HomeMy WebLinkAboutSale of Eklutna and Snettisham Hydroelectric Projects Divestiture Summary Report 1992, + p ;
Divestiture Summary Report
Sale of Eklutna and Snettisham
Hydroelectric Projects
Alaska Power
.JJ.;~~.Department of Energy
1992
Divestiture Summary Report
Sale of Eklutna and
Snettisham Hydroelectric Projects
Alaska Power Administration
U.s. Department of Energy
April, 1992
Note: This report was prepared to accompany the legislative proposal authorizing sale
of the Eklutna and Snettisham Hydroelectric Projects and subsequent close out of
the Alaska Power Administration. The report contains negotiated agreements
covering sale terms and post-sale fish and wildlife management, which will be
implemented on Congressional authorization of the sales.
EXECUTIVE SUMMARY
This report accompanies the legislative proposal to authorize sale of the two Alaskan Federal
hydroelectric projects and close out the Alaska Power Administration (APA). Briefly:
• The 78,210 kW Snettisham Project serving Juneau would be sold to the Alaska Energy
Authority, a State corporation which owns six other hydroelectric projects.
• The 30,000 kW Eklutna Project serving the Anchorage and Matanuska Valley areas
would be sold to the three electric utilities which now purchase power from that project,
namely Anchorage Municipal Light and Power, Chugach Electric Association, and
Matanuska Electric Association.
• Terms and conditions for the sales are set out in negotiated Purchase Agreements. Key
aspects include:
Development of Transition Plans within six months after Congress authorizes the
divestiture.
Transaction Date to be set in the Transition Plans.
Description of assets to be transferred.
Price and payment terms.
Environmental Management Plans.
Protection of interests in several important "non-power" uses of project land and
water.
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• Under a separate agreement, the Purchasers assume responsibility for developing and
implementing post-sale programs for protection, mitigation, and enhancement of fish and
wildlife resources impacted by hydroelectric development in the Eklutna and Snettisham
basins.
The estimated sale proceeds to the United States Treasury are between $73.5 and $80.3 million,
assuming the transactions are completed between October 1, 1992 and October 1, 1993. The
proceeds represent approximately 95 percent of the present value of post-sale interest and
principal payments the United States Treasury would receive under continued Federal ownership
of the projects. The Federal Government would no longer be responsible for staffing and ,
funding operation, maintenance, repair, and replacement of the project facilities.
Eklutna and Snettisham are modest-sized, sing~e-purpose hydroelectric projects involving small
river basins entirely within Alaska. Locally, they are important long-term suppliers of
economically-priced hydroelectric power. They are well suited for ownership and control within
Alaska. They do not involve international or interstate river basin considerations.
The sale terms and structure assure that the projects will continue to serve their intended
purposes. Modest rate increases are expected over the short term, but long-term power rates
are expected to be similar to those that would prevail under continued Federal ownership. APA,
the Department of Energy, and the Purchasers will all cooperate in efforts to minimize impacts
on AP A employees.
The divestiture will close out a small Federal power program by transferring its functions to
existing State and utility organizations which are fully capable of handling the functions without
further Federal involvement.
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TABLE OF CONTENTS
Page
Executive Summary ........................................... 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background ............................................ 1
Previous Reports ......................................... 4
Alaska Power Administration
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Legislative Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Organization and Staffing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Project Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Marketing and Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Federal Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Program Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Purchase Agreements ...................................... 15
The Fish and Wildlife Agreement ................................. 18
I..ands and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Financial Analyses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Eklutna ............................................. 24
Unpaid Balances ........................................ 24
Present Value .......................................... 24
Purchase Price ......................................... 24
Rate Impact ........................................... 25
Comparative Analyses ..................................... 25
Snettisham ........................................... 26
Unpaid Balances ........................................ 26
Present Value .......................................... 27
Purchase Price ......................................... 27
Rate Impacts . . . . . . . . . . . . . . . . . . '. . . . . . . . . . . . . . . . . . . . . . . . . 29
Comparative Analyses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Page
Impact to u.s. Treasury .................................. 35
Key Issues ................................................ 38
Non-Power Uses ........................................ 38
Environment and Public Safety ............................... 40
Personnel Management .................................... 41
Transition ............................................ 42
Appendices
A. The Purchase Agreements
B. The Fish and Wildlife Agreement
C. APA Background and Information
D. Divestiture Personnel Management Plan
E. Environmental Assessment and DOE's Finding
of No Significant Impact
F. Other References
Introduction \
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A view of the Snettisham transmission line as it leaves the Snettisham Project. This 138,000 volt line carries
80 percent of Juneau's electrical energy.
This report was prepared to accompany the legislative proposal to authorize sale of the two
Federal hydroelectric projects in Alaska and subsequent close out of the Alaska Power
Administration (APA).
The report contains:
• A summary of the processes which led to the legislative proposal.
• Negotiated purchase agreements which contain the sale terms, and a separate
agreement which provides for post-sale management of fish and wildlife
resources.
• Financial analyses which detail expected proceeds to Treasury and describe the
anticipated impact to ratepayers and taxpayers.
• Discussion of key issues raised by the sale.
BACKGROUND
APA has responsibility for operation, maintenance, transmission, and power marketing for the
two Alaskan Federal hydroelectric projects. These are the 30,000 kilowatt (kW) Eklutna
Project, which has served the Anchorage and Matanuska Valley areas since 1955; and the
78,210 kW Snettisham Project, which has been Juneau's main power source since 1975. The
projects presently provide about eight percent of the energy requirements for Alaska's electric
utilities (about 80 percent for Juneau and about five percent for the Eklutna market area).
The projects were authorized to encourage economic and industrial development in Alaska. The
authorizations direct that project power be sold so as to encourage widespread use at lowest rates
to consumers, consistent with sound business principles, with all costs, including investment
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costs, to be recovered from power sale revenues. The projects are serving the authorized
purposes well. They are important, relatively low cost, long term suppliers of renewable energy
for the areas they serve. Power sales revenues to the United States Treasury are recovering the
Federal costs as intended in the authorizing legislation. There are no plans, proposals, or
authorizations to expand the Federal power programs in Alaska.
Sale of the Alaskan projects was proposed in Presidential budgets for FY 1986 and subsequent
years. It had been discussed on an informal basis for several years previously. The proposal
recognizes it is no longer necessary to have the separate small Federal power program in Alaska,
that Eklutna and Snettisham are well suited to ownership and control within Alaska, and that the
State and its electric utilities have excellent capability to manage the projects.
The divestiture was approached through a series of studies and public reports and consultation
with interested parties. The reports are listed subsequently. Briefly, the process involved
evaluation of issues, objectives, alternative approaches, an asset valuation, and consideration of
public comments at three separate stages of the process. Formal invitation of proposals to
purchase the projects were extended in the Spring of 1987 to the electric utilities served by the
projects, municipalities in the project service areas, and the State of Alaska.
In response to the solicitations, APA received one proposal for each project:
• A September 15, 1987 proposal by the Alaska Energy Authority to purchase the
Snettisham Project.
• A November 9, 1987 joint proposal from the City of Anchorage, the Matanuska
Electric Association, and the Chugach Electric Association to purchase the
Eklutna Project.
APA and the proposing parties negotiated Purchase Agreements which set forth specific terms
and conditions for sale of the projects. The Agreement~ (February 10, 1989, for Snettisham;
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August 2, 1989, for Eklutna) are presented in Appendix A. Each Agreement was amended once
in 1991, primarily to extend the term of agreement.
APA and the Department of Energy (DOE) developed a legislative proposal authorizing sale of
the projects in accordance with the two Purchase Agreements. During review of the legislative
proposal in late 1989, concerns were raised about post-sale management of fish and wildlife
resources. Those concerns led to negotiation of a formal agreement between the "Purchasers,"
the State of Alaska, and the Departments of Interior and Commerce providing for long-range
protection, mitigation, and enhancement of fish and wildlife resources affected by Eklutna and
Snettisham hydroelectric development. This agreement, dated August 7, 1991, is presented in
Appendix B.
The two Purchase Agreements and the Fish and Wildlife Agreement become effective upon
Congressional authorization of the divestiture.
Background information on APA and its programs is included in Appendix C. APA's Personnel
Management Plan as approved by DOE is found in Appendix D.
Numbers in this report for FY 1991 sales and revenues are estimated based upon 10 months'
experience. "Finals" for FY 1991 may differ slightly.
An Environmental Assessment (EA) was prepared on the proposed action (the legislative
proposal to authorize sale of Eklutna and Snettisham). The EA and DOE's March 27, 1992
"Finding of No Significant Impact for the Proposed Sale of the Eklutna and Snettisham Projects"
are included in Appendix E.
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PREVIOUS REPORTS
AP A's previous reports on the divestiture are listed below for reference.
• The Alaska Power Administration Transfer Study, April, 1986, provides review of issues
surrounding the proposed sale of the Alaskan Federal hydroelectric projects. This is a
joint report by the State of Alaska's Office of Management and Budget, and APA.
• The Alaska Power Administration Divestiture Work Plan, APA, July 17,1986, outlining
objectives, guidelines, activities, and schedules for obtaining proposals for purchase of
the two projects.
• The draft report, Alternative Structures for Sale of Alaska Power Administration, APA,
July 18, 1986, discusses a fairly wide range of possible approaches to the divestiture and
issues raised in the choices amongst the alternatives.
• Divestiture Status Report: Comments on Divestiture Work Plan and draft report,
Alternative Structures for Sale of Alaska Power Administration, APA, September 26,
1986, presenting a compilation of comments received on the two documents.
• Valuation of Alaska Power Administration Electric Power Assets, October 30, 1986, an
independent asset valuation prepared by Coopers & Lybrand for APA.
• Review of Alternative Sale Structures, November 14, 1986, prepared by Coopers &
Lybrand for AP A.
• Divestiture Status Report: Revised Work Plan and Proposed Sale Structure, APA,
January 14, 1987. This report discusses priorities for the divestiture goals and
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objectives, summarizes consideration of comments received, reviews several key sale
structure issues, and presents a revised work plan and structure for the sale.
• Divestiture Status Report: The Purchase Proposal Process, APA, July 10, 1987. This
report outlines the process used to obtain specific proposals to purchase the AP A projects
and contains the invitations for proposals.
Appendix F lists a number of other important references.
5
This photo shows the 69 kV circuit breakers located at the Thane Substation, four miles south of Juneau. Gastineau
Channel is visible in the photo as well as the mountains on Douglas Island. Not only is the Snettisham Project
operated remotely from Thane Substation, but it serves as the main control center for the entire Juneau area power
system.
OVERVIEW
The Alaska Power Administration (APA) is a unit of the Department of Energy (DOE). It is
responsible for operation, maintenance, transmission and power marketing for the two Federal
hydroelectric projects in Alaska: the 30,000 kW Eklutna Project serving the Anchorage and
Matanuska Valley areas, and the 78,210 kW Snettisham Project which is Juneau's main power
source.
LEGISLATIVE AUTHORITIES
Each project has specific legislative authorization. The Eklutna Project Act of July 31, 1950 (64
Stat. 382) provided authorization to the Secretary of the Interior to construct, operate, maintain
and market power from that project.
The Snettisham authorization is contained in Section 204 of the 1962 Flood Control Act (82 Stat.
875). Design and construction responsibility is assigned in that law to the Secretary of the
Army, with operation, maintenance and power marketing assigned to the Secretary of the
Interior. Section 201 of the 1976 Water Resources Development Act (Public Law 94-587) fixes
repayment criteria for the Snettisham Project.
Interior's responsibilities with respect to these projects were carried out by the Bureau of
Reclamation until June 1967. At that time, the Secretary of the Interior established APA by
Secretarial Order. APA took over all of Reclamation's Alaska work, including operation,
maintenance and power marketing for the two projects.
The Department of Energy Organization Act of August 1977 (91 Stat. 565) transferred all of the
Interior Department's functions with respect to APA to DOE. The referenced legislation and
subsequent amendments appear in Appendix C.
