under any other contract for the sale of power,energy,transmission or other service from the Project or any part thereof or any contractual arrangement with respect to the use of the Project or any portion thereof or the services, output or capacity thereof,and (ii)interest received or to be received on any moneys or securities (other than in the Con- struction Fund or in the Excess Investment Earnings Fund)held pursuant to this Resolution and required to be paid into the Revenue Fund. "Series"shall mean all of the Bonds authenticated and delivered on original issuance and identified pursuant to this Resolution or a Supplemental Resolution authorizing such Bonds as a separate Series of Bonds,and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to Article III or Section 406 or Section 1106,regardless of variations in maturity,interest rate, Sinking Fund Installments,or other provisions. "Sinking Fund Instaliment"means,as of any particular date of determination and with respect to the Outstanding Bonds of any Series,the amount required by a Supplemental Resolution to be paid in any event by the Authority on a single future date for the retirement of Bonds of such Series which mature after said future date,but does not include any amount payable by the Authority by reason only of the maturity of a Bond. "Supplemental Resolution"shall mean any resolution supplemental to or amendatory of this Resolution,adopted by the Authority in accordance with Article X. "Trustee"shall mean the trustee appointed pursuant to Article IX,and its successor or successors and any other corporation or association which may at any time be substituted in its place pursuant to this Resolution. "Variable Rate Demand Bonds"shall mean the $267,500,000 Alaska Power Authority Variable Rate Demand Bonds (Bradley Lake Hydroelectric Project)dated November 20,1985. 102.Interpretation.In this Resolution,unless the context otherwise requires: (i)The terms "hereby,""hereof,""hereto,""hereunder,""herein"and any similar terms used herein refer to this Resolution,and the term "hereafter"shall BOND RESOLUTION Page 13 A16355CM mean after,and the term "heretofore"shall mean before, the date of adoption of this Resolution; (ii)Words of the masculine gender shall mean and include correlative words of the feminine and neuter genders and words importing the singular number shall mean and include the plural number and vice versa; (iii)Words importing persons shall include firme, associations,partnerships (including limited partnerships),trusts,corporations and other legal enti- ties,including public bodies,as well as natural persons; (iv)Words importing the redemption or redeeming of a Bond or the calling of a Bond for redemption do not include or connote the payment of such Bond at its stated maturity or the purchase of such Bond; (v)Any percentage of Bonds,for purposes of this Resolution,shall be computed on the basis of the unpaid principal amount of Bonds Outstanding at the time the computation is made or is required to be made hereun- der; (vi)Any headingsa preceding the text of the several Articles and Sections of this Resolution,and any table of contents or marginal notes appended to copies hereof,shall be solely for convenience of reference and shall not constitute a part of this Resolution,nor shall they affect its meaning,construction or effect; (vii)Articles and Sections mentioned by number only are the respective Articles and Sections of this Resolution so numbered;and (viii)The term "principai™when used in connec- tion with compound interest or zero coupon or like paying Bonds shall mean the initial principal amount of such Bonds as at their date of issuance plus interest accreted thereon to the date of calculation. 103.Authority for this Resolution.This Resolution is adopted pursuant to the provisions of the Act.The Board of Directors has ascertained and hereby determines and declares that adoption of this Resolution is necessary to carry out the powers and duties expressly provided by the Act,that each and every act,matter,thing or course of conduct as to which provision is made in this Resolution is necessary or convenient in order to carry out and effectuate the purposes of the Author- ity in accordance with the Act and to carry out powers expressly given in the Act,and that each and every covenant or agreement BOND RESOLUTIONPage14 A16355CM herein contained and made is necessary,useful or convenient in order to better secure the Bonds and are contracts or agreements necessary,useful and convenient to carry out and effectuate the corporate purposes of the Authority under the Act. 104.Resolution to Constitute Contract.In consid- eration of the purchase and acceptance of any and all of the Bonds authorized to be issued hereunder by those who shall hold the same from time to time,this Resolution shall be deemed to be and shall constitute a contract between the Authority,the Trustee,and the holders from time to time of the Bonds,a trust agreement under the Act and a security agreement under the Alaska Uniform Commercial Code.The pledge and assignment made in this Resolution and the covenants and agreements herein set forth to be performed on behalf of the Authority shall be for the equal benefit,protection and security of the holders of any and all of the Bonds,all of which,regardless of the time or times of their authentication and delivery or maturity,shall be of equal rank without preference,priority or distinction of any of the Bonds over any other thereof except as expressly provided in or permitted by this Resolution. 105.Obligation of Bonds.The Bonds shall be direct and general obligations of the Authority,and the full faith and credit of the Authority are hereby pledged to the payment of the principal of and interest on the Bonds in accordance with their terms.All Bonds shall be entitled to the benefit of the continuing pledge and lien created by this Resolution to secure the full and final payment of the principal and Redemption Price of and interest on all of the Bonds. ARTICLE II Authorization and Issuance of Bonds 201.Authorization of Bonds.1.The Resolution provides for the authorization of Bonds of the Authority to be designated as "Power Revenue Bonds"for the purpose of providing funds for the financing or refinancing of the Project and Capital Improvements.The aggregate principal amount of the Bonds which may be executed,authenticated and delivered under this Resolution is not limited except as may hereafter be provided in this Resolution,or as may be limited by the Power Sales Agreement or by law. 2.The Bonds may,if and when authorized by the Authority pursuant to one or more Supplemental Resolutions,beissuedinoneormoreSeries,and the designation thereof,in addition to the name "Power Revenue Bonds",shall include such further appropriate particular designation added to or BOND RESOLUTION Page 15 A16355CM incorporated in such title for the Bonds of any particular Series as the Authority may determine.Each Bond shall bear upon its face the designation so determined for the Series to which it belongs. 3.Nothing contained in this Resolution shall be deemed to preclude or restrict the consolidation pursuant to a Supplemental Resolution of any Bonds of two or more separate Series authorized pursuant to such Supplemental Resolution to be issued pursuant to any of the provisions of Sections 203,204 and 205 into a single Series cf Bonds for purposes of sale and issuance;provided that each of the tests,conditions and other requirements contained in Sections 203,204 and 205 as applica- ble to each such separate Series shall be met and complied with. Except as otherwise provided in this subsection or in such Supplemental Resolution,such a consolidated Series shall be treated as a single Series for all purposes of this Resolution. 202.General Provisions for Issuance of Bonds.1. All (but not less than all)the Bonds of each Series shall be executed by the Authority for issuance under this Resolution and delivered to the Trustee and thereupon shall be authenticated by the Trustee and by it delivered to the Authority or upon its order,but only upon the receipt by the Trustee of: (a)A Counsel's Opinion to the effect that (i)the Authority has the right and power under the Act as amended to the date of such Opinion to adopt this Resolu- tion,and this Resolution has been duly and lawfully adopted by the Authority,is in full force and effect and is valid and binding upon the Authority in accordance with its terms,and no other authorization for this Resolution is required;(ii)the Authority has the right and power under the Act as so amended to enter into the Power Sales Agreement and the Power Sales Agreement is valid and binding upon the Authority in accordance with its terms, and no other authorization for the Power Sales Agreement is required;(iii)this Resolution creates the valid pledge and assignment which it purports to create of the Revenues, moneys,securities and funds held or set aside under this Resolution subject only to the provisions of this Resolution permitting the application thereof for the purposes and on the terms and the conditions set forth in this Resolution;and (iv)the Bonds of such Series are valid and binding general obligations of the Authority for the payment of which the full faith and credit of the Authority are pledged as provided in this Resolution,and entitled to the benefits of this Resolution and of the Act as amended to the date of such Opinion,and such Bonds have been duly and validly authorized and issued in accordance with law,including the Act as amended to the date of such BOND RESOLUTION Page 16 A16355CM Opinion,and in accordance with this Resolution;provided, that such Opinion may take exception for limitations imposed by or resulting from bankruptcy,insolvency, moratorium,reorganization or other laws affecting creditors'rights generally; {b)A written order as to authentication and delivery of such Bonds,signed by an Authorized Officer of the Authority; (c¢})A copy of the Supplemental Resolution authorizing such Bonds,certified by an Authorized Officer of the Authority,which shall,to the extent necessary and not already fixed by the Resolution,among other provi- Bions,specify:(1)the authorized principal amount, designation and Series of such Bonds;(ii)the purposes for which such Series of Bonds is being issued,which shall be (A)the purpose specified in Section 203,(B)one of the purposes specified in Section 204,or (C)the refunding of Bonds as provided in Section 205;(iii)the date,and the Maturity date or dates,of the Bonds of such Series;(iv) the interest rate or rates or the maximum rate of interest of the Bonds of such Series or the method of calculating the interest rate,which interest rate may be determinable at one or more specified times or periodically by reference to an index or other reference point,an interest accreting or compound interest,zero coupon,or like method of interest rate or yield calculation and the interest payment dates therefor,provided that the interest rate shall be identical for all such Bonds of like maturity;(v)the denominations of,and the manner of dating,numbering and lettering,the Bonds of such Series;(vi)the Paying Agent or Paying Agents and the place or places of payment of the principal and Redemption Price,if any,of,and interest on,the Bonds of such Series;(vii)the Redemption Price or Prices,if any,and subject to Article IV,the redemption terms for the Bonds of such Series;(viii)the amount and due date of each Sinking Fund Installment,if any,forBondsoflikematurityofsuchSeries;(ix)if so deter- mined by the Authority,provisions for the sale of the Bonds of such Series;(x)the amount (or the method of determining the amount),if any,to be deposited from the proceeds of such Series of Bonds in the Debt Service Fund and provisions for the application thereof to the paymentofalloraportionoftheinterestonsuchSeriesofBondsoeranyotherSeriesofBonds;(xi)whether the Series of Bonds is to be issued pursuant to paragraphs 3 -8 of Section 305;(xv)the amount to be deposited from the pro- ceeds of such Series of Bonds in the account in the Construction Fund established for the Project or the undertaking of Capital Improvements for which such Bonds BOND RESOLUTION Page 17 A16355CM are authorized to be issued;and (xii)such other matters as shall be necessary or appropriate so as to comply with the provisions of this Resolution or to provide for the issuance and delivery of the Bonds; (ad)Except in the case of Refunding Bonds,a certificate of an Authorized Officer of the Authority stating that the Authority is not in default in the per- formance of any of the covenants,conditions,agreements or provisions contained in this Resolution; (e)A certificate from the Committee stating that the Supplemental Resolution authorizing such Bonds has been adopted in accordance with Section 11 of the Power Sales Agreement,provided that,a Supplemental Resolution adopted pursuant to Section 12 of the Power Sales Agreement does not require such a certificate;and (£)Such further documents as are required by the provisions of Section 203,204 or 205 or Article X or any Supplemental Resolution adopted pursuant to Article X. 2.After the original issuance of Bonds of any Series,no Bonds of such Series shall be issued except in lieu of or in substitution for other Bonds of such Series pursuant to Article III or Section 406 or Section 1106. 3.The Supplemental Resolution authorizing the initial Series of Bonds for the Project shall establish Princi- pal Installments for such Series. 203.Project Issue.1.There is hereby authorized an issue of Bonds under this Resolution which shall be designated "Power Revenue Bonds"and which shall be issued pursuant to one or more Supplemental Resolutions establishing the terms of the Series from time to time,for the purpose of paying all or a portion of the Cost of Acquisition and Construction of the Project,including,without limitation,the refunding of a portion of the Variable Rate Demand Bonds. 2.The proceeds of each Series of Power Revenue Bonds,including accrued interest shall be paid to the Trustee and deposited by the Trustee,as follows: {a)The amount,if any,necessary so that the amount in the Renewal and Contingency Reserve Fund is equal to the Renewal and Contingency Reserve Fund Requirement, shall be deposited in the Renewal and Contingency Reserve Fund; BOND RESOLUTION Page 18 A16355CM .(b)The amount,if any,necessary so that the amount in the Capital Reserve Fund is equal to the Capital Reserve Fund Requirement shall be deposited in the Capital Reserve Fund; (c)The amount,if any,necessary so that the amount in the Operating Reserve Account is equal to the Operating Reserve Requirement,or such greater amount as the Authority directs,shall be transferred to the Authority and deposited in the Operating Reserve Account; and (d)After any further deposits directed by Supplemental Resolution,the balance of the proceeds shall be deposited into the Construction Fund. 204.Additional Bonds.1.One or more Series of Additional Bonds may be authenticated and delivered upon origi- nal issuance for the purpose of paying all or a portion of the Cost of Acquisition and Construction of any Capital Improve- ments,upon compliance with the terms and conditions set forth in Section 202,and upon receipt by the Trustee of (1)evidence that such Capital Improvements have been approved by the Commit- tee in accordance with the Power Sales Agreement,and (ii)a written Opinion of the Consulting Engineer that neither the issuance of the Additional Bonds nor the payment of the Cost of Acquisition and Construction of the Capital Improvements will impair the ability of the Authority to pay Debt Service through collection of Revenues under the Power Sales Agreement. 2.The proceeds,including accrued interest,of the Additional Bonds of each Series shall be applied simultaneously with the delivery of such Bonds,as provided in the Supplemental Resolution authorizing such Series. 205.Refunding Bonds.1.One or more Series of Refunding Bonds may be authenticated and delivered upon original issuance to refund any Outstanding Bond or Bonds.Refunding -Bonds shall be issued in a principal amount sufficient,together with other moneys available therefor,to accomplish such refund- ing and to make the deposits in the Funds and Accounts under this Resolution required by the provisions of the Supplemental Resolution authorizing such Bonds.Bonds issued to retire the Variable Rate Demand Bonds are not subject to the requirements of this section for Refunding Bonds. 2.Refunding Bonds of each Series shall be authen- ticated and delivered by the Trustee only upon receipt by the Trustee (in addition to the documents required by Section 202) of: BOND _RESOLUTIONPage19 A16355CH (a)Irrevocable instructions to the Trustee, satisfactory to it,to give due notice of redemption,on a redemption date or dates specified in such instructions,of any of the refunded Bonds to be redeemed; (>)Irrevocable instructions to the Trustee, satisfactory to it,to give due notice provided for in Section 1201 to the Holders of the Bonds being refunded; and (¢)Either (i)moneys (including moneys with- drawn and deposited pursuant to subsection 4 of Section 507)in an amount sufficient to effect payment at the applicable Redemption Price of the refunded Bonds to be redeemed and of the principal amount of the refunded Bonds not to be redeemed,together with accrued interest on such Bonds to the redemption date or maturity date,as the case may be,which moneys shall be held by the Trustee inaseparateaccountirrevocablyintrustforandassigned to the respective Holders of the Bonds to be refunded,or (11) Federal Obligations in such principal amounts,of such maturities,bearing such interest,and otherwise having such terms and qualifications,and any moneys,as shall be necessary to comply with the provisions of subsection 2 of Section 1201,which Federal Obligations and moneys shall be held in trust by the Trustee and used only as provided in said subsection 2. 3.The proceeds,including accrued interest,of the Refunding Bonds of each Series shall be applied simultaneously with the delivery of such Bonds for the purposes of making deposits in such Funds and Accounts under this Resolution as shall be provided by the Supplemental Resolution authorizing such Series of Refunding Bonds and shall be applied to the refunding purposes thereof in the manner provided in said Sup- plemental Resolution. 4,The Supplemental Resolution authorizing a Series of Refunding Bonds may establish such funds and accounts in addition to the Funds and Accounts established herein as are necessary to provide for such refunding. ARTICLE III General Terms and Provisions of Bonds 301.Medium of Payment:Form and Date;Letters and Numbers.1.The Bonds shall be payable,with respect to interest,principal and Redemption Price,in any coin or curren- cy of the United States of America which at the time of payment is legal tender for the payment of public and private debts. BOND RESOLUTION Page 20 A16355CM 2.The Bonds of each Series shall be negotiable instruments issued in the form of fully registered Bonds.If and to the extent it is hereafter judicially determined or determined by enactment of law that coupon bonds may be issued with interest exempt from federal income taxation or if the Authority determines to issue Bonds the interest on which is not exempt from taxation,the Authority may provide for the issu- ance,execution,authorization,exchange and other details of coupon bonds by Supplemental Resolution. 3.Each Bond shall be lettered and numbered as provided in this Resolution or the Supplemental Resolution authorizing the Series of which such Bond is a part and so as to be distinguished from every other Bond. 4.Bonds of each Series shall be dated as provided in the Supplemental Resolution authorizing such Series. 5.The principal and Redemption Price of the Bonds shall be payable upon presentation and surrender at the princi- pal corporate trust office of any Paying Agent or as may be provided by Supplemental Resolution.Interest on Bonds shall be paid by the Trustee by check or draft mailed by first class mail to the registered owners of record as of the 15th day of the month preceding each interest payment date at the addresses of such owners appearing on the registration books maintained by the Authority for such purpose at the principal corporate trust office of the Bond Registrar or as may be provided by Supplemental Resolution. 302.Legends.The Bonds of each Series may contain or have endorsed thereon such provisions,specifications and descriptive words not inconsistent with the provisions of this Resolution as may be necessary or desirable to comply with custom,the rules of any securities exchange or commission orbrokerageboard,or otherwise,as may be determinedby theAuthoritypriortotheauthenticationanddeliverythereof. 303.Execution and Authentication.1.The Bonds shall be executed in the name of the Authority by the manual or facsimile signature of its Chairman or its Vice Chairman,and its corporate seal (or a facsimile thereof)shall be impressed,imprinted,engraved or otherwise reproduced thereon and attested by the manual or facsimile signature of the Secretary or an Assistant Secretary of the Authority,or in such other manner asmayberequiredorpermittedbylaw.In case any one or more oftheofficerswhoshallhavesignedorsealedanyoftheBonds shall cease to be such officer before the Bonds so signed and sealed shall have been authenticated and delivered by the Trustee,such Bonds may,nevertheless,be authenticated and delivered as herein provided,and may be issued as if the BOND RESOLUTION Page 21 A16355CM persons who signed or sealed such Bonds had not ceased to hold such offices.Any Bond of a Series may be signed and sealed on behalf of the Authority by such persons as at the time of the execution of such Bonds shall be duly authorized to hold the proper office in the Authority,although at the date borne by the Bonds of such Series such person may not have been so au- thorized or have held such office. 2.The Bonds of each Series shall bear thereon a certificate of authentication,in the form set forth in Section 1301 and any Supplemental Resolution authorizing such Bonds, executed manually by the Trustee.Only such Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or benefit under this Resolution and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Trustee. Such certificate of the Trustee upon any Bond executed on behalf of the Authority shall be conclusive evidence that the Bond so authenticated has been duly authenticated and delivered under this Resolution and that the Holder thereof is entitled to the benefits of this Resolution. 304.Exchange of Bonds.Bonds,upon surrender thereof at the principal corporate trust office of the Bond Registrar with a written instrument of transfer satisfactory to the Bond Registrar,duly executed by the registered owner or his duly authorized attorney,may,at the option of the registered owner thereof,and upon payment by such registered owner of any charges which the Bond Registrar may make as provided in Section 306,be exchanged for an equal aggregate principal amount of Bonds of the same Series and maturity of any other authorized denominations. 305.Negotiability,Transfer and Registry;Bond Depository.1.Bonds shall be transferable only upon the books of the Authority,which shall be kept for such purposes at the principal corporate trust office of the Bond Registrar,by the registered owner thereof in person or by his attorney duly authorized in writing,upon surrender thereof together with a written instrument of transfer satisfactory to the Bond Registrar duly executed by the registered owner or his duly authorized attorney.Upon transfer of any such Bond,the Authority shall issue in the name of the transferee a new Bond or Bonds of the same aggregate principal amount and Series and maturity as the surrendered Bond. 2.The Authority and each Fiduciary may deem and treat the person in whose name any Bond shall be registered upon the books of the Authority as the absolute owner of such Bond, whether such Bond shall be overdue or not,for the purpose of receiving payment of,or on account of,the principal and BOND RESOLUTION Page 22 A16355CM Redemption Price,if any,of and interest on such Bond and for all other purposes,and all such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid,and neither the Authority nor any Fiduciary shall be affected by any notice to the contrary. The Authority agrees to indemnify and save each Fiduciary harmless from and against any and all loss,cost,charge, expense,judgment or liability incurred by it,acting in good faith and without negligence under this Resolution,in so treat- ing such registered owner. 3.A Supplemental Resolution may provide that (i)the Bonds may be initially issued in the form of a separate single authenticated fully registered bond in the amount of each separate stated maturity of the Bonds and (ii)upon initial issuance,the ownership of such Bond may be registered in the registry books kept by the Trustee in the name of the nominee of a Bond Depositary or in the name of the Bond Depository.With respect to Bonds registered in the registry books kept by the Trustee in the name of a nominee of a Bond Depository or in the name of the Bond Depository,the Authority and the Trustee shall have no responsibility or obligation with respect to (i)the accuracy of the records of the Bond Depository,its nominee or any participant with respect to any ownership interest in the Bonds,(ii)the delivery to any participant,any beneficial owner or any other person,other than the nominee or Bond Depository,of any notice with respect to the Bonds,including any notice of redemption,or (iii)the payment to any participant,any beneficial owner or any other person,other than the nominee or Bond Depository,of any amounts with respect to the principal of or premium,if any,or interest on the Bonds.The Authority and the Trustee may treat as and deem the nominee or Bond Depository to be the absolute owner of each Bond for the purpose of payment of the principal of or premium,if any,and interest on such Bond,for the purpose of giving notices of redemption and other matters with respect to such Bond,for the purpose of registering transfers with respect to such Bond,and for all other purposes whatsoever.The Trustee shall pay all principal of or premium,if any,and interest ontheBondsonlytoorupontheorderofthenomineeorBond Depository,and all such payments shall be valid and effectivetofullysatisfyanddischargetheAuthority's obligation withrespecttotheprincipalofandpremium,if any,and interest on the Bonds to the extent of the sum or sums so paid.No person other than the nominee or Bond Depository shall receive an authenticated Bond evidencing the obligation of the Authority to make payments of principal and premium,if any,and interestpursuanttothisResolution.Upon delivery by the nominee orBondDepositorytotheTrusteeofwrittennoticetotheeffect that the Bond Depository has determined to substitute a new BOND RESOLUTION Page 23 A16355CM nominee in place of the existing nominee,the Trustee shall issue a new registered bond to the new nominee in exchange for each bond surrendered which was registered in the name of the old nominee to such new nominee of the Bond Depository. 4.Upon receipt by the Authority and the Trustee of written notice from the Bond Depository to the effect that the Bond Depository is unable or unwilling to discharge its responsibilities and no substitute depository willing to undertake the functions of the Bond Depository hereunder can be found which is willing and able to undertake such functions upon reasonable and customary terms,then the Bonds shall no longer be restricted to being registered in the registry books of the Authority kept by the Trustee in the name of the nominee of the Bond Depository,but may be registered in whatever name or names the beneficial owners transferring or exchanging Bonds shall Gesignate,in accordance with the provisions of this Resolution. 5.In the event the Authority determines that it is in the best interests of the beneficial owners that they be able to obtain Bond certificates,the Authority may notify the Bond Depository and the Trustee,whereupon the nominee or Bond Depository will notify the participants,of the availability through the nominee or Bond Depository of Bond certificates.In such event,the Trustee shall issue,transfer and exchange Bond certificates as requested to the Bond Depository and any other Bondholders in appropriate amounts,and whenever the Bond Depository requests the Authority and the Trustee to do so,the Trustee and the Authority will cooperate with the Bond Depository by taking appropriate action after reasonable written notice (i)to make available one or more separate certificates evidencing the Bonds to any nominee or participant having Bonds credited to its Bond Depository account or (ii)to arrahge for another securities depository to maintain custody of certificates evidencing the Bonds. 6.So long as any Bond is registered in the name of a nominee of the Bond Depository,all payments with respect to the principal of and premium,if any,and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively,to the nominee or Bond Depository. 7.$§In connection with any notice or other communication to be provided to Bondholders pursuant to this Resolution by the Authority or the Trustee with respect to any consent or other action to be taken by Bondholders,the Authority or the Trustee,as the case may be,shall establish a record date for such consent or other action and give the nominee or Bond Depository notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. BOND RESOLUTION Page 24 Ai6355CM 8.As used in this section "participant"means any person or other entity for whom the Bond Depository holds Bonds under this section. 306.Regulations With Respect to Exchanges and Transfers.In all cases in which the privilege of exchanging or transferring Bonds is exercised,the Authority shall execute and the Trustee shall authenticate and deliver Bonds in accordance with the provisions of this Resolution.All Bonds surrendered in any such exchanges or transfer shall forthwith be delivered to the Trustee and cancelled by the Trustee.For every such exchange or transfer of Bonds,whether temporary or definitive, the Authority or the Bond Registrar may make a charge sufficient to reimburse it for any tam,fee or other governmental charge required to be paid with respect to such exchange or transfer. Neither the Authority nor the Bond Registrar shall be required (a)to transfer or exchange Bonds of a Series which could be redeemed for a period of 15 days next preceding any selection of such Bonds to be so redeemed or thereafter until after the first mailing of any notice of redemption;or (b)to transfer or exchange any Bonds called for redemption. 307.Bonds Mutilated,Destroyed,Stolen or Lost.If any Bond becomes mutilated or is lost,stolen or destroyed,the Authority may execute and the Trustee shall authenticate and deliver a new Bond of like date of issue,maturity date,princi- pal amount and interest rate per annum as the Bond so mutilated, lost,stolen or destroyed,provided that (1)in the case of such mutilated Bond,such Bond is first surrendered to the Trustee , (ii)in the case of any such lost,stolen or destroyed Bond there is first furnished evidence of such loss,theft or de- struction satisfactory to the Authority and Trustee together with indemnity satisfactory to the Authority and Trustee,(iii) all other reasonable requirements of the Authority are complied with,and (iv)expenses in connection with such transaction are paid by the Hoider.Any Bonds surrendered for exchange shall be cancelled.Any such new Bonds issued pursuant to this Section in substitution for Bonds alleged to be destroyed,stolen or lost shall constitute original additional contractual obliga- tions on the part of the Authority,whether or not the Bonds so alleged to be destroyed,stolen or lost be at any time enforce- able by anyone,and shall be equally secured by and entitled to equal and proportionate benefits with all other Bonds issued under this Resolution in any moneys or securities held by the Authority or any Fiduciary for the benefit of the Bondholders. 308.Temporary Bonds.1.Until the definitive Bonds of any Series are prepared,the Authority may execute,in thesamemannerasisprovidedinSection303,and upon the requestoftheAuthority,the Trustee shall authenticate and deliver,in lieu of definitive Bonds,but subject to the same provisions, BOND RESOLUTION Page 25 A16355CM limitations and conditions as the definitive Bonds except as to the denomination thereof,one or more temporary Bonds substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued,in denominations authorized by the Authority,and with such omissions,insertions and variations as may be appropriate to temporary Bonds.The Authority at its own expense shall prepare and execute,and, upon surrender of such temporary Bonds for exchange and the cancellation of such surrendered temporary Bonds,the Trustee shall authenticate and without charge to the Holder thereof deliver in exchange therefor,definitive Bonds,if any,of the game aggregate principal amount and Series and maturity as the temporary Bonds surrendered.Until so exchanged,the temporary Bonds shall in all respects be entitled to the same benefits and security as definitive Bonds authenticated and issued pursuant to this Resolution. 2.If the Authority shall authorize the issuance of temporary Bonds in more than one denomination,the Holder of any temporary Bond or Bonds may,at his option,surrender the same to the Trustee in exchange for another temporary Bond or Bonds of like aggregate principal amount and Series and maturity of any other authorized denomination or denominations,and there- upon the Authority shall execute and the Trustee shall authenti- cate and,in exchange for the temporary Bond or Bonds so surren- dered and upon payment of the taxes,fees and charges provided for in Section 306,shall deliver a temporary Bond or Bonds of like aggregate principal amount,Series and maturity in such other authorized denomination or denominations as shall be requested by such Holder. 