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ORGANIZATION AND STAFFING
APA maintains its Headquarters Office in Juneau and field offices at each project. Each project
office is headed by a Project Manager who is responsible for the full range of operation and
maintenance activities.
The Headquarters Office includes a Power Division which provides technical supervision and
oversight for the operation and maintenance and conducts the power marketing work; and an
Administrative Division which handles such things as finance, accounting, procurement,
personnel, environmental management, and safety. The two Divisions report to the
Administrator, who in turn reports to the DOE Assistant Secretary for Conservation and
Renewable Energy.
Present staffing includes 34 permanent positions, with 16 at the two field offices and 18 at the
Juneau Headquarters.
Organization and function charts appear in Appendix C.
PROJECT INFORMATION
The Eklutna Project is located near Palmer, Alaska, about 34 miles northeast of Anchorage.
The 30,000 kW project provides an average of 153 million kWh of firm electrical energy to the
Anchorage and Matanuska Valley areas, or about 5 percent of the area need. The project
consists of a dam, power tunnel, generating plant, switch yard , transmission lines, and
substations. The project is staffed by seven full-time APA employees who handle all
maintenance work. It is operated by remote control from the Chugach Electric Association
dispatch center in Anchorage.
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Non-power uses of Eklutna project lands and water include:
• A fish hatchery operated by Cook Inlet Aquaculture Association which draws
water from the Eklutna tailrace;
• A state park with camping and picnicking facilities at Eklutna Lake;
• A municipal water supply project operated by the Municipality of Anchorage
which draws water from Eklutna Lake; and
• An Alaska Energy Authority storage yard near Eklutna powerplant.
The Snettisham Project is located in a remote area about 45 miles southeast of Juneau. The
project consists of a small dam, power tunnels, underground generating plant, switchyard,
transmission line and substation. Due to its remote location, the project also has its own
airstrip, boat dock, residential quarters and utility system. Nine APA employees cover the
maintenance functions. The project is operated by remote control from Juneau under a contract
with Alaska Electric Light and Power Company. The 78,210 kW project presently provides
about 80 percent of Juneau's electrical energy, and has the capability of providing 285 million
kWh firm energy and 330 million kWh average energy annually.
The State of Alaska operates a fish hatchery adjacent to the Snettisham Project and draws water
from the powerplant tailrace.
Project sketches and maps appear in Appendix C.
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MARKETING AND RATES
The Project Authorizations include important instructions on power marketing:
• Marketing objectives of widespread use at lowest cost to consumers consistent
with good business principles;
• Preference in sale of power to public bodies and cooperatives; and,
• Rate schedules to produce sufficient revenues to repay costs, with interest over
a 60-year period for the Long Lake phase of Snettisham, a 50-year period for
Crater Lake, and a "reasonable period of years" for Eklutna (administratively set
at 50 years).
Interest rates for repayment are set by the authorizing legislation generally reflecting long-term
Federal borrowing costs at the time of authorization. The rate for Eklutna is 21J2 percent, and
the rate for Snettisham is 3 percent.
DOE administrative procedures provide substantial additional criteria. AP A must make an
annual review of rate sufficiency, and propose changes if the projected revenues are either too
high or too low to meet the repayment objectives. Interim rate authority is delegated to DOE's
Assistant Secretary for Conservation and Renewable Energy. Rates are subject to confirmation
and approval by the Federal Energy Regulatory Commission (FERC).
DOE uses a levelized rate approach, and does not require a fixed repayment schedule. An
interest penalty is assessed if revenues in any given year fail to cover annual operation,
maintenance and interest costs. In effect, the principal payments can be deferred if revenues are
below normal, for example, in a low runoff year, or if costs are above normal.
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Eklutna power is marketed under wholesale contracts with the Chugach Electric Association
(Chugach), Anchorage Municipal Light & Power (ML&P) and the Matanuska Electric
Association (MEA), with plant capability and all energy produced allocated amongst the three.
Present rates are 17 mills (1. 7 cents) per kWh for firm energy and 10 mills (1.0 cents) for non-
firm energy. These rates were placed into effect on October 1, 1990, for a period not to exceed
four years. APA does not expect a need to increase Eklutna rates during that period.
Significant amounts of power produced by ML&P and Chugach are wheeled over APA
transmission lines. The present wheeling rate is 0.3 mills (0.03 cents) per kWh.
Nearly all Snettisham power is marketed under wholesale contracts with the Alaska Electric
Light & Power (AEL&P). The State of Alaska purchases a relatively small amount of energy
for operation of a fish hatchery at Snettisham.
The present rate for firm energy from Snettisham is 32.1 mills (3.21 cents) per kWh and was
placed in effect on October 1, 1991, for a period of up to five years and appears sufficient to
meet repayment obligations during that time. Non-firm energy is sold under two incentive
programs at rates of 11.8 mills (1.18 cents) and 21.7 mills (2.17 cents) per kWh.
All revenues collected from sale of Eklutna and Snettisham power are returned to the Treasury
and credited to miscellaneous receipts, except that certain operation and maintenance costs
provided by customer utilities are taken from revenues by net-billing.
A summary of recent and projected sales and revenues is presented in Appendix C.
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FEDERAL INVESTMENT
APA's FY 1990 financial statements and the audit report by the Office of Inspector General,
DOE, are presented in Appendix C.
The financial statements show several measures of Federal investment in the Eklutna and
Snettisham hydroelectric projects. Construction costs and annual costs for operations,
maintenance, and replacements have been funded by direct Congressional appropriations to the
Alaska Power Administration, Corps of Engineers, and Bureau of Reclamation. Interest during
construction and annual interest charges for unpaid debt are calculated amounts based on interest
"
rates applicable for each'project.
Through FY 1990, the statements show a gross Federal investment of $213 million, including
$70 million of calculated interest\.~harges. Some $111 million of revenues have been returned
to the Treasury, leaving a net investment of $102 million ($91 million for Snettisham and
$11 million for Eklutna). The FY 1990 figures do not include costs for the Crater Lake Unit
of the Snettisham Project. The Crater Lake costs will appear in AP A statements beginning with
FY 1991, the start of the Crater Lake repayment period.
The FY 1990 power repayment studies show year-end balances to be repaid of $89.5 million for
Snettisham and $10.3 million for Eklutna. APA projects FY 1991 unpaid balances of $154.2
million for Snettisham (including Crater Lake investment) and $9.1 million for Eklutna. These
numbers are lower than the net investment from the financial statements because of construction
in progress and year-end accounts receivable at each project.
The financial statements and the repayment studies do nO!J!lclude certain Federal costs which,
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by law, are non-reimbursable. These are: repairs at Eklutna following the 1964 great Alaskan
earthquake; and the costs of repairing and relocating a portion of the original Snettisham Project
transmission lines (the Salisbury Ridge section).
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PROGRAM LEVELS
APA receives funds to cover its operation, maintenance, marketing, and administrative expenses
through the annual Energy and Water Development Appropriation Act. In recent years, the
appropriation language provides that the funds are available until expended, i.e., unexpended
funds in a given year may be carried forward. New appropriations for FY 1991 were
$3,232,000; the FY 1992 amount is $3,218,000. The FY 1984 appropriations bill established
a $200,000 emergency fund, none of which has been expended.
Eklutna Powerplant operation is monitored by a modern computer system and
controlled remotely from a utility dispatch center in Anchorage.
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The Purchasers
A view of the 115 kV transformers and associated switchgear in the Anchorage Substation of the Eklutna Project.
When built in the mid-1950's, it was located in a rural area and was a key intertie point in the Anchorage area
electrical system. Today the Anchorage area is much larger and the area more urban.
The three Eklutna Purchasers are:
• Matanuska Electric Association, Inc., of Palmer, Alaska (MEA)
• Anchorage Municipal Light and Power (ML&P)
• Chugach Electric Association, Inc. (Chugach), headquartered in Anchorage.
These are the same three electric utilities which have purchased Eklutna power since the project
entered commercial service. They are also among the largest electric utilities in the State of
Alaska.
Chugach and MEA are non-profit electric cooperatives. ML&P is owned by the Municipality
of Anchorage. Chugach and ML&P are major power generators. Chugach and MEA own most
of the high voltage transmission system in Southcentral Alaska. All three transmit and distribute
power at retail. For the year 1990, the three "Eklutna Purchasers" served approximately
120,000 retail customers with retail sales of about 1.8 billion kWh.
Per Section 10 of the Eklutna Purchase Agreement, the three "Eklutna Purchasers" will establish
and put into effect before the Transaction Date the necessary organizational, functional, and
staffing arrangements for post-sale operation, maintenance, and administration of Eklutna.
The Alaska Energy Authority (AEA) would purchase the Snettisham Project. AEA is a public
corporation of the State of Alaska established by the Legislature in 1976. Since that time, AEA
has been involved in planning, financing, constructing, acquiring, and operating power projects
around the State. AEA presently owns six hydroelectric projects with installed capacity of 164
megawatts. AEA also owns 420 miles of transmission lines.
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AEA plans to contract Snettisham operation and maintenance with the Alaska Electric Light and
Power Company (AELP), the electric utility serving Juneau. AELP owns and operates
generators (hydroelectric and oil-fired), transmission, and distribution facilities. In addition,
AELP has operated Snettisham by supervisory control under contract with APA since 1975. In
1990, AELP served approximately 12,000 retail customers, with retail sales of 260 million
kilowatthours.
Without question, the proposed purchase and operating arrangements reflect organizations which
have demonstrated that they have excellent organizational, technical, and financial capabilities
to handle the ownership and operating responsibilities for Eklutna and Snettisham in a thoroughly
effective and efficient manner.
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The Purchase Agreenlents
This cutaway sketch of the Eklutna Powerplant was drawn by Joe Ebner, APA's first Environmental Specialist, in
1974. It shows (from the bottom) the tailrace conduit, the turbine draft tube and scroll case, the two generators,
an overhead crane, and the switchyard on the roof of the powerplant. As shown in the sign on the plant, when this
was sketched in 1974 Alaska Power Administration was part of the Department of the Interior. APA was moved
to the Department of Energy when the Department was organized in 1977.
,-----------------------------------------,------,
The legislative proposal seeks Congressional authorization to sell the two AP A projects under
terms of the February 10, 1989, Snettisham Purchase Agreement and the August 2, 1989,
Eklutna Purchase Agreement.
The agreements provide and require:
• A description of assets to be sold or transferred to the new owners.
• Price and payment terms.
• Transition plans.
• Delineation of responsibilities of the purchasers and the sellers through the
transition to new ownership.
• Protection for "non-power" users of project lands and water.
• Environmental management plans.
The assets to be transferred include the project facilities, property, and records held by APA as
well as lands and rights-of-way needed for project operation. Each agreement includes an
Exhibit A narrative and land status map detailing land and rights-of-way actions to be completed.
The Exhibit A maps are in the "back pocket" of this report.
The Transition Plans are to be adopted within six months after Congress authorizes the
divestiture. Each Transition Plan would establish a Transaction Date, which is the date on
which ownership would be transferred, and plans and schedules for accomplishing such transfer.
Up to the Transaction Date, APA would be responsible for operation and maintenance of the
projects and the Federal government would continue to receive revenues from power sold. APA
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would also be responsible for preparing the assets for transfer so that on the Transaction Date
the new owners would receive clear and sufficient title for continued operation of the projects.
In the event that portions of the assets are not available for transfer on the Transaction Date,
AP A would provide reasonable assurance that such assets would be transferred at a later date.
The parties would conduct inspections and make a joint determination of specific maintenance
activities to be completed by AP A.
As of the Transaction Date, the Purchasers would take over full responsibilities for the projects
and the AP A responsibilities would terminate, except for specific items of unfinished business
(for example, completing unfinished lands and permitting activities).
The Transaction Date also triggers the pricing mechanism (Section 5 of each agreement). In
each case, the purchase price is to be based upon the present value of the estimated interest and
principal payments the U.S. Treasury would receive if Federal ownership of the projects were
to continue. The estimated interest and principal payments are displayed in Exhibit B of each
agreement. The purchase price is set as of the Transaction Date, reflecting those payments that
would occur after the Transaction Date.