3.All temporary Bonds surrendered in exchange either for another temporary Bond or Bonds or for a definitive Bond or Bonds shall be forthwith cancelled by the Trustee. ARTICLE IV Redemption of Bonds 401.Privilege of Redemption and Redemption Price. Bonds subject to redemption prior to maturity pursuant to this Resolution or a Supplemental Resolution shall be redeemable, upon notice as provided in this Article IV,at such times,at such Redemption Prices and upon such terms in addition to the terms contained in this Article IV as may be specified in this Resolution or in the Supplemental Resolution authorizing such Series. 402.Redemption at the Election or Direction of the Authority.In the case of any redemption of Bonds at the BOND RESOLUTION : Page 26 A16355CM election or direction of the Authority,the Authority shall give written notice to the Trustee of its election or direction so to redeem,of the redemption date,of the Series,and of the principal amounts of the Bonds of each maturity of such Series to be redeemed (which Series,maturities and principal amounts thereof to be redeemed shall be determined by the Authority in its sole discretion,subject to any limitations with respect thereto contained in this Resolution and the Supplemental Resolution with respect to such Series).Such notice shall be given at least 45 days prior to the redemption date or such shorter period as shall be acceptable to the Trustee.In the event notice of redemption shall have been given as in Section 405 provided,there shall be paid prior to the redemption date to the appropriate Paying Agents an amount in cash which,in addition to other moneys,if any,available therefor held by such Paying Agents,will be sufficient to redeem on the redemp- tion date at the Redemption Price thereof,plus interest accrued and unpaid to the redemption date,all of the Bonds to be redeemed.The Authority shall promptly notify the Trustee in writing of all such payments by it to a Paying Agent. 403.Redemption Otherwise Than at the Authority's Election or Direction.Whenever by the terms of this Resolution the Trustee is required or authorized to redeem Bonds otherwise than at the election or direction of the Authority,the Trustee shall select the Bonds to be redeemed,give the notice of redemption and pay out of moneys available therefor the Redemp- tion Price thereof,plus interest accrued and unpaid to the redemption date,to the appropriate Paying Agents in accordance with the terms of this Article IV and,to the extent applicable, Section 507. 404.Selection of Bonds to be Redeemed.If less than all of the Bonds of like maturity of any Series shall be called for prior redemption,the particular Bonds or portions of Bonds to be redeemed shall be selected by lot by the Trustee in such Manner as the Trustee in its discretion may deem fair and appropriate. 405.Notice of Redemption.When the Trustee shallreceivenoticefromtheAuthorityofitselectionordirection to redeem Bonds pursuant to Section 402,and when redemption of Bonds is authorized or required pursuant to Section 403,the Trustee shall give notice,in the name of the Authority,of the redemption of such Bonds,which notice shall specify the Series and maturities of the Bonds to be redeemed,the redemption date and the place or places where amounts due upon such redemption will be payable and,if less than all of the Bonds of any like Series and maturity are to be redeemed,the letters and numbers or other distinguishing marks of such Bonds so0 to be redeemed, and,in the case of Bonds to be redeemed in part only,such BOND RESOLUTION Page 27 A16355CM notice shall also specify the respective portions of the princi- pal amount thereof to be redeemed.Such notice shall further state that on such date there shall become due and payable upon each Bond to be redeemed the Redemption Price thereof,or the Redemption Price of the specified portions of the principal thereof in the case of Bonds to be redeemed in part only,to- gether with interest accrued to the redemption date,and that from and after such date interest thereon shall cease to accrue and be payable.Such notice shall be given by mailing such notice,first class mail,postage prepaid,not less than 30 or more than 60 days before the redemption date,to the registered owners of any Bonds or portions of Bonds which are to be redeemed,at their last addresses,if any,appearing upon the registry books. 406.Payment of Redeemed Bonds.Notice having been given in the manner provided in Section 405,the Bonds or portions thereof so called for redemption shall become due and payable on the redemption date so designated at the Redemption Price,plus interest accrued and unpaid to the redemption date, and,upon presentation and surrender thereof at the office specified in such notice,such Bonds,or portions thereof,shall _be paid at the Redemption Price,plus interest accrued andunpaidtotheredemptiondate.If there shall be selected for redemption less than all of a Bond,the Authority shall execute and the Trustee shall authenticate and the Paying Agent shall deliver,upon the surrender of such Bond,without charge to the owner thereof,for the unredeemed balance of the principal amount of the Bond so surrendered,at the option of the owner thereof,Bonds of like Series and maturity in any of the author- ized denominations.If,on the redemption date,moneys for the redemption of all the Bonds or portions thereof of any like Series and maturity to be redeemed,together with interest to the redemption date,shall be held by the Paying Agents so as to be available therefor on said date and if notice of redemption shall have been mailed as aforesaid (and notwithstanding any defect therein or the lack of actual receipt thereof by any Bondholder),then,from and after the redemption date interest on the Bonds or portions thereof of such Series and maturity so called for redemption shall cease to accrue and become payable. If said moneys shall not be so available on the redemption date, such Bonds or portions thereof shall continue to bear interest until paid at the same rate as they would have borne had they not been called for redemption. BOND RESOLUTION Page 28 A16355CM ARTICLE V Establishment of Funds and Application Thereof 501.Pledge of Revenues and Other Funds.1.A pledge of the Revenues,and of all moneys,securities and funds,except the Excess Investment Earnings Fund,held or set aside or to be held or set aside by the Authority or any Fiduciary under this Resolution,is hereby made,and the same are hereby pledged and assigned to secure the payment of the principal and Redemption Price of and interest on the Bonds and any Sinking Fund Installments for the retirement thereof,subject only to the provisions of this Resolution permitting the payment,setting apart or appropriation thereof for or to the purposes and on the terms,conditions,priorities and order set forth in or provided under this Resolution.This pledge shall be valid and binding from the time when it is made;the Revenues so pledged and then or thereafter received by the Authority shall immediately be subject to the lien of such pledge without any physical delivery or further act:and the lien of such pledge and the obligation to perform the contractual provisions hereby made shall be valid and binding as against all parties having claims of any kind in tort,contract or otherwise against the Authority,irrespective of whether such parties have notice thereof. 2.The Bonds shall be direct and general obligations of the Authority for the payment of which the full faith and credit of the Authority are pledged and neither the State of Alaska nor any political subdivision (other than the Authority) nor any Purchaser shall be obligated to pay the principal or Redemption Price thereof or interest thereon and neither the faith and credit nor the taxing power of the State of Alaska or any political subdivision thereof (other than the Authority)or of any Purchaser is pledged to the payment of the principal or Redemption Price of,or interest on,the Bonds.The Authority may not pledge the full faith and credit of the State of Alaska or any political subdivision thereof,except the Authority,to the payment of the Bonds and the issuance of the Bonds by theAuthoritymaynotdirectlyorindirectlyorcontingentlyobli- gate the State of Alaska or a political subdivision of the State of Alaska to apply money from,or levy or pledge any form of taxation whatever to the payment of the Bonds.Nothing contained in this Section shall be construed to affect any obligation of a Purchaser under the Power Sales Agreement. 3.Nothing contained in this Resolution shall be construed to prevent the Authority from acquiring,constructingorfinancingthroughtheissuanceofitsbonds,notes or otherevidencesofindebtednessanyfacilitieswhichdonotconstitute a part of the Project for the purposes of this Resolution or from securing such bonds,notes or other evidences of BOND RESOLUTION Page 29 Al6355CM indebtedness by a mortgage of the facilities so financed or by a pledge of,or other security interest in,the revenues therefrom or any lease or other agreement with respect thereto or any revenues derived from such lease or other agreement;provided that such bonds,notes or other evidences of indebtedness shall not be payable out of or secured by the Revenues or any Fund held under this Resolution and neither the cost of such facili- ties nor any expenditure in connection therewith or with the financing thereof shall be payable from the Revenues or from any such Fund. 502.Establishment of Funds and Accounts.1.The following Funds and Accounts,each to be held by the Trustee, are hereby established: (1)Construction Fund, (2)Debt Service Fund,which shall consist of an Interest Account and a Principal Account, (3)Capital Reserve Fund, (4)Renewal and Contingency Reserve Fund,and (5)Excess Investment Earnings Fund. 2.The following funds,each to be held by the Authority,are hereby established: (1)Revenue Fund,and (2)Operating Fund,which shall include therein an Operating Reserve Account. 503.Construction Fund.1.There shall be paid into the Construction Fund the amounts required to be so paid by the provisions of this Resolution and any Supplemental Resolution, and there may be paid into the Construction Fund,at the option of the Authority,any moneys received for or in connection with the Project by the Authority from any other source,unless required to be otherwise applied as provided by this Resolution. Amounts in the Construction Fund shall be applied to the Cost of Acquisition and Construction in the manner provided in this Section 503,and until so applied are pledged for the security of and the payment to Bondholders of the principal or Redemption Price of and interest on the Bonds and shall at all times be subject to the lien of such pledge. 2.There shall be established within the Construc- tion Fund separate accounts for the Project and for each BOND RESOLUTION Page 30 A16355CM undertaking of Capital Improvements for which Bonds are author- ized to be issued. 3.The proceeds of insurance,including the proceeds of any self-insurance fund,maintained pursuant to this Resolution against physical loss of or damage to the Project orCapitalImprovements,or of contractor's performance bonds or other assurances of completion with respect thereto,pertaining to the period of construction thereof,shall be paid into the appropriate separate account in the Construction Fund. 4.The Trustee shall,during and upon completion of the Project or Capital Improvements,make payments from the Construction Fund in the amounts,at the times,in the manner and on the other terms and conditions set forth in this para- graph and in paragraph 5 of this Section 503.Before any such payment shall be made,the Authority shall file with the Trust- ee: (a)its requisition therefor,stating in respect of each payment to be made (1)the name of the person,firmorcorporationtowhompaymentisdue,(2)the amount to bepaid,and (3)in reasonable detail the purpose for which the obligation was incurred;and (b)its certificate signed by the chief finan- cial officer of the Authority attached to the requisition certifying (1}that obligations in the stated amounts have been properly incurred by the Authority in or for the construction or acquisition of the Project or Capital Improvements,and that each item thereof is a proper charge against the Construction Fund and is a proper Cost of Construction and Acquisition of the Project or Capital Improvements and has not been paid,(2)that there has not been filed with or served upon the Authority notice of any lien,right to lien,or attachment upon,or claim affecting the right to receive payment of,any of the moneys payable under such requisition to any of the persons,firms or corporations named in such requisition,or if any such lien,attachment or claim has been filed with or served upon the Authority,that such lien,attachment or claim has been released or discharged in the amount in which such lien,right to lien,attachment or claim is stated in said notice,or if no amount is so stated the amount stated by the Construction Engineer as his opinion of the amount thereof,and (3)that such requisition contains no item representing payment on account of any retained percentages which the Authority is at the date of such certificate entitled to retain. BOND RESOLUTION Page 31 A16355CM Upon receipt of each such requisition and accompanying certifi- cates,the Trustee shall pay each such obligation or,if so requested by the Authority,shall tranefer from the Construction Fund to the credit of a special account in the name of the Authority an amount equal to the total of the amounts to be paid as set forth in such requisition but not more than the excess of such amounts over the amount stated of any lien,right to lien, attachment or claim referred to above in subparagraph (b)},the amounts in such special account to be held solely for the pay- ment of the obligations set forth in such requisition.In making such transfer,the Trustee may rely upon such requisition and accompanying certificates. 5.If any requisition filed with the Trustee in accordance with paragraph 4 of this Section 503 contains any item for the payment of the cost and expense of acquisition of any lands,easements,or rights or interests in or relating to lands,there shall be attached to such requisition,before any transfer or payment with respect to such item shall be made,in addition to the certificates mentioned in said paragraph 4: (a)a certificate of an Authorized Officer to the effect that such lands,easements,rights or interests have been or are being acquired and are necessary for the Project or Capital Improvements;and (b)a Counsel's Opinion stating,in the opinion of the signer,that the Authority has authority to acquire such lands,easements,rights or interests,and that the Authority will have upon the payment of such item title in fee simple to,or perpetual easements for the purposes of the Authority over and through,such lands subject to no Lien, charge or encumbrance thereon or affecting the title thereto except such as will not under any circumstances cause the possession and use of the property by the Authority for its purposes to be disturbed,or,if such payment be a payment for an option to purchase or a quitclaim deed or a lease or a release or on a contract to purchase or be a payment to the United States of America or the State of Alaska or any political subdivision,or to a public utility,for the acquisition of a right or interest in lands less than a fee simple or a perpetual easement,or if such payment be a part payment for any suchpurpose,the written approval,by the signer of such Counsel's Opinion,of such payment as proper,and of the acquisition of such lesser right or interest as sufficient,for the purposes of the Authority.A requisition directing application of amounts in the Construction Fund to purchase or redeem bonds or notes issued to pay the Cost of Acquisition or Construction of the Project or any Capital Improvement need only recite that fact and the principal amount of bonds or notes to be purchased or redeemed. 6.As soon as practicable after the date as of which the Construction Engineer shall determine that (i)the Project BOND RESOLUTION Page 32 A16355CM or Capital Improvements conforms to the plans and specifications thereof as may be modified from time to time and is ready for normal continuous operation;(11)acquisition,construction and installation of the Project or Capital Improvements has been completed in every material respect;and (iii)costs (including contingencies),as estimated by the Construction Engineer,of all work remaining to be done in order to complete such acquisition,construction and installation will not exceed 2%of the Cost of Acquisition and Construction of the Project or Capital Improvements,the Authority shall cause the Construction Engineer to file a report to that effect with the Authority and the Trustee. 7.As soon as practicable after the date referred to in paragraph 6 of this Section 503,or the Date of Commercial Operation of the Project or Capital Improvements,whichever is the later,the Authority shall cause the Construction Engineer to file with the Authority and the Trustee a report setting forth,as of such later date,the following in reasonable detail with respect to the Project or Capital Improvements:(a)the total Cost of Acquisition and Construction exclusive of claims ef contractors and others which are the subject of actual orprospectivedisputeorcontroversyandexclusiveofthecost-(including contingencies),as estimated by the Construction Engineer,of the remaining work;(b)the portion of the total Cost of Acquisition and Construction specified pursuant to clause (a)of this paragraph which has been paid in full; ({c)the portion of the total Cost of Construction and Acquisi- tion specified pursuant to said clause (a)which remains to be paid,including all amounts which are not the subject of a dispute or controversy but are dependent upon the satisfaction of any agreements or conditions precedent to such payment; (d)the aggregated amount of the claims of contractors and others which are the subject of a dispute or controversy; (e)the cost (including contingencies),as estimated by the Construction Engineer and as approved by the Authority,of the remaining work;and (f£f)such amount,if any,as the Construction Engineer shall determine is necessary or desirable to be set aside in the Construction Fund for contingencies. 8.The Trustee shall at any time or from time to time after the filing with the Trustee of the report of the Construction Engineer as provided in paragraph 7 of this Sec- tion 503,withdraw from the Construction Fund the balance in the Construction Fund,or any part thereof,in the amounts,at the times,in the manner and on the other terms and conditions set forth in this paragraph.Before any such withdrawal shall be made,the Authority shall file with the Trustee: {a)its requisition therefor,stating the amount of such withdrawal; BOND _RESOLUTIONPage33 A16355CM (b)a certificate of the chief financial officer of the Authority attached to the requisition certifying (1)that the Project or Capital Improvements has been completed,and (2)that a sum (which shall not be less that the amount stated in the report of the Construction Engineer filed with the Trustee pursuant to paragraph 7 of this Section 503)stated in the certificate is sufficient to pay,and is required to be reserved in the Construction Fund to pay,all items of Cost of Acquisition and Construc- tion of the Project or Capital Improvements then remaining unpaid,including the estimated amount of any such items the amount of which is not finally determined and all claims against the Authority arising out of the Project or Capital Improvements;and (¢)A Counsel's Opinion stating,in the opinion of the signer,that the Authority has acquired title to all property constituting a part of the Project or Capital Improvements and all property incidental thereto sufficient for the purposes of the Authority,free from all liens, charges,conditions or encumbrances except such as will not under any circumstances cause the possession and use of the property by the Authority for its purposes to be disturbed, and that,as to such parts of the Project or Capital Improvements as constitute real property acquired, constructed or installed under a right or interest less than a fee simple or perpetual easement,the right or interest is sufficient for the purposes of the Authority, and that there are no uncanceled mechanics',Laborers', contractors'or materialmen's liens on any such property or any funds of the Authority or on file in any public office where the same should be filed in order to be valid liens against any fund of the Authority or any part of such property or of the Project or Capital Improvements,and that,in the opinion of the signer of such Counsel's Opinion,the time within which such liens can be filed has expired. Upon filing of such certificates and Counsel's Opinion,the balance in the separate account in the Construction Fund estab- lished therefor in excess of the amount,if any,stated in such certificate shall be transferred to the Capital Reserve Fund,if and to the extent necessary to make the amount of such Fund equal to the Capital Reserve Requirement,and any balance shall be paid over or transferred to the Authority for deposit to theRevenueFundandapplied,if and to the extent a Counsel's Opinion states that such application is necessary to preserve the tax-exempt status of interest on the Bonds,to the retirement of Bonds by purchase or redemption.If the Cost of Acquisition and Construction of the Project exceeds $350,000,000,the balance in the Construction Fund for the BOND RESOLUTION Page 34 A16355CM Project instead of being paid over to the Revenue Fund shall be paid to the State of Alaska.If subsequent to the filing of such certificate it shall be determined that any amounts specified in such certificate as being required for the payment of any remaining part of the Cost of Acquisition and Construction are no longer so required,such fact shall be evidenced by a certificate or certificates of an Authorized Officer of the Authority which shall be filed with the Trustee stating such fact and any amount shown therein as no longer being required shall be transferred to the Capital Reserve Fund, if and to the extent necessary to make the amount of such Fund equal to the Capital Reserve Requirement,and any balance shall be applied to the extent stated in such Counsel's Opinion.If the Cost of Acquisition and Construction of the Project exceeds $350,000,000,the balance shall be paid over to the State of Alaska.If the Cost of Acquisition and Construction of the Project is less than $350,000,000,Bonds issued pursuant to Section 203,as shall be determined by Supplemental Resolution, in the amount equal to one half of the difference between $350,000,000 and the Cost of Acquisition and Construction of the Project shall be retired by purchase or redemption from money in the Construction Fund or from other available sources,including funds made available by the State of Alaska,to the extent provided by the Supplemental Resolution authorizing the Series of Bonds and the terms of the Series of Bonds.Any balance remaining in the Construction Fund after such retirement shall then be paid to the State of Alaska. 9.The Trustee shall during the construction of the Project or Capital Improvements,pay from the appropriate separate account in the Construction Fund to the Authority,upon its requisitions therefor signed by an Authorized Officer of the Authority,at one time or from time to time,a sum or sums not more than $250,000,such sums to be used by the Authority as a revolving fund for the purpose of paying such items of the Cost of Acquisition and Construction thereof as cannot conveniently be paid as in this Section otherwise provided.So long as the amount in such revolving fund shall at any time be less than §250,000,such revolving fund shall be reimbursed by the Trustee from time to time for such expenses so paid,by payments from the Construction Fund upon requisitions and certificates signed by an Authorized Officer and filed with the Trustee specifyingthepayeeandtheamountandparticularpurposeofsuchpaymentfromsuchrevolvingfundforwhichsuchreimbursementisre- quired and certifying that each such amount so paid was neces- sary for the payment of an item of the Cost of Acquisition and Construction of the Project or Capital Improvements and that Buch expense could not conveniently be paid except from such revolving fund.In making such reimbursement the Trustee may rely upon such requisitions and accompanying certificates. BOND RESOLUTION Page 35 A16355CM 10.Notwithstanding any of the other provisions of this Section,to the extent that other moneys are not available therefor,amounts in the Construction Fund shall be applied to the payment of principal of and interest on Bonds when due. 504.Revenues and Revenue Fund.All Revenues shall be promptly deposited by the Authority and the Trustee,as the case may be,upon receipt thereof to the credit of the Revenue Fund. 505.Operating Fund.1.As soon as practicable after deposit of Revenues in the Revenue Fund and in any case no later than the last business day of each month after the deposit,the Authority shall withdraw from the Revenue Fund and pay to the Operating Fund a sum which,together with any amount therein not set aside in the Operating Reserve Account or as a reserve for working capital,is equal to one-twelfth (or such other fraction as may be appropriate if the period with respect to which such amount is withdrawn is other than monthly)of the total moneys appropriated for Operating Expenses in the Annual Budget for the then current Fiscal Year.If and to the extent provided in a Supplemental Resolution authorizing Bonds of a Series,amounts from the proceeds of such Bonds may be deposited in the Operat- ing Fund and set aside therein as a reserve for working capital. The Authority shall establish an Operating Reserve Account within the Operating Fund.The Operating Reserve Account shall be established and maintained at all times in an amount not less than the Operating Reserve Account Requirement.Amounts in the Operating Reserve Account may be expended for Operating Expenses to the extent other amounts in the Operating Fund are not available. 2.Amounts in the Operating Fund shall be paid out from time to time by the Authority for reasonable and necessary Operating Expenses.Any amounts budgeted by the Committee in the Annual Budget for Annual Project Costs constituting costs of the Committee shall be paid out from time to time to the Commit- tee by the Authority. 506.Payments Into Certain Funds.1.As soon as practicable after the deposit of Revenues into the Revenue Fund and after the payment has been made to the Operating Fund pursuant to Section 505,and with at least the frequency stated below,the Authority shall apply moneys from the Revenue Fund and deposit said amounts with the Trustee on the dates set forth below and the Trustee shall deposit said amounts in the follow- ing order in the amounts and in the Funds set forth below. (1).Except as provided in Section 506(2)in the Debt Service Fund (i)semi-annually on June 1 and December 1,for credit to the Interest Account,unless the sum on deposit therein equals or exceeds the interest due on all Bonds on the BOND RESOLUTION Page 36 A16355CM next succeeding interest payment date,an amount equal to the interest due on such interest payment date less the interest to be paid on such interest payment date from Bond proceeds held in said Account for such purpose;provided,however,that for the purposes of computing the amount on deposit in said Account, there shall be excluded the amount,if any,set aside in said Account for the payment of interest due after the next succeeding interest payment date;(11)annually on December 1, for credit to the Principal Account,unless the sum on deposit therein equals or exceeds all Principal Installments due on the next succeeding July 1,an amount equal to one-half of such Principal Installments;and (iii)annually on June 1,for credit to the Principal Account,the amount,if any,necessary to cause the sum on deposit therein to equal all Principal Installments due on the next succeeding July 1;provided that the Authority may establish by Supplemental Resolution payments into the Debt Service Fund at different times and in different amounts as necessary for interest paid other than semi-annually and in fixed amounts. (2).In the Capital Reserve Fund,the amount,if any, required so that the balance in the Fund equals the Capital Reserve Requirement. (3).Semi-annually on June 1 and December 1,transfer to the Authority for deposit in the Operating Reserve Account, the amount,if any,required so that the balance in the Account equals the Operating Reserve Account Requirement. (4).In the Renewal and Contingency Reserve Fund,the°amount,if any,required so that the balance in the Fund,within a period no greater than four (4)years from the initial depositandthereafterfromthemostrecentwithdrawaltherefrom,shall equal the Renewal and Contingency Reserve Requirement or such larger amount as may be determined from time to time by the Committee to be included in the calculation of Annual Project Costs pursuant to Section 8(a)(v)of the Power Sales Agreement. (5).Annually on a date or dates to be determined by Supplemental Resolution to the credit of the Excess Investment Earnings Fund in such amount as is necessary to cause the amount on deposit in the Excess Investment Earnings Fund (after a deposit therein,if any,from the Construction Fund)to be equaltotheAuthority's estimate of Excess Investment Earnings for the Bond Year from amounts in the Revenue Fund or from amounts transferred from the Construction Fund. 2.So long as the Municipal Bond Insurance Policy shall be in full force and effect,the Authority and the Trustee hereby agree to comply with the following provisions: BOND RESOLUTION Page 37 A16355CM {a)The amount to be deposited to the Debt Service Fund to pay principal and/or interest on the Insured Bonds on any payment date shall be on deposit at least five (5)Business Days prior to such payment date; (b)If,on the fifth day (or if the fifth day is not a Business Day,then on the Business Day next preceding the fifth day)prior to a payment date the Trustee determines that there will be insufficient funds in the funds and accounts available to pay the principal of or interest on the Insured Bonds on such payment date,the Trustee shall immediately notify BIG.Such notice shall be by telephone,promptly confirmed in writing,and shall specify the amount of the anticipated deficiency,the Bonds to which such deficiency will be applicable and whether payment due on such Insured Bonds will be deficient as to principal or interest,or both; {c)The Trustee shall,after giving notice to BIG as provided in (b)above,make available to BIG and Bankers Trust Company as insurance trustee for the Insurance Trustee,the registration books of the Authority maintained by the Trustee, and all records relating to the funds and accounts established under the Resolution; (a)The Trustee shall provide BIG and the Insurance Trustee with a list of the names and addresses of registered Bondowners entitled to receive principal or interest payments from BIG under the terms of the Municipal Bond Insurance Policy, and shall make arrangements with the Insurance Trustee (i)to mail checks or drafts to the registered Bondowners entitled to receive full or partial interest payments from BIG,and (ii)to pay principal due on the Bonds once such Bonds are surrendered to the Insurance Trustee by the registered Bondowners entitled to receive full or partial principal payments from BIG;and {e)The Trustee shall,at the time it provides notice to BIG pursuant to (b)above,notify registered Bondowners entitled to receive principal or interest payments from BIG (i) as to the fact of such entitlement,(ii)that BIG will remit all or a portion of the interest payments next coming due,(iii) that if entitled to receive full payment of principal from BIG such registered owners must tender their Bonds (together with a form of transfer of title thereto)for payment to the Insurance Trustee and not to the Trustee,and (iv)that,if entitled to receive partial payment of principal from BIG,such registered owners must tender their Bonds for payment thereof first to the Trustee,who shall note on such Bonds the portion of the principal paid by the Trustee,and thereafter,together with a form of transfer of title thereto,to the Insurance Trustee, After such bonds and instruments transferring title thereto have BOND RESOLUTIONPage38 A16355CM been tendered to the Insurance Trustee,BIG will pay the unpaid portion of principal then due. (f)For purposes of this Section 506,"Business Day” shall mean any day other than a Saturday,Sunday or a day of which the Insurance Trustee is authorized by law to remain closed. 507.Debt Service Fund.1.The Trustee shall pay out of the Debt Service Fund to the respective Paying Agents (i)out of the Interest Account,on or before each interest payment date for any of the Bonds the amount required for the interest payable on such date;(ii)out of the Principal Account,on or before each Principal Installment due date,the amount required for the Principal Installment payable on such due date;and (iii)out of the Interest Account,on or before any redemption date for the Bonds,the amount required for the payment of interest on the Bonds then to be redeemed.Such amounts shall be applied by the Paying Agents on and after the due dates thereof.The Trustee shall also pay out of the Interest Account the accrued interest included in the purchase price of Bonds purchased for retirement. 