For Eklutna, the purchase price is the present value as of the Transaction Date of the remaining
interest and principal payments discounted at a rate of 9 percent, plus $1 million. The
Purchasers are allowed up to five years to pay the purchase price, but any portion of the price
paid after the Transaction Date would have interest charges at the rate of 9 percent. If full
payment is made on the Transaction Date, there would be no interest charges. The Purchasers
have agreed not to seek Federal financing.
For a Transaction Date of October 1, 1992, the Eklutna purchase price is $9,022,000. For a
Transaction Date of October 1, 1993, the Eklutna purchase price is $8,818,000.
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AEA will issue revenue bonds to finance the purchase of Snettisham. The sales price would be
the present value as of the Transaction Date of the remaining interest and principal payments.
The full Snettisham purchase price is to be paid to the U.S. Treasury on the Transaction Date.
The price is to be the larger of two present value calculations:
• The present value using a discount rate equal to the actual net interest costs for
AEA's Snettisham revenue bonds plus 2 percent; and
• Eighty-five percent of the present value using yield rate for recent 30-year U.S.
Treasury Bonds.
Under these formulas, the Snettisham purchase price will be based upon actual borrowing costs
at the time of the transaction. The purchase price increases with each drop in interest rates.
The purchase price is expected to be between $64,741,000 and $71,456,000 for a Transaction
Date between October 1, 1992, and October 1, 1993.
Sale proceeds for the two projects are thus expected to be between $73.5 and $80.3 million.
Each Purchase Agreement was amended once in 1991, primarily to extend for two years the
terms of the agreement.
The above discussion provides a general overview of the Purchase Agreements. APA is
confident that the agreements provide a sound and workable framework for implementing the
divestiture.
The Purchase Agreements appear in their entirety in Appendix A of this report, including the
amendments.
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and WildJife
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This is a view of the area around Eklutna Lake. When constructed in the mid-1950's, the Eklutna Project was a
single purpose power project, but has since become a popular recreation area and source of municipal water. The
Chugach Slate Park, located on Eklutna Lake, has picnic and camping facilities and provides hiking, cross-country
skiing, and off-road vehicle tmils.
The Purchasers, the State of Alaska, the U.S. Department of Commerce National Marine
Fisheries Service, and the U.S. Department of the Interior Fish and Wildlife Service entered
into a formal agreement providing for post-sale protection, mitigation, and enhancement of fish
and wildlife resources affected by Eklutna and Snettisham. The Agreement is included in
Appendix B.
The Fish and Wildlife Agreement would become effective with respect to each project on the
Transaction Date established under the Purchase Agreements. It sets up a process of
consultation, studies, and public involvement for development of a fish and wildlife program
which would be implemented by the Purchasers. It assigns costs of the studies and
implementation measures to the Purchasers. The process is quite similar to that under the
Federal Energy Regulatory Commission (FERC) licensing of hydroelectric projects with the
Governor of Alaska assigned a role similar to FERC's in decisions on fish and wildlife
measures.
Specifically, the Agreement:
• Commits the Purchasers to fund studies to determine impacts and propose
measures for protection, mitigation, and enhancement of fish and wildlife affected
by the projects. These studies will result in a Fish and Wildlife Program.
• Assures that the studies will be conducted in consultation with State and Federal
resource management agencies.
• Requires that the draft Fish and Wildlife Program be reviewed by the Resource
Management agencies as well as the public.
• Designates the Governor of Alaska to review the Proposed Fish and Wildlife
Program, reconcile differences, and establish a final Fish and Wildlife Program.
In doing so, the Agreement requires the Governor to give consideration to
18
efficient power production, energy conservation, protection to fish and wildlife,
recreation, municipal water supplies, other aspects of environmental quality,
public uses, and requirements of law.
• Requires the Purchasers to implement the Fish and Wildlife Program subject to
their rights of judicial review.
• Requires the study and program development process described above to be
repeated every 35 years.
• Makes this agreement binding as long as the projects continue to operate or until
the projects become subject to the Federal Power Act.
Specific fish and wildlife measures were not contemplated in the earlier divestiture studies and
reports or in negotiations for the Purchase Agreements. This was because the projects were
generally viewed as not involving fish and wildlife problems.
During reviews of the legislative proposal, loss of a sockeye salmon run that once spawned in
Eklutna Lake was identified. The loss was caused by a small private power project constructed
in the 1920's. The loss was not identified in pre-authorization studies for the Federal Eklutna
Project and the Federal project does not include mitigation. This specific problem and the
desires of the fish and wildlife agencies to provide appropriate consideration to fish and wildlife
resources over the long run led to the August 7, 1991 Agreement.
The formal process to develop fish and wildlife programs is to begin no later than 25 years after
the Transaction Date with formal fish and wildlife programs to be in place within 30 years for
Eklutna and 35 years for Snettisham. The agreement provides for an earlier start if the parties
find that to be desirable. These timing provisions are designed primarily to reduce uncertainties
in financing and repayment of new debt while recognizing that known fish and wildlife concerns
are not of the type that will require near future action.
19
Given the nature of the projects and the river basins affected, there is good reason to believe that
the proposed arrangements will work at least as well as Federal regulation for the intended
purpose of mitigation and enhancement of affected fish and wildlife resources. The August 7,
1991 Agreement affords fish and wildlife interests a stronger voice in project management than
would be available under continued Federal ownership.
The State of Alaska's Snettisham Fish Hatchery uses water from the powerplant
to incubate and rear chinook and sockeye salmon.
20
Lands and Pernlits
A view from the shore of Eklutna Lake. The area around the lake is not only a popular recreation spot, but the
lake also provides some of Anchorage's municipal water supply. In 1988, the Municipality of Anchorage completed
construction of a water treatment facility near Eklutna Lake. This facility is specially designed to treat water from
the glaciers which feed the lake.
Lands used for Eklutna and Snettisham include Federal land withdrawal for the projects, rights-
of-way and easements, and lands purchased during construction.
The Purchase Agreements and the proposed legislation include provisions that will provide the
Purchasers sufficient rights and interests in these lands for continued operation and maintenance
of the projects. The lands provisions were worked out in close cooperation with the Forest
Service, the Bureau of Land Management, and the Alaska Department of Natural Resources.
Each Purchase Agreement contains an Exhibit A (narrative and map) detailing land provisions.
The maps appear in the back "pocket" of this report.
The land actions are to include:
• Conveyance under the Alaska Statehood Act Entitlements of approximately 2,671
acres of land used for Snettisham Project and approximately 853 acres of land
used for Eklutna Project.
• Issuance by the Forest Service of a 40-year land use permit for operation of the
Snettisham transmission system and two radio repeater sites on Forest Service
lands.
• Issuance by the Bureau of Land Management to APA of rights-of-way assignable
to the Eklutna Purchasers for Federal lands used for the Eklutna transmission
system and to AEA for a portion of the Snettisham transmission system.
• Transfer of APA held fee lands, rights-of-way, and easements to the Purchasers,
including all actions necessary to ensure that the Purchasers will have sufficient
title for continued use of these lands.
21
APA expects to incur costs of approximately $500,000 to $800,000 for surveys, appraisals, and
actions to clear title for easements across private lands used for the Eklutna transmission system.
Much of this work would be needed eventually if Federal ownership were to continue.
The two J5,OOO kW generators at the Eklutna Project supply energy to three utilites in
the Anchorage area.
22
This photo shows the tailrace area and entrance to the Snettisham Powerplant. The powerplant is located
underground, 200 feet inside the mountain. Just downstream from this picture is the Snettisham fish hatchery
operated by the State of Alaska. The water flowing from the powerplant is used by the hatchery to incubate nearly
12 million chinook and sockeye salmon.
This section discusses financial implications of the divestiture. Costs and revenues to the
purchaser and seller are examined, as are ratepayer impacts.
Impact on the Federal Treasury is estimated by comparing Federal revenues and costs with and
without the divestiture. Briefly, the Federal Treasury would receive up front payment for the
Eklutna and Snettisham purchases and revenues up to the Transaction Date. Federal costs would
include project O&M up to the Transaction Date, costs to prepare assets for transfer to the new
owners, and costs to close out APA.
The Purchasers would incur new debt to purchase the projects and would assume responsibility
for post-sale project activities. The Purchasers' costs would become the basis for post-sale rates
for project power.
Also examined are revenue and cost experience since the purchase terms were negotiated. The
purchase terms were based on actual experience through FY 1987 and APA's estimate of costs
and revenues for 1988 and subsequent years. (APA's FY 1987 Power Repayment Study or 1987
PRS). Actual costs and revenues for FY 1988-1991 and APA's current estimates for FY 1992
and subsequent years (APA's 1991 PRS) are compared with the earlier data.
The Eklutna financial analyses are quite simple. The purchase price is fixed in the Purchase
Agreement for any given transaction date. The project is small in comparison to its market area.
The price is quite small because over 70 percent of the initial investment has been repaid.
The Snettisham analysis requires more detail. This is a newer, more expensive project which
is the main power supply for its market area. Also, the price is to be set based upon actual
borrowing costs as of the Transaction Date.
Present value calculations are used fairly extensively. This report uses 7.9 percent as a discount
rate for determining present value to the U.S. Treasury of future revenues and costs. The
7.9 percent represents the yield on 30-year Treasury bonds in late December, 1991. As with
23
most other Federal investments in similar projects, interest rates for repaying Eklutna
(21/2 percent) and Snettisham (3 percent) investments are well below current Federal borrowing
costs.
EKLUTNA FINANCIAL ANALYSIS
Unpaid Balances
Eklutna began commercial operations in 1955. The Eklutna investment of $30.2 million is to
be repaid by 2006, with interest of 21/2 percent. Through FY 1991, project revenues have
covered all annual costs including interest, all investment in replacements, and repaid $21
million or over 70 percent of the initial investment. The unpaid balance as of October 1, 1991
is $9,106,000.
APA projects unpaid balances of $8,151,000 for October 1, 1992, and $7,394,000 for
October 1, 1993 (FY 1991 PRS).
Present Value
The October 1, 1991 present value of the 1992-2006 interest and principal payments shown in
the 1991 Eklutna PRS is $6,629,000 using a discount rate of 7.9 percent.
The October 1, 1992 present value of 1993-2005 payments is $6,031,000; the October 1, 1993
present value of 1994-2005 payments if $5,519,000.
24
Purchase Price
The purchase price formula is: discounted present value of remaining principal and interest
payments in Exhibit B of the Purchase Agreement after the Transaction Date plus $1 million.
The discount rate for the computation is 9 percent.
The Eklutna purchase price for a Transaction Date of October 1, 1992 is $9,022,000 and the
price for a Transaction Date of October 1, 1993 is $8,818,000, as stated in Section 5 of the
Eklutna Purchase Agreement.
Rate Impact
Eklutna provides approximately 5 percent of the power supplies for the three Purchasers.
Present Eklutna wholesale revenues amount to about 2 percent of revenues for the three.
The Purchasers expect to achieve some scale economies in operation and maintenance (O&M)
and overhead costs but will see a net increase in revenues needed to cover debt. Purchasers'
total annual costs for Eklutna wi11likely be quite similar to the Federal costs.
It is unlikely that the Eklutna sale will produce noticeable rate impacts at the retail levels.
Comparative Analyses
As shown in the following tabulation, the purchase price exceeds the estimated unpaid balances
for Transaction Dates of October 1, 1992 and October 1, 1993.
25
Transaction Purchase Unpaid Price As
Date Price Balance % of Balance
October 1, 1992 $9,022,000 $8,151,000 110
October 1, 1993 $8,818,000 $7,394,000 119
The Purchase Agreement was premised on actual revenue and cost experience through FY 1987
and APA's estimates of cost and revenues for FY 1988 and subsequent years. The negotiators
recognized that costs and revenues between 1988 and the Transaction Date could be higher or
lower than the estimates.
As shown in the following tabulation, the FY 1988-1991 period experienced higher revenues and
lower costs than expected: actual revenues were about $800,000 above the estimates due to
above-average water supply and power production; actual expenses were about $800,000 below
the estimates; and the October 1, 1991 unpaid balance is $1.6 million lower than estimated at
the time of the negotiations.
EKLUTNA REP A YMENT (FY 1988 -1991)
FY 1987 PRS FY 1991 PRS
Revenues $12,242,400 $13,054,454
O&M Expenses 5,492,000 4,933,652
Interest Expenses 1,302,034 1,169,106
Replacement Expenses 2,056,000 1,969,659
Principal Paid 3,392,366 4,982,037
Unpaid Balance -FY 1991 10,605,771 9,016,101
The favorable revenue and cost experience for the 1988-1991 period make the Eldutna purchase
terms more favorable to the U.S. Treasury than expected at the time the Purchase Agreement
26
was concluded. The post-sale production values are not diminished, so Eklutna's post-sale value
to the Purchasers is as large as expected.
SNETTISHAM FINANCIAL ANALYSES
Unpaid Balances
The Long Lake stage of Snettisham began service in 1975. The Crater Lake stage began service
in 1990. Investment as of October 1, 1991 is $164.8 million, including the Crater Lake
investment. The unpaid balance as of that date is $154.2 million, to be repaid by 2041 with
interest at 3 percent.
APA projects unpaid balances of $153.5 million for October 1, 1992, and 152.5 million for
October 1, 1993 (1991 PRS).
Present Value
The October 1, 1991 present value of the 1992-2041 interest and principal payments in the 1991
Snettisham PRS is $75,898,000, using a discount rate of 7.9 percent.
The October 1, 1992 present value of the 1993-2041 payments is $76,347,000; the October 1,
1993 present value of the 1994-2041 payments is $76,542,000.
Purchase Price
The purchase price for Snettisham is to be established and paid in full to the Federal government
on the Transaction Date. The funds are to come from proceeds of AEA Snettisham Revenue
Bonds, and the bond sale is to be finalized on the Transaction Date. The bonds are to be tax
exempt within the State's allocation for such bonds. The exemption provides a lower cost of
27
borrowing to the State and thus a higher purchase price for the projects. Tax revenues foregone
are actually returned to the Treasury through the higher purchase price.
Section 5 of the Snettisham Purchase Agreement has two sales price formulas. Both use the
discounted present value of principal and interest payments (Exhibit B payments) after the
Transaction Date. The formulas provide alternate methods of fixing the discount rate.
The first formula (formula 1) sets the discount rate at the actual interest cost for Snettisham
Revenue Bonds, plus two percent. The second or "floor price" formula is equal to 85 percent
of the present valuation with a discount rate set equal to the most recent 90-day average yield
rate of 3D-year Treasury Bonds as of the Transaction Date.
The formulas reflect the negotiators' concerns about uncertainty of future interest rates and the
impact of these rates on sale proceeds and future power rates. Under formula 1, annual debt
service for the revenue bonds would be essentially the same regardless of the final interest rate,
but the Purchase Price or proceeds to the Treasury would increase for each drop in interest rate.
Thus the rate payers would be protected relating to changing interest rates and the taxpayer
would receive full benefit when interest rates go down.
The floor price formula provides protection for the taxpayers in the event the borrowing costs
for the State's revenue bonds turn out to be high relative to other interest rates. The "floor
price" formula would control pricing only if the interest rate on the Snettisham bonds approaches
or exceeds the rates for 3D-year Treasury Bonds. Based on recent years' experience, we
estimate that actual interest rates for the Snettisham bonds will be at least one percent below the
rate for 3D-year Treasury Bonds as of the Transaction Date. Thus formula 1 would govern the
price.
AEA's most recent issuance of revenue bonds for hydroelectric financing is their July, 1990,
Bradley Lake, Second Series which produced funds of $60,259,000 to complete construction of
the Bradley Lake Project with terms varying up to 30 years and a weighted average interest rate
28
of 7.2 percent. At that time, the most recent 90-day average yield rate for 30-year Treasury
Bonds was 8.8 percent, or 1.6 percent above the rate for the Bradley Lake bonds.
As of the end of CY 1991, yield rates for 30-year Treasury Bonds were somewhat below
8 percent. It is estimated that revenue bonds similar to the Bradley Lake or Snettisham bonds
would have received interest rates of 1.1 to 1.3 percentage points below the rate for 30-year
Treasury Bonds.
It is estimated that, for a Transaction Date between October 1, 1992, and October 1, 1993, the
interest rate for Snettisham revenue bonds will be in the range of 61/2 to 7th percent. This
would produce a formula 1 discount rate of 8th to 9 th percent and a purchase price between
$64.5 and $71.5 million, as shown in the following table.
Selling Price if AEA bond Selling Price if AEA bond
Transaction Date rate = 6.5% rate = 7.5%
October 1, 1992 $71,269,000 $64,510,000
October 1, 1993 $71,456,000 $64,741,000
Rate Impacts
The following tabulation compares expected revenue requirements and rates under Federal and
State ownership. A Transaction Date of October 1, 1993 and an interest rate of 6.8 percent for
the Snettisham revenue bonds are assumed.
For continued Federal ownership, the sales, revenues, and rates are from APA's FY 1991 PRS.
For State ownership, the same sales forecast is used and the revenue requirements reflect
estimated costs for debt service, operation, maintenance, replacements, insurance, and
administration under State ownership.
29
The debt service costs reflect a bond issue of sufficient size to cover the purchase price,
establishment of maintenance and replacement reserves, insurance on the bonds, and the costs
of financing. For the case examined here, the purchase price would be $69.3 million and the
total bond issue would be $80.9. Earnings from the reserve funds offset the other annual costs.
The comparison shows that, in the first lO years, revenue requirements and rates are higher
under the State ownership case. For the next 20 years, estimated State and Federal rates are
essentially the same. After 30 years, the Snettisham revenue bonds will have been returned.
At that point, estimated State rates drop below those for continued Federal ownership.
In this comparison,the average rate for the first 10 years of State ownership is estimated at 3.2
cents per kWh, compared to 3.06 cents under Federal ownership. For that lO-year period,
wholesale power rates from Snettisham under State ownership are estimated to average
4.6 percent above the estimate for Federal ownership. Impact on retail rates would likely be
under 2 percent for this period.
An interior view of the Snettisham Powerplant, which is the only powerplant in
Alaska located underground.
30
FEDERAL OWNERSHIP STATE OWNERSHIP
Energy Annual Avg
Sales Rev. cents/ Debt Int. cents/
FY (GWh) Reqnts kWh Svc Earnings Operating Insurance Acinin. Repl'nnts Total kWh
1988 195
1989 204
1990 216
1991 228 6,454 2.83
1992 239 7,478 3.13
1993 248 7,724 3.11
1994 257 7,970 3.10 6.359 (477) 1,444 734 390 570 9,919 3.51
1995 266 8,218 3.09 6,359 (477) 1,501 760 403 570 9,115 3.43
1996 275 8,465 3.08 6,359 (477) 1,549 786 416 570 9,202 3.35
1997 280 8,167 2.92 6,359 (477) 1,511 812 390 570 9,165 3.27
1998 285 8,281 2.91 6,359 (477) 1,511 812 390 570 9,165 3.22
1999 290 8,394 2.89 6,359 (477) 1,511 812 390 570 9,165 3.16
2000 295 8,508 2.88 6,359 (477) 1,511 812 390 570 9,165 3.11
2001 301 8,652 2.87 6,359 (477) 1,511 812 390 570 9,165 3.04
2002 307 8,325 2.71 6,359 (477) 1,511 812 390 570 9,165 2.99
2003 311 8,440 2.71 6,359 (477) 1,511 812 390 570 9,165 2.95
2004 315 8,555 2.72 6,359 (477) 1,511 812 390 570 9,165 2.91
2005 319 8,668 2.72 6,359 (477) 1,511 812 390 570 9,165 2.87
2006 323 8,784 2.72 6,359 (477) 1,511 812 390 570 9,165 2.84
2007 327 8,899 2.72 6,359 (477) 1,511 812 390 570 9,165 2.80
2008 330 9,003 2.73 6,359 (477) 1,511 812 390 570 9,165 2.78
2009 330 9,074 2.75 6,359 (477) 1,511 812 390 570 9,165 2.78
2010 330 9,144 2.77 6,359 (477) 1,511 812 390 570 9,165 2.78
2011 330 9,215 2.79 6,359 (477) 1,511 812 390 605 9,199 2.79
2012 330 9,286 2.81 6,359 (477) 1,511 812 390 605 9,199 2.79
2013 330 9,339 2.83 6,359 (477) 1,511 812 390 605 9,199 2.79
2014 330 9,339 2.83 6,359 (477) 1,511 812 390 605 9,199 2.79
2015 330 9,339 2.83 6,359 (477) 1,511 812 390 864 9,459 2.87
2016 330 9,339 2.83 6,359 (477) 1,511 812 390 864 9,459 2.87
2017 330 9,335 2.83 6,359 (477) 1,511 812 390 864 9,459 2.87
2018 330 9,339 2.83 6,359 (477) 1,511 812 390 864 9,459 2.87
2019 330 9,339 2.83 6,359 (477) 1,511 812 390 864 9,459 2.87
2020 330 9,338 2.83 6,359 (477) 1,511 812 390 864 9,459 2.87
2021 330 9,339 2.83 6,359 (477) 1,511 812 390 864 9,459 2.87
2022 330 9,339 2.83 6,359 (477) 1,511 812 390 864 9,459 2.87
2023 330 9,339 2.83 0 0 1,511 812 390 864 3,577 1.08
2024 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2025 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2026 330 9,338 2.83 0 0 1,511 812 390 933 3,646 1.10
2027 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2028 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1. 10
2029 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2030 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2031 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2032 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2033 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2034 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2035 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2036 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2037 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2038 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2039 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2040 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
2041 330 9,339 2.83 0 0 1,511 812 390 933 3,646 1.10
31
Snettlsham Wholesale Rate Impact
US30 T,easu,y=7.9%; STATE cost=6.8%
3
2.5
s::.
~
::..L
...... 2 w (J)
tv +-'
C
<Ll u
1.5
1
0.5
o ~__~ __ -L ____ ~ __ ~ ____ ~ __ ~ ____ ~ __ ~ ____ -L ____ ~ __ ~ ____ L-____ ~
1994 1998 2002 2006 2010 2014 2018 2022 2026 2030 2034 2038
Fede,al Fiscal Yea,
o Fede,a I ,ate + State AEA ,ate
Comparative Analyses
As above, the Snettisham purchase price is expected to be in the range of $64.5 to $71.5 million
for a Transaction Date between October 1, 1992, and October 1, 1993. This price range is
about 42 to 44 percent of the unpaid balance.
The purchase price is expected to be in the range of 90 to 95 percent of the present value of
remaining principal and interest payments.
Market conditions as of the end of CY 1991 would likely have produced interest rates for the
Snettisham-type revenue bonds at about 1.1 to 1.3 percent below the 7.9 percent yield rate for
30-year Treasury Bonds. If similar conditions occurred along with a Transaction Date of
October 1, 1993, the purchase price would be in the range of$69.3 to $70.7 million, or between
90.5 and 92 percent of "present value."
The Purchase Agreement was premised on actual revenue and cost experience through FY 1987
and APA's estimates of costs and revenues for FY 1988 and subsequent years. The negotiators
recognized that actual costs and revenues between 1988 and the Transaction Date could be
higher or lower than the estimates.
The following tabulation compares cost and revenue experience for the fiscal years 1988 to 1991
with the estimated values at the time the sale terms were negotiated.
33
SNE'ITISHAM REPAYMENT (FY 1988 -FY 1991)
FY 1987 PRS FY 1991 PRS
Crater Lake Investment $ 61,700,000 $ 66,143,000
(Start of Crater Repayment) (10/89) (10/91)
Revenues (4-year total) 25,884,600 23,983,536
O&M Expenses (4-year total) 6,618,000 7,455,223
Replacement Investment (4-year total) 1,224,000 508,654
Principal Paid (4-year total) 3,738,038 4,614,076
Unpaid Balance -FY 1991 150,651,080 154,218,037
Completion of Crater Lake construction and start of repayment for the new investment were
delayed for two years because of problems with construction contracts. Because of the delay,
APA deferred a rate adjustment to begin repayment of the new investment, and revenues for the
four-year period were $1.9 million below the estimate.