2.Amounts accumulated in the Principal Account with respect to any Sinking Fund Installment (together with amounts accumulated in the Interest Account with respect to interest on the Bonds for which such Sinking Fund Installment was established)may,and if so directed by the Authority,shall,be applied by the Trustee,on or prior to the 60th day preceding the due date of such Sinking Fund Installment,to (i)the purchase of the Bonds of the Series and maturity for which such Sinking Fund Installment was established,or (ii)the redemption at the applicable sinking fund Redemption Price of such Bonds. After the 60th day but on or prior to the 45th day preceding the @due date of such Sinking Fund Installment,any amounts then on deposit in the Principal Account may,and if so directed by the Authority,shall,be applied by the Trustee to the purchase of Bonds of the Series and maturity for which such Sinking Fund Installment was established in an amount not exceeding that necessary to complete the retirement of the unsatisfied balance of such Sinking Fund Installment.All purchases of any Bonds pursuant to this subsection 2 shall be made at prices not exceeding the applicable sinking fund Redemption Price of such Bonds plus accrued interest,and such purchases shall be made by the Trustee as directed by the Authority.The applicable sinking fund Redemption Price of any Bonds so purchased or redeemed shall be deemed to constitute part of the Principal Account,until such Sinking Fund Installment date,for the purpose of calculating the amount of such Account.As soon as practicable after the 45th day preceding the due date of anysuchSinkingFundInstallment,the Trustee shall proceed to call BOND RESOLUTION Page 39 A16355CM for redemption,by giving notice as provided in Section 405,on such due date Bonds of the Series and maturity for which such Sinking Fund Installment was established in such amount as shall be necessary to complete the retirement of the unsatisfied balance of such Sinking Fund Installment.The Trustee shall pay out of the Principal Account to the appropriate Paying Agents, on or before such redemption date,the amount required for the redemption of the Bonds so called for redemption,and such amount shall be applied by such Paying Agents to such redemption.All expenses in connection with the purchase or redemption of Bonds shall be paid from the Operating Fund. 3.The amount,if any,deposited in the Interest Account from the proceeds of each Series of Bonds shall be set aside in such Account and applied to the payment of interest on Bonds as provided in the Supplemental Resolution relating to the issuance of such Series of Bonds. 4.In the event of the refunding of one or more Series of Bonds,the Trustee shall,upon the direction of the Authority,withdraw from the Debt Service Fund amounts accumu- lated therein with respect to Debt Service on the Bonds being refunded and deposit such amounts with itself as Trustee to be held for payment of the principal or Redemption Price,if applicable,and interest on the Series of Bonds being refunded; provided that such withdrawal shall not be made unless (a) immediately thereafter the Series of Bonds being refunded shall be deemed to have been paid pursuant to subsection 2 of Section 1201,and (b)the amount remaining in the Debt Sarvice Fund after such withdrawal shall not be less than the requirement of such Fund pursuant to paragraph (2)of Section 506. 508.Capital Reserve Fund.1.If five business days prior to any date on which a Principal Installment or interest is due the amount in the Debt Service Fund shall be less than the amount required to be in such Fund to pay said Principal Installment or interest,the Trustee shall apply amounts from the Capital Reserve Fund to the extent necessary to make good the deficiency. 2.Whenever the moneys on deposit in the Capital Reserve Fund shall exceed the Capital Reserve Requirement,until the Date of Commercial Operation of the Project,such excess shall be deposited into the Construction Fund and thereafter such excess shall,on the request of the Authority,be trans- ferred to the Authority for deposit in the Revenue Fund at leastannuallyandshallbedeemed"other available funds"within the meaning of Section 712 to be used for the payment of amounts required to be paid therein or for the purpose of refunds to the Purchasers pursuant to Section 13 of the Power Sales Agreement. BOND RESOLUTION Page 40 A16355CM 3.Whenever the amount in the Capital Reserve Fund, together with the amount in the Debt Service Fund,is sufficient to pay in full all Outstanding Bonds in accordance with their terms (including principal or applicable sinking fund Redemption Price and interest thereon),the funds on deposit in the Capital Reserve Fund shall be transferred to the Debt Service Fund. Prior to said transfer,all investments held in the Debt Service Fund shall be liquidated to the extent necessary in order to provide for the timely payment of principal and interest (or Redemption Price)on Bonds. 4,In the event of the refunding of one or more Series of Bonds or one or more maturities within a Series of Bonds,the Trustee shall,upon the direction of the Authority, withdraw from the Capital Reserve Fund amounts accumulated therein with respect to the Bonds being refunded and deposit such amounts with itself as Trustee to be held for the payment of the principal or Redemption Price,if applicable,and inter- est on the Series or maturities within a Series of Bonds being refunded;provided that such withdrawal shall not be made unless (a)immediately thereafter the Series or maturities within a Series of Bonds being refunded shall be deemed to have been paid pursuant to subsection 2 of Section 1201 and (b)the amount remaining in the Capital Reserve Fund after such withdrawal shall not be less than the Capital Reserve Requirement. 509.Renewal and Contingency Reserve Fund. 1.Amounts in the Renewal and Contingency Reserve Fund shall be applied to the costs of Capital Improvements,the payment of extraordinary operation and maintenance costs,and contingen- cies,including payments with respect to the prevention or correction of any unusual loss or damage in connection with the Project or to prevent a loss of Revenues therefrom,all to the extent not provided for in the then current Annual Budget or by reserves in the Operating Fund or from the proceeds of Bonds pursuant to a requisition of the Authority. 2.No payments shall be made from the Renewal and Contingency Reserve Fund if and to the extent that the proceeds of insurance,including the proceeds of any self-insurance fund, or other moneys recoverable as the result of damage,if any,are available to pay the costs otherwise payable from such Fund. 3.Any balance of moneys and securities in the Renewal and Contingency Reserve Fund in excess of an amount which,within a period no greater than four (4)years from the initial deposit and thereafter no greater than four (4)years from the most recent withdrawal therefrom,shall equal the Renewal and Contingency Reserve Requirement or such larger amount as may be determined from time to time by the.Committee to be included in the calculation of Annual Project Costs BOND RESOLUTION Page 41 A16355CM pursuant to Section 8(a)(v)of the Power Sales Agreement,shall be transferred to the Revenue Fund at least annually. 510.Excess Investment Earnings Fund. 1.The Trustee shall establish within the Excess Investment Earnings Fund a separate account for each Series of Bonds.Within 30 days after the end of each Bond Year the Authority shall determine the Excess Investment Earnings with respect to each Series of Bonds for such Bond Year and the Trustee,at the direction of the Authority,shall transfer from the Construction Fund or the Authority shall transfer from the Revenue Fund,such amount as shall be necessary to cause the amount held in such account to equal the Excess Investment Earnings for such Series of Bonds accrued as of the end of such Bond Year and not previously paid to the United States of America. 2.Moneys in the Excess Investment Earnings Fund shall be applied by the Trustee to pay rebate amounts due the United States,as provided in Section 148(f)of the Code and the applicable Income Tax Regulations.All moneys in the Excess Investment Earnings Fund shall be held by the Trustee free and clear of the lien of this Resolution.If at any time,the amount held in any account in the Excess Investment Earnings Fund exceeds the accrued and unpaid Excess Investment Earnings attributable to the Series of Bonds for which such account is maintained;then the Trustee,at the direction of the Authority, shall transfer such excess to the Authority for deposit to the Revenue Fund. 3.If and to the extent necessary the Authority shall take all action required to cause amounts to equal Excess Investment Earnings to be included as Operating Expenses and therefore as Annual Project Costs. 511.Cancellation and Destruction of Bonds.All Bonds paid or redeemed,either at or before maturity,shall be delivered to the Trustee when such payment or redemption is made,and such Bonds,together with all Bonds purchased by the Trustee,shall thereupon be promptly cancelled and destroyed. ARTICLE VI Depositories of Moneys,Security for Deposits and Investment of Funds 601.Depositories.1.All moneys held by the Trustee under the provisions of this Resolution shall be deposited with the Trustee and the Trustee shall,if directed by the Authority, BOND RESOLUTION Page 42 A16355CM deposit such moneys with one or more Depositories in trust for the Trustee.All moneys held by the Authority under this Resolution shall be deposited in one or more Depositories in trust for the Authority.All moneys deposited under the provi- sions of this Resolution with the Trustee or any Depository shall be held in trust and applied only in accordance with theprovisionsofthisResolution,and each of the Funds establishedbythisResolutionshallbeatrustfundforthepurposesthere- of. 2.Each Depository shall be a bank or trust company organized under the laws of any state of the United States of America or a national banking association and willing and able to accept the office on reasonable and customary terms and authorized by law to act in accordance with the provisions of this Resolution. 602.Deposits.1.All Revenues and other moneys held by any Depository under this Resolution may be placed on demand or time deposit,if and as directed by the Authority,provided that such deposits shall permit the moneys held to be available for use at the time when needed.The Authority shall not be liable for any loss or depreciation in value resulting from any investment made pursuant to this Resolution.Any such deposit may be made in the commercial banking department of any Fiduci- ary which may honor checks and drafts on such deposit with the same force and effect as if it were not such Fiduciary.All moneys held by any Fiduciary,as such,may be deposited by such Fiduciary in its banking department on demand or,if and to the extent directed by the Authority and acceptable to such Fiduci- ary,on time deposit,provided that such moneys on deposit be available for use at the time when needed,Such Fiduciary shall allow and credit on such moneys such interest,if any,as it customarily allows upon similar funds of similar size and under Similar conditions or as required by law. 2.All moneys held under this Resolution by the Trustee or any Depository shall be (a)either (1)continuously and fully insured by the Federal Deposit Insurance Corporation,or (2)continuously and fully secured by lodging with the Trust- ee,any Federal Reserve Bank or branch,or another third partycustodianapprovedbytheTrusteeandtheAuthority,QualifiedCollateralhavingamarketvalue(exclusive of accrued interest) not less than 100%of the amount of such moneys,or (b)held insuchothermannerasmaythenberequiredbyapplicablefederalorStateofAlaskalawsandregulationsandapplicablestatelawsandregulationsofthestateinwhichtheTrusteeorsuchDepository(as the case may be)is located,regarding securityfor,or granting a preference in the case of,the deposit oftrustfunds;provided,however,that it shall not be necessary for the Fiduciaries to give security under this subsection 2 for BOND RESOLUTION Page 43 A16355CM the deposit of any moneys with them held in trust and set aside by them for the payment of the principal or Redemption Price of or interest on any Bonds,or for the Trustee or any Depository to give security for any moneys which shall be represented by obligations or certificates of deposit purchased as an invest- ment of such moneys. 3.All moneys deposited with the Trustee and each Depository shall be credited to the particular Fund or Account to which such moneys belong. 4.The Trustee may,and upon the written request of the Authority shall,commingle any of the funds or accounts established pursuant to this Resolution into a separate fund or funds,provided,however,that all Funds or Accounts held by the Trustee hereunder shall be accounted for and credited to the correct Fund or Account notwithstanding such commingling. 603.Investment of Certain Funds.Moneys held in any Fund or Account shall be invested and reinvested by the Trustee to the fullest extent practicable in Investment Securities which mature not later than such times as shall be necessary to provide moneys when needed for payments to be made from such Funds and Accounts in accordance with instructions received from any Authorized Officer of the Authority.Amounts in the Debt Service Fund derived from proceeds of the First Series Bonds shall be invested in Federal Obligations maturing at such times and in such amounts as are necessary to match the interest and principal payments for which the amounts are expected to be expended. Any amount in any Fund in excess of amounts required to be on deposit therein,shall be paid to the Authority for deposit to the Revenue Fund,provided,however,that any such amount shall be paid into the Construction Fund to the extent the amount is realized prior to the Date of Commercial Operation of the Project.Interest earned on any moneys or investments in a separate account in the Construction Fund shall be held in such account for the purposes thereof.Interest earned on amounts in the Interest Account shall be held in such Account for the purposes thereof. Nothing in this Resolution shall prevent any Invest- ment Securities acquired as investments of funds held under this Resolution from being issued or held in book-entry form on the books of the Department of Treasury of the United States of America. 604.Valuation and Sale of Investments.Obligations purchased as an investment of moneys in any Fund created under the provisions of this Resolution shall be deemed at all times BOND RESOLUTION Page 44 A16355CM to be part of such Fund and any profit realized from the liqui- dation of such investment shall be credited to such Fund and any loss resulting from the liquidation of such investment shall be charged to the respective Fund. In computing the amount in any Fund created under the provisions of this Resolution for any purpose provided in this Resolution or Sec.44,83.110(e)of the Act,obligations pur- chased as an investment of moneys therein shall be valued at the market value thereof exclusive of accrued interest,or otherwise as may then be required by the Code.Such computations shall be determined not less frequently than quarterly in each year. Except as otherwise provided in this Resolution,the Trustee shall sell at the best price obtainable,or present for redemption,any obligation so purchased as an investment whenev- er it shall be requested in writing by an Authorized Officer of the Authority so to do or whenever it shall be necessary in order to provide moneys to meet any payment or transfer from any Fund held by it.The Trustee shall not be liable or responsible for making any such investment in the manner provided above or for any loss resulting from any such investment. ARTICLE VII Particular Covenants of-the Authority 7O1l.Payment of Bonds.The Authority shall duly and punctually pay or cause to be paid,the principal or Redemption Price,if any,of every Bond and the interest thereon,at the dates and places and in the manner mentioned in the Bonds according to the true intent and meaning thereof. 702.Extension of Payment of Bonds.The Authority shall not directly or indirectly extend or assent to the exten- sion of the maturity of any of the Bonds or the time of payment of claims for interest,by the purchase or funding of such Bonds or claims for interest or by any other arrangement,and in case the maturity of any of the Bonds or the time for payment of any such claims for interest shall be extended,such Bonds or claims for interest shall not be entitled,in case of any default under this Resolution,to the benefit of this Resolution or to any payment out of Revenues or Funds established by this Resolution, including the investments,if any,thereof,pledged under this Resolution or the moneys (except moneys held in trust for the payment of particular Bonds or claims for interest pursuant to this Resolution)held by the Fiduciaries,except subject to the prior payment of the principal of all Bonds Outstanding the maturity of which has not been extended and of such portion of the accrued interest on the Bonds as shall not be represented by BOND RESOLUTION Page 45 A16355CM such extended claims for interest.Nothing herein shall be deemed to limit the right of the Authority to issue Refunding Bonds and such issuance shall not be deemed to constitute an extension of maturity of Bonds. 703.Offices for Servicing Bonds.The Authority shall at all times maintain one or more agencies as may be provided by Supplemental Resolution where Bonds may be presented for payment and shall at all times maintain one or more agencies where Bonds may be presented for registration,transfer for registration,transfer or exchange,and where notices,demands and other documents may be served upon the Authority in respect of the Bonds or of this Resolution.The Authority hereby appoints the Trustee as Bond Registrar to maintain an agency for the registration,transfer or exchange of Bonds,and for the service upon the Authority of such notices,demands and other documents and the Trustee shall continuously maintain or make arrangements to provide such services.The Authority hereby appoints the Paying Agent or Agents in such city as its respec- tive agents to maintain such agencies for the payment or redemp- tion of Bonds. 704.Further Assurance.At any and all times the Authority shall,as far as it may be authorized by law,comply with any reasonable request of the Trustee to pass,make,do, execute,acknowledge and deliver,all and every such further resolutions,acts,deeds,conveyances,assignments,transfers and assurances as may be necessary or desirable for the better assuring,conveying,granting,pleading,assigning and confirm- ing all and singular the rights,Revenues and other moneys, securities and funds hereby pledged or assigned,or intended so to be,or which the Authority may become bound to pledge or assign. 705.Power to Issue Bonds and Pledge Revenues andOtherFunds.The Authority is duly authorized under the Act and all other applicable laws to create and issue the Bonds and to adopt this Resolution and to pledge and assign the Revenues and other moneys,securities and funds purported to be subject to the lien of this Resolution in the manner and to the extent provided in this Resolution.Except to the extent otherwise provided in this Resolution,the Revenues,and other moneys, securities and funds so pledged are and will be free and clear of any pledge,lien,charge or encumbrance thereon or withreapecttheretopriorto,or of equal rank with,the pledge and assignment created by this Resolution,and ail corporate or other action on the part of the Authority to that end has been and will be duly and validly taken.The Bonds and the provi-sions of this Resolution are and will be valid and legally en- forceable obligations of the Authority in accordance with their terms and the terms of the Act and this Resolution.The BOND RESOLUTION Page 46 Al6355CM Authority shall at all times,to the extent permitted by law, defend,preserve and protect the pledge and assignment of the Revenues and other moneys,securities and funds pledged under this Resolution and alli the rights of the Bondholders under this Resolution against all claims and demands of all persons whom- ever. 706.Power to Fix and Collect Rates,Fees and Charges.The Authority has,and will have as long as any Bonds are Outstanding,good right and lawful power-to establish and collect rates and charges with respect to the use of the capa- bility of the Project and the sale of the capacity,output or service thereof,subject to the terms of the Power Sales Agree- ment and other contracts relating thereto. 707.Creation of Liens;Sale and Lease of Property. 1.The Authority shall not issue any bonds,notes or other evidences of indebtedness,other than the Bonds,secured by a pledge of or other lien or charge on the Revenues (including amounts which the Authority may thereafter be entitled to expend for Operating Expenses)and shall not create or cause to be created any lien or charge on such Revenues or on any amounts held by any Fiduciary under this Resolution;provided,however, that neither this Section nor any other provision of this Resolution shall prevent the Authority from issuing bonds or notes or other obligations for the purposes of the Authority payable out of,or secured by a pledge of,Revenues to be de- rived on and after such date as the pledge of the Revenues provided in this Resolution shall be discharged and satisfied as provided in Section 1201,or from issuing bonds or notes or other obligations for the purposes of the Authority which are secured by a pledge of amounts which is and shall be in all respects subordinate to the provisions of this Resolution and the lien and pledge created by this Resolution and shall not be accelerated in the event of default. 2.No part of the Project shall be sold,leased, mortgaged or otherwise disposed of,except as follows: (a)The Authority may sell or exchange at any time and from time to time any property or facilities constituting part of the Project only in accordance with,and in a manner that will not impair the Authority's obligations under,the provisions of the Power Sales Agreement and if (i)it shall determine that such property or facilities are not useful in the operation of the Project,or (ii)the proceeds of such sale are less than 2%of the prior Bond Year's Debt Service,or it shall filewiththeTrusteeanopinionoftheConsultingEngineer stating that the fair market value of the property or facilities exchanged are less than 2%of the prior Bond BOND RESOLUTION Page 47 A16355CM Year's Debt Service or (iii)if such proceeds or fairmarketvalueexceeds2%of the prior Bond Year's Debt Service it shall file with the Trustee an opinion of the Consulting Engineer stating that the sale or exchange of such property or facilities will not impair the ability of the Authority to comply during the current or any future Fiscal Year with the provisions of Section 712.The proceeds of any such sale or exchange not used to acquire other property necessary or desirable for the safe or efficient operation of the Project shall forthwith be deposited in the Renewal and Contingency Fund;and (®)In addition to the Power Sales Agreement, the Authority may lease or make contracts or grant licenses for the operation of,or make arrangements for the use of, or grant easements or other rights with respect to,any part of the Project,provided that any such lease, contract,license,arrangement,easement or right ({1)does not impede the operation by the Authority or its agent of the Project and (ii)does not in any manner impair or adversely affect the rights or security of the Bondholders under this Resolution,and (iii)does not adversely affect the exemption from federal income taxation of the interest on the Bonds;and provided,further,that if the depreci- ated cost of the property to be covered by any such lease, contract,license,arrangement,easement or other right is in excess of 2%of the prior Bond Year's Debt Service the Authority shall first file with the Trustee an opinion of the Consulting Engineer that such action of the Authority with respect thereto does not impair the ability of the Authority to comply during the current or any further Fiscal Year with the provisions of Section 712.Any payments received by the Authority under or in connection with any such lease,contract,license,arrangement, easement or right in respect of the Project or any part thereof shall constitute Revenues and shall be deposited in the Revenue Fund. 708.Consulting Engineer.The Authority shall,for the purpose of performing and carrying out the duties imposed on the Consulting Engineer by this Resolution,employ an inde- pendent engineer or engineering firm or corporation having a nationwide and favorable reputation and demonstrated experience in the field of consulting engineering for power systems. 709.Annual Budget.The Authority,acting in conjunction with the Committee or separately in accordance with Section 13(e)of the Power Sales Agreement,shall adopt an Annual Budget each Fiscal Year pursuant to Section 13 of the Power Sales Agreement and shall adopt and have in effect,and file with the Trustee,said Annual Budget at least 90 days BOND RESOLUTION Page 48 A16355CM prior to such Fiscal Year.Each Annual Budget shall set forth in reasonable detail the estimated Revenues and Operating Expenses including Annual Project Costs for the Fiscal Year, and including provision for the estimated amount to be deposited during such Fiscal Year in each Fund and Account established under this Resolution and the requirements,if any,for the amounts estimated to be expended from each Fund and Account established under this Resolution.Such Annual Budget shall also set forth such detail with respect to such Revenues, Operating Expenses and other expenditures and such deposits,as shall be necessary or appropriate so as to comply with the Power Sales Agreement and the Authority may set forth such additional material as the Authority may determine.Such Annual Budget shall be revised as necessary or prudent during each Fiscal Year to reflect unanticipated changes in actual Revenues,Operating Expenses or other requirements,or if there are at any time during any such Fiscal Year extraordinary receipts or payments of unusual costs,if appropriate,there shall be filed with the Trustee an amended Annual Budget for the remainder of the then current Fiscal Year. 710.Limitations on Operating Expenses and Other Costs.The Authority shall not incur Operating Expenses or other costs payable from the Renewal and Contingency ReserveFundinanyFiscalYearinexcessofthereasonableandneces- sary amount of such expenses or costs,respectively,and shall not expend any amount from the Operating Fund for Operating Expenses or from the Renewal and Contingency Reserve Fund for costs payable therefrom for such Fiscal Year in excess of the respective amounts provided therefor in the Annual Budget as then in effect.Nothing in this Section contained shall limit the amount which the Authority or the Committee may expend for Operating Expenses or other costs payable from the Renewal and Contingency Reserve Fund in any Fiscal Year provided any amounts expended therefor in excess of such Annual Budget shall he received by the Authority or the Committee from some source other than the Revenues,which source shall not be reimbursable out of Revenues. 711.Acquisition and Construction of the Project and Its Operation and Maintenance.1.The Authority shall use its best efforts to acquire and construct the Project,or cause the same to be acquired and constructed,with due diligence and in a sound and economical manner. 2.The Authority shall at all times use its best efforts to operate or cause the Project to be operated properly and in an efficient and economical manner,consistent with the Power Sales Agreement and Prudent Utility Practice,and shall use its best efforts to maintain,preserve,reconstruct and keep the same or cause the same to be so maintained,preserved, BOND RESOLUTION Page 49 :Ai6355CM reconstructed and kept,with the appurtenances and every part and parcel thereof,in good repair,working order and good condition,and shall from time to time make,or use its best efforts to cause to be made,all necessary and proper repairs, replacements and renewals so that at all times the operation of the Project may be properly and advantageously conducted. 3.The Authority shall take all necessary steps to comply with applicable federal and state laws and regulations relating to the use and operation of the Project,including the terms of the Federal Energy Regulatory Commission license appli- cable to the Project. 712.Rates,Fees and Charges.i1.The Authority, acting in conjunction with the Committee or separately under Section 13(e)of the Power Sales Agreement,shall at all times after the date of Commercial Operation charge and collect,asa wholesale power rate,from each Purchaser pursuant to the PowerSalesAgreementthatPurchaser's Percentage Share (as defined in the Power Sales Agreement)of Annual Project Costs.The Author- ity,acting in conjunction with the Committee or separately under Section 13(e)of the Power Sales Agreement,shall deter- mine Annual Project Costs in such amounts as shall be required to provide Revenues at least sufficient in each Fiscal Year, together with other available funds,for the payment of the sum of: (a)Operating Expenses during such Fiscal Year; (b)The amount,if any,to be paid during such Fiscal Year into the Operating Reserve Account which shall be the amount,if any,necessary to restore the Operating Reserve Account to the Operating Reserve Account Require- ment; (c)An amount equal to the Aggregate Debt Service during such Fiscal Year; (ad)The amount,if any,to be paid during such Fiscal Year into the Capital Reserve Fund,which shall be the amount,if any,necessary to restore the Capital Reserve Fund to the Capital Reserve Requirement subject to Section 716; (e)The amount to be paid during such Fiscal Year into the Renewal and Contingency Reserve Fund which shall be the amount,if any,necessary to restore the Renewal and Contingency Reserve Fund over a period no greater than four years to the Renewal and Contingency Reserve Fund Requirement or such larger amount as may be Getermined from time to time by the Committee to be BOND RESOLUTION Page 50 A16355CM included in the calculation of Annual Project Costs pursuant to Section 8(a)(v)of the Power Sales Agreement; and (£)All other charges or liens whatsoever required to be paid out of Revenues during such Fiscal Year. 2.The Authority will not furnish or supply,or cause to be furnished or supplied,any use,output,capacity or service of the Project,free of charge to any person,firm or corporation,public or private,and the Authority will enforce the payment of any and all amounts owing to the Authority pursuant to the Power Sales Agreement in accordance with its terms. 3.As required by AS 44,83.110,the Authority further will at all times maintain rates,fees or charges,and a contract entered into by it for the sale,transmission or distribution of power shall contain rates,fees or charges, sufficient (i)to pay the costs of operation and maintenance of the Project,and the principal of and interest on the Bonds as the same severally become due and payable,(ii)to provide for debt service coverage as considered necessary by the Authority for the marketing of the Bonds and to provide for renewals, replacements and improvements of the Project,and (iii)to maintain reserves required by the terms of this Resolution. 713.Power Sales Agreement.1.The Authority shall collect and forthwith deposit in the Revenue Fund all amounts payable to it pursuant to the Power Sales Agreement or payable to it pursuant to any other contracts for the use of the capa- bility of the Project or the sale of the output,capacity or service of the Project or any part thereof.The Authority hereby pledges,assigns and transfers to the Trustee,acting on behalf of the Bondholders,all of its rights under the Power Sales Agreement or any other contracts for the use of the capa- bility of the Project or the sale of the output,capacity or service of the Project or any part thereof and the Trustee shall enjoy and hold for the benefit of the Bondholders the rights and privileges so assigned,including,without Limiting the forego- ing,the rights of the Authority to receive payments thereunder. The Authority shall enforce the provisions of the Power Sales Agreement and duly perform its covenants and agreements thereun- der.The Authority will not consent or agree to or permit any termination,rescission of or amendment to or otherwise take any action under or in connection with the Power Sales Agreement which will in any manner materially impair or materially ad- versely affect the rights or security of the Bondholders under this Resolution.A copy of the Power Sales Agreement certified by an Authorized Officer of the Authority shall be filed with BOND RESOLUTION Page 51 A16355CM the Trustee,and a copy of any such amendment certified by an Authorized Officer of the Authority shall be filed with the Trustee. 2.The Authority shall perform its obligations under the Power Sales Agreement to delegate to the Committee,consult with the Committee and act through the Committee,with respect to the management,operation,maintenance and improvement of the Project,including its obligation to follow procedures adopted by the Committee with respect to certain actions to be taken by the Authority under this Resolution.The Authority represents that it has the power under Section 13(e)of the Power Sales Agreement,notwithstanding any action or inaction by the Committee,to take such measures as it deems necessary to meet its obligations under this Resolution.The Authority hereby covenants that it will exercise the powers granted pursuant to Section 13(e)of the Power Sales Agreement,if necessary,to carry out actions required to be taken under this Resolution. 