All of the changes since the 1987 estimates are reflected in FY 1991 unpaid balance of
$154.2 million compared to $150.7 million projected at the time of the negotiations.
At the time of the negotiations, a Snettisham purchase price of somewhat under $60 million was
anticipated. It is now expected that the price will be in the range of $64.5 to $71.5 million.
The higher price reflects the outlook that interest rates will remain well below those that
prevailed at the time of the negotiations.
34
IMPACT TO U.S. TREASURY
The impact on the Federal Treasury is estimated by comparing Federal revenues and costs, with
and without the divestiture.
APA's 1991 Power Repayment Studies for Eklutna and Snettisham provide the estimates for
continued Federal ownership.
With the divestiture, the Federal government would continue to fund project activities and
receive revenues for power produced up to the Transaction Date. The Federal government
would receive payment from the purchasers up front and would be responsible for costs
associated with preparing the assets for transfer and closing out APA.
APA estimates that the costs for preparing the assets for transfer and for closing out APA after
the transfer will be approximately $1.9 million. These are estimated costs over and above those
expected under continued Federal operation. They include allowances for implementing the
Divestiture Personnel Management Plan.
The following table demonstrates the expected impact on the U. S. Treasury. It assumes a
Transaction Date of October, 1993 and completion of all close out activities by the June, 1994.
Sale proceeds of $76,353,000 are estimated in FY 1994.
In these estimates, Federal costs for the years 1992 through 1994 are $9,103,000, revenues are
$98,235,000, and net revenues (including sale proceeds) are $89,222,000. There would not be
additional Federal costs or revenues after FY 1994.
A present value comparison was made as of October 1, 1993 (discount rate of 7.9 percent). On
this basis, the value of net revenues is $76.4 million with divestiture and $83.5 million under
continued Federal ownership.
35
There are other cost-related factors not evaluated in this example.
• The divestiture Fish and Wildlife Agreement provides a clear commitment for non-
Federal funding of protection, mitigation, and enhancement measures. It is likely that
part of these costs would be borne by the Federal government under continued Federal
ownership.
• The Forest Service will receive permit fees for the transmission line, but would not
receive these revenues under continued Federal ownership.
• The State will use up some 3,524 acres of its Statehood Act land selection entitlements
to facilitate the divestiture; the entitlements would be used to select other Federal lands
if it were not for the divestiture.
• The Federal government will be relieved of costs associated with any future problems
associated with Eklutna and Snettisham, such as damages due to natural causes or
equipment failure.
36
Impact to U. S. Treasury
Without Divestiture
FY Budget
1992 $3,400,000
1993 3,800,000
1994 3,700,000
2041 4,200,000
Total $207,800,000
Present Value, FY 1994
With Divestiture
FY Budget
1992 $3,400,000
1993 3,950,000
1994 1,753,000
Total $9,103,000
Present Value, FY 1994
Total
Revenues
$10,000,000
10,200,000
10,400,000
8,900,000
$534,300,000
Total
Revenues
$10,000,000
10,200,000
78,125,000
$98,235,000
37
Net Revenue
to Treasury
$6,600,000
6,400,000
6,700,000
4,700,000
$326,500,000
$83,560,347
Net Revenue
to Treasury
$6,600,000
6,250,000
76,372,000
$89,222,000
$76,372,000
Key Issues
This photo was taken in 1975 during construction of the newest portion of the Snettisham transmission line. The
picture shows a helicopter carrying the upper portion of a tower to its site. There is no overland access along the
43-mile long Snettisbam transmission line. All construction, inspection, maintenance and repair is done by
helicopter. Most of the transmission line is overhead, but a three-mile portion of the transmission line is underwater
cable.
NON-POWER USES
Eklutna and Snettisham were authorized and developed as single-purpose hydroelectric projects,
with development costs to be repaid from power revenues.
Other valuable uses of project land and water have been developed by State and local interests.
Total investment in these non-Federal developments probably exceeds $200,000. Public benefits
from the non-Federal investment are as important as the values for power.
Each Purchase Agreement recognizes the rights of the non-power users and commits the
Purchasers to assumption of APA responsibilities and benefits under existing agreements with
the non-power users.
Eklutna
Important non-power uses of Eklutna project resources are:
• Use of Eklutna Lake water for municipal water supply by the Municipality of
Anchorage.
• Use of water from the tailrace by the Cook Inlet Aquaculture Association for
operation of a fish hatchery.
• Use of land around Eklutna Lake by the State of Alaska as part of Chugach State
Park. The park includes camping and picnic facilities.
• Use of project land for other recreational purposes such as fishing or picnicking.
38
Section 8 of the Eklutna Purchase Agreement assures that rights of the non-power users are not
affected by the divestiture. The Purchasers agree to assume APA responsibilities with respect
to formal agreements with the Municipality of Anchorage and Cook Inlet Aquaculture
Association. They also agree to work with the Bureau of Land Management and Alaska
Department of Natural Resources in management of Eklutna lands. A third provision of the
Agreement is a commitment by the Purchasers to continue to make Eklutna lands and water
available for recreational uses, except as limited by safety or operational considerations.
AEA operates an equipment and storage yard near the Eklutna Powerplant under a permit from
the Bureau of Land Management. This is on land that will be conveyed to the State and
operation of the storage yard will not be affected adversely by the divestiture.
Snettisham
Existing agreements for non-power use of Snettisham resources include:
• An agreement with the Alaska Department of Fish and Game for operation of a
fish hatchery at Snettisham.
• An agreement with the U.S. Forest Service for use of surplus rock spoil material
stored at Snettisham.
Section 9 of the Snettisham Purchase Agreement requires the Purchasers to continue these
existing agreements. It guarantees that any new agreements with the Department of Fish and
Game will be at least as favorable as existing ones. The Agreement also requires the Purchaser
to continue to make lands and water accessible and available to the public.
39
ENVIRONMENT AND PUBLIC SAFETY
Each Purchase Agreement provides that:
• AP A develop, in consultation with the Purchasers, a management plan to assure
continued compliance with environmental and public safety standards and law.
• APA and Purchasers will conduct inspections and make a joint determination of items
and matters requiring correction by AP A prior to the transfer.
• After the divestiture, Purchasers will continue implementation of the management plan,
including periodic updates of the plan.
AP A has accomplished much of the work to establish the management plan. Based on results
so far, including in-house audits and inspections by APA and limited inspections by DOE, the
Environmental Protection Agency, and the State of Alaska, there are a number of relatively
minor corrective and cleanup actions needed, but no known or suspected major environmental
or public safety problems at either project.
40
PERSONNEL MANAGEMENT
The divestiture poses a difficult set of personnel management challenges. AP A employees are
faced with the loss of their jobs and the financial and other dislocations associated with that loss.
At the same time, AP A must maintain a high quality staff to carry out operation responsibilities
prior to the transfer, make the preparation to transfer assets, and then conduct the transfer and
close out. There is potential for serious harm to individuals and to continuity of service for
APA functions.
AP A and DOE have adopted a Divestiture Personnel Management Plan addressing management
and employee interests (see Appendix D). Key elements include training, assistance in locating
other jobs, use of temporary hires and details where appropriate, and action by DOE in locating
jobs for employees after the APA work is completed.
The divestiture will result in loss of 33 or 34 permanent APA jobs and a net loss of 15 to 20
jobs. Some new jobs will be created on the rolls of the new owners/operators of Eklutna and
Snettisham.
The Purchase Agreements provide first calion post sale jobs at the two projects for those APA
employees who transfer to the new owners/operators and assistance in locating job opportunities
for displaced employees.
APA's small size enhances the ability to tailor training and assistance to individual needs. The
Purchase Agreements provide a framework for completing expeditiously the transfer of functions
and close out of APA when authorization of the divestiture is obtained.
41
TRANSITION
Purchase Agreements for both projects require a transition plan to be adopted within six months
after Congressional authorization. Specific items include:
• Setting a "Transaction Date" on which ownership would transfer to the
Purchasers.
• Finalizing financial plans: for the Eklutna Project, a schedule for payments to
Treasury; for the Snettisham project, a schedule for obtaining financing and
making the price determination.
• Arranging for and scheduling the transfer of operation and administrative
functions to the Purchasers
• Defining remaining activities to be accomplished to complete the transfer.
• Creating a specific list of assets to be transferred.
• Developing staffing plans to assure continuity of project operations and minimize
adverse impacts on AP A employees.
42
Plan
DOE's Finding of No
Stephens Passage and Taku Inlet south of Juneau, Alaska. Portions of the Snettisham 138kV transmission line are
in the lower left of the photo.
APPENDIX A
The Purchase Agreements
February 10, 1989
Snettishanl Purchase Agreenlent
Including Amendment No.1, January 25, 1991
Alaska Power Administration
United States Department of Energy
Alaska Energy Authority
State of Alaska
Snettisham Purchase Agreement
Table of Contents
1. Parties to the Agreement ............................ 1
2 • Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Definitions......................................... 1
4. Assets to be Sold or Transferred ................. ... 2
5. Sales Price ......................................... 4
6. Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Liabilities and Responsibilities .................... 5
8. Operation and Maintenance Expenses, Revenues ........ 5
9. Non-Power Users ..................................... 6
10 . Transition Plans .................................... 6
11. Interim Activities.................................. 7
12. Post-sale Operation, Maintenance and
Power Marketing Arrangements .... .... .............. 9
13 . Effective Date ...................................... 10
14. Environmental Management ............................ 10
15. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
16 . Term.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
17. Disputes Resolution ................................. 11
18 . Amendment... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
19. Continuing Support and Assistance ..... .... .......... 11
Appended Material:
Exhibit A: Lands, Easements and Rights-of-Way
Exhibit B: Future Principal & Interest Payments
Sample Projected Floor Selling Price
Sample Projected Formula Selling Price
Sales Price Determination
Amendment No.1, January 25, 1991
February 10, 1989
SNETTISHAM PURCHASE AGREEMENT
1. Parties to the Agreement.
The parties to this agreement are the Alaska Power
Administration (APAd), a unit of the United states Department of
Energy, and the Alaska Power Authority (APAu), a corporate entity
of the State of Alaska.
2. Purpose.
This agreement sets out arrangements, terms, and
conditions for sale of the snettisham hydroelectric project
("Snettisham") to APAu, such arrangements, terms, and conditions
to be implemented if the United States Congress authorizes such
sale and the APAu receives all necessary approvals and is able to
sell revenue bonds in an amount sufficient to pay the Sales
Price.
3. Definitions. As used in this Agreement:
"ADF&G" means the Alaska Department of Fish and Game.
"APAd" means the Alaska Power Administration, a unit of
the united states Department of Energy.
"APAu" means the Alaska Power Authority, a corporate
entity of the State of Alaska.
"BLM" means the Bureau of Land Management, a unit of
the United States Department of Interior.
"Corps of Engineers" means the United states Army Corps
of Engineers.
"Crater Lake" or "Crater Lake addition" means the
Crater Lake portion of snettisham now under construction by the
Corps of Engineers and described in section 4 of this agreement
(Assets to be Sold or Transferred) .
"DOE" means the United States Department of Energy.
"Federal authorization" means legislation by the united
states Congress authorizing the transfer of Snettisham to the
APAu.
"Final Interest Rate" means the net interest cost on
the date of sale of the Snettisham Bonds.
snettisham Purchase Agreement February 10, 1989
Page 2
"Sales Price" means the price set out in section 5
(Sales Price).
"Exhibit B Payments" means the schedule of interest and
principal payments shown in Exhibit B to this agreement.
"Snettisham" means the Snettisham hydroelectric project
and includes both the Long Lake portion and the Crater Lake
portion as well as all other assets generally described in
section 4 (Assets to be Sold or Transferred) .
"Snettisham Bonds" means the APAu revenue bonds to be
issued to finance the purchase of Snettisham by the APAu.
"Transaction Date" means the date on which ownership of
Snettisham is to be transferred to the APAu as discussed in
section 6 (Transfer).
"USFS" means the United States Forest Service.
4. Assets to be Sold or Transferred.
The Snettisham assets to be transferred comprise the
power production, transmission, and all other facilities and
assets constructed or otherwise provided and held by the Corps of
Engineers and APAd for the "Crater-Long Lakes Division of the
Snettisham project" authorized in Section 204 of the Flood
Control Act of 1962 (76 Stat. 1194, as amended).
The Long Lake portion of Snettisham, on which
construction was completed in the 1970' s, includes such assets
as the improvements and property including: an underground
powerhouse containing two complete turbine-generator sets with
ratings of 23,580 kilowatts, each; auxiliary electrical and
mechanical systems; waterways and hydraulic structures;
reservoir and low concrete dam; switchyards, transformers,
138,000 kilovolt transmission line connecting the Snettisham
powerplant and Juneau; the Juneau sUbstation; proj ect roads,
airstrip, boat basin, and barge dock: water, sewage, and waste
disposal facilities; maintenance facilities and vehicles; spare
parts and materials; supervisory control and communications
systems; and various buildings such as living quarters, garage,
and warehouses.
The Crater Lake portion of Snettisham is now under
construction by the Corps of Engineers with power production
expected to begin in March 1989 and all construction expected to
be completed by September 1990, and includes such assets as the
improvements and property including: one complete
turbine-generator set with a rating of approximately 31,000
kilowatts: auxiliary electrical and mechanical systems:
snettisham PUrchase Agreement February 10, 1989
Page 3
waterways and hydraulic structures; a reservoir; a transformer
and certain switchyard modification; a new supervisory control
system; and all spare parts and materials.
The above description of assets is intended to be
general and not precise or all inclusive. As part of the
transi~ion activities, the parties will jointly prepare a
particularized listing of the assets to be sold or transferred.
other assets acquired or otherwise provided by the
Corps of Engineers and APAd for snettisham include: lands,
easements, and permits; studies, records, drawings, operating
data, and other technical information: and improvements and
replacements for original equipment; and warranties or other
intangible rights associated with the assets to be transferred or
sold.
Federal lands administered by the United states Forest
Service (USFS) and Bureau of Land Management (BLM) are used for
project purposes. with respect to these lands, the parties
intend that approximately 2,666 acres in the vicinity of Port
snettisham (generally identified in Exhibit A) be selected by the
State of Alaska under Statehood Act entitlements and that
rights-of-way be provided to APAu to operate and maintain the
snettisham transmission facilities between Port Snettisham and
Juneau. Such rights-of-way are included in the assets to be sold
and transferred. . Alaska will acquire the approximately 2,666
acres under its Statehood Act entitlement; that land is not a
part of the assets to be sold by the APAd.
The parties intend that the sale of Snettisham and
accompanying transfer of assets to APAu not result in additional
costs to APAu for licenses, permits, or other rights for
Snettisham, which costs would not have been encountered under
continued Federal ownership of Snettisham.
In full consideration of the payment by APAu of the
sales price to the federal government, APAd will convey title to
all Snettisham assets, including but not limited to those assets
described above by bill of sale or other appropriate documents;
provided that for any Snettisham assets not yet available for
transfer at the Transaction Date, APAd will provide: 1)
satisfactory assurances that such remaining assets will be
transferred to APAu subsequently and in a timely fashion, and 2)
clear authority to APAu for use and/or beneficial occupancy of
such remaining assets pending their conveyance to APAu.
All costs associated with preparing the Snettisham
assets under control of the Corps of Engineers and APAd for
conveyance to APAu, including the costs of completing
construction of the Crater Lake unit, shall be the responsibility
of the federal government.
snettisham PUrchase Agreement
5. Sales Price.
February 10, 1989
Page 4
The sales price will be calculated by APAd immediately
after APAu has notified APAd of the Final Interest Rate for the
APAu revenue bonds issued to finance the purchase of Snettisham
("Sne'Ctisham Bonds").
The sales price shall be the larger of:
1. The present value as of the Transaction Date of
the remaining interest and principal payments after the
Transaction Date according to the schedule shown in Exhibit
B ("Exhibit B Payments") discounted at a rate two (2)
percen'Cage points above the final interes'C rate for the
snettisham Bonds; or
2. Eighty-five (85) percent of the present value as
of the Transaction Date of the remaining Exhibit B payments
after the Transaction Date discounted at a rate equal to the
average yield rate for the most current 30 year United
states Treasury Bonds during the 90 day period immediately
preceding the selling price determination, with such average
yield rate to be based upon Treasury bond yield rates as
published .in "The Bond Buyer."
For purposes of the price determination, the Exhibit B
payments will be assumed to occur at the federal fiscal mid-year
(April 1). For the federal fiscal year in which the Transaction
Date occurs, the Exhibit B payments will be prorated to reflect
the portion of the year remaining after the Transaction Date.
APAu will make full payment of the sales price to the
United ,States Treasury by wire transfer on the Transaction Date.
The sales price described above is to be full
consideration for all Snettisham assets, including Crater Lake,
described in section 4 (Assets to be Sold or Transferred) .
6. Transfer.
APAu will pay the sales price to the united States
Treasury simultaneously with the transfer of available Snettisham
assets from the federal government or APAd to APAu on the
Transaction Date. "Transaction Date" means the date on which
ownership of Snettisham is to be transferred to the APAu. The
date will initially be set in the transition plans described in
section 10. The parties recognize, however, that there may arise
circumstances that would warrant deferral of the Transaction
Date. Accordingly, each party has a one-time option to defer the
scheduled Transaction Date up to 90 days if a party notifies the
other in writing at any time prior to 45 days before the
snettisham Purchase Agreement February 10, 1989
Page 5
scheduled Transaction Date. By mutual agreement the parties may
defer the Transaction Date to any mutually agreeable date. If on
the Transaction Date the federal government or APAd is unable to
either transfer all snettisham assets (including Crater Lake) or
produce satisfactory assurances of reasonable future delivery and
interim use of such assets, then the parties agree to discuss and
implement appropriate remedies, including but not limited to
termination of the agreement.
7. Liabilities and Responsibilities.
As of the Transaction Date, APAu will assume all
ownership responsibilities and liabilities for Snettisham and
federal -responsibilities and liabilities shall cease, except
that:
1. APAd will be solely responsible for all costs to
close out APAd responsibilities including but not limited to
federal employee entitlements and benefits for APAd
employees;
2. The parties recognize that there may be unfinished
work as of the Transaction Date which is the responsibility
of APAd and/or the Corps of Engineers to complete. Such
unfinished work could include completion of construction on
the Crater Lake unit, incomplete transfer of some assets, or
specific APAd responsibilities arising out. of the joint
determination of maintenance activities to be completed by
APAd. APAd will be solely responsible for such unfinished
work, including provisions of appropriate assurances that
unfinished work under control of the Corps of Engineers will
be completed at federal expense; and
3. APAu assumes no responsibility for any claims
filed or legal proceedings initiated by any other parties
concerning Snettisham and arising from actions or alleged
actions by APAd and the Corps of Engineers while those
entities controlled snettisham assets, regardless of the
date on which such claims may be asserted or proceedings may
be initiated.
8. Operation and Maintenance Expenses, Revenues.
All snettisham operation and maintenance expenses
incurred up to the Transaction Date, including all obligations
incurred by the federal government for payments to be disbursed
after the Transaction Date, will be the responsibility of the
APAd. Operation and maintenance expenses for assets transferred
after the Transaction Date will be the responsibility of the
federal government until the date of transfer to the APAu or
snettisham Purchase Agreement February 10, 1989
Page 6
until APAu gains use and/or beneficial occupancy of such assets.
Subsequent operation and maintenance expenses will be the
responsibility of APAu. APAd fund balances from Congressional
appropriations as of the Transaction Date will remain with APAd.
All revenues for power delivered up to the Transaction
Date will be returned to ~he united states Treasury. APAu will
receive all revenues for power delivered after the Transaction
Date.
9. Non-Power Users.
The parties do not intend to adversely affect non-power
users as a result of transfer of ownership from federal control.
APAu, consistent with state and federal law, will
continue to make lands and water accessible and available to the
public.
The existing agreement between APAd and the Alaska
Department of Fish and Game ("ADF&G") will be continued. Any new
agreement will contain terms at least as favorable to ADF&G as
now exist.
APAu will continue to
between the APAd and the USFS
material stored at snettisham.
honor the existing agreement
for use of surplus rock spoil
APAu will work with the USFS and BLM in a cooperative
manner to ensure effective and proper management of lands
required for Snettisham.
10. Transition Plans.
Within six months after the state and federal
authorizations are obtained, APAu and APAd will adopt specific
transition plans setting forth the arrangements and a timetable
for completing the sale and transfer. The parties intend that
the transition plans will foster an efficient, orderly, and
expedi tious transfer of Snettisham and its operation to APAu,
help minimize transition costs, and help minimize adverse impacts
on employees. The transition plans shall be developed jointly by
APAu and APAd and, among other items, will include:
1. A "Transaction Date'" on which ownership of
snettisham would transfer to APAu;
2. A timetable for obtaining the financing and making
the price determination;
snettisham Purchase Agreement February 10, 1989
Page 7
3. Arrangements and timetable for the transfer of
operations, maintenance, power marketing, and administration
of Snettisham;
4. A definition of activities and schedules for
completing the sale and assignment of responsibilities for
such activities;
5. A continuation of the consultations and access to
records and data, and arrangements and timetable for
transfer of data and other records to APAu;
6. provisions for engineering and safety inspections
by APAu and APAd and a joint determination by APAu and APAd
of specific maintenance activities, including procurement,
to be completed by the APAd;
7. If necessary, provisions for completing asset
transfer actions that may not be completed as of the
Transaction Date, including transfer of the Crater Lake
addition;
8. Provisions for the completion of necessary
agreements, including a particularized listing of the assets
to be sold or transferred;
9. Transi tion staffing plans as necessary to assure
continuity of operations and minimizing adverse impacts on
APAd employees. In this regard, the parties intend that
APAd snettisham personnel have first calIon post-transfer
Snettisham jobs for which they are qualified, and APAu will
include such a requirement in any operations contract. The
staffing plans shall also consider transferring portions or
all of the operations and maintenance functions to its
operations contractor in advance of the Transaction Date, if
that course of action is found to be feasible and helpful in
minimizing adverse impacts to employees. APAu will request
assistance through state personnel and employment offices
and from its operations contractor in locating suitable
employment opportunities for displaced APAd employees; and
10. Other matters as may be considered necessary by
the parties.
11. Interim Activities.
The parties to this agreement recognize that, in
addition to the transition plan described above, a number of
actions still need to be taken by the parties and other entities.