714.Insurance.1.The Authority shall keep and maintain the Project at all times insured against such risks and in such amounts,with such deductible provisions,or provide for @ source of self insurance,as is customary in connection with the operationof facilities of a type and size comparable to theProjectandasmayreasonablyandeconomicallybeobtainedor secured.The determination of what is "customary”and what may be "reasonably and economically obtained or secured"within the meaning of the prior sentence shall be made by an independent insurance consultant employed by the Authority or by the State Givision of risk management.Without limiting the foregoing, but only if required under the preceding sentences,the Authority shall carry and maintain,or cause to be carried and maintained,and pay or cause to be paid timely the premiums for, the following insurance with respect to the Project and the Authority: (a)insurance coverage for buildings,works, plants and facilities comprising the Project for all risks of direct physical loss,at all times in an amount not less than an amount necessary giving regard to co-insurance provisions to pay and retire and redeem all the Outstanding Bonds; (b)general public liability insurance (other than as set forth in subsection (c)of this Section)in minimum amounts per occurrence,for annual aggregate claims,and with a deductible amount,to the same extent that other entities comparable to the Authority and owning or operating facilities of the size and type comparable to the Project carry such insurance; BOND RESOLUTION . Page 52 Al16355CM (c)comprehensive automobile liability insur- ance; (d)workers'compensation insurance or self- insurance as required by the laws of the State of Alaska; 2.Each insurance policy required by this Section (i)shall be issued or written by a financially responsible insurer (or insurers),or by an insurance fund established by the United States of America or State of Alaska or an agency or instrumentality thereof,(ii)shall be in such form and with such provisions (including,without Limitation and where appli- cable,loss payable clauses payable to the Trustee,waiver of subrogation clauses,provisions relieving the insurer of liabil- ity to the extent of minor claims and the designation of the named assureds)as are generally considered standard provisions for the type of insurance involved,and (iii)shall prohibit cancellation or substantial modification by the insurer withoutatleastthirtydays'prior written notice to the Trustee and the Authority.Without limiting the generality of the forego- ing,all insurance policies,and other arrangements to the extent feasible,carried pursuant to this Section 714 shall name the Trustee,the Authority and the Purchasers as parties insured thereunder as the respective interest of each of such parties aay appear,and loss thereunder shall be made payable and shall be applied as provided in this Resolution. 3.The Authority covenants to review each year the insurance carried by the Authority with respect to the Authority and the Project and,to the extent feasible and economically prudent,will carry insurance insuring against the risks and hazards specified in this Section to the same extent that other entities comparable to the Authority and owning or operating facilities of the size and type comparable to the Project,and taking into account any special circumstances of the Project, carry such insurance.In the event that the Authority deter- mines that the insurance required by this Section is not avail- able to the Authority at reasonable cost,and,in any case, every two years,from and after July 1,1990,the Authority shall employ an independent insurance consultant or the State division of risk management (the "consultant")for the purpose of reviewing the insurance coverage of,and the insurance required for,the Authority and the Project and making recom- mendations respecting the types,amounts and provisions of insurance that should be carried with respect to the Authority and the Project and their operation,maintenance and adminis- tration.A signed copy of the report of the consultant shall be filed with the Trustee and copies thereof shall be sent to the Authority,and the insurance requirements specified hereunder, including any and all of the dollar amounts set forth in this BOND RESOLUTION Page 53 A16355CM Section,shall be deemed modified or superseded as necessary to conform with the recommendations contained in said report. 4,The Authority may establish a fund to provide self-insurance against the risks and hazards relating to the properties of the Project and the interests of the Authority and the Bondholders as described in this Section,and,in connection therewith,may specify and determine the matters and things set forth in paragraph 3 of this Section. 5.Insurance maintained pursuant to this Section may be part of one or more master policies maintained by the State of Alaska so long as the form of such policy and the coverage is the same as if a separate policy was in effect. 6.The Authority shall on or before January 1 of each year,commencing January 1,1990,submit to the Trustee a certificate verifying that all minimum insurance coverages required by this Resolution are in full force and effect as of the date of such Authority certificate. 715.Reconstruction;Application of Insurance Proceeds.1.If any useful portion of the Project shall be damaged or destroyed,the Authority shall,as expeditiously as possible,continuously and diligently prosecute or cause to be prosecuted the reconstruction or replacement thereof,unless the Authority declares the Project ended pursuant to Section 14 ofthePowerSalesAgreement,or unless the Consulting Engineer in an opinion or report filed with the Trustee shall state that such reconstruction and replacement is not consistent with Prudent Utility Practice or is not in the interest of the Purchasers and the Bondholders.The proceeds of any insurance, including the proceeds of any self-insurance fund,paid on account of such damage or destruction shall be held by the Trustee in a special account in the Construction Fund and made available for,and to the extent necessary be applied to,the cost of such reconstruction or replacement.Pending such application,such proceeds may be invested at the direction of the Authority in Investment Securities which mature not later than such time as shall be necessary to provide moneys when needed to pay such costs of reconstruction or replacement.The proceeds of any insurance,including the proceeds of any self-insurance fund,not applied within 36 months after receipt thereof by the Authority to repairing or replacing damaged or destroyed property,or in respect to which notice in writing of intention to apply the same to the work of repairing or replac- ing the property damaged or destroyed shall not have been given to the Trustee by the Authority within such 36 months,or which the Authority shall at any time notify the Trustee are not to be so applied,in excess of $5,000,000 shall be used to retire Bonds by purchase or redemption to the extent provided by the BOND RESOLUTION Page 54 A16355CM Supplemental Resolution authorizing the Bonds and the terms of the Bonds.Notwithstanding the foregoing,in the event that payments are made from the Renewal and Contingency Reserve Fund for any such repairing of property damaged or destroyed prior to the availability of insurance proceeds,including the proceeds of any self-insurance fund therefor,such proceeds when received by the Authority shall be deposited in the Renewal and Contingency Reserve Fund to the extent of such payments there- from. 2.If the proceeds of insurance,including the proceeds of any self-insurance fund,authorized by this Section to be applied to the reconstruction or replacement of any por- tion of the Project are insufficient for such purpose,the deficiency may be supplied out of moneys in the Renewal and Contingency Reserve Fund. 3.Alternate methods (if any)of carrying out and funding Required Project Work may be determined as provided in Section 4(c)of the Power Sales Agreement. 716.Maintenance of Capital Reserve Fund.1.The Authority has determined and does hereby determine that establishment of a Capital Reserve Fund will enhance the market- ability of the Bonds.The Authority shall at all times maintain the Capital Reserve Fund with the Trustee created and established by Section 502 and do and perform or cause to be done and performed each and every act and thing with respect to the Capital Reserve Fund provided to be done or performed on behalf of the Authority or the Trustee under the terms and provisions of Article V hereof or of the Act. 2.In order better to secure the Bonds and to make them more marketable and to maintain in the Capital Reserve Fund an amount equal to the Capital Reserve Requirement,the Authori- ty shall,in compliance with the provisions of the Act,cause the Chairman annually,on or before the second day of January of each year and whenever the Trustee transfers funds from the Capital Reserve Fund to pay Principal Installments or interest on the Bonds,to make and deliver to the Governor of the State and the Chairmen of the House and Senate Finance Committees of the Alaska State Legislature his certificate stating the amount, if any,required to restore the Capital Reserve Fund to the Capital Reserve Requirement and requesting such amount.A copy of such certificate shall be promptly delivered to the Trustee. Any such moneys received by the Authority from the State of Alaska in accordance with the provisions of the Act pursuant to any such certification shall be paid to the Trustee for deposit and credit to the Capital Reserve Fund. BOND RESOLUTION Page 55 A16355CM 717.Accounts and Reports.1.The Authority shall keep or cause to be kept proper books of records made of its transactions relating to the Project and each Fund and Account established under this Resolution and relating to its costs and charges under the Power Sales Agreement and which,together with the Power Sales Agreement and all other books and papers of the Authority,including insurance policies,relating to the Project,shall at all times be subject to the inspection of the Trustee and the Holders of an aggregate of not less than 5%in principal amount of the Bonds then Outstanding or their repre- sentatives duly authorized in writing. 2.The Trustee shall advise the Authority promptly after the end of each month in its regular statements of the respective transactions during such month relating to each Fund and Account held by it under this Resolution.The Authority shall have the right upon reasonable notice and during reasonable business hours to audit the books and records of the Trustee with respect to the Funds and Accounts held by the Trustee under this Resolution. 3.The Authority shall annually,within 120 days after the close of each Fiscal Year (the first such report to be filed with respect to the Fiscal Year commencing July 1,1990), file with the Trustee,and otherwise as provided by law,a copy of an annual report for such Fiscal Year,accompanied by anAccountant's Certificate,relating to the Project and including the following statements in reasonable detail:a statement of assets and liabilities as of the end of such Fiscal Year,to the extent relating to the Project;a statement of Revenues and Operating Expenses for such Fiscal Year;and a summary with respect to each Fund and Account established under this Resolu- tion of the receipts therein and disbursements therefrom during such Fiscal Year and the amount held therein at the end of such Fiscal Year.Such Accountant's Certificate shall state whether or not,to the knowledge of the signer,the Authority is in default with respect to any of the covenants,agreements or conditions on its part contained in this Resolution,and if so, the nature of such default. 4,The Authority shall file with the Trustee (a) forthwith upon becoming aware of any Event of Default or default in the performance by the Authority of any covenant,agreement er condition contained in this Resolution,a certificate signed by an Authorized Officer of the Authority and specifying such Event of Default or default and (b)within 120 days after the | end of each Fiscal Year,commencing with the Fiscal Year ending June 30,1991,a certificate signed by an Authorized Officer of the Authority stating that,to the best of his knowledge and belief,the Authority has kept,observed,performed and fulfilled each and every one of its covenants and obligations BOND RESOLUTION Page 56 A16355CM contained in this Resolution and there does not exist at the date of such certificate any default by the Authority under this Resolution or any Event of Default or other event which,with the lapse of time specified in Section 801,would become an Event of Default,or,if any such default or Event of Default or other event shall so exist,specifying the same and the nature and status thereof. 5.With respect to the Project and each Capital Improvement for which a Construction Engineer is retained pursu- ant to paragraph 7 of Section 503,the Authority shall cause such Construction Engineer to (a)prepare and submit to the Authority such drawings,designs,plans,specifications,surveys and reports as are necessary for the proper acquisition and construction of the Project or Capital Improvement,and approve and supervise any necessary modifications in the designs,plans and specifications thereof;(b)prepare and submit to the Authority quarterly reports of progress during the period of construction of the Project or Capital Improvement,including data as to the date of expected completion and the comparison of estimated construction time and the Cost of Acquisition and Construction thereof with the estimates made prior to the issuance and sale of any Bonds,and an estimate of the amountsthatwillbeneededfrom.time.to time to pay.the-Cost-of Acqui-sition and Construction therecf and the estimated dates of such payments;(c)continuously supervise and inspect the acquisition and construction of the Project or Capital Improvement in accordance with the usual accepted practices of such inspection and supervision;and (d)upon completion and testing as required by the specifications of the Project or Capital Improvement, certify to the Authority to that effect and to the further effect that the Project (or,with respect to a Capital Improve- ment,the Project with such Capital Improvement)is ready for normal continuous operation.The Authority shall cause a copy of every report of the Construction Engineer referred to in 'thisParagraphtobefiledwiththeTrustee. 6.The reports,requested statements and other documents required to be furnished to the Trustee pursuant to any provisions of this Resolution shall be available for the inspection of Bondholders at the office of the Trustee and shall be mailed to each Bondholder who shall file a written request therefor with the Authority.The Authority shall request each Purchaser to send a copy of its annual financial statement to the Authority and shall send a copy to each Bondholder which has requested it.The Authority may charge each Bondholder requesting such reports,statements and other documents a reasonable fee to cover reproduction,handling and postage. 7.The Authority agrees to provide to BIG not more than 90 days after the end of each Fiscal Year,a certificate of BOND RESOLUTION Page 57 A16355CM its chief financial officer to the effect that the Authority is in compliance with the terms and conditions of the Resolution or specifying the nature of any noncompliance and the remedial action taken or proposed to be taken to cure such noncompliance. 8.The Authority agrees promptly to provide to BIG (i)all budgets,budget amendments,reports,certificates and financial information required to be filed with the Trustee pursuant to this Resolution or available at the request of Bondowners,(ii)all reports and certificates prepared by the Insurance Consultant,the State division of risk management retained pursuant to Section 714 and Consulting Engineer and Construction Engineer pursuant to this Resolution and (iii) audited financial statements for the most recent Fiscal Year are to be submitted within 120 days of the end of each Fiscal Year. 9.The Authority agrees that immediately,in the case of additional parity indebtedness,and annually,in the case of other indebtedness,it will file or cause to be filed with BIG any official statement issued by,or on behalf of,the Authority in connection with the incurrence by the Authority of any such indebtedness. 10.The Authority agrees promptly to provide or cause to be provided to BIG such financial,statistical and other factual information as BIG shall from time to time reasonably request regarding the Authority. 718.Tax Covenants.1.The Authority shall at alli times do and perform all acts and things necessary or desirable including,but not limited to,compliance with provisions of a letter of instructions from Bond Counsel,as the same may be revised from time to time,in order to assure that interest paid on the Bonds shall,for the purposes of federal income taxation, be excludable from the gross income of the recipients thereof and exempt from such taxation,except in the event that such recipient is a "substantial user"or "related person"within the meaning of Section 147(a)of the Code. 2.The Authority shall not permit at any time or times any of the proceeds of the Bonds,Revenues or any other funds of the Authority to be used directly or indirectly to acquire any securities or obligations the acquisition of which would cause any Bond to be an "arbitrage bond"as defined in Section 148(a)and (e)of the Code. BOND RESOLUTION Page 58 A16355CM 3.The Authority shall not permit at any time or times any proceeds of any Bonds,Revenues or any other funds of the Authority to be used,directly or indirectly,in a manner which would result in the exclusion of any Bond from the treat- ment afforded by subsection (a)of Section 103 of the Code,as from time to time amended,except in the case of Bonds held by a person who,within the meaning of Section 147(a)of the said Code,is a "substantial user”or "related person". 4,This Section shall not apply to any Series of Bonds the interest on which is determined by the Authority not to be exempt from taxation under Section 103 of the Code,pro- vided,that no such Series of Bonds shall be issued unless a Counsel's Opinion is filed with the Trustee stating that the issuance of such Series will not cause the interest on a tax-ex- empt Bond previously issued to be subject to taxation under Sections 103 and 141-150 of the Code. 5.Notwithstanding any other provision of this Resolution to the contrary,upon the Authority's failure to observe,or refusal to comply with,the covenants in this Section 718,no person other than the Trustee or the Holders of Bonds of the specific Series affected shall be entitled to exercise any right or remedy provided to the above Holders under this Resolution on the basis of the Authority's failure to observe,or refusal to comply with,the covenant. 719.Payment of Taxes and Charges.The Authority will from time to time duly pay and discharge,or cause to be paid and discharged,all taxes,assessments and other governmen- tal charges,or required payments in lieu thereof,lawfully imposed upon the properties of the Authority or upon the rights, Revenues,income,receipts and other moneys,securities and funds of the Authority when the same shall become due (including all rights,moneys and other property transferred,assigned or pledged under this Resolution),and all lawful claims for labor and material and supplies,except those taxes,assessments, charges or claims which the Authority shall in good faith contest by proper legal proceedings,if the Authority shall in all such cases have set aside on its books reserves deemed adequate with respect thereto. 720.Pledge of the State.The State of Alaska pledges to and agrees with the Holders of the Bonds that the State will not limit or alter the rights and powers vested in the Authority by the Act to fulfill the terms of the contracts made by the Authority under this Resolution with the Holders of Bonds,or in any way impair the rights and remedies of the Holders of Bonds until the Bonds,together with the interest on them with interest on unpaid installments of interest,and all costs and expenses in connection with an action or proceeding by BOND RESOLUTION Page 59 A16355CM or on behalf of the Holders of the Bonds,are fully met and discharged.This pledge is included in this Resolution under the specific authority of 44.83.140 of the Act. 721.Waiver of Laws.The Authority shall not at any time insist upon or plead in any manner whatsoever,or claim or take the benefit or advantage of,any stay or extension law now or at any time hereafter in force which may affect the covenants and agreements contained in this Resolution or in the Bonds,and all benefit or advantage of any such law is hereby expressly waived by the Authority. 722.Special Provisions Relating to BIG.1. Notwithstanding any provision of this Resolution to the contrary,BIG shall at all timed be deemed the exclusive owner of all Insured Bonds for the purposes of all approvals, consents,waivers,institution of any action,and the direction of all remedies.No Event of Default shall be waived,without BIG's consent. 2.To the extent that BIG makes payment of the principal of or interest on the Insured Bonds,it shall become the ownerof such Bonds and the right to payment of suchprincipaloforinterestonsuchBondsandshallbefullysubrogatedtoalloftheregisteredowners'rights thereunder, including the registered owners'rights to payment thereof.To evidence such subrogation (i)in the case of subrogation as to claims for past due interest,the Trustee shall note BIG's rights as subrogee on the registration books of the Authority maintained by the Trustee upon receipt of proof from BIG as to payment of interest thereon to the registered owners of the Bonds,and (ii)in the case of subrogation as to claims for past due principal,the Trustee shall note BIG's rights as subrogee on the registration books of the Authority maintained by the Trustee upon surrender of the Bonds by the registered owners thereof to the Insurance Trustee. 3.In the event that the principal of and/or interest on the Bonds shall be paid by BIG pursuant to the terms of the Municipal Bond Insurance Policy,(i)such Bonds shall continue to be Outstanding under the Resolution,(ii)the assignment and pledge of the trust estate and all covenants, agreements and other obligations of the Authority to the registered owners shall continue to exist,and BIG shall be fully subrogated to all of the rights of such registered owners in accordance with the terms and conditions of subparagraph (2) above and the Municipal Bond Insurance Policy. 4.BIG shall be notified by the Authority (i)in advance of the adoption of any Supplemental Resolution in the event Bondowner consent is not required,(ii)immediately upon BOND RESOLUTION Page 60 A16355CM the occurrence of any Event of Default under the Resolution or if any event that with notice and/or with the lapse of time could become an event of default under the Resolution,and (iii) of any redemption of Insured Bonds at the same time that the owners of the Bonds to be redeemed are notified.In addition, all notices,reports,certificates and opinions to be delivered to or by the Trustee or to the Bondowners or available at the request of the Bondowners pursuant to this Resolution,any Supplemental Resolution shall also be delivered to BIG. 5.In the event that BIG shall make any payments of principal of,and/or interest on,any of the bonds pursuant to the terms of the Municipal Bond Insurance Policy,and the Bonds are accelerated,BIG may,at any time and at its sole option, pay to the owners of the Bonds all or any portion of amounts due under the Bonds prior to the stated maturity dates thereof. 6.The Authority and the Trustee shall also notify BIG (i)immediately,upon the withdrawal of amounts on deposit in the Capital Reserve Fund,other than amounts comprising investment earnings thereon which may be withdrawn in accordance with the terms of the Resolution,upon the determination that deficiency in the Capital Reserve Fund exists or upon the failure to make any required deposit to the Debt Service Fund to pay principal or interest when due;and (ii)immediately upon the resignation or removal of a Trustee or the appointment of a successor Trustee.All notices,reports,certificates and opinions required to be given to BIG shall be in writing and shall be sent by registered or certified mail or by overnight Gelivery,addressed to Bond Investors Guaranty Insurance Company,70 Pine Street,53rd Floor,New York,New York 10270, Attention:Manager,Portfolio Surveillance Department. 723.General.1.The Authority shall do and perform or cause to be done and performed all acts and things required to be done or performed by or on behalf of the Authority under the provisions of the Act and this Resolution. 2.Upon the date of authentication and delivery of each Series of Bonds,all conditions,acts and things required by law and this Resolution to exist,to have happened and to have been performed precedent to and in the issuance of such Bonds shall exist,have happened and have been performed and the issue of such Bonds,together with all other indebtedness of the Authority,shall comply in all respects with the applicable laws of the State of Alaska including the debt and other limitations prescribed by the Constitution and laws of the State of Alaska. 3.The provisions of this Article are covenants and agreements by the Authority with the Trustee and the Bond- holders. BOND RESOLUTION Page 61 A16355CM ARTICLE VITI Remedies of Bondholders Section 801.Events of Default.'The following shall constitute Events of Default: (1)aif default shall be made in the due and punctual payment of the principal of or Redemption Price, if any,when and as the same shall become due on or with respect to any Bond,whether at maturity or upon call for redemption or otherwise; (ii)if default shall be made in the due and punctual payment of any installment of interest on any Bond or the unsatisfied balance of any Sinking Fund Installment therefor,when and as such interest installment or Sinking Fund Installment shall become due and payable; (iil)if default shall be made by the Authority in the performance or observance of any other of the covenants,agreements or conditions on its part in this Resolution or in the Bonds contained,and such default shall continue for a period of 60 days after written notice thereof to the Authority by the Trustee or to the Authority and to the Trustee by the Holders of not less than 25%in principal amount of the Bonds Outstanding; (iv)if there shall occur the dissolution or liquidation of the Authority or the filing by the Authority of a voluntary petition in bankruptcy,or the commission by the Authority of any act of bankruptcy,or adjudication of the Authority as a bankrupt,or assignment by the Authority for the benefit of its creditors,or the entry by the Authority into an agreement of composition with its creditors,or the approval by a court of competent jurisdiction of a petition applicable to the Authority in any proceeding for its reorganization instituted under the provisions of the federal bankruptcy act,as amended,or under any similar act in any jurisdiction which may now be in effect or hereafter enacted; (v)if an order or decree shall be entered,with the consent or acquiescence of the Authority,appointing a receiver or receivers of the Project,or any part thereof, or of the rents,fees,charges or other Revenues therefrom, or if such order or decree,having been entered without the consent or acquiescence of the Authority,shall not be vacated or discharged or stayed within 90 days after the entry thereof;and BOND RESOLUTION Page 62 A16355CM (vi)1£judgment for the payment of money shall be rendered against the Authority as the result of the construction,improvement,ownership,control or operation of the Project,and any such judgment shall not be dis- charged within 90 days after the entry thereof,or an appeal shall not be taken therefrom or from the order, decree or process upon which or pursuant to which such judgment shall have been granted or entered,in such manner as to set aside or stay the execution of or levy under such judgment,or order,decree or process or the enforcement thereof... 802.Account and Examination of Records After Default.1.The Authority covenants that if an Event of Default shall have happened and shall not have been remedied,the books of record and account of the Authority and all other records of the Project at all times shall be subject to the inspection and use of the Trustee and of its agents and attorneys. 2.The Authority covenants that if an Event of Default shall have happened and shall not have been remedied, the Authority upon demand of the Trustee,will account,as if it were the trustee of an express trust,for all Revenues and other moneys,securities and funds pledged or held under this Resolu- tion for such period as shall be stated in such demand. 803.Application of Revenues and Other Moneys After Default.1.The Authority covenants that if an Event of Default shall happen and shall not have been remedied,the Authority upon the demand of the Trustee,shall pay over or cause to be paid over to the Trustee (i)forthwith,all moneys,securities and funds then held by the Authority in any Fund or Account under this Resolution,and (ii)all Revenues as promptly as practicable after receipt thereof. 2.During the continuance of an Event of Default, the Trustee shall apply all moneys,securities,funds and Reve- nues received by the Trustee pursuant to any right given or action taken under the provisions of this Article as follows and in the following order: (i)Expenses of Fiduciaries -to the payment of the reasonable and proper fees,charges,expenses including,but not limited to,fees and expenses of their attorneys,and liabilities of the Fiduciaries; (ii)Operating Expenses -to the payment of the amounts required for reasonable and necessary Operating Expenses.For this purpose the books of record andaccountsoftheAuthorityrelatingtotheProjectshall at all times be subject to the inspection of the Trustee and BOND RESOLUTION Page 63 A16355CM its representatives and agents during the continuance of such Event of Default; (iii)Principal or Redemption Price and Interest -to the payment of the interest and principal or Redemption Price then due on the Bonds,as follows: First:Interest -To the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments,together with accrued and unpaid interest on the Bonds theretofore called for redemp- tion,and,if the amount available shall not be sufficient to pay in full any installment or install- ments maturing on the same date,then to the payment thereof ratably,according to the amounts due thereon, to the persons entitled thereto,without any Giscrimination or preference;and Second:Principal or Redemption Price -To the payment to the persons entitled thereto of the unpaid principal or Redemption Price of any Bonds which shall have become due,whether at maturityor by call for redemption,in the order of their due dates, and,if the amount available shall not be sufficient to pay in full all the Bonds due on any date,then to the payment thereof ratably,according to the amounts of principal or Redemption Price due on such date,to the persons entitled thereto,without any discrimination or preference. 3.If and whenever all overdue installments of interest on all Bonds,together with the reasonable and proper fees,charges,expenses,including,but not limited to,fees and expenses of its attorneys and liabilities of the Trustee,and all other sums payable by the Authority under this Resolution, including the principal and Redemption Price of and accrued unpaid interest on all Bonds which shall then be payable by declaration or otherwise,shall either be paid by or for the account of the Authority or provision satisfactory to the Trustee and BIG shall be made for such payment,and all defaults under this Resolution or the Bonds shall be made good or secured to the satisfaction of the Trustee and BIG or provision deemed by the Trustee and BIG to be adequate shall be made therefor, and the Trustee shall pay over to the Authority ail moneys, securities and funds then remaining unexpended in the hands of the Trustee (except moneys,securitiesand funds deposited orpledged,or required by the terms of this Resolution to be deposited or pledged,with the Trustee),and thereupon the Authority and the Trustee shall be restored,respectively,to their former positions and rights under this Resolution.No BOND RESOLUTIONPage64 A16355CM such payment over to the Authority by the Trustee nor such restoration of the Authority and the Trustee to their former positions and rights shall extend to or affect any subsequentdefaultunderthisResolutionorimpairanyrightconsequent thereon. 4.The Trustee shall not take any action which will unreasonably interfere with the performance of the Power Sales Agreement. 804.Appointment of Receiver.The Trustee shall have the right to apply in an appropriate proceeding for the appointment of a receiver of the Project. 805.Proceedings Brought by Trustee.1.If an Event of Default shall happen and shall not have been remedied,then and in every such case,the Trustee,by its agents and attor- neys,may proceed,and upon written request of the Holders of not less than 25%in principal amount of the Bonds Outstanding shall proceed,to protect and enforce its rights and the rights of the Holders of the Bonds under this Resolution forthwith by a suit in equity or at law,whether for the specific performance of any covenant herein contained,or in aid of the execution of any power herein granted or any remedy granted under the Act,or for an accounting against the Authority as if the Authority were the trustee of an express trust,or in the enforcement of any other legal or equitable right as the Trustee,being advised by counsel,shall deem most effectual to enforce any of its rights or to perform any of its duties under this Resolution. 2.All rights of action under this Resolution may be enforced by the Trustee without the possession of any of the Bonds or the production thereof on the trial or other proceed- ings,and any such suit or proceedings instituted by the Trustee shall be brought in its name. 3.The Holders of not less than a majority in principal amount of the Bonds at the time Outstanding may direct the time,method and place of conducting any proceeding for any remedy available to the Trustee,or exercising any trust or power conferred upon the Trustee,provided that the Trustee shall have the right to decline to follow any such direction if the Trustee shall be advised by counsel that the action or proceeding so directed may not lawfully be taken,or if the Trustee in good faith shall determine that the action or pro- ceeding so directed would involve the Trustee in personal liability or be unjustly prejudicial to the Bondholders not parties to such direction. 4.Upon commencing a suit in equity or upon other commencement of judicial proceedings by the Trustee to enforce BOND RESOLUTION Page 65 A16355CM any right under this Resolution,the Trustee shall be entitled to exercise any and all rights and powers conferred in this Resolution and provided to be exercised by the Trustee upon the occurrence of any Event of Default. 806.Restriction on Bondholder's Action.1.No Holder of any Bond shall have any right to institute any suit, action or proceeding at law or in equity for the enforcement of any provision of this Resolution or the execution of any trust under this Resolution or for any remedy under this Resolution, unless such Holder shall have previously given to the Trustee written notice of the happening of an Event of Default,as provided in this Article,and the Holders of at least 25%in principal amount of the Bonds then Outstanding shall have filed a written request with the Trustee,and shall have offered it reasonable opportunity either to exercise the powers granted in this Resolution or by the Act or by the laws of the State of Alaska or to institute such action,suit or proceeding in its own name,and unless such Holders shall have offered to the Trustee adequate security and indemnity against the costs, expenses and liabilities to be incurred therein or thereby,and the Trustee shall have refused to comply with such request for a period of 60 days after receipt by it of such notice,request and offer of indemnity,it being understood and intended that no one or more Holders of Bonds shall have any right in any manner whatever by his or their action to affect,disturb or prejudice the pledge created by this Resolution,or to enforce any right under this Resolution,except in the manner therein provided; and that all proceedings at law or in equity to enforce any provision of this Resolution shall be instituted,had and maintained in the manner provided in this Resolution and for the equal benefit of all Holders of the Outstanding Bonds,subject only to the provisions of Section 702. 2.Nothing contained in this Resolutionor in the Bonds shall affect or impair the obligation of the Authority, which is absolute and unconditional,to pay at the respective dates of maturity and places therein expressed the principal of (and premium,if any)and interest on the Bonds to the respec- tive Holders thereof,or affect or impair the right of action, which is also absolute and unconditional,of any Holder to enforce such payment of his Bond. 807.Remedies Not Exclusive.No remedy by the terms of this Resolution conferred upon or reserved to the Trustee or the Bondholders is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Resolution or existing at law,including under the Act,or in equity or by statute on or after the date of adoption of this Resolution. BOND RESOLUTION Page 66 A16355CM 808.Effect of Waiver and Other Circumstances.No delay or omission of the Trustee or any Bondholder to exercise any right or power arising upon the happening of an Event of Default shall impair any such right or power or shall be con- atrued to be a waiver of any such Event of Default or be an acquiescence therein;and every power and remedy given by this Article to the Trustee or to the Bondholders may be exercised from time to time and as often as may be deemed expedient by the Trustee or by the Bondholders. 809.Notice of Default.The Trustee shall promptly mail written notice of the occurrence of any Event of Default of which it has actual knowledge to each registered owner of Bonds then Outstanding at his address,if any,appearing upon the registry books of the Authority,and to each Purchaser.The Trustee shall be deemed to have actual notice of any default under Section 801(1i)and (ii). ARTICLE IX Concerning the Fiduciaries 901.Trustee;Appointment and Acceptance of Duties. The Trustee shall be appointed by a Supplemental Resolution. The Trustee shall signify its acceptance of the duties and obligations imposed upon it by this Resolution by executing and delivering to the Authority a written acceptance thereof,and by executing such acceptance the Trustee shall be deemed to have accepted such duties and obligations with respect to all the Bonds thereafter to be issued,but only,however,upon the terms and conditions set forth in this Resolution. 902.Paying Agents;Appointment and Acceptance of Duties.1.The Authority shall appoint one or more Paying Agents for the Bonds of each Series,and may at any time or from time to time appoint one or more other Paying Agents having the qualifications set forth in Section 913 for a successor Paying Agent.The Trustee may be appointed a Paying Agent. 2.Each Paying Agent shall signify its acceptance of the duties and obligations imposed upon it by this Resolution by executing and delivering to the Authority and to the Trustee a written acceptance thereof. 3.Unless otherwise provided,the principal corpo- rate trust offices of the Paying Agents are designated as the respective offices or agencies of the Authority for the payment of the interest on and principal or Redemption Price of the Bonds. BOND RESOLUTION Page 67 416355CM 903.Responsibilities of Fiduciaries.1.The recitals of fact herein and in the Bonds contained shall be taken as the statements of the Authority and no Fiduciary as- sumes any responsibility for the correctness of the same.No Fiduciary makes any representations as to the validity or suffi- ciency of this Resolution or of any Bonds issued thereunder or as to the security afforded by this Resolution or the Power Sales Agreement,and no Fiduciary shall incur any liability in respect thereof.The Trustee shall,however,be responsible for its representation contained in its certificate of authentication on the Bonds.No Fiduciary shall be under any responsibility or duty with respect to the application of any moneys paid by such Fiduciary in accordance with the provisions of this Resolution to the Authority or to any other Fiduciary. No Fiduciary shall be under any obligation or duty to perform any act which would involve it in expense or liability or to institute or defend any suit in respect thereof,or to advance any of its own moneys,unless properly indemnified.Subject to the provisions of subsection 2 of this Section 903,no Fiduciary shall be liable in connection with the performance of its duties hereunder except for its own negligence,misconduct or default. 2.The Trustee,priortothe occurrence of any Event of Default and after the curing of all Events of Default which may have occurred,undertakes to perform such duties and only such duties are specifically set forth in this Resolution.In case an Event of Default has occurred (which has not been cured),the Trustee shall exercise such of the rights and powers vested in it by this Resolution,and use the same degree of care and skill in their exercise,as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. Any provision of this Resolution relating to action taken or to be taken by the Trustee or to evidence matters upon which the Trustee may rely shall be subject to the provisions of this Section 903. 904.Evidence on Which Fiduciaries May Act.1.Each Fiduciary,upon receipt of any notice,resolution,request, consent,order,certificate,report,opinion,bond or other paper or document furnished to it pursuant to any provision of this Resolution,shall examine such instrument to determine whether it conforms to the requirements of this Resolution and shail be protected in acting upon any such instrument believed by it to be genuine and to have been signed or presented by the proper party or parties.Each Fiduciary may consult with counsel,who may or may not be of counsel to the Authority,and the opinion of such counsel shall be full and complete author- ization and protection in respect of any action taken or suf- fered by it under this Resolution in good faith and in accor- dance therewith. BOND RESOLUTION Page 68 A16355CM 2.Whenever any Fiduciary shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under this Resolution,such matter (unless other evidence in respect thereof be herein specifically prescribed)may be deemed to be conclusively proved and established by a certificate of an Authorized Officer of the Authority and such certificate shall be full warrant for any action taken or suffered in good faith under the provisions of this Resolution upon the faith thereof;but in its discretion the Fiduciary may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evi- dence as to it may seem reasonable. 3.Except as otherwise expressly provided in this Resolution,any request,order,notice or other direction re- quired or permitted to be furnished pursuant to any provision thereof by the Authority to any Fiduciary shall be sufficiently executed in the name of the Authority by an Authorized Officer of the Authority. 905.Compensation.The Authority shall pay to each Fiduciary from time to time reasonable compensation for all services rendered under this Resolution,and also all reasonable expenses,charges,counsel fees and other disbursements,includ- ing those of its attorneys,agents and employees,incurred in and about the performance of their powers and duties under this Resolution and each Fiduciary shall have a lien therefor on any and all funds at any time held by it under this Resolution. Subject to the provisions of Section 903,the Authority further agrees to indemnify and save each Fiduciary harmless against any loss,expense including attorneys fees and expenses,and liabilities which it may incur in the exercise and performance of its powers and duties hereunder,and which are not due to its negligence,misconduct or default. 906.Certain Permitted Acts.Any Fiduciary may become the owner of any Bonds with the same rights it would have if it were not a Fiduciary.To the extent permitted by law,any Fiduciary may act as depository for,and permit any of its officers or directors to act as a member of,or in any other capacity with respect to,any committee formed to protect the rights of Bondholders or to effect or aid in any reorganization growing out of the enforcement of the Bonds or this Resolution, whether or not any such committee shall represent the Holders of a majority in principal amount of the Bonds then Outstanding. 907.Resignation of Trustee.The Trustee may at any time resign and be discharged of the duties and obligationscreatedbythisResolutionbygivingnotlessthan60days' written notice to the Authority,and mailing notice thereof to each Bondholder,specifying the date when such resignation shall BOND RESOLUTION Page 69 A16355CM take effect,and such resignation shall take effect upon the day specified in such notice,provided a successor shall have been appointed by the Authority or the Bondholders as provided in Section 909,and has accepted the appointment. 908.Removal of Trustee.The Trustee may be removed at any time by an instrument or concurrent instruments in writing,filed with the Trustee,and signed by the Holders of a majority in principal amount of the Bonds then Outstanding or their attorneys-in-fact duly authorized,excluding any Bonds held by or for the account of the Authority.The Authority may remove the Trustee at any time except during the existence of an Event of Default,for such cause as shall be determined in the sole discretion of the Authority,by filing with the Trustee an instrument in writing signed by an Authorized Officer of the Authority. 909.Appointment of Successor Trustee;Financial Qualifications of Trustee and Successor Trustee.1.In case at any time the Trustee shall resign or shall be removed or shall become incapable of acting,or shall be adjudged a bankrupt or insolvent,or if a receiver,liquidator or conservator of the Trustee,or of its property,shall be appointed,or if any public officer shall take charge or control of the Trustee,or of its property or affairs,a successor may be appointed by the Holders of a majority in principal amount of the Bonds then Outstanding,excluding any Bonds held by or for the account of the Authority,by an instrument or concurrent instruments in writing signed and acknowledged by such Bondholders or by their attorneys-in-fact duly authorized and delivered to such succes- sor Trustee,notification thereof being given to the Authority and the predecessor Trustee;provided,nevertheless,that unless a successor Trustee shall have been appointed by the Bondholders as aforesaid,the Authority by a duly executed written instru- ment signed by an Authorized Officer of the Authority shall forthwith appoint a Trustee to fill such vacancy until a succes- sor Trustee shall be appointed by the Bondholders as authorized in this Section 909.The Authority shall mail notice to each Bondholder of any such appointment made by it within 20 days after such appointment.Any successor Trustee appointed by the Authority shall,immediately and without further act,be super- seded by a Trustee appointed by the Bondholders. 2.If in a proper case no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section within 45 days after the Trustee shall have given to the Authority written notice as provided in Section 907 or after a vacancy in the office of the Trustee shall have occurred by reason of its inability to act,removal,or for any reason whatsoever,the Trustee (in the case of its resignation under Section 907)or the Holder of any Bond (in any case)may apply BOND_RESOLUTION Page 70 A16355CM to any court of competent jurisdiction to appoint a successor Trustee.Said court may thereupon,after such notice,if any, as such may deem proper,appoint a successor Trustee. 3.The Trustee appointed under the provisions of this Article or any successor to the Trustee shall be a bank or trust company or national banking association having capital stock and surplus aggregating at least $200,000,000,if there be such a bank or trust company or national banking association willing and able to accept the office on reasonable and custom- ary terms and authorized by law to perform all the duties im- posed upon it by this Resolution. 910,Transfer of Rights and Property to Successor Trustee.Any successor Trustee appointed under this Resolution shall execute,acknowledge and deliver to its predecessor Trust- ee,and also to the Authority,an instrument accepting such appointment,and thereupon such successor Trustee,without any further act,deed or conveyance,shall become fully vested with all moneys,estates,properties,rights,powers,duties and obligations of such predecessor Trustee,with like effect as if originally named as trustee;but the Trustee ceasing to actshallnevertheless,on the written request of the Authority,or of the successor Trustee,execute,acknowledge and deliver auch instrument of conveyance and further assurance and do such other things as may reasonably be required for more fully and certain- ly vesting and confirming in such successor Trustee all the right,title and interest of the predecessor Trustee in and to any property held by it under this Resolution,and shall pay over,assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth.Should any deed,conveyance or instrument in writing from the Authority be required by such successor Trustee for more fully and certainly vesting in and confirming to such successor Trustee any such estates,rights,powers and duties, any and all such deeds,conveyances and instruments in writing shall,on request,and so far as may be authorized by law,be executed,acknowledged and delivered by the Authority.Any such successor Trustee shall promptly notify the Paying Agents of its appointment as Trustee. 911.Merger or Consolidation.Any company into which any Fiduciary may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which any Fiduciary may sell or transfer all or substantially all of its corporate trust business,provided such company shall be a bank or trust company organized under the laws of any state of the United States of America or a national banking association and shall be authorized by law to perform all the duties imposed upon it by this Resolution,shall be the BOND RESOLUTION Page 71 A16355CM successor to such Fiduciary without the execution or filing of any paper or the performance of any further act. 912.Adoption of Authentication.In any case any of the Bonds contemplated to be issued under this Resolution shail have been authenticated but not delivered,any successor Trustee may adopt the certification of authentication of any predecessor Trustee so authenticating such Bonds and deliver such Bonds so authenticated;and in case any of the said Bonds shall not have been authenticated,any successor Trustee may authenticate such Bonds in the name of the predecessor Trustee,or in the name of the successor Trustee,and in all cases such certificate shall have the full force which it is anywhere in said Bonds or in this Resolution provided that the certificate of the Trustee shall have. 913.Resignation or Removal of Paying Agent and Appointment of Successor.1.Any Paying Agent may at any time resign and be discharged of the duties and obligations created by this Resolution by giving at least 60 day's written notice to the Authority,the Trustee and the other Paying Agents.Any Paying Agent may be removed at any time by an instrument filed with such Paying Agent and the Trustee and signed by an Author- ized Officer.Any successor Paying Agent shall be appointed by the Authority with the approval of the Trustee,and shall be a bank or trust company organized under the laws of any state of the United States of America or a national banking association, having capital stock and surplus aggregating at least $25,000,000,and willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by this Resolution. 2.In the event of the resignation or removal of any Paying Agent,such Paying Agent shall pay over,assign and deliver any moneys held by it as Paying Agent to its successor, or if there be no successor,to the Trustee.In the event that for any reason there shall be a vacancy in the office of any Paying Agent,the Trustee shall act as such Paying Agent. ARTICLE X Supplemental Resolutions 1001.Supplemental Resolutions Effective Upon Filing With the Trustee.For any one or more of the following purposes and at any time or from time to time,a Supplemental Resolution of the Authority may be adopted,which,upon the filing with the Trustee of (i)a copy thereof certified by an Authorized Officer of the Authority and (ii)a certificate of the Committee stating that such Supplemental Resolution has been adopted in accordance BOND RESOLUTION Page 72 A16355CM with Section 11 of the Power Sales Agreement,unless the Supplemental Resolution is adopted pursuant to Section 12 of the Power Sales Agreement shall be fully effective in accordance with its terms: (1)To close this Resolution against,or provide limitations and restrictions in addition to the limitations and restrictions contained in this Resolution on,the authentication and delivery of Bonds or the issuance of other evidences of indebtedness; (2)To add to the covenants and agreements of the Authority in this Resolution,other covenants and agreements to be observed by the Authority which are not contrary to or inconsistent with this Resolution as theretofore in effect; (3)To add to the limitations and restrictions in this Resolution,other limitations and restrictions to be observed by the Authority which are not contrary to or inconsistent with this Resolution as theretofore in effect; (4)To authorize Bonds of a Series and,in connection therewith,specify and determine the matters and things referred to in Section 202,and also any other matters and things relative to such Bonds which are not contrary to or inconsistent with this Resolution as theretofore in effect,including without limitation the form of coupon bonds as provided in Section 301,or to amend,modify or rescind any such authorization,specifi- cation or determination at any time prior to the first authentication and delivery of such Bonds; (5)To confirm,as further assurance,any pledge or assignment under,and the subjection to any lien,pledge or assignment created or to be created by,this Resolution, of the Revenues or of any other moneys,securities or funds; (6)To modify any of the provisions of this Resolution in any other respect whatever,provided that (i) such modification shall be,and be expressed to be, effective only after all Bonds of each Series Outstanding at the date of the adoption of such Supplemental Resolution shall cease to be Outstanding,and (ii)such Supplemental Resolution shall be specifically referred to in the next text of all Bonds of any Series authenticated and delivered after the date of the adoption of such Supplemental Resolution and of Bonds issued in exchange or in place thereof;and BOND RESOLUTION Page 73 A16355CM (7)To appoint the Trustee. 1002.Supplemental Resolutions Effective Upon Consent of Trustee.For any one or more of the following purposes and at any time from time to time,a Supplemental Resolution may be adopted,which,upon ({i)the filing with the Trustee of a copy thereof certified by an Authorized Officer of the Authority, (ii)a certificate of the Committee stating that such Supplemental Resolution has been adopted in accordance with Section 11 of the Power Sales Agreement,and (iii)the filing with the Authority of an instrument in writing made by the Trustee consenting thereto,shall be fully effective in accord- ance with its terms: (1)To cure any ambiguity,supply any omission, or cure or correct any defect or inconsistent provision in this Resolution;or (2)To insert such provisions clarifying matters or questions arising under this Resolution as are necessary or desirable and are not contrary to or inconsistent with this Resolution as theretofore in effect. (3)To make any changes which do not in the sole opinion of the Trustee,materially and adversely affect the rights of the Bondholders. The Trustee,in determining whether any amendments or supplements to the Resolution may be made without the consent of Bondowners and in determining whether any action should be taken,shall consider the effect of such amendment,supplement or action on the rights of the Bondowners as if the Municipal Bond Insurance Policy were not in effect. 1003.Supplemental Resolutions Effective With Consent eof Bondholders.At any time or from time to time,a Supplemental Resolution may be adopted subject to consent by Bondholders in accordance with and subject to the provisions of Article XI,which Supplemental Resolution,upon the filing with the Trustee of (i)a copy thereof certified by an Authorized Officer of the Authority and (ii)a certificate of the Committee stating that such Supplemental Resolution has been adopted in accordance with Section 11 of the Power Sales Agreement,and upon compliance with the provisions of said Article XI,shall become fully effective in accordance with its terms as provided in said Article XI. 1004.General Provisions.1.The Resolution shall not be modified or amended in any respect except as provided in and in accordance with and subject to the provisions of this Article X and Article XI.Nothing in this Article X or Article BOND RESOLUTION Page 74 A16355CM XI contained shall affect or limit the right or obligation of the Authority to adopt,make,do,execute,acknowledge or deliver any resolution,act or other instrument pursuant to the provisions of Section 704 or the right or obligation of the Authority to execute and deliver to any Fiduciary any inetrument which elsewhere in this Resolution it is provided shall be delivered to said Fiduciary. 2.Any Supplemental Resolution referred to and permitted or authorized by Section 1001 and 1002 may be adopted by the Authority without the consent of any of the Bondholders, but shall become effective only on the conditions,to the extent and at the time provided in said Sections,respectively.The copy of every Supplemental Resolution when filed with the Trustee shall be accompanied by an Opinion of Counsel stating that such Supplemental Resolution has been duly and lawfully adopted in accordance with the provisions of this Resolution,is authorized or permitted by this Resolution,and is valid and binding upon the Authority and enforceable in accordance with its terms. 3.The Trustee is hereby authorized to accept the delivery of a certified copy of any Supplemental Resolution referred to and permitted or authorized by Sections 1001,1002 or 1003 and to make all further agreements and stipulations which may be therein contained,and the Trustee,in taking such action,shall be fully protected in relying on an Opinion of Counsel that such Supplemental Resolution is authorized or permitted by the provisions of this Resolution. 4.No Supplemental Resolution shall change or modify any of the rights or obligations of any Fiduciary without its written assent thereto. 1005.Amendments Prior to Delivery of Bonds. Amendments to this Resolution and of the First Series Resolution,not substantial in nature but required in the Opinion of Counsel to effectuate delivery of the Bonds in. accordance with the Bond Purchase Agreement or the Official Statement issued in connection with the Bonds,may be effected by certificate of the Executive Director filed with the Trustee and BIG prior to the delivery of any Bonds.The certificate shall state the amendment,whether the same is in the nature of a clerical correction or consists of the completion of an omission,or otherwise,and from and after the delivery of the certificate this Resolution or the First Series Resolution,as the case may be,shall be considered as if originally adopted with such change. BOND RESOLUTION Page 75 A16355CM ARTICLE XI Amendments 1101.Mailing.Any provision in this Article for the mailing of a notice or other paper to Bondholders shall be fully complied with if it is mailed postage prepaid only to each registered owner of Bonds then Outstanding at his address,if any,appearing upon the registry books of the Authority and each Fiduciary. 1102.Powers of Amendment.Any modification or amendment of this Resolution and of the rights and obligations of the Authority and of Holders of the Bonds thereunder,in any particular,may be made by a Supplemental Resolution,with the written consent of the Committee and,if required by the terms of a written commitment for Bond insurance,the consent of the Bond insurer,and with the written consent given as provided in Section 1103 of the Holders of at least a majority in principal amount of the Bonds Outstanding at the time such consent is given,and (ii)in case less than all of the several Series of Bonds then Outstanding are affected by the modification oramendment,of the Holders of at leasta majority in principalamountoftheBondsofeachSeriessoaffectedandOutstanding at the time such consent is given,and (iii)in case the modifi- cation or amendment changes the terms of any Sinking Fund Installment,of the Holders of at least a majority in principal amount of the Bonds of the particular Series and maturity entitled to such Sinking Fund Installment and Outstanding at the time such consent is given;provided,however,that if such modification or amendment will,by its terms,not take effect so long as any Bonds of any specified like Series and maturity remain Outstanding the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding Bonds under this Section.No such modifications or amendment shall permit a change in the terms of redemption or maturity of the principal of any Outstanding Bond or any installment of interest thereon or a reduction in the principal amount or the Redemption Price thereof or in the rate of interest thereon without the consent of the Holder of such Bond,or shall reduce the percentages or otherwise affect the classes of Bonds the consent of the Holders of which is required to effect any such modification or amendment,or shall change or modify any of the rights or obligations of any Fiduciary without its written assent thereto.For the purposes of this Section,a Series shall be deemed to be affected by a modification or amendment of this Resolution if the same adversely affects or diminishes the rights of the Holders of Bonds of such Series.The Trustee may in its discretion determine whether or not in accordance with the foregoing powers of amendment Bonds of any particular Series BOND RESOLUTION Page 76 A16355CM or maturity would be affected by any modification or amendment of this Resolution and any such determination shall be binding and conclusive on the Authority and all Holders of Bonds. 1103.Consent of Bondholders.The Authority may at any time adopt a Supplemental Resolution making a modification or amendment permitted by the provisions of Section 1102 to take effect when and as provided in this Section,provided that such modification or amendment receives the written consent of the Committee.A copy of such Supplemental Resolution (or brief summary thereof or reference thereto in form provided by the Authority to by the Trustee),together with a request to Bondholders for their consent thereto in form satisfactory to the Trustee,shall be mailed by the Authority to Bondholders (but failure to mail such copy and request shall not affect the validity of the Supplemental Resolution when consented to as in this Section provided).Such Supplemental Resolution shall not be effective until (i)there shall have been filed with the Trustee (a)the written consents of Holders of the percentages of Outstanding Bonds specified in Section 1102 and (b)an Opinion of Counsel stating that such Supplemental Resolution has been duly and lawfully adopted and filed by the Authority in accordance with the provisions of this Resolution,is authorized or permitted by this Resolution,and is valid and binding upon the Authority,the Fiduciaries and the Holders of Bonds and enforceable in accordance with its terms,and (ii)a notice shall have been mailed as hereinafter in this Section 1103 provided.Each such consent shall be effective only if accompa- nied by proof of the holding,at the date of such consent,of the Bonds with respect to which such consent is given,which proof shall be such as is permitted by Section 1202.A certifi- cate or certificates executed by the Trustee and filed with the Authority stating that it has examined such proof and that such proof is sufficient in accordance with Section 1202 shall beconclusivethatthecansentshavebeengivenbytheHolders ofBondsdescribedinsuchcertificateorcertificatesofthe Trustee.Any such consent shall be binding upon the Holders of Bonds signing such consent and,anything in Section 1202 to the contrary notwithstanding,upon any subsequent Holder of such Bonds and of any Bonds issued in exchange (whether or not such subsequent Holder has notice thereof)provided however that any consent may be revoked in writing by any Holder of such Bonds by filing with the Trustee,prior to the time when the written statement of the Trustee hereinafter in this Section 1103 provided for is filed,such revocation.The fact that a consent has not been revoked may likewise be proved by a certificate of the Trustee filed with the Authority to the effect that no revocation thereof is on file with the Trustee.At any time after the Holders of the required percentages of Bonds shall have filed their consents to the Supplemental Resolution,the Trustee shall make and file with the Authority a written BOND RESOLUTION Page 77 A16355CM statement that the Holders of such required percentages of Bonds have filed such consents.Such written statements shall be conclusive that such consents have been filed.At any time thereafter,notice stating in substance that the Supplemental Resolution (which may be referred to as a Supplemental Resolution adopted by the Authority on a stated date,a copy of which is on file with the Trustee)has been consented to by the Holders of the required percentages of Bonds,and will be effective as provided in this Section 1103,may be given to Bondholders by the Authority by mailing such notice to Bondhold- ers (but failure to mail such notice shall not prevent such Supplemental Resolution from becoming effective and binding as in this Section 1103 provided).The Authority shall file with the Trustee proof of the mailing of such notice to Bondholders. A record,consisting of the certificates or statements required or permitted by this Section 1103 to be made by the Trustee, shall be proof of the matters therein stated.Such Supplemental Resolution making such amendment or modification shall be deemed conclusively binding upon the Authority,the Fiduciaries and the Holders of all Bonds at the expiration of 40 days after the filing with the Trustee of the proof of the mailing of such last mentioned notice,except in the event of a final decree of a court of competent jurisdiction setting aside such Supplemental Resolution in a legal action or equitable proceeding for such purpose commenced within such 40 day period;provided,however, that any Fiduciary and the Authority during such 40 day period and any such further period during which any such action or pro- ceeding may be pending shall be entitled in their absolute discretion to take such action,or to refrain from taking such action,with respect to such Supplemental Resolution as they may deem expedient. 1104.Modifications by Unanimous Consent.The Resolution and the rights and obligations of the Authority and of the Holders of Bonds thereunder may be modified or amended with the written consent of the Committee in any respect by a Supplemental Resolution effecting such modification or amendment and the consents of the Holders of all the Bonds then Outstand- ing,each such consent to be accompanied by proof of the holding at the date of such consent of the Bonds with respect to which consent is given.Such Supplemental Resolution shall take effect upon the filing (a)with the Trustee of (i)a copy thereof certified by an Authorized Officer of the Authority, (ii)such consents and accompanying proofs and (iii)the Coun- sel's Opinion referred to in Section 1103 and (b)with theAuthorityandtheTrusteeoftheTrustee's written statement that the consents of the Holders of all Outstanding Bonds have been filed with it.No mailing of any Supplemental Resolution (or reference thereto or summary thereof)or of any request or notice shall be required.No such modification or amendment, BOND RESOLUTION Page 78 A16355CM however,shall change or modify any of the rights or obligations of any Fiduciary without its written assent thereto. 