The asset transfer will involve several administrative
jurisdictions within the federal and state governments. The
snettisham Purchase Agreement February 10, 1989
Page 8
parties intend to maintain full coordination with each of these
jurisdictions and that legislation authorizing the sale provide
appropriate authority to implement the asset transfer. The
parties agree to take all actions necessary to complete the asset
transfer including, but not limited to, the following actions:
a. APAd and the united states Department of Energy (DOE)
will prepare federal legislation needed to implement this
agreement. The legislation, among other items, will include
provisions to accomplish the following:
(1) Authorize in accordance with this agreement
the sale and transfer of Snettisham to APAu;
(2) Direct and authorize other federal agencies,
including the united states Departments of Defense,
Agriculture, and Interior, to assist and cooperate in sale
implementation including transfer of Snettisham assets under
their jurisdiction;
(3) Provide for the selection by the state and
conveyance to the state of lands needed for Snettisham,
including improved lands, under Alaska's Statehood Act
entitlements;
(4) Exempt snettisham and APAu or state
activities associated with snettisham, including but not
limited to exempting subsequent project modifications, from
jurisdiction of the Federal Energy Regulatory Commission
under the Federal Power Act (16 U.S.C. 791), unless such
modifications impact federal lands other than those
presently used for snettisham; and
(5) Affirm tax-exempt status,
state of Alaska's private activity bond
applicable, for the snettisham bonds.
subject to the
volume limit if
b. APAd will be responsible for the following actions:
(1) Apply for USFS and BLM rights-of-way
necessary for operation and maintenance of Snettisham
transmission facilities crossing federal lands, such
rights-of-way to be subsequently transferred to APAu;
(2) Arrange for expeditious transfer of all
Snettisham assets held by the Corps of Engineers or other
agencies of the federal government to APAd for subsequent
transfer to APAu; and
Snettisham Purchase Agreement February 10, 1989
Page 9
(3) Arrange and be prepared to transfer to APAu
all other Snettisham assets including but not limited to
those assets described in section 4 (Assets to be Sold or
Transferred) .
c. APAu will be responsible for the following:
(1) Pursue state selection of the approximately
2,666 acres of snettisham land identified in Exhibit B with
appropriate state agencies; and
( 2) Arrange for the payment of the amounts set
out in section 5 (Sales Price) to be paid to the United
States Treasury.
d. APAu and APAd will conduct engineering and safety
inspections at Snettisham, APAu and APAd will jointly determine a
list of items or matters they consider necessary to be changed or
modified prior to transfer. APAd will make the changes prior to
the Transaction Date, or provide appropriate ass~rances that
those changes or modifications will be made. APAu and APAd will
also jointly determine the acceptability of snettisham for
transfer to APAu. Failure to reach agreement on the joint
determination of either the list of necessary changes or
moditications or the acceptability of snettisham for transfer
will constitute grounds for either party to terminate this
agreement.
The parties agree that the above-listed actions in
subsections (a) through (d) along with passage of the
legislation described in (a) are crucial to the snettisham
purchase and that failure to complete such actions by the
Transaction Date, or provide appropriate assurance of subsequent
completion, shall constitute grounds for either party to
terminate this agreement.
12. Post-sale
Arrangements.
operation. Maintenance and Power Marketing
APAu intends to contract for operation and maintenance
of snettisham and for sale of project power with the power sales
contract standing as the instrument backing APAu revenue bonds
issued to purchase the project.
To assist in implementation of these post-sale
arrangements, APAd will make available for inspection and use by
APAu all project records and data and will consult with APAu on
operating procedures, replacement schedules, staffing plans, and
training on a continuing basis starting on the effective date of
this agreement.
Snettisham Purchase Agreement February 10, 1989
Page 10
These provisions are intended to ensure that APAu has
full opportunity to become fully familiar with Snettisham and to
help identify further specific actions that will facilitate the
transfer of operation of snettisham to state ownership.
13. Effective Date.
This agreement shall become effective as of the
calendar date as of which signatures on behalf of the parties and
the approval of the APAu board of directors have been obtained.
14. Environmental Management.
The parties intend that the transfer of ownership be
accomplished in a manner that assures continued compliance with
environmental and public safety standards and laws. The parties
note that, under applicable Department of Energy instructions,
APAd is required to prepare a management plan for the Snettisham
Project covering environmental and safety regulations.
APAd agrees to develop and implement such management
plan prior to the Transaction Date and in full consultation with
APAu.
APAu agrees to cont'inue the implementation of such
management plan after the Transaction Date, and to update the
plan periodically as needed.
15. Severability.
If any provision of this agreement is held invalid, the
remaining provisions shall not be affected thereby.
16. Term.
This agreement shall remain in effect for such time as
is necessary both to complete the sale and transfer of Snettisham
to APAu and to complete payments for such sale to the United
states Treasury, provided that this agreement shall terminate two
years after the effective date if authorization by federal
legislation has not been obtained wi thin those two years, and
provided further that this agreement shall terminate two years
after the date of the federal authorization if transfer of
Snettisham to APAu has not occurred by that time. The above
termination dates may be extended by mutual agreement of the
parties.
The above termination provisions are intended to
provide ample time to obtain state and federal authorizations and
complete the transaction. However, it is the intent of the
parties to obtain those authorizations as quickly as possible and
complete the sale as quickly thereafter as is practicable.
snettisham Purchase Agreement February 10, 1989
Page 11
This agreement shall be terminated if, at any time
prior to the Transaction Date, APAu determines that it is not
able to meet the payment terms and so notifies APAd in writing.
17. Disputes Resolution.
The parties agree to provide best efforts to resolve
any disputes arising out of interpretation of this agreement.
Ei ther party may request mediation assistance in disputes, in
which case the parties will jointly select a mediator to provide
such assistance.
18. Amendment.
This agreement may be modified only by mutual agreement
between APAu and APAd. Any such modifications must be consistent
with applicable state and federal law.
19. Continuing Support and Assistance.
The parties agree to support and assist each other in
the mutually satisfactory resolution of any unforeseen problems
associated with the transfer. APAd and APAu recognize that new
issues invol ving the transfer process may arise prior. to and
after transfer, or that issues considered resolved may need
further clarification, implementation, or other resolution. APAd
and APAu agree that open lines of communication are desirable
after the date of this agreement and after transfer to facilitate
the transfer process. To that end, APAd and APAu each agree to
exercise their good faith efforts to resolve any such disputes
expeditiously. APAd further agrees to use its best efforts to
make available an appropriate federal entity to implement this
section in the event that APAd as an identifiable federal entity
ceases to exist.
DATED this lilt. day of k~~ ,19SJ-.
ALASKA POWER ADMINISTRATION
0,/ .,~l /]
by: flCiDi1-4 !.J.i( (jft.t/2~
Robert J. Cross
Administrator
ALASKA POWER AUTHORITY
by: ~4fE ~(!a"""-----o
Robert E. LeResche
Executive Director
snettisham Purchase Agreement
Exhibit A
Lands, Easements and Rights-of-Ways
February 10, 1989
Page 1 of 2
Exhibit A consists of this narrative (pages 1 and 2 of 2) and the
map labeled "Exhibit A," signed by BLM, USFS and APAd, and dated
February 3, 1989.
This exhibit describes and displays present land status for
Snettisham Hydroelectric Project and describes in general terms
the conveyances of land and land rights contemplated in the
purchase agreement.
1. / BLM. Refers to Federal lands managed by BLM used for the
snettisham Project for which BLM is to provide APAd
rights-of-way sufficient for operation, maintenance, repair
and replacement of Snettisham facilities, such rights-of-way
to be assigned by APAd to the state of Alaska; and includes
Federal lands withdrawn for project purposes subject to
selection and conveyance to the state of Alaska.
Legend Symbols and Description.
withdrawals. Refers to approximately 2,671 acres
of public lands withdrawn for Snettisham housing
such major facilities as the "snettisham
Powerhouse, " "Intake Area, " "Power Tunnel, "
"Crater and Long Lake Reservoirs" and "Thane
Substation." The total acreage is comprised of
the following land:
a. Approximately 2,666 acres withdrawn for major
facilities including the "snettisham
Powerhouse," "Intake Area," "Power Tunnel"
and "Crater and Long Lake Reservoirs," such
lands subject to selection and conveyance to
the state of Alaska on or about the
Transaction Date.
b. Approximately 5 acres withdrawn for the
"Thane Substation" for which BLM is to
provide APAd rights-of-way, such rights-of-
-way to be assigned to the State of Alaska.
BLM Lands. Refers to rights-of-way across
State-selected lands covering a small portion of
the 138kV transmission line from the Tongass
Forest to approximately a mile from "Thane
Substation."
Snettisham Purchase Agreement
Exhibit A
February 10, 1989
Page 2 of 2
2. USFS. Refers to federal lands managed by the Forest Service
within the Tongasss National Forest.
3 .
Legend Symbols and Description.
FS-R/W. Refers to rights-of-way and permits
across approximately 40 miles of federal lands
housing the majority of the 138kV transmission
line between Snettisham and the city of Juneau,
such rights-of-way to be provided to APAd for
assignment to the State of Alaska.
Acquired-Easements.
i. I
I •••• I Map Symbol: Acquired-Easements
, ·.1
Refers to easements acquired by the Corps of Engineers for a
small portion of the 138kV transmission line near Thane
Substation during construction of Snettisham, such easements
to be provided to APAd for assignment to the State of
Alaska.
EXHIBIT B Page 1 of 2
snettisham Purchase Agreement
Future principal & Interest Payments
June 27, FY 1988 Power Repayment study Data
($l,OOO's)
FISCAL YEAR PRINCIPAL INTEREST TOTAL
1989 914 2,740 3,655
1990 942 4,563 5,505
1991 994 4,534 5,529
1992 1,090 4,503 5,593
1993 1,167 4,469 5,636
1994 1,253 4,433 5,686
1995 1,351 4,394 5,745
1996 1,441 4,352 5,793
1997 1,544 4,307 5,852
1998 1,658 4,260 5,918
1999 1,857 4,207 6,064
2000 1,748 4,152 5,901
2001 1,904 4,098 6,002
2002 1,984 4,040 6,024
2003 2,383 3,974 6,357
2004 2,563 3,900 6,463
2005 2,190 3,829 6,019
2006 2,935 3,752 6,687
2007 2,406 3,672 6,078
2008 2,675 3,596 6,271
2009 2,972 3,511 6,483
2010 2,190 3,434 5,624
2011 3,513 3,348 6,861
2012 3,619 3,241 6,860
2013 3,708 3,131 6,839
2014 3,840 3,018 6,858
2015 908 2,946 3,854
2016 935 2,919 3,854
2017 1,153 2,889 4,043
2018 3,879 2,813 6,692
2019 4,142 2,692 6,835
2020 2,108 2,599 4,707
2021 4,338 2,502 6,839
2022 4,467 2,370 6,837
2023 4,574 2,234 6,808
2024 4,748 2,094 6,843
2025 1,221 2,004 3,224
2026 2,053 1,955 4,008
2027 4,106 1,862 5,969
2028 4,230 1,737 5,967
2029 4,397 1,609 6,006
2030 4,446 1,475 5,922
2031 5,450 1,328 6,778
2032 5,674 1,161 6,835
2033 5,867 988 6,856
2034 6,041 810 6,850
2035 4,776 648 5,424
2036 6,382 480 6,862
2037 6,566 286 6,852
2038 6,197 93 6,290
TOTAL FY89-2039 152,587 141,216 293,803
TOTAL FY90-2039 151,645 136,653 288,298
TOTAL FY91-2039 150,651 132,119 282,770
Transaction Date
EXHIBIT B
snettisham Purchase Agreement
Sample Projected Floor Selling Price
($l,OOO's)
Avg of US
30 Year
Treasury
Yields
During 90
Days Prior
Transaction
Present
Value of
Remaining
Payments
(assumed to
occur mid
Fiscal Year)
Page 2 of 2
Floor Selling
Price Equal
Eighty-five
(85) Percent
of Present
Value
======================================================================
oct 1, 1989
(start of
oct 1, 1990
(start of
Oct 1, 1991
(start of
9% $66,942
FY90)
9% $67,219
FY91)
9% $67,496
FY92)
Sample Projected Formula Selling Price
($l,OOO's)
$56,900
$57,136
$57,372
Transaction Date
Projected Final
Interest Rate for
the APAu Revenue
Bonds plus addi-
tional discount
Formula Selling
Price Equal to
Discounted Present
Value of Remaining
Payments
==================================================================
oct 1, 1989 8.5% + 2% $57,987
(start of FY90)
oct 1, 1990 8.5% + 2% $58,288
(start of FY91)
Oct 1, 1991 8.5% + 2% $58,597
(start of FY92)
Sales Price Determination
The above are samples only. The actual US30 average yields and APAu
Final Interest Rate will be determined on the Transaction Date. The
sales price will be the larger of the floor or formula selling price.
If the sales transaction occurs on October 1, 1990, and the average US
30 Treasury yield is 9%; and APAu's cost of borrowing is 8.5%; then
the Sales Price would be $58,288,000.
January 25, 1991
SNETTISHAM PURCHASE AGREEMENT
Amendment No. 1
1. Purpose.
This Amendment No. 1 reflects new information with
respect to lands, and extends the terms of the February 10, 1989
snettisham Purchase Agreement. It also recognizes that, subsequent
to the February 10, 1989 Agreement, the Alaska Power Authority
became the Alaska Energy Authority.
2. Alaska Energy Authority (AEA).
Wherever used in the February 10, 1989 Agreement, "Alaska
Power Authority" or "APAu" means "Alaska Energy Authority" or AEA.
This reflects a name change only and does not change the intent of
or responsibilities under the February 10, 1989 Agreement.
3. Amendment to Section 4. Assets to be Sold or Transferred.
The sixth (6th) and seventh (7th) full paragraphs under
section 4 of the February 10, 1989 Agreement are amended to read as
follows:
"Federal lands administered by the united states Forest
Service (USFS) and Bureau of Land Management (BLM) are
used for project purposes. With respect to these lands,
the parties intend that approximately 2,666 acres in the
vicinity of Port snettisham and approximately 5 acres of
Thane Substation (generally identified in Exhibit A) be
selected by the State of Alaska under Statehood Act
entitlements and that rights-of-way be provided to APAu
to operate and maintain the Snettisham transmission
facilities between Port snettisham and Juneau. Such
rights-of-way are included in the assets to be sold and
transferred. Alaska will acquire the approximately 2,671
acres under its Statehood Act entitlement: that land is
not a part of the assets to be sold by the APAd."
"The parties intend that, to the extent possible, the
sale of snettisham and accompanying transfer of assets to
AEA not result in additional costs to AEA for licenses,
permits, or other rights for Snettisham, which costs
would not have been encountered under continued Federal
ownership of snettisham. The parties recognize that
existing law requires the Forest Service to assess fees
for use of rights-of-way for project transmission lines
on Forest Service lands."
snettisham Purchase Agreement
Amendment No. 1
January 25, 1991
Page 2
These changes correct a minor discrepancy between the
body of the February 10, 1989 Agreement and Exhibit A of that
Agreement and recognize that the u.s. Forest Service must assess a
land use fee upon issuance of the special Use Permit to the Alaska
Energy Authority for transmission rights-of-way.
4. Amendments to section 11. Interim Activities.
section 11b.(1) of the February 10, 1989 Agreement is
amended to read as follows:
"llb. (1) Assuring that USFS and BLM rights-of-way
necessary for operation and maintenance of Snettisham
transmission facilities crossing Federal lands will be
available to the Alaska Energy Authority as of the
Transaction Date."
A new Section 11e. is added:
"lle. The Parties shall each designate one person and an
al ternate as representatives to coordinate activities
under this agreement."
5. Amendment to Exhibit A.
The narrative descriptions under "loBLM. withdrawals" and
"loBLM.a." at page 1 of Exhibit A of the February 10, 1989
Agreement are amended to read as follows:
"wi thdrawals. Refers to approximately 2,671 acres of
public lands withdrawn for snettisham. The total acreage
is comprised of the following land:"
"a. Approximately 2,666 acres withdrawn for maj or
facilities including the "Snettisham Powerhouse," "Intake
Area," "Power Tunnel," and lands surrounding "Crater and
Long Lake Reservoirs," such lands subject to selection
and conveyance to the state of Alaska on or about the
Transaction Date."
The narrative description under "2.USFS." at page 2 of
Exhibi t A of the February 10, 1989 Agreement is amended by
inserting a period in place of the comma after "City of Juneau" and
deleting the phrase "such rights-of-way to be provided to APAd for
assignment to the state of Alaska."
Snettisham Purchase Agreement
Amendment No. 1
6. Extended Term.
January 25, 1991
Page 3
Under provisions of Section 16 of the February 10, 1989
Agreement, the term of that agreement is hereby extended two full
years until February 10, 1993.
7. Effective Date.
This Amendment No. 1 to the February 10, 1989 Agreement
shall become effective as of the calendar date on which the parties
have executed this amendment.
DATED this Z5~ day Of~' 1991.
ALASKA POWER ADMINISTRATION ALASKA ENERGY AUTHORITY
by: ~,~
Robert J. oss
Administrator
by:
Executive Director
p
August 2, 1989
Eklutna Purchase Agreement
Including Amendment No.1, July 30, 1991
Chugach Electric Association, Inc.
Matanuska Electric Association, Inc.
Municipality of Anchorage
d/b/a Municipal Light and Power
Alaska Power Administration
United States Department of Energy
Eklutna Purchase Agreement
Table of Contents
Parties to the Agreement ............................... . 1
2. Purpose ................................................. . 1
3 • Definitions ...... . 1
4 . Assets to be Sold or Transferred ....................... . 2
5. Price and Payment Terms ................................ . 4
6. Responsibilities .................. . . ..................... .. 5
7. operation and Maintenance Expenses, Revenues ........... .
8. Non-Power Users. .. .................................... . 6
9. Transition Plans and Activities. 7
10. Interim Activities ...... . 8
11. Post-sale Operations, Maintenance and
Power Marketing Arrangements ....... . 11
12. Effective Date. 12
13. Environmental Management ................................ 12
14. Term ........................................................ 12
15. Dispute Resolution. . ................................... . 13
16. Notice .•.. . ....... -..................................... . 13
17. Amendment. . . . . . . . .. • • . . . . . . . . . . . . . . . . . . . • .. . . . . . . . . . . . .. . .. 13
18. Approvals .. . ............................................ . 13
19. Assignment .... . ............................................... . 14
20. Force Majeure. . ......................................... .. 14
21. Continuing Support and Assistance ....................... 14
22. Relationship of Purchasers ...... . 14
23. Agreement for Benefit of Parties Only ................... 15
24. Miscellaneous Provisions .......................... . 15
Table of Contents
Appended Material:
Exhibit A:
Exhibit B:
Lands, Easements and Rights-of-Ways, Including Map
Marked Exhibit A, Dated February 3, 1989.
Future Principal & Interest Payments
Projected Selling Price.
Amendment No.1, July 30, 1991.
August 2, 1989
EKLUTNA PURCHASE AGREEMENT
1. Parties to the Agreement.
The parties to this Agreement are the Alaska Power
Adm:'nistration (A.u.d), a unit of the united States Department of
Energy, and the Municipality of Anchorage d/b/a Municipal Light
and Power (ML&P), the chugach Electric Association, Inc.
(Chugach) and Matanuska Electric Association, Inc. (MEA)
(Purchasers) .
2. Purpose.
This Agreement sets out arrangements, terms and
conditions for sale of the Eklutna Hydroelectric Project
(Eklutna) to Purchasers, such arrangements, terms and conditions
to be implemented if the United States Congress authorizes such
sale.
3. Definitions. As used in this Agreement:
"ADNR" means the Alaska Department of Natural
Resources.
"ANCSA" means the Alaska Native Claims Settlement Act
(PL-92-203).
"APAd" means the Alaska Power Administration, a unit of
the United States Department of Energy (including any successor
entity) .
"Chugach" means the Chugach Electric Association, Inc.
"BLM" means the united States Bureau of Land
Management.
"Eklutna" means the Eklutna Hydroelectric Project
authorized, constructed and operated pursuant to the Eklutna
Project Act of July 31, 1950 (64 stat. 382, as amended),
including any and all property and facilities acquired or used in
connection with Eklutna.
"MEA" means the Matanuska Electric Association, Inc.
"ML&P" means the Municipality of Anchorage, d\b\a
Municipal Light and Power.
"Purchasers" means ML&P, Chugach, and MEA.
Eklutna Purchase Agreement August 2, 1989
Page 2
"Actions" means actions, inaction, and omissions.
"Transaction Date" means the date on which ownership of
. Eklutna is to be transferred to the Purchasers as set forth in
sections 4 and 9.
4. Assets to be Sold an~ Transferred.
a. The Eklutna assets to be sold and transferred consist of
the power production, transmission, associated real property and
all other facilities and assets provided or otherwise acquired
for Eklutna under the Eklutna Project Act of July 31, 1950 (64
Stat. 382, as amended) including but not limited to:
(1) Eklutna Dam; power intake structure; power tunnel
and penstock; the Eklutna powerplant containing two complete
turbine-generator sets with ratings of 15,000 kilowatts,
each; auxiliary electrical and mechanical systems; a
tailrace and tailrace embankment; switchyard, transformers,
115 kilovolt transmission lines connecting the powerplant
with Palmer and AnChorage; Anchorage, Palmer and Reed
Substations; access roads; maintenance facili ties and
vehicles; supervisory control and communications systems;
various buildings including office, warehouse, and garage;
personal property, including spare parts and equipment; and
any ilDprovements, replacements and renewals of such major
items;
(2) Title in acquired land at Palmer substation, and
easements or rights-at-way tor Eklutna facilities on
privately owned land as described in Exhibit A; and fee
title to lands at Anchorage SUbstation if the Department of
Interior determines that the lands are available under law
for conveyance to the Purchasers;
(3) Granted rights-of-way for existing Eklutna
facilities located on BLM managed lands and military lands
as described in Exhibit A;
(4) Studies, records, drawings, operating data,
technical information; water rights including the reservoir
rights; licenses and any other permits; accurate location
maps of Eklutna facilities tied to public land surveys;
acceptable land descriptions of the areas of the easements,
permits and licenses showing the location of the Eklutna
facilities within the described areas; other tangible rights
as required for operations and maintenance of Eklutna
facilities; and warranties or other intangible rights
associated with the assets to be transferred and sold.
Eklutna Purchase Agreement August 2, 1989
Page 3
b. Granted rights-of-way for existing Eklutna facilities
located on BLM managed lands including lands selected by the
state of Alaska and military lands shall:
(1) Be sufficient for operation, maintenance, repairs,
renewals and replacements of E~lutna facilities located on
such lands, including provisions for access.
(2) Be issued consistent with existing Federal
statutes, at no cost to the Purchasers, and remain effective
for a period equal to the life of Eklutna as extended by any
improvements, repairs, renewals or replacements; provided
further that if Eklutna is further sold or transferred to
private ownership, BLM may assess such reasonable and
customary fees for continued use of the rights-of-way on BLM
managed lands and military lands as consistent with law or
regulation.
c. The life of Eklutna shall continue as long as Eklutna is
capable of generating and transmitting electricity. Temporary
interruptions in service or generation of power shall not
constitute a termination of the life of Eklutna. Disuse of one
portion of the project system shall not cause the life to Eklutna
as a whole to terminate.
d. APAd shall provide satisfactory assurance that ANCSA
17 (b) easement rights crossing native lands are sufficient for
continued operation, maintenance, repair and replacement of
Eklutna facilities by the Purchasers.
e. The above description of assets is intended to be
general and not precise or all inclusive. As part of the
transition activities, the parties will jointly prepare a
particularized listing' of the assets to be sold and transferred.
f. APAd intends that the sale and transfer of Eklutna to
the Purchasers not result in additional costs to the Purchasers
for licenses, permits or other rights for Eklutna, which costs
would not have been incurred under continued Federal ownership of
Eklutna.
g. Nothing in this Agreement shall prevent Purchasers from
seeking substantial change in Eklutna. Purchasers shall be
responsible for any appropriate approvals by affected government
and non-governmental entities required for such substantial
change.
h. On the Transaction Date, the APAd shall conveyor cause
to be conveyed title to all Eklutna assets to the Purchasers by
bill of sale or other instrument of conveyance, provided that
Purchasers payor make arrangement for payment under Section 5 of
Eklutna Purchase Agreement August 2, 1989
Page 4
this Agreement, and provided further that for any assets not
available for transfer at the Transaction Date, APAd shall
provide:
(1) Mutually satisfactory assurance that such
rema1n1ng assets will be transferred to the Purchasers
subsequently and in a timely fashion, and
(2) Clear authority to the Purchasers for the
beneficial use, enjoyment and occupancy of such remaining
assets pending their conveyance to the Purchasers.
(3) If APAd fails to perform any of the requirements
stated in paragraphs 4(h), 4(h)(1) or 4(h)(2) above, the
parties agree to discuss appropriate remedies. The parties
may agree to mediation, arbitration or other means to