1105.Exclusion of Bonds.Bonds owned by or for the account of the Authority shall not be deemed Outstanding for the purpose of consent or other action or any calculation of Out- standing Bonds provided for in this Article XI,and the Authori- ty shall not be entitled with respect to such Bonds to give any consent or take any other action provided for in this Article. At the time of any consent or other action taken under this Article,the Authority shall furnish the Trustee a certificate of an Authorized Officer of the Authority upon which the Trustee may rely,describing all Bonda so to be excluded. 1106.Notation on Bonds.Bonds authenticated and delivered after the effective date of any action taken as in Article X or Article XI provided may,and if the Trustee so determines,shall,bear a notation by endorsement or otherwise in form approved by the Authority and the Trustee as to such action,and in that case upon demand of the Holder of any Bond Outstanding at such effective date and presentation of his Bond for the purpose at the principal corporate trust office of the Trustee or upon any transfer or exchange of any Bond Outstanding at such effective date,suitable notation shall be made on such Bond or upon any Bond issued upon any such transfer or exchange by the Trustee as to any such action.If the Authority or the Trustee shall so determine,new Bonds so modified as in the opinion of the Trustee and the Authority to conform to such action shall be prepared,authenticated and delivered,and upon demand of the Holder any Bond then Outstanding shall be ex- changed,without cost to such Bondholder,for Bonds of the same Series and maturity then Outstanding,upon surrender of such Bonds. ARTICLE XII Miscellaneous 1201.Defeasance.1.If the Authority shall pay or cause to be paid,or there shall otherwise be paid,to the Holders of all Bonds the principal or Redemption Price,ifapplicable,and interest due or to become due thereon,at thetimeandinthemannerstipulatedthereinandinthisResolu- tion,then the pledge and assignment of any Revenues and other moneys and securities pledged under this Resolution and allcovenants,agreements and other obligations of the Authority to the Bondholders,shall thereupon cease,terminate and become void and be discharged and satisfied.In such event,the Trust-ee shall cause an accounting for such period or periods as shall be requested by the Authority to be prepared and filed with the BOND RESOLUTION Page 79 A16355CM Authority and,upon the request of the Authority shall execute and deliver to the Authority all such instruments as may be desirable to evidence such discharge and satisfaction,and the Fiduciaries shall pay over or deliver to the Authority all moneys or securities held by them pursuant to this Resolution which are not required for the payment of principal or Redemp- tion Price,if applicable,and interest on Bonds.If the Authority shall pay or cause to be paid or there shall otherwise be paid,to the Holders of all Outstanding Bonds of a particular Series,or of a particular maturity within a Series,the princi- pal or Redemption Price,if applicable,and interest due or to become due thereon,at the times and in the manner stipulated therein and in this Resolution,such Bonds shall cease to be entitled to any lien,benefit or security under this Resolution, and all covenants,agreements and obligations of the Authority to the Holders of such Bonds shall thereupon cease,terminate and become void and be discharged and satisfied. 2.Bonds or interest installments for the payment or redemption of which moneys shall have been set aside and shall be held in trust by the Paying Agents (through deposit by the Authority of funds for such payment or redemption or otherwise) at the maturity or redemption date thereof shall be deemed to have been paid within the meaning and with the effect expressed in subsection 1 of this Section 1201.Prior to the maturity or redemption date thereof,Bonds shall be deemed to have been paid within the meaning and with the effect expressed in subsection 1 of this Section 1201 if (a)in case any of said Bonds are to be redeemed on any date prior to their maturity,the Authority shall have given to the Trustee irrevocable instructions accepted in writing by the Trustee to mail as provided in Article IV notice of redemption of such Bonds on said date,(b) there shall have been deposited with the Trustee either moneys (including moneys withdrawn and deposited pursuant to subsection 4 of Section 507)in an amount which shall be sufficient,or Federal Obligations (including any Federal Obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States cf America)which shall not contain provisions permitting the redemption thereof other than at the option of the holder the principal of and the interest on which when due will provide moneys which,together with the moneys,if any,deposited with the Trustee at the same time, shall be sufficient to pay when due the principal or Redemption Price,if applicable,and interest due and to become due on said Bonds on or prior to the redemption date or maturity date thereof,as the case may be,and (c)the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail,as soon as practicable,a notice to the Holders of such Bonds that the deposit required by (b)above has been made with the Trustee and that said Bonds are deemed to have been paid in accordance with this Section 1201 and stating BOND RESOLUTION Page 80 A16355CM such maturity or redemption date upon which moneys are to be available for the payment of the principal or Redemption Price, if applicable,and interest on said Bonds and BIG ahall have received (1)the final official statement delivered in connection with the refunding bonds,if any,issued inconnectionwiththedefeasance,(ii)a copy of the accountants' verification report,(iii)a copy of the escrow deposit agreement under which the Trustee holds the monies or Federal obligations in form and substance acceptable to BIG,and (iv)a copy of an opinion of bond counsel,dated the date of closing and addressed to BIG,to the effect that such Bonds have been paid within the meaning and with the effect expressed in the Resolution,and that the covenants,agreements and other obligations of the Authority to the Holders of such Bonds have been discharged and satisfied.Neither Federal Obligations nor moneys deposited with the Trustee pursuant to this Section 1201 nor principal or interest payments on any such Federal Obliga- tions shall be withdrawn or used for any purpose other than,and shall be held in trust for,the payment of the principal or Redemption Price,if applicable,and interest on said Bonds; provided that any cash received from such principal or interest payments on such Federal Obligations deposited with the Trustee, {A)to the extent such cash will not be requiredatany time forsuchpurpose,after verification by a Certified Public Accountant shall be paid over to the Authority as received by the Trustee,free and clear of any trust,lien,pledge or assignment securing said Bonds or otherwise existing under this Resolution,and (B)to the extent such cash will be required for such purpose at a later date,shall,to the extent practicable, be reinvested in Federal Obligations maturing at times and in amounts sufficient to pay when due the principal or Redemption Price,if applicable,and interest to become due on said Bonds, on or prior to such redemption date or maturity date thereof,as the case may be,and interest earned from such reinvestment shall be paid over to the Authority as received by the Trustee,free and clear of any trust,lien,pledge or assignment securing said Bonds or otherwise existing under this Resolution.For the purposes of this Section 1201,Federal Obligations shall mean and include only such Federal Obligations which shall not be subject to redemption prior to their maturity other than at the option of the holder thereof. 3.Anything in this Resolution to the contrary notwithstanding,any moneys held by a Fiduciary in trust for the payment and discharge of any of the Bonds which remain unclaimed for six years after the date when such Bonds have become due and payable,either at their stated maturity dates or by call for earlier redemption,if such moneys were held by the Fiduciary at such date,or for six years after the date of deposit of such moneys if deposited with the Fiduciary after the said date when such Bonds became due and payable,shall,at the written request BOND RESOLUTION Page 81 A16355CM of the Authority,be repaid by the Fiduciary to the Authority for payment into the Revenue Fund,and shall be deemed "other available funds"within the meaning of Section 712 to be used for the payment of amounts required to be paid therein or for the payment of refunds to the Purchasers pursuant to Section 13 of the Power Sales Agreement,and the Fiduciary shall thereupon be released and discharged with respect thereto and the Bond- holders shall look only to the Authority for the payment of such Bonds. 1202.Evidence of Signatures of Bondholders and Ownership of Bonds.1.Any request,consent,revocation of consent or other instrument which this Resolution may require or permit to be signed and executed by the Bondholders may be in one or more instruments of similar tenor,and shall be signed or executed by such Bondholders in person or by their attorneys appointed in writing.Proof of the execution of any such in- strument,or of any instrument appointing any such attorney, shall be sufficient for any purpose of this Resolution (except as otherwise therein expressly provided)if made in the follow- ing manner,or in any other manner satisfactory to the Trustee, which may nevertheless in its discretion require further and other proof in cases where it deems the same desirable: The fact and date of the execution by any Bondholder or his attorney of such instruments may be proved by a guarantee of the signature thereon by a bank or trust company or by the certificate of any notary public or other officer authorized to take acknowledgements of deeds,that the person signing such request or other instrument acknowledged to him the execution thereof,or by an affidavit of a witness of such execution,duly sworn to before such notary public or other officer.Where such execution is by an officer of a corporation or partnership,such Bignature guarantee,certificate or affidavit shall also consti- tute sufficient proof of his authority. 2.The ownership of Bonds and the amount,numbers and other identification,and date of holding the same shall be proved by the registry books. 3.Any request or consent by the owner of any Bond shall bind all future owners of such Bond in respect of anything done or suffered to be done by the Authority or any Fiduciary in accordance therewith. 1203.Moneys Held for Particular Bonds.The amounts held by any Fiduciary for the payment of the interest,principal or Redemption Price due on any date with respect to particular Bonds shall,on and after such date and pending such payment,be set aside on its books and held in trust by it for the Holders of the Bonds entitled thereto. BOND RESOLUTION Page 82 A16355CM 1204.Preservation and Inspection of Documents.All documents received by a Fiduciary under the provisions of this Resolution shall be retained in its possession and shall be subject at all reasonable times during regular hours with reasonable notice to the inspection of the Authority,any other Fiduciary,and any Bondholder and their agents and their representatives,any of whom may make copies thereof. 1205.No Recourse on the Bonds.No recourse shall be had for the payment of the principal of or interest on the Bonds or for any claim based thereon or on this Resolution against any member of the Board of Directors or officer of the Authority or any person executing the Bonds. 1206.Severability of Invalid Provisions.If any one or more of the covenants provided in this Resolution on the part of the Authority or any Fiduciary to be performed should be contrary to law,then such covenant or covenants or agreement or agreements shall be deemed severable from the remaining cove- nants and agreements,and shall in no way affect the validity of the other provisions of this Resolution. 1207.Holidays.If the date for making any payment or the last date for performance of any act or the exercising of any right,as provided in this Resolution,shall be a legal holiday or a day on which banking institutions in the city in which is located the principal office of the Trustee are author- ized by law to remain closed,such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are not authorized by law to remain closed,with the same force and effect as if done on the nominal date provided in this Resolu- tion. 1208.Notices.It shall be sufficient service of any notice,request,complaint,demand or other paper on the Authority or the Trustee,as the case may be,if the same shall be duly mailed by registered or certified mail and addressed to it at Alaska Energy Authority,P.0.Box 190869,Anchorage, Alaska 9$9519-0869,Attention:Executive Director,or to such other address as the Authority may from time to time file with the Trustee (in respect of the Authority)or at Security Pacific Bank Washington,N.A.,Corporate Trust Department,P.O.Box 24407,Seattle,Washington 98124-0407,Attention:Diana Woodard T15-1,or at such other address as the Trustee may from time to time file with the Authority (in respect of the Trustee). BOND _RESOLUTIONPage83 A16355CM ARTICLE XIII Bond Form and Effective Date 1301.Form of Bonds and Trustee's Certificate of Authentication.Subject to the provisions of this Resolution,the form of the Bonds of each Series and the Trustee's Certifi- cate of Authentication,shall be substantially of the following tenor with such variations,omissions and insertions with respect to capital appreciation bonds and otherwise as are required or permitted by this Resolution and as fixed by or pursuant to Supplemental Resolution. ALASKA ENERGY AUTHORITY Power Revenue Bond,Series () %Due July 1, $No. ALASKA ENERGY AUTHORITY (herein called the "Authori- ty"),a public corporation of the State of Alaska organized and existing under and by virtue of the laws of the State of Alaska, acknowledges itself indebted to,and for value received hereby promises to pay to or registered assigns,on the first day of July,,the principal sum of Dollars in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts,upon presentation and surrender of this bond at the principal corporate trust office of or (such banks and any successors thereto being referred to herein as the "Paying Agents”),at the option of the registered owner hereof,and to pay to the registered owner the interest on such principal sum in like coin or curren- cy from the date hereof,at the rate per annum specified above, payable on the first days of January and July in each year, until the Authority's obligation with respect to the payment of such principal sum shall be discharged by check or draft mailed to the registered owner of record hereof as of the 15th day of the calendar month next preceding such interest payment date at the address of such owner appearing on the registration books maintained by the Authority for such purpose at the principal corporate trust office of ,in the City of ,as bond registrar. BOND RESOLUTION Page 84 A16355CM This bond is one of a duly authorized issue of bonds of the Authority designated as its "Power Revenue Bonds, Series "(herein called the "Series Bonds"), in the aggregate principal amount of §issued pursuant to the (herein called the "Act"),and under and pursuant to a resolution of the Authority, adopted ,entitled "Power Revenue Bond Resolution"and a supplemental resolution of the Authority authorizing the Series Bonds (said being herein called the "Resolution"). As provided in the Resolution,the Bonds are direct and general obligations of the Authority for the payment of which the full faith and credit of the Authority is pledged, which are secured as to payment of the principal and redemption price thereof,and interest thereon,in accordance with their terms and the provisions of the Resolution by (i)the proceeds of the sale of the Bonds,(ii)the Revenues (as defined in the Resolution,and (iii)all funds established by the Resolution including the investments,if any,thereof,subject only to the provisions of the Resolution permitting the application thereof For the purposes and on the terms and conditions set forth in the Resolution.Cepies of the Resolution are on file at the office of the Authority and at the principal corporate trust office of ,a8 Trustee under the Resolu- tion,or its successor as Trustee (herein called the "Trustee"), and reference to the Resolution and any and all supplements thereto and modifications and amendments thereof and to the Act is made for a description of the pledge and assignment and covenants securing the Bonds,the nature,extent and manner of enforcement of such pledge and assignment,the rights and remedies of the registered owners of the bonds with respect thereto,the limitations on such rights and remedies and the terms and conditions upon which the Bonds are issued and may be issued thereunder. As provided in the Resolution,Bonds of the Authority may be issued from time to time pursuant to supplemental resolu- tions in one or more series,in various principal amounts,may mature at different times,may bear interest at different rates and may otherwise vary as in the Resolution provided.The aggregate principal amount of Bonds which may be issued under the Resolution is not limited except as provided in the Resolu- tion,and all Bonds issued and to be issued under the Resolution are and will be equally secured by the pledge and assignment and covenants made therein,except as otherwise expressly provided or permitted in the Resolution. To the extent and in the manner permitted by the terms of the Resolution,the provisions of the Resolution,or any BOND RESOLUTION Page 85 ,A16355CM resolution amendatory thereof or supplemental thereto,may be modified or amended by the Authority,with the written consent of the owners of at least a majority in principal amount of the bonds then outstanding under the Resolution,and,in case less than all of the Series of bonds would be affected thereby,with such consent of at least a majority in principal amount of the bonds of each Series so affected then outstanding under the Resolution,and,in case such modification or amendment would change the terms of any sinking fund installment,with such consent of at least a majority in principal amount of the bonds of the particular Series and maturity entitled to such sinking fund installment then outstanding;provided,however,that,if such modification or amendment will,by its terms,not take effect so long as any bonds of any specified like Series and maturity remain outstanding under the Resolution,the consent of the owners of such bonds shall not be required and such bonds shall not be deemed to be outstanding for the purpose of the calculation of outstanding bonds.No such modification or amendment shall permit a change in the terms of redemption or maturity of the principal of any outstanding bond or of any installment of interest thereon or a reduction in the principal amount or redemption price thereof or in the rate of interest thereon without the consent of the owner of such bond,or shall reduce the percentages or otherwise affect the classes of bonds the consent of the owners of which is required to effect any such modification or amendment,or shall change or modify any of the rights or obligations of the Trustee or of any Paying Agent without its written assent thereto. This Bond is transferable as provided in the Resolu- tion,only upon the books of the Authority kept for the purpose at the above-mentioned office of the Trustee,by the registered owner hereof in person,or by his duly authorized attorney,upon surrender of this bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the regis- tered owner or his duly authorized attorney,and thereupon a new registered Bond or Bonds,and in the same aggregate principal amounts,shall be issued to the transferee in exchange therefor as provided in the Resolution,and upon payment of the charges therein prescribed.The Authority,the Trustee and any Paying Agent may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment of,or on account of,the principal or redemp- tion price hereof and interest due hereon and for all other purposes. The Bonds of the issue of which this Bond is one are subject to redemption prior to maturity,upon notice as hereinafter provided,(i)by operation of the Principal Account established under the Resolution to satisfy sinking fund installments,on any interest payment date on and after BOND RESOLUTION Page 86 A16355CM at the principal amount thereof together with accrued interest to the redemption date,and (ii) otherwise,as a whole,or in part in maturities,at any time on or after ,at the respective redemption prices (expressed as percentages of the principal amount of the bonds or portions thereof to be redeemed)set forth below,in each case together with accrued interest to the redemption date: Period During Which Redemption (both dates inclusive)Prices If less than all the bonds of like maturity are to be redeemed,the particular bonds to be redeemed shall be selected by lot by the Trustee. (Further Redemption provisions per the Resolution and Supplemental Resolution) The Bonds of the issue of which this bond is one are payable upon redemption at the above-mentioned offices of the Paying Agents.Notice of redemption,setting forth the place of payment,shall be mailed by first class mail to each registered owner not less than 30 days nor more than 60 days prior to the redemption date,all in the manner and upon the terms and conditions set forth in the Resolution.If notice of redemption shall have been given as aforesaid,the Bonds or portions thereof specified in said notice shall become due and payable on the redemption date therein fixed,and if,on the redemption date,moneys for the redemption of all the Bonds and portions thereof to be redeemed,together with interest to the redemption date,shall be available for such payment on said date,then from and after the redemption date interest on such Bonds or portions thereof so called for redemption shall cease to accrue and be payable. Neither the State of Alaska nor any political subdi- vision thereof,other than the Authority,nor any member of the Authority nor any Power Purchaser (as defined in the Resolution) is obligated to pay the principal,premium,if any,or interest on this bond and the issue of which it is one and neither the faith and credit nor the taxing power of the State of Alaska or any political subdivision thereof is pledged to the payment of the principal of,premium,if any,or interest on this bond or the issue of which it is one. It is hereby certified and recited that all condi- tions,acts and things required by law and the Resolution to exist,to have happened and to have been performed precedent to and in the issuance of this bond,exist,have happened and have BOND RESOLUTION Page 87 A16355CM been performed and that the issue of bonds of which this is one, together with all other indebtedness of the Authority,complies in all respects with the applicable laws of the State of Alaska,including,particularly,the Act and is within every debt and other limit prescribed by said laws of the State of Alaska. This bond shall not be entitled to any benefit under the Resolution or be valid or become obligatory for any purpose until this bond shall have been authenticated by the execution by the Trustee of the Trustee's Certificate of Authentication hereon. IN WITNESS WHEREOF,ALASKA ENERGY AUTHORITY has caused this bond to be signed in its name and on its behalf by the facsimile signature cf its Chairman or its Vice Chairman,and its corporate seal (or facsimile thereof)to be hereunto af- fixed,imprinted,engraved or otherwise reproduced and attested by the facsimile signature of its Secretary or its Assistant Secretary. DATED: ALASKA ENERGY AUTHORITY BY. (Vice)Chairman ATTEST: (Assistant)Secretary BOND RESOLUTION Page 88 A16355CM [FORM OF CERTIFICATE OF AUTHENTICATION ON ALL BONDS] TRUSTEE'S CERTIFICATE OF AUTHENTICATION This bond is one of the Series Bonds Gelivered pursuant to the within mentioned Resolution. Trustee, By. Authorized Officer 1302.Effective Date.This Power Revenue Bond Resolution shall take effect immediately. Power Revenue Bond Resolution approved and adopted by Alaska Energy Authority on September 7,1989. ALASKA ENERGY AUTHORITY By CHhairman BOND RESOLUTION Page 89 A16355CM SECOND AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT BETWEEN HOMER ELECTRIC ASSOCIATION,INC. AND ALASKA ENERGY AUTHORITY EFFECTIVE AS OF JULY 1,2008 TABLE OF CONTENTS Page Section |-Construction and Defimitions..........escscssssceseeseeeeecesseseeeseecesneesceaesaeesseaaserssssscasesssees 2 Section 2 -Term of Agreement ...........cccsccsssssssessessersrsenessesceeesecsssersssecesensesausaeesuseersneseasenseaeensesseas 5 Section 3 -Qualified Utility Status...cc ceecsssscssseseecssessessecasesecsaesscesenseenersseeneeseesaeensensneres 5 Section 4 -Operator's General Duties and Right to Subcontract.0.0...cscsssssesesessecsesscesesstesseeones 5 Section 5 -Operator's Specific Duties...sesecscseseeeceseceereeceecesenececesaseensaessceneeeesenacescessesanenees 6 Section 6 -Accounts,Records and Audits...........ccccccsssscscscscsssssessnsnecessssssesescesssssecscessusesnenenseaaces 8 Section 7 -Budget...csseccsssssccsneescesccccsenensceesesesscecessesseeseeseecesesseeensensesesceseceeesceasenaeenseseeeeeaces 8 Section 8 -Extraordinary Costs ..........cssccsssessesscessceeceesseseecesssseesseeesesceessssccevsesssssesceseeseseeeneeseseneeners 9 Section 9 -Emergency Expenditures 20.0...ecscesscecestscesseeseecsesencacsacsecesseseesacesaenaeeceeseesaeeeseaeenees 9 Section 10 -Disbursement of Funds ..........ccessccssssecsctcsessncescenseccesceeseseesecsncesssecsssscesseensenetererasenees 9 Section 11 -Access to Operator's Facilities .........c.cccsssesssesssesssesssscsssesesessscsessssecessseseaesesesenseeesess 10 Section 12 -Use of Project Living Quarters...ccc ssscceseesscnseseesssstesceessssetcnecacessensseeeaserensesseones 10 Section 13 -Insurance and Indemnity 000...ec eeecessseesseececeeetecsececeescesceeeseseeseesaeecseaeseaesaseneeesenes 10 Section 14 -Dispute Resolution ..........csssscsscsseessessscssssessecesssnsesscnuceneeenessnesersesseceseseeessceeaasecesones 13 Section 15 -Notices.Time and Holidays Computation.Designated Representatives ................-14 Section 16 -Remedies Cumulative....cssessssccssssccsesessesssssssssessencseessnsseneeenscessessecessasereseneeneees 14 Section 17 -Availability of Information...ce sssscessesceseeccneeecctecsnceneeeessessessrsscesseersesssaeees 14 Section 18 -Effect of Termination ..............ecsssccsssrcesssssesssscessssecencsetsceacsesecseceaceusersneneseaceeeseenseees 14 Section 19 -Force Majeure..........ccscessscsccsececesscsssesecenecescessesesecesestenesecersesseeceenenseeaeteceeneeseensenseas 15 Section 20 -Third Party Beneficiaries...sesssscsscsssssesscesscescsssesssscesssnssssssssssecnsesassereserseaveres 15 Section 21 -Assignment of Contract...escscssssscesscseeseescerssesseetseenenensenesseescesseassnesasorssseraceass 15 Section 22 -Exhibits...eeesssssssesseccsscecessessseseseessesssssossessessssessessoeeessessesessesecsecessoessesesseseases 16 Section 23 -Multiple Copies 0...ct sescssssssscscssesecssesesssnsssnossssessseseesssssncseseseesssseassssssesssasessesees 16 Section 24 -Amendment ........cscesscsssssscssesncscsessenensecnsssncessescesssensscecesseseaaeessseeesscesessonsasosensseeseses 16 Section 25 -Waiver Not Continuing .........cc cescesssesssssecssessssesensseressscssssssscessesasssscecssessesssssseecarees 16 Section 26 -Severability .........ccsccssccssecssecssssecscsssscsssscsssssseseesasensesrssesscessessessecessssesaseesensensnseseseses 16 Section 27 -Conduct in Accord with Applicable Law...ceesessecrseesesssesseescscesreeseseseneeeeceseees 16 Section 28 -Section Headings 0.0...ceesesecesessseeessesssescsceseessensssssssneessassssesssssesssssssssseesssessenseneees 17 SECOND AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT THIS SECOND AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT ("Agreement”)dated as of ,2008,is entered into by the HOMER ELECTRIC ASSOCIATION,INC. ("Operator”)and the ALASKA ENERGY AUTHORITY ("Authority”). WITNESSETH WHEREAS,the Authority is a public corporation of the State of Alaska duly created,organized, and existing pursuant to AS 44.83,and authorized by law to sell electric power generated by the Bradley Lake Project ("Project”); WHEREAS,the Bradley Lake Project Power Sales Agreement (the "Power Sales Agreement”) provides that the Bradley Lake Project Management Committee (""BPMC”)shall arrange for the operation and maintenance of the Project and Project Related Facilities and adopt an annual budget of Project Costs; WHEREAS,to provide for the operation and maintenance of the Project and Project Related Facilities,the BPMC entered into a Master Maintenance and Operating Agreement with the Authority under which the Authority shall enter into contracts necessary to perform services for,or operation and maintenance of,the Project and Project Facilities; WHEREAS,the Authority is authorized under AS 44.83.396 to enter into agreements for the operation and maintenance of power projects owned by the Authority with a "qualified utility”; WHEREAS,the BPMC is authorized under the Master Maintenance and Operating Agreement and its Bylaws adopted pursuant to the terms of the Power Sales Agreement,to approve contracts for the operation and maintenance of Project facilities; WHEREAS,the Operator has been identified in the "Bradley Lake Hydroelectric Project Agreement for the Wheeling of Electric Power and Related Services”("Services Agreement”) dated June 29,1989,by the participating utilities as an appropriate entity to operate and maintain the Project; WHEREAS,the Operator is both a qualified utility within the meaning of AS 44.83.425(3)and is authorized to operate and maintain a power project acquired or constructed by the Authority; WHEREAS,the Operator has agreed to operate and maintain the Project in accordance with the terms and conditions of this Agreement; 1 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT WHEREAS,the Operator has provided O&M services pursuant to the Operation &Maintenance Agreement for the Bradley Lake Project dated as of February 11,1994 ("1994 O&M Agreement”), which was for an initial period of five years and automatically renewable annually thereafter; WHEREAS,the parties extended the 1994 O&M Agreement through an Amendment dated June 22,1999,which extended the 1994 O&M Agreement through June 30,2004,and provided that the term shall continue from year to year thereafter;and WHEREAS,the parties have determined that instead of the annual renewal,this Agreement shall be for a term of five (5)years,which may be renewed for successive five-year terms thereafter. NOW,THEREFORE,THE PARTIES AGREE AS FOLLOWS: Section 1 -Construction and Definitions (a)Construction. This agreement is executed in accordance with the terms of the following underlying agreements (the "Underlying Agreements”): (1)Bond Resolution; (2)Power Sales Agreement; (3)Master Maintenance and Operating Agreement. This Agreement in its entirety including the exhibits and the Underlying Agreements represent the entire Agreement of the Operator and the Authority.Nothing in this Agreement is intended to alter the rights and obligations of the Authority and any Purchaser under the Underlying Agreements.In the event of a conflict between a term or provision in this Agreement and any Underlying Agreement,the term or provision in any Underlying Agreement shall control,and the Underlying Agreements shall be construed in the order of precedence in which they are listed above.In the event of a conflict between any provision in the body of this Agreement and any provision contained in an exhibit hereto,the former shall control. (b)For purposes of this Agreement,the following definitions apply. (1)"Agreement”means this Second Amended and Restated Operation &Maintenance Agreement for the Bradley Lake Project. (2)"Annual Project Costs”shall have the meaning given to that term by the Power Sales Agreement. (3)"Authority”means the Alaska Energy Authority as established by AS 44.83,and any successor agency thereto and,unless the context otherwise requires,the employees,agents,and contractors who are directly responsible,respectively,to the Authority. 2 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (14) (15) (16) (17) "Bond Resolution”shall have the meaning given to that term by the Power Sales Agreement. "BPMC”means the Bradley Lake Project Management Committee as established under the December 8,1987,Power Sales Agreement and operating under its Bylaws. "Construction”has the meaning given in AS 36.90.300(c). "Contract Year”means the twelve month period starting July 1 of a calendar year through and including June 30 of the next succeeding calendar year. "Emergency”means an event as declared by the Operator resulting from an unforeseen combination of circumstances or the resulting state that requires immediate action to protect or preserve the Project (or its operations),Project personnel,or public health and safety. "Extraordinary Costs”mcans costs for operations,maintenance,repair or equipment replacement which were not anticipated to materialize in the Contract Year,and not provided for in the Project O&M Budget. "Effective Date”means July 1,2008. "Division of Risk Management”means an office which is part of the State Department of Administration and which is established pursuant to AS 44.21.020. "FERC”means the Federal Energy Regulatory Commission,an agency of the United States Department of Energy,or its successor agency. "Master Maintenance and Operating Agreement”means the Master Maintenance and Operating Agreement dated as of May 24,1994,between the Authority and the BPMC. "O&M”means operation and maintenance of the Project and includes the duties set forth in this Agreement. "Operation and Maintenance Standards”means the Plant Operation and Maintenance Manual,and equipment installation,operation,and maintenance manuals. "Operator”means Homer Electric Association,Inc.(HEA)or its authorized assignee (pursuant to Section 21)and the employees,agents,and contractors who are directly responsible,respectively,to either. "Optional Project Work”shall have the meaning given to that term by the Power Sales Agreement. 3 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) "Participant”shall have the meaning given to that term by the Power Sales Agreement. "Party”or "Parties”means each or all the signatories to this Agreement or a party's authorized assignee. "Percentage Share”shall have the meaning given to that term by the Power Sales Agreement. "Power”or "Electric Power”means electric energy or electric capacity,or both, except where the context requires a distinction,in which case electric energy is expressed in kilowatt hours,and electric capacity is expressed in kilowatts. "Power Sales Agreement”means the Bradley Lake Power Sales Agreement,dated December 8,1987,among the Authority;the Municipality of Anchorage (d.b.a. Municipal Light and Power (ML&P));the City of Seward (d.b.a.Seward Electric System (SES));the Chugach Electric Association,Inc.(Chugach);the Golden Valley Electric Association,Inc.(GVEA);the Alaska Electric Generation and Transmission Cooperative,Inc.(AEG&T),the Matanuska Electric Association,Inc. (MEA);and the Homer Electric Association,Inc.(HEA),as it may be amended from time to time. "Professional Services”has the meaning given in AS 36.90.300(c). "Project”means the Bradley Lake power generation facility and the associated transmission and substation facilities described in Exhibit A. "Project Budget”means the budget for Annual Project Costs as adopted and amended pursuant to Section 13 of the Power Sales Agreement. "Project Capacity”shall have the meaning given to that term by the Power Sales Agreement. "Project O&M Budget”means the budget for the operation and maintenance of the Project as adopted and amended pursuant to Section 13 of the Power Sales Agreement. "Project Related Facilities”shall have the meaning given to that term by the Master Maintenance and Operating Agreement. "Prudent Utility Practices”shall have the meaning given to that term by the Power Sales Agreement. "Purchaser”or "Purchasers”shall have the meaning given to that term by the Power Sales Agreement. "Required Project Work”shall have the meaning given to that term by the Power Sales Agreement. 4 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (32)'Work Rules”means the Bradley Lake Hydroelectric Site Work Rules as initially published by the Authority and as amended from time to time by the Authority and the BPMC. Section 2 -Term of Agreement (a) (b) (c) (d) This Agreement shall take effect as of the Effective Date,subject to execution by the authorized representatives of both Parties. The term of this Agreement shall be five (5)years from the Effective Date,and shall automatically be renewed for successive five-year terms until terminated as provided herein and subject to the termination rights set forth in Section 2(c)and Section 7(d).Notice of termination by either party shall be given two years in advance of the end of any term. In the event the Authority reasonably determines that the Operator's performance of its obligations under this Agreement,without immediate remedial actions,could cause substantial damage to the Project or endanger public health or safety,the Authority shall promptly notify the Operator and shall identify the areas where performance must be remedied.The Operator shall submit to the Authority a plan for remedial action to correct its performance within twenty-four (24)hours of such notice.The Authority or its designee shall have the right to temporarily take over the duties of the Operator until a remedial action plan reasonably satisfactory to the Authority is agreed to by the Operator.If the Parties fail to agree to a remedial action plan within thirty (30)days of the date of notice provided by the Authority,the Authority may immediately terminate this Agreement. This Agreement may be terminated upon no less than six (6)months'notice if (i)the termination is approved by the Authority and a majority of the members of the BPMC constituting not less than 75%of Project Capacity,and (ii)the Authority contracts to transfer operation and maintenance responsibility over the Project to an entity organized to operate generation assets in the Railbelt. Section 3 -Qualified Utility Status The Authority has determined that the Operator is a qualified utility within the meaning of AS 44.83.425(3)and has met all the requirements thereof. Section 4 -Operator's General Duties and Right to Subcontract. To the extent authorized by the Project O&M Budget,or as otherwise funded in accordance with this Agreement,the Operator shall: (a) (b) Operate and maintain the Project so as to make power available to the Purchasers in an amount equal to the amount the Purchasers may schedule from the Project,within the limitations imposed by available Project capability,available water,and the scheduling procedures adopted by the BPMC; Bring to the attention of the Authority and the BPMC Required Project Work,and perform or cause to be performed such Required Project Work to the extent funds are made available 5 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT for such purpose:provided,however,that any procurement or other contracts related to Required Project Work must be in writing and must be approved in advance pursuant to Section 13 of the Power Sales Agreement. The Operator shall not perform or cause to be performed Optional Project Work unless such Optional Project Work is approved and funded by the BPMC and assigned to the Operator by the Authority. Notwithstanding the foregoing,the Operator may subcontract work in accordance with Section 5(q) on the operation or maintenance of the Project or Project Related Facilities to the extent authorized in the Project O&M Budget or with the written approval of the Authority and the BPMC,which shall not be unreasonably withheld.Each subcontract will contain a specific clause providing that it is subject to the provisions of the Master Maintenance and Operating Agreement. In performing its duties hereunder,Operator,or any subcontractor,is performing solely as an independent contractor. Section 5 -Operator's Specific Duties To the extent authorized by the Project O&M Budget or as otherwise funded in accordance with this Agreement,the Operator shall: (a)Coordinate operation,maintenance,repair and other work schedules with the Purchasers in accordance with the Bradley Lake Allocation and Scheduling Procedures; (b)Operate,maintain,and repair the Project in accordance with the Operation and Maintenance Standards and Work Rules.In addition,the Operator shall use and update the Automated Maintenance Management System or such equivalent system as the Authority may direct. The Operation and Maintenance Standards and Work Rules shall be maintained at the Project site.Any revisions to the Operation and Maintenance Standards or Work Rules shall be effective within a period of time after notice having due regard to the nature of the revisions requested and necessary project budget revisions; (c)Provide all material,labor,engineering and other technical support,subcontract management,and training to operate,maintain,and repair the Project,and all tools, equipment,spare parts,materials,and supplies needed to perform work under this Agreement in accordance with the Operation and Maintenance Standards and written directives by the Authority; (d)Comply with all applicable federal,state,and local government laws,regulations and permits.If the Operator elects to contest an order issued by a local government,state or federal agency (other than the Authority),the Operator shall promptly notify the Authority and the BPMC; (e)Provide security and access in accordance with a mutually agreed plan; 6 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (f) (g) (h) (i) G) (k) () (m) (n) (0) Read,maintain,and operate all Project metering devices,record such readings,and maintain or forward data,forms,relevant graphs,and/or magnetic tapes as required by the Authority; Make annua!recommendations to the Authority and BPMC for: (1)operation,maintenance,repair,replacement,and modification of Project facilities; (2)installation of additional protective relaying,instrumentation,control systems,or other apparatus as necessary to maintain or improve the Project and interconnected system reliability,integrity,efficiency,and safety; (3)a five (5)year schedule of estimated equipment modifications,replacements, additions,and disposals; Prepare monthly and year-end operating and financial statements,in a form acceptable to the Authority relating to the performance of this Agreement; Provide qualified personnel with the ability to perform the duties assigned to the Operator under this Agreement; Prepare and conduct an annual training program that meets the minimum training standards established by the BPMC.The Authority may require the Operator to undertake additional training which the Authority deems necessary,however,funding for such additional training is the responsibility of the Authority; Following a protective relay or alarm action,and upon observation or notification,interpret the cause,identify corrective measures,and take corrective action as the situation warrants. The Operator shall document any such actions within three (3)days of their accomplishment; Take prudent measures to protect equipment,personnel,and the general public from hazards arising from equipment failure such as electrical faults,vandalism,and mechanical failure and repair and report damaged facilities to the Authority,to the BPMC on behalf of the Authority and any appropriate law enforcement authority,as soon as possible following each occurrence; Record the operating characteristics of the power plant equipment and machinery as required; Maintain the Project living quarters,including expenses for utility services,as a cost of operation and maintenance; Update,keep and make available to the Authority,BPMC,or any Purchaser the required Project documents,as-built drawings,and other records,including records to meet FERC license requirements and records required by any project related insurance agreements; 7 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (p)Perform water and power operation studies as required to integrate power from the Project into the Purchasers'systems with due regard for the capability limits of the Project planned water reserves,and Purchasers'power needs; (q)Arrange for and administer subcontracts or agency agreements related to the O&M of the Project;provided,however,that Operator agrees to comply with any written procedures adopted by the BPMC and approved by the Authority concerning the review,approval and administration of any such contracts,subcontracts,or agreements; (r)Conduct all technical,operation,and maintenance inspections of the Project in accordance with FERC and other permits or agency requirements,and submit inspection and other reports to the appropriate entities as directed by the Authority; (s)Support the Project by coordinating related technical and operating activities with the Purchasers;and (t)Perform such other additional duties related to the operation,maintenance and repair of the Project as may be included in the Project O&M Budget. Section 6 -Accounts,Records and Audits In keeping records for work performed under the Agreement,the Operator shall utilize the accounting system required of public utilities and licensees by the FERC for electric plants.The Operator shall make its records available at reasonable times.The Operator shall retain copies of all invoices,payroll records,and other supporting documents sufficient for an audit of all expenditures,for three (3)years following the close of each Fiscal Year. The Operator will furnish the Authority with operating and financial statements related to work performed under the Agreement as may be reasonably requested by the Authority.If delivery of those statements is unreasonably delayed,the Authority may,with its own staff or agents,perform all work necessary to collect the data reasonably necessary,but only at such times and in such a manner as will not unreasonably interfere with Operator's operations under the Agreement. Section 7 -Budget (a)In accordance with schedules provided by the Authority,the Operator shall prepare and submit each year to the Authority and the BPMC a draft O&M budget for the Project for the following Contract Year. (b)The draft O&M budget shall be based upon prudent estimates and anticipated O&M requirements and expenditures,and reflect appropriate accounting and budgetary principles for utilities.The draft budget shall be prepared in a format and schedule provided to the Authority by the BPMC. (c)Not less than 30 days prior to the beginning of a Contract Year the Project O&M Budget shall be adopted for the Contract Year pursuant to Section 13 of the Power Sales Agreement. 8 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (d)|The Operator shall perform its duties in a manner consistent with the Project O&M Budget except as provided in Sections 8 and 9 below.If the Operator makes a determination during any Contract Year that it cannot perform its obligations under this Agreement without an increase in the expenditures authorized under the Project O&M Budget,the Operator shall report such finding to the Authority and the BPMC and shall submit a revised budget for the Authority's and the BPMC's review and approval.In the event the revised budget is not adopted pursuant to Section 13 of the Power Sales Agreement,and the Operator determines that it cannot perform its obligations under this Agreement,the Operator may terminate this Agreement upon 150 days notice to the BPMC and the Authority. Section 8 -Extraordinary Costs (a)If the Operator learns of an event or other contingency which involves an Extraordinary Cost,the Operator shall promptly notify the Authority and the BPMC of the circumstances and request authorization to make such expenditures pursuant to Section 13 of the Power Sales Agreement. (b)After notice is given as provided for in Section 8(a)and if required by the Authority or BPMC,the Operator shall develop a scope,schedule,budget and proposed plan of work and deliver the same with a request to proceed as soon as practicable.The Authority and BPMC shall respond in writing to the Operator's request as soon as practicable after the receipt of the plan.Upon approval obtained pursuant to Section 13 of the Power Sales Agreement,the Operator shall perform such work consistent with the plan.The Operator shall not incur any Extraordinary Costs without the written approval obtained pursuant to Section 13 of the Power Sales Agreement except as provided in Section 9 below. Section 9 -Emergency Expenditures The Operator shall take such actions as it reasonably believes are necessary in an Emergency, including incurring unbudgeted costs.If,in the reasonable judgment of the Operator,the Emergency requires the Operator to incur costs prior to obtaining written approval from the Authority and the BPMC pursuant to Section 13 of the Power Sales Agreement,the Operator shall notify the Authority and the BPMC of the Emergency as promptly as practicable with due regard to the Emergency. Section 10 -Disbursement of Funds (a)The normal and routine costs of performing under this Agreement shall be initially paid by the Operator. (b)The Operator shall submit complete written invoices to the Authority for payment with cost summaries and support documents as reasonably requested by the Authority and BPMC. (c)The Authority shall expeditiously arrange for payment of all invoices,including invoices for Emergency expenditures,and shall work with the Opcrator to promptly resolve any disputed billings.All such invoices shall be subject to audit and approval by the Authortty, such approval shall not be unreasonably withheld.In the event the Authority disputes any 9 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (d) (e) amount set forth in such an invoice,the Authority shall arrange for payment of the undisputed amounts of the invoice. Subject to the availability of funds,the Authority shall reimburse the Operator for all costs under this Agreement. Any undisputed amount on an invoice submitted to the Authority by the Operator shall be paid by the Authority within thirty (30)days of receipt of the invoice.Any amount not paid within thirty (30)days shall accrue simple interest at the legal rate of interest at the time payment was due,until paid by the Authority. Section 11 -Access to Operator's Facilities Authority and BPMC personnel or agents shall be granted reasonable access to the Project and the Project-owned equipment and facilities on the Operator's premises upon reasonable notice and subject to security measures,for the purpose of inspection and testing. Section 12 -Use of Project Living Quarters (a) (b) (c) Use of living quarters is established by the Work Rules.Modification of the Work Rules requires the approval of the Authority and the BPMC. The Operator shall schedule occupation of the Project living quarters in an efficient manner. The Operator shall include in such scheduling,quarters for visiting employees of the Operator,subcontractors,the Authority,and the BPMC as needed and available. On-site operations and maintenance personnel shall!have priority in the use of permanent residences at the Project. Section 13 -Insurance and Indemnity (a)General. (1)During the term of this Agreement,the Operator shall use its best efforts to maintain insurance satisfactory to the Authority and the BPMC covering injury to persons or property suffered by any Party or a third party,as a result of errors,omissions,or operations which arise both out of and during the course of this contract by the Operator or by any of its contractors (the "Operator's Insurance”). (2)The Operator's Insurance shall be the primary coverage for the exposures delineated in subsection (1)above with respect to the State of Alaska,its officers,agents,and employees,the BPMC,its officers,agents,and employees,and the Operator,its officers,agents,and employees,as named insureds.Any additional insurance or self-insurance separately maintained by the State,except insurance purchased on behalf of the BPMC,shall be in excess of the Operator's Insurance and shall not contribute to it. 10 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (3) (4) (5) (6) (7) (8) (9) The cost of the required insurance shall be paid by the Operator and included in the Project O&M Budget as an operating cost. Policies maintained under this Agreement must provide that any cancellation,non- renewal or material change be upon thirty (30)days written notice to all named insureds.Insurance Companies shown on the certificate of insurance must be acceptable to the Authority.The Authority shall not unreasonably withhold approval of such Insurance Company. The Operator shall,at least thirty (30)days prior to cancellation,non-renewal,or material change,provide the Authority with written evidence of insurance which replaces or reinstates the required insurance coverage. A copy of the insurance policies required of the Operator will be furnished to the Authority prior to beginning work under this Agreement.Prior to February 1 of each year thereafter,evidence of insurance shall be provided by the Operator. The Operator's obligation to obtain and maintain insurance coverage pursuant to this section shall be subject to the general availability of such coverage under reasonable terms and conditions.If one or more of the required insurance coverages is not available under reasonable terms and conditions,the Operator shall,under the guidance and direction of the BPMC and Division of Risk Management,use its best efforts to obtain substantively equivalent insurance coverage acceptable to the BPMC,the Authority,and the Division of Risk Management. If,after utilizing its best efforts,the Operator is unable to obtain the required insurance coverage under reasonable terms and conditions,as reasonably determined by the Operator,the Operator shall request a waiver of the relevant insurance requirement.The request shall outline steps taken by the Operator to obtain such insurance and shall disclose quotations received for coverage.To the extent the waiver will not materially affect the safe and prudent operation of the Project,the Authority,after consulting with the Division of Risk Management,will not unreasonably withhold approval of the requested waiver.Failure to furnish satisfactory evidence of insurance or failure to maintain the policy without complying with this subsection shall result in a material breach of this Agreement. The Authority shall maintain a policy or policies of property damage insurance insuring the Project against loss resulting from fire,explosion,accident,or equipment breakdown for the probable maximum loss of the Project,with deductible amounts as established after consultation with the BPMC.The policy or policies shall contain a waiver of subrogation with respect to the Operator and the BPMC and list the Operator as an additional named insured to the extent of its interests. The Authority shall annually,prior to February Ist each year,furnish evidence of insurance to the Operator and the BPMC. 1] 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (b) (c) (d) Workers'Compensation Insurance. (1) (2) The Operator shall provide and maintain,for all employees engaged in work under this Agreement,coverage as required by AS 23.30.045,and,where applicable,any other statutory obligations including but not limited to Federal U.S.L.&H.and Jones Act requirements.The policy must waive subrogation against the State and provide for an All States Endorsement. The Operator is responsible for workers'compensation insurance for any of its subcontractors who directly or indirectly provide services under this Agreement. Commercial General Liability Insurance. (1) (2) The Operator shall maintain commercial general liability insurance.The Operator shall secure insurance as required to meet its obligations under this subsection.The BPMC and the Authority shall be included as additional insureds as respects insurance required in this subsection and shall not,by their inclusion,be responsible to the insurance carrier for payment of the premium These insurance policies must also contain a provision providing for cross liability or severability of interest. The commercial general liability insurance shall be subject to the following limits of liability: (i)Bodily Injury and Property Damage Liability of a minimum $5,000,000 Combined Single Limits each occurrence and affording insurance for Premises Operations.Owners and Contractors'Protective.Independent Contractors,Products/Completed Operations,Blanket Contractual Liability, Broad Form Property Damage,and personal Injury Liability; (il)Commercial Auto Liability Insurance covering all vehicles used by the Operator in the performance of services under this agreement with minimum coverages of not less than $5,000,000 combined single limit each occurrence for bodily injury and property damage liability. Additional Liability Insurance. The Operator shall maintain the following additional insurance,where applicable,for aircraft and watercraft owned or contracted for by the Operator. (1)Owned Aircraft and Non-Owned Aircraft with seating capacity of five seats or less, except commercial,scheduled flights,with limits of liability not less than: $5,000,000 for Bodily Injury per occurrence;$1,000,000 for Passenger Liability per seat;and $5,000,000 for Property Damage Liability per occurrence.Coverage must include Slung Cargo exposures.Except in an Emergency,if an aircraft with more than five seat capacity is used,then special coverage and limits must be obtained and must be approved by the Authority and BPMC. 12 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (e) (f) (g) (2)Owned Watercraft and Non-Owned Watercraft with limits of liability not less than $5,000,000 per combined single limit each occurrence. Subcontractor's insurance. Any contract entered into with a subcontractor,other than a Purchaser,by the Operator to perform part of its obligations hereunder shall require the same insurance provisions stated in paragraphs (b)through (d)of this Section 13.The Operator may request a waiver of part or all of such provisions where such waiver will not materially affect the Project and the Operator determines the waiver is necessary to its performance of this Agreement.The Authority will not unreasonably withhold approval of such waiver. Indemnity. The Operator shall indemnify,defend,and hold the Authority harmless from and against any claim of,or liability for,negligent acts,errors,and omissions of the Operator with respect to any Construction-related Professional Services provided under this Agreement. The Operator is not required to indemnify,defend,or hold harmless the Authority for a claim of,or liability for,the independent negligent acts,errors,and omissions of the Authority.If there is a claim of,or liability for,a joint negligent act,error,or omission of the Operator and Authority,the indemnification,defense,and hold harmless obligation of this provision shall be apportioned on a comparative fault basis.In this provision, "independent negligent acts,errors,and omissions”means negligence other than in the Authority's selection,administration,monitoring,or controlling of the Operator,or in approving or accepting the Operator's work. Uninsured Loss. The costs of any loss or damage to or arising out of the Project not covered by insurance, including uninsured deductibles and indemnity (including the Operator's indemnity under Section 13(f),above),shall be included in the Project Budget as an operating cost unless and to the extent caused by the willful act or gross negligence of the Operator.The Operator shall be responsible for paying any such costs if and to the extent the loss or damage is determined to be caused by or arises out of the Operator's willful act or gross negligence.For the avoidance of doubt,the Operator acknowledges its responsibility,as a Participant,to pay its Percentage share of Annual Project Costs,including its Percentage Share of all amounts included in the Project Budget. Section 14 -Dispute Resolution Pending resolution of a disputed matter,the Parties will continue performance of their respective obligations pursuant to this Agreement.If the Parties cannot reach timely mutual agreement on any matter in the administration of this Agreement,the Operator shall,to the extent necessary for its continued performance,make a determination of such matter without prejudice to the rights of the other Parties.Such determination shall not constitute a waiver of any other remedy belonging to either Party. 13 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT Section 15 -Notices.Time and Holidays Computation.Designated Representatives (a) (b) (c) (d) Any notice or demand involving a claim of default,breach of the Agreement,or notice of a dispute shall be sent to the appropriate Party by registered or certified mail. Any notice required to be given to any Party by this Agreement shall be effective when it is received by such Party.In computing any period of time from such notice,the period shall commence at 12:01 p.m.on the date of receipt of such notice.Notice to Operator required by this Agreement shall be in writing directed to the General Manager of Homer Electric Association,Inc.,3977 Lake Street,Homer,Alaska 99603.Notice to the Authority required by this Agreement shall be in writing addressed to the Executive Director of the Alaska Energy Authority,813 West Northern Lights,Anchorage,Alaska 99503. If the date for making any payment or performing any act is a day on which banking institutions are closed in the place where payment is to be made or a legal holiday,payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day when banking institutions are closed. Each Party shall designate a representative to act for it in matters not requiring formal action by its governing bodies.Either Party may at any time change its designated representative by giving written notice to the other Party. Section 16 -Remedies Cumulative No remedy conferred upon or reserved to the Parties under this Agreement is intended to be exclusive of any other remedy or remedies existing at law or equity. Section 17 -Availability of Information The Parties shall make available to each other,for inspection and copying during business hours, all books,records,plans and other information relating to any calculation or determination to be made under this Agreement. Section 18 -Effect of Termination (a)Not less than 75 days prior to the date of any scheduled termination of this Agreement the parties shall meet for the purpose of discussing arrangements necessary for the orderly takeover of the duties of the Operator by the Authority.At or before the meeting the Operator shall submit to the Authority a takeover plan which sets forth the actions which in the opinion of the Operator are reasonably required to accomplish the takeover,and any budget amendments necessary to accomplish the plan.The Authority shall review and either approve or modify the plan and budget.The Operator shall perform in accordance with the approved plan,subject to any budgetary constraints. The Authority shall secure funding for and pay any Extraordinary Costs reasonably incurred by the Operator in performing its duties hereunder,including close-out and demobilization costs. 14 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT (b)Following termination of this Agreement for any cause.the Authority shall have the right and a reasonable amount of time,not to exceed six (6)months.to arrange disposition of Project-owned equipment on the Operator's premises. Section 19 -Force Majeure (a)No Party to the Agreement shall be liable to other Parties for,or be considered to be in breach of or default under this Agreement on account of,any delay in performance or any delay or failure to deliver,receive or accept delivery of energy due to any of the following events: ()Any cause or condition beyond such Party's reasonable control which such Party is unable to overcome by the exercise of reasonable diligence (including but not limited to:fire.flood,earthquake,volcanic activity,wind,drought and other acts of the elements:court order and act of civil,military or governmental authority;strike, lockout and other labor dispute excluding those disputes wrongfully caused by the Operator;riot,insurrection,sabotage and war;breakdown of or damage to facilities or equipment;electrical disturbance originating in or transmitted through such Party's electric system or any electric system with which such Party's system is interconnected;and,any act or omission of any person or entity other than such Party,or Party's contractors or suppliers of any tier or anyone acting on behalf of such Party);or (2)Any action taken by such Party which is reasonably necessary or prudent to protect the operation,performance,integrity,reliability or stability of the Project or of such Party's electric system or any electric system with which such Party's electric system is interconnected,whether such actions occur automatically or manually. (b)In the event of any delay excused under this section,the time for performance thereby delayed shall be extended by a period of time reasonably necessary to compensate for such delay.No cost adjustment will be allowed,only time extensions as appropriate.Nothing contained in this paragraph shall require any Party to settle any strike,lockout or other labor dispute.Each Party shall give the other Parties prompt written notice of any delay which the Party giving notice considers to be an excusable delay of its performance. Section 20 -Third Party Beneficiaries The BPMC,as representative of the Purchasers,is a third party beneficiary of this Contract,with the legal right to enforce the provisions hereof.In any action by the BPMC for damages,the Operator shall have the right to assert against the BPMC any defense which it could have asserted against the Authority.The raising of any such defense by the Operator shall not affect any right of a purchaser or the BPMC under the Master Maintenance and Operating Agreement or Power Sales Agreement. Section 21 -Assignment of Contract This Agreement shall be binding upon and inure to the benefit of the successors,legal representatives or assigns of the Operator and the Authority.However,the Operator may not i5 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT assign the Agreement or any part thereof without the prior written consent of the Authority and the BPMC.No such assignment shal!operate to relieve the Operator of its obligations under this Agreement.If the Authority discontinues its current legal existence.unless the rights,powers and duties of the Authority are transferred to a successor entity with substantially the same expertise within the meaning of Prudent Utility Practices,powers and duties as the Authority.its obligations under the Agreement wil!automatically be assigned to the BPMC.without the need for consent by the Operator. Section 22 -Exhibits The provisions of the following exhibits attached hereto are incorporated by reference herein: Exhibit A -Project Facility Description; Exhibit B -Project Specific Federal and State Agency Requirements: Section 23 -Multiple Copies This Agreement may be executed in several counterparts,each of which shall be an original,but all of which shall constitute one and the same instrument. Section 24 -Amendment Any amendment or modification to this Agreement must be in writing and signed by the Operator and the Authority and approved by the BPMC. Section 25 -Waiver Not Continuing Any waiver at any time by any Party of its nghts with respect to any default of the other Party hereto,or with respect to any other matter arising in connection with the Agreement,shall not be considered a waiver with respect to any subsequent default,right or matter.Any delay short of the statutory period of limitations in asserting or enforcing any right shall not be deemed a waiver of such right. Section 26 -Severability In the event that any provision of the Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,the remainder of the Agreement shall be unaffected by such adjudication and all the remaining provisions of the Agreement shal]remain in full force and effect as if such provision so adjudicated to be invalid had not been included hercin. Section 27 -Conduct in Accord with Applicable Law The Operator and the Authority agree that at all times during the term of the Agreement,they shall conduct themselves in accord with all applicable laws and permits,and they will undertake no action contrary to such laws or permits.Moreover,the Parties specifically acknowledge that the Agreement is subject to all applicable provisions of state and federal law concerning Equal Employment Opportunity as well as all applicable provisions of state and federal law concerning 16 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT work hours and safety standards.The interpretation and application of the Agreement and the actions of the parties hereunder shall be governed by the laws of the State of Alaska. Section 28 -Section Headings The section headings of the Agreement are for convenience only.and do not purport to.and shall not be deemed to,define,limit or extend the scope or intent of the section to which they pertain. IN WITNESS WHEREOF,the Parties have caused this Agreement ta be executed the day and vear first above written. HOMER ELECTRIC ASSOCIATION,INC. Bradley P:JanorsSchke General Manager Date "A-4/-O8 ALASKA ENERGY AUTHORITY PF ePiZeByaeLetaCuo-TT -_--_*Sfeve Haagenson Executive Director Date ?P-3Soe -oO¢g 17 2nd AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT EXHIBIT A PROJECT DESCRIPTION 1.PROJECT DESCRIPTION 1.1 1.2 General The Bradley Lake Hydroelectric Project is located on the Kenai Peninsula at the northeast end of Kachemak Bay about 27 miles from Homer.The project contributes to the electrical generating capacity of Alaska's Railbelt serving customers from the Kenai Peninsula to Fairbanks. Major elements of the project include a concrete faced,rockfill dam,to raise the level of Bradley Lake about 100 feet,an ungated spillway having discharge capacity of 23,800 cfs at pool elevation 1190.6,a diversion tunnel which also serves as a low level outlet,a submerged intake leading to the power tunnel which,including the vertical shaft,is 19,152 ft.long,a surface powerhouse located on the shore of Kachemak Bay anda tailrace channel into the bay.All elevations given in this report are referred to Bradley Lake Project Datum,at which zero is equal to 13.63 ft.above MLLW at Bear Cove. The two unit plant has a nominal generating capacity of 126 MW at 917 ft.net head. Each generating unit consists of a six jet,vertical shaft Pelton turbine driving a 63 MVA generator at 0.95 power factor.The penstock for a future third unit was also constructed as part of the initial project development. Usable storage in Bradley Lake at full pool (El 1180)is about 280,000 acre ft.The project is connected to the existing Kenai Peninsula transmission line,consisting of two parallel 115 KV lines.The lines run through the Fox River Delta to connect with Homer Electric Association's Fritz Creek to Soldotna Transmission line.A summary of pertinent project data is given on Table 1. History of Development The power generation potential of Bradley Lake was first studied by the U.S.Corps of Engineers and presented in a report dated March 1955.The project was authorized by Congress in 1962,but despite its feasibility federal funds were not available for its construction.The Alaska Energy Authority (then Alaska Power Authority)assumed responsibility for the project in 1982.Preliminary plans were developed and field investigations started in 1982.In April 1984,the Authority submitted an application for license to the Federal Energy Regulatory Commission (FERC).The license to construct the project was issued on December 31,1985. The first major contract,"Site Preparation”was let in 1986 and was completed in 1987.This contract included on-site access roads,barge dock,airstrip,permanent facilities,construction camp and diversion tunnel.Following a one year hold on project construction,the General Civil Construction and Transmission Line Clearing Contracts were awarded in June 1988.The Powerhouse Construction Contract was awarded in December 1988 and the Transmission Line Construction Contract was awarded in June 1989,The General Civil Construction and the Powerhouse contracts were completed in August 1991. The Alaska Energy Authority issued a contract for supply of the turbines and generators in 1987,and issued a contract for supply of the SCADA control systems in July 1989.Smaller contracts were also issued for transmission line surveying, geotechnical surveys,and construction of the Middle Fork and Nuka Diversion structures. The diversion tunnel was closed in October 1990,however all inflow to the reservoir was released through the fish water bypass lines.Actual storage in the lake started in Spring 1991 when enough water was available to meet downstream minimum flow requirements.A contract for Site Rehabilitation was issued in June 1991.Both units were released to dispatch in August 1991,and the Project was declared in commercial operation September 1,1991.Construction of the project was completed on November 21,1991,with the completion of the Site Rehabilitation work. 2.DESIGN 2.1 Geology Except for the transmission line,all major elements of the project are founded on or in the bedrock.The geology of the site is composed of Upper Mesozoic Age metamorphic rocks of the McHugh Complex.Most probably this melange is composed of turbidites which have been slightly to moderately metamorphosed. Rock types encountered are graywacke,argillite,chert,dacite,metatuff,and greenstone.The graywacke,argillite and mixtures of these rocks are dominant. Chert occurs as nodules and lenses in the argillite and metatuff with some massive beds up to 15 ft thick.The diabase occurs as intrusive dikes generally 10 to 20 ft.in width with some dikes about 40 ft.thick.The metatuff is metamorphosed,volcanic pyroclastic debris.Frequently it is intermixed with the argilite but some layers up to 15 ft.thick were encountered.Over all it constitutes less than 5%of the rock mass. The greenstone is metamorphosed volcanics.It constitutes less than 3%of the rock mass. Except where severely weathercd,the argillite is moderately hard to hard.The graywacke,chert,dacite and greenstone are hard to very hard.Foliation (cleavage) is poorly developed in the argillite and bedding,when identifiable,is poorly preserved.The graywacke is massive and displays neither bedding nor foliation.The chert,dacite and metatuffs are generally massive and show no foliation. Jointing is well developed.It is widely spaced in the graywacke and moderately to widely spaced in the argillite.Generally three or more sets are observed resulting in blocky structures.There are some open joints in the abutment of the dam and spillway,especially in the rock know between these structures.Hydrosplitting tests totvmade along the tunnel alignment showed low in situ horizontal stresses ranging from 0.9 to 0.5 of overburden pressure at the depth tested.Open vertical joints striking about parallcl to the tunnel (N60 W)were observed during tunnel construction at depths of rock cover of as much as 1200 ft. Geologic Hazards The Pacific Plat is subducting under the North American Plate south of the coast of Alaska.The Aleutian Arc trench marks the surface juncture of the two plates.This trench trends northeast-southwest and is located about 185 miles southeast of the site at its nearest approach.The Pacific Plate is moving north relative to the North American plate.The subduction zone dips northwest and the upper contact of the subduction plate,the Benioff zone,lies at a depth of about 30 miles beneath the surface at the site.The Benioff zone is the locus of great earthquakes. Major faults in the general site area are the Border Ranges fault which lies under Kachemak Bay and the Eagle River Fault which crosses Bradley Lake near its head. Both faults trend NE-SW (about N45 E)parallel to regional structure.Three smaller faults lie within the site area crossing the power tunnel between the intake and the powerhouse.These are the Bull Moose Fault,the Bradley River Fault,and the Bear Cub Fault.These trend approximately north-south.The Bull Moose and Bradley River are the larger of these faults.Where crossed by the power tunnel they consisted of a series of gouge-filled anastamosing shears,a few feet to possibly 20 ft.wide,separated by sound rock and extending over a width of 300 to-400 ft. Lineations and minor shears parallel these faults. Seismicity of the site was investigated by Woodward-Clyde Consultants,"Report on Bradley Lake Hydroelectric Project Design Earthquake Study,”1981.They recommended an MCE earthquake spectrum normalized to zero period horizontal acceleration of 0.75g with a duration of 25 seconds for design of critical,water retaining structures.Vertical acceleration was taken at 2/3 horizontal.This spectrum has been the basis of investigation and design of the dam,spillway and powerhouse. Dynamic analyses of the dam and spillway were made using Finite Element analyses.The time-history used an accelerogram whose spectrum envelopes the Woodward Clyde spectrum.This was constructed by combining two appropriate shorter earthquake records.This hybrid earthquake has a duration of 28 seconds. The nearest active volcanoes are Mt.St.Augustine and Mt.Redoubt which are more than 100 miles from the site across Cook Inlet.Renewed activity poses no direct threat to the project other than possible development of a tsunami due to large mudflows or slides from Mt.St.Augustine and ash falls from both. The cost of Alaska has been subjected to tsunami generated by uplift due to offshore earthquakes.This hazard was investigated by Stone &Webster Engineering Corporation in a report presented to this Board (September 1987).This report indicated an annual probability (combined earthquake and volcanic activity)of about 0.007 for a wave height at the powerhouse reaching El 25 BLP Datum (El A-3 tatu38.63 MLLW datum).The powerhouse is designed to withstand water to this level without damage. The hazards of seiche in Bradley Lake due to earthquake and the possibility of a wave generated in the lake by a liquefaction generated slide in the Bradley Glacier delta were investigated.It was concluded waves from these sources would not damage the dam or spillway.The mountain sides surrounding Bradley Lake are bare rock which has been scoured by late Pleistocene and recent glaciation.Minor rockfalls may result from earthquake but slides which could cause overtopping are not a hazard.The Kachemak and Nuka glaciers are sufficiently far from the lake that ice falls or slides which might result from earthquake would not reach the lake. Main Dam The dam is a concrete faced,rockfill structure.Top of the embankment is El 1190. A parapet wall at the upstream face extends to El 1194.Normal full pool (crest of the spillway)is El 1180 and pool level under PMF is El 1190.6.The parapet wall is designed to provide wave protection during floods.The face slab is 12 inches thick, constant top to bottom.The toe plinth varies in width along its contact with the rock from 10.5 ft.to 13.3 ft.Minimum thickness varies from 3 ft.to 2.25 ft.depending on location and head.The face slab is underlain by a 12 ft.wide zone of crushed rock grading from fines (passing No.200 mesh)to 3 inch size. The toe plinth is founded on rock for its full length.General rock level in the river bottom is about E]1065 giving a nominal dam height to the top of the embankment of 125 ft.However.a narrow channel was found along the right side of the river bottom.This was excavated to bedrock,at its lowest point at El 1032,over a length of 28 ft.centered on the toe plinth and backfilled with concrete.Thus the dam is actually 158 ft.high above the lowest point in the bedrock.The rock surface drops slightly south of the left abutment under the gate shaft bench.In this area the rock is covered by overburden and some rock fill.A concrete wall was constructed across this bench.This extends down to rock for its full length of about 175 ft.A single line grout curtain is located along it. The single line ground curtain extends the full length of the toe plinth and into the abutments.Maximum hole depth is 110 ft.In general the rock was tight and takes were small.However several open joints were found in the abutments.These were grouted to refusal and check holes drilled and grouted. Alternative types of dams considered in selecting a concrete face rock fill included a thick arch structure,a concrete gravity dam or a central core embankment dam.The concrete face rockfill was selected because of its excellent resistance to earthquake, relative cost,lack of suitable earth core material,and topographic constraints, especially space for the upstream cofferdam.Slopes upstream and downstream were established at 1.6H to 1V to restrict deformation under the MCE 0.75 g horizontal) to acceptable limits. A-4 bonmSpillway The spillway is an ungated concrete gravity section with side slopes of 3H to 10V upstream and 8H to 10V downstream. Crest length is 175 ft.at elevation 1180.00.Overall length of the spillway is 275 ft. Spillway discharge at PMF would be 23,800 cfs at a lake level of El 1190.6.A drainage and grouting gallery extends the full length of the spillway at or just above rock level.Access to this gallery is from the left abutment.A single line grout curtain having a depth of 30 to 50 ft.below rock surface inclined 20 upstream and fanning into both abutments was constricted.Drain holes are 3 inches diameter,five feet on centers,and 30 ft.deep except at the right abutment where a fan of holes 50 ft.to 60 ft.long were drilled.All seepage from the spillway drainage system is collected and discharged over a vee notch weir to permit monitoring. Ice loading causes some tension in the upstream face at about El 1170.Accordingly reinforcing was placed in the upstream face.Dynamic analyses using the hybrid accelogram confirmed that stresses are within allowable and no lateral displacement of the spillway would occur under the MCE. The spillway was model tested at Colorado State University.The model extended from well upstream of the power tunnel intake to well)downstream of the main dam.Water velocities along the toe of the main dam were measured and riprap along the downstream tow sized to prevent erosion in the event of spillway operations. Power Tunnel &Intake The power tunnel system consists of an upper tunnel 738 ft.long extending from the intake through the upper elbow,a vertical shaft 647 ft.deep and a lower elbow and lower tunnel with a total length of 17,767 ft.The lower tunnel is on a 1.67%)grade. The intake channel is about 350 ft.long,and the bottom at the intake is at El 1030. Dual high-pressure gates are installed in the upper tunnel about 520 ft.downstream of the tunnel portal in a vertical drywell.The gates are hydraulically actuated.An accumulator bank rides on the hydraulic system.This is sized to permit closing each gate without recharging even in the event of complete loss of power. Provision is made for stoplogs at the intake portal.The samc stoplogs can also be used at the intake portal of the diversion tunnel.A rock trap is provided just upstream of the intake portal. The downstream 435 ft.of the lower tunnel is designated the manifold section.This section contains three wye-branch penstocks which extend to the powerhouse.Two are in service and one is closed by a hemispherical head to be used for a future third unit.The downstream end of the manifold is closed with a hemispherical head which can be removed as necessary for access to the tunnel.The manifold-penstock section and downstream portion of the tunne]for 2725 ft.upstream of the manifold are steel liner encased in concrete.Inside diameter of this section is 11 ft.Four drain pipes A-5 2.7 are located outside of the steel liner in the concrete encasement.Drain holes extend from these drains into rock at intervals of 10 and 20 ft.Seepage from these drains is collected and passed through the powerhouse where it can be measured.The remainder of the lower tunnel is 13 ft.ID with a 12 inch thick concrete lining.The vertical shaft and upper tunnel are 11 ft.ID lined with concrete. The manifold-penstock section was pressure tested at 960 psi (1.9 times static head) for 1 hour before encasing it in concrete.There were no indications of distress,and distortions were very small and acceptable. In situ horizontal stresses in the rock are low.To protect against possible hydro- splitting of the rock by leakage from the tunnel,the steel lining was carried to Sta. 31 +58 where rock cover was equal to 0.8 of the static head.The concrete lining was reinforced to Sta.38+60.From Sta.31 +60 to Sta.35+60 the rock was high pressure grouted (500 psi)using squeeze grouting procedures.Selected areas of the remainder of the lower tunnel were also reinforced.High pressure grouting (250 psi) was done from Sta.35+60 to Sta.38+60 and at selected areas to Sta.64+00 to ensure that open joints intersecting or close to the tunnel were filled with high strength grout.The tunnel was first filled to the then reservoir level,El 1076,in May 1991.A falling head test for a 12 hour duration was made in late May which showed an average leakage of only 58 gpm. Powerhouse The powerhouse has a concrete substructure with steel framed superstructure.It is founded entirely in rock,and the tailrace excavation is in rock for a modest distance away from the powerhouse.The powerhouse has been designed for safety against excessive structural stresses,sliding,overturning or flotation.Loading conditions include MCE,(0.75g)DBE (0.35g),high tides,storm high tide,tsunami,and various plant conditions such as in operation,servicing,and construction including appropriate factors of safety. Diversion Tunnel The diversion tunnel is approximately 407.5 ft.long and is located in the high rock spur between the spillway and the main dam.It has been converted to a low level outlet which is normally closed by a dual system of high pressure slide gates located in a deep dry well shaft.The tunnel is lined with concrete from the upstream portal to downstream of the gate shaft.Gate operation is by hydraulic actuators.There is a bank of accumulators which can open each gate completely in the event of loss of all power.The gates discharge through a steel penstock 10.5 ft.in diameter which extends past the downstream portal of the tunnel.Two 28 inch-diameter steel pipes encased in concrete extend through the entire length of the tunnel.these discharge through a system of 7 motor operated valves of different sizes so arranged that fish water releases can be made from the reservoir as necessary to maintain required flows in the Lower Bradley River of 40 to 100 cfs at Riffle Reach. A-6 Diversions into Bradley Lake As a part of the development of the Project.the Middle Fork of the Bradley River.a portion of the outflow from the Nuka Glacier,and a small tributary of Battle Creek were diverted into the reservoir. 2.8.1 Nyi)Middle Fork Diversion The Middle Fork Diversion is located approximately one mile north of Bradley Lake in an adjacent drainage at elevation 2160 on the Middle Fork Tributary of the Bradley River.The Diversion consists of a small intake basis and two reaches of open channel approximately 760 feet and 483 feet long,separated by a stilling basin which is located in a natural bog area,all of which were established by excavation.The Diversion conveys water from the Middle Fork of the Bradley River to Marmot Creek,a tributary to Bradley Lake,and operates in all seasons. Nuka Diversion Glacial melt forms a pond called Nuka Pool at the terminus of the Nuka Glacier.Nuka Pool lies on the divide between two drainages,discharging water both into the Upper Bradley River and into the Nuka River.Water discharged into the Upper Bradley River flows to Bradley Lake and that which is discharged to the Nuka River flows to the Kenai Fjords National Park. The purpose of the Nuka Diversion is to cause the glacial melt water flowing through the Nuka Pool to flow in the upper Bradley River,except of an initial increment of flow which must be provided to the Nuka River in accordance with the June 1986 Contract between the Alaska Energy Authority and the U.S.Department of Interior.In compliance with this Contract,the design must assure that when flows are available in the Nuka Pool,5 cfs will be diverted to the Nuka River prior to any diversion of water to the Upper Bradley River. To accomplish this,flow from the Nuka Pool to the Upper Bradley River passes over a long,uniform weir constructed by modifying the naturally occurring rock weir at the pool outlet.At the Nuka River outlet of the pool, water is constrained to flow through a 12-inch steel pipe in a gabion dike. This pipe has been sized such that it will discharge 5 cfs when the Nuka Pool level is at the elevation of the Bradley-side weir crest and flow is about to commence to the Upper Bradley River.No flow is allowed to enter the Upper Bradley River from the Nuka Pool until 5 cfs enters the Nuka River. A second,identical pipe is also provided.This second pipe ensures flows if the first pipe becomes inoperative and needs to be repaired.It may also be used to augment flows. A-7 2.12 2.8.3.Upper Battle Creek Diversion The Upper Battle Creek Diversion is located at elevation 1342 approximately 0.7 miles south-southeast of Bradley Lake Dam and diverts a small tributary of Battle Creek into the reservoir adding 0.9 square miles of drainage area to the Project. Diversion is accomplished by emplacement of a small,talus dike across the tributary at the base of a waterfall.An intake basin 25'x25'by 3 feet deep was constructed near the bottom of the falls and flow is directed through three interconnected ponds.Approximately 300 feet of ditch was excavated between the ponds to reverse the direction of the flow into the reservoir. Permanent Facilities To accommodate for the needs of on-site personnel,the project is provided with two 32'x82'duplex living quarters,a 43°x50”office/transient worker residence building, a 50'x160'shop-warehouse and a fenced storage yard which also contains an unheated storage/incinerator building. Project Airstrip The project airstrip is incorporated into the permanent project road system between the barge dock and permanent facilities. The strip is 2400 ft.long and 75 ft.wide and is equipped with plane lights,a taxi and parking apron,weather building and warning lights. The airstrip is designed for VFR use only and is not open to the public. Barge Dock Water access to the project is from a dock facility consisting of five (5)53 ft. diameter sheet pile cells placed out into the tidal flats of Kachemak Bay.A rockfill, gravel-surfaced causeway extending some 700 ft.from the shoreline connects the barge dock cells to the project access road at the bay shore.Use of this facility is available only during half tides and greater. A small,aluminum floating dock is attached to the sheet pile cells to provide mooring for skiffs belonging to the public.This small dock is removed each winter to prevent it from being damaged by ice. Transmission Line Two parallel and separate single circuit 115 kV transmission lines,each about 20 miles long,connect to the substation at the powerhouse and carry the power generated to the Fritz Creek-Soldotna 115 kV Transmission Line owned by Homer A-8 tw-(a2Electric Association.Inc.The point of connection for these two lines is designated as the Bradley Junction. The Bradley Lake transmission line towers are guved,X-configuration towers manufactured of Corten type steel.The conductor is 556 kemil,4219 Aluminum/Steel "Special Dove.” Roads About 1]0.8 miles of gravel surface access roads have been constructed and connect the powerhouse,permanent facilities,airstrip.dam site and other project areas. Instrumentation Settlement and deflection of the main dam are monitored by two rows of monuments set on the upstream face at approximately mid-height of the face and just below the parapet;and three monuments set in the rock fill along the upstream side of the El 1077 berm.Three monuments are set in the crest of the spillway. Instrument pedestals were established along these several lines of monuments.The instrument pedestals are referenced to four primary survey monuments set in rock. Seepage into the spillway drainage gallery is collected and discharged over a vee notch weir.Main dam leakage is estimated by deducting fish water releases and spillway seepage from the flow recorded at the USGS gaging station just downstream of the dam. Four exploratory borings along the line of the tunnel have been converted to open standpipe piezometers to measure groundwater levels above the tunnel. Seepage flow from the drain system around the steel lining in the tunnel is monitored in the powerhouse. INITIAL FILLING OF RESERVOIR . Filling of the reservoir started October 3D,1990,but was suspended shortly thereafter to meet the fisheries minimum flow requirements.As the hydrograph began to rise the following spring,filling was resumed.The initial rate of filling was slow but accelerated during the summer of 1991.Water level reached full pool during a severe storm in late September 1991.Spilling started on September 27 and continued for 8 days with about 0.5 ft.depth passing over the spillway.The winds during this storm were heavy.Waves splashed over the spillway and to some extend over the parapet wall of the dam.These caused no damage. Measured deflections and settlements of the main dam during filling were very small, maximum displacements being: crest settlement 0.02 ft. displacement 0.03 downstream A-9 upstream face settlement 0.04 displacement 0.02 downstream downstream bench settlement 0.07 displacement 0.01 The settlement and deflection of the crest are only about (0.03%of the dam height.There was no detectable seepage through the dam. 4,POWER HOUSE STARTUP The units were turned over for pre-operational testing in March 1991.Unit 2 was first rotated on May 15,1991,and Unit 1 on May 18,1991.The units were released to Chugach Electric Association in Anchorage,Alaska for dispatch on August 1,1991,and the plant declared in Commercial Operation on September 1,1991. 5.PROJECT LANDS On the basis of the project boundary shown in Exhibit G,the acreage of the lands belonging to the United States of Alaska are tabulated below: Asterisks (*)denote transmission line ROW acreage only. BLM Area State Area Other Water Subtotal Description Acres Acres Acres Acres Acres T.3S.,R.1OW Tract A*263.62 Total Per TP 263.62 263.62 T.3S.,R.L1W Section 23 26.15 Section 25 42.48 Section 26 20.78 Tract B*129.34 Total Per TP 218.75 218.75 T.4S.,R.9W Section 30*45.74 2.79 Section 31*0.33 182.13 Tract A*12.73 USS.Surv.2937 182.13 12.73 2.79 Total Per TP 46.07 182.13 12.73 2.79 240.93 T.4S.,R.10W Section 35 149.14 Section 36 75.94 182.13 4.00 Section 36*40.17 Tract A*14.36 Description Total Per TP T.5S.,R.8W Section 19 Section 20 Section 29 Section 30 Section 31 Total Per TP T.5S.,R.OW Section 3 Section 6 Section 7 Section 8 Section 9 Section 10 Section 1] Section 14 Section 15 Section 16 Section 17 Section 18 Section 22 Section 23 Section 24 Section 25 Section 26 Section 36 Total Per TP T.5S.,R.1OW Section | Section 2 Section 3 Section 9 Section 10 Section 11 Section 12 Section 13 Section 14 ATS 1418 Total Per TP BLM Area Acres 265.25 388.74 93.63 6.04 139.40 316.24 944.05 40.00 5.64 121.12 267.30 29.21 210.59 5.67 168.73 32.28 69.46 31.37 3.97 66.32 513.20 558.08 372.53 15.07 15.46 2,425.17 26.81 128.83 384.89 127.87 398.57 222.79 64.41 41.59 1.56 1,397.32 State Area Acres 23.21 3 139.39 139.39 A-11 Other Acres Water Subtotal Acres Acres 14.36 208.39 4.00 279.61 944.05 100.71 166.95 170.10 0.94 232.80 548.73 145.42 16.63 67.64 35.77 1,485.70 2,633.56 1,536.71 Description T.6S..R.8W Section 6 Total Per TP Total Proj.Area Including Transmission Line Transmission Line Area Only BLM Area Acres 86.24 State Area Acres 925.81 407.32 A-12 Other Acres 12.73 Water Acres 1,492.49 Subtotal Acres Dam: Spillway: Power Tunnel: Diversion Tunnel: Penstock: Middle Fork Diversion: Nuka Diversion: Battle Creek Diversion: Airstrip: Table A-1 Bradley Lake Hydroelectric Project Data Concrete-faced rockfill,600 feet long.125 feet high, 360,000 cubic yards rockfill. and 10,800 cubic yards concrete Ungated concrete ogee section,175 feet long (11,000 cubic yards concrete) 13-foot nominal diameter, fully concrete lined, approximately 19,152 feet in length 21-foot horseshoe concrete lines/penstock tunnel,407.5 feet long Steel,9-foot diameter with 6 1/2 foot diameter branches 1517 foot diversion includes upper and lower channels with intake basin and stilling basin 2 diversion and control dikes,pilot channel and outlet weir 300 foot diversion channel with intake basin,talus diversion weir Gravel surface airstrip 2,400 ft.long by 75 feet wide incorporated into access road A-13 Annual Firm Energy: Average Annual Energy: Transmission Line: Barge Dock: Access Roads: Powerhouse: Turbines: Generators: Governors: 329 gigawatt hrs 376 gigawatt hrs 115 kilovolt,two Sheet pile cells granular fill 10.8 miles,gravel Surface,steel superstructure,160 feet long,80 feet wide,92 fect high 2 each Pelton, vertical shaft, 90,170 horsepower max. 2 each Rated output at max.operating pool is 63 MVA. 2 each VA Tech digital EXHIBIT B BRADLEY LAKE PROJECT SPECIFIC FEDERAL AND STATE AGENCY REQUIREMENTS Dept.of Environmental Conservation (DEC) Dept.of Environmental Conservation (DEC) Corps of Engineers (COE) Corps of Engineers (COE) Corps of Engineers (COE) Corps of Engineers (COE) Corps of Engineers (COE) Corps of Engineers (COE) Dept.of Fish &Game (DFG) Dept.of Fish &Game (DFG) Dept.of Fish &Game (DFG) Dept.of Fish &Game (DFG) Approval to Operate Class "C”Water System Permit date 11/4/88 Permit date 04/3/89 Waiver Approval 5/23/91 Certificate to Construct Class "C”Water System Land Use License DACW85-3-91-88 Land Use License DACW$85-2-90-24 Dredge and Fill Permit #071-QYD-2-850502 Plus seven modifications Land Use License DACW585-3-86-55 Land Use License DACW85-3-86-73 Land Use License DACW85-3-86-101 Critical Habitat Area FG 88-11-0077 Special Area Permit FG 86-11-0824 Anadromous Fish Stream, Critical Habitat Area FG 86-11-0416 Plus Amendment 1V Critical Habitat Area FG 86-II-0115 Approval to operate permanent facilities -Public water system and wastewater disposal system. Approval to operate permanent facilities - Powerhouse Creek Source. Waiver Approval,Class "°C”Water Well. Certificate to construct ,otable water system at Bradley Lake Powerhouse. Approval to Operate was requested 2/4/92 -No response as of yet. COE land use license to construct and operate the upper Battle Creek Diversion Dam. Land use license for gauging station electrical distribution line. Section 10 -Perform work in or affecting U.S. navigable waters.Section 404 Discharge dredged or fill material into U.S.waters. Extension of land use license to allow'for matcrial extraction. Extension of land use license for area used as access road and construction landfill. Land use license to conduct studies and design project. Road Construction Kachemak Bay Critical Habitat Area Airstrip Construction and Operation Transmission Line Construction Powerhouse to Lower Camp Access Road ) Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. of Fish &Game (DFG) of Fish &Game (DFG) of Fish &Game (DFG) of Fish &Game (DFG) of Fish &Game (DFG) of Fish &Game (DFG) of Fish &Game (DFG) of Fish &Game (DFG) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) Critical Habitat Area FG 86-II-0114 Plus Amendment | Anadromous Fish Stream Critical Habitat Area FG §6-I]-0113 Plus twe amendments Critical Habitat Area FG 86-II-0112 Plus Amendment II Anadromous Fish Stream FG 86-II-0110 Plus Amendment II Critical Habitat Area FG 86-11-0108 Critical Habitat Area FG 86-11-0107 Plus Amendment I Anadromous Fish Stream FG 86-11-0106 Plus Amendment II Critical Habitat Area FG 85-T]-0824 Plus one amendment Water Rights LAS 13370 Permanent Water Rights LAS 6998 Water Rights Application LAS 14316 Permanent Water Rights LAS 2837 Public and Charitable Lease ADL 225142 Permanent Water Rights LAS 2836 Right -of-Way ADL 223192 Uplands Lease ADL B-2 Airstrip to Powerhouse Access Road Martin River material site access road.Battle Creek. Spoil Disposal'Waterfowl Nesting Area Martin River material site.Martin Barge dock and staging area. Powerhouse and switchyard construction and operation. Bradley River Dam.Bradley. Airstrip construction and operation. Water rights for Upper Battle Creek Diversion Project. Permit to use permanent facilities Well No.4 for 5 additional years. Bradley Lake Waterfowl Nesting Area Appropriate water for waterfowl nesting area. Lease of State Lands near Fritz Creek for Moose Mitigation. Appropriate water from Middle Fork and Nuka Glacier Pool Final documents issued Final documents issued. Dept.of Natural Resources(DNR) Dept.of Interior (DOI) Federal Energy Regulatory Commission (FERC) Federal Energy Regulatory Commission (FERC) Federal Energy Regulatory Commission (FERC) Federal Energy Regulatory Commission (FERC) Federal Energy Regulatory Commission (FERC) Federal Energy Regulatory Commission (FERC) 222656 Tidelands Lease Contract FERC License Amendment FERC License Amendment FERC License Amendment FERC License Amendment FERC License FERC License Amendment Final documents issued. Provisions for water from Nuka Glacier Pool. To construct and operate Upper Battle Creek Diversion Project. To adopt modified flow regime during reservoir filling. For relocation of permanent landing strip To adopt modified operational flow regime to be consistent with ADF&G flow regime. FERC order issuing license Order granting extension until Januarv 1,1992 to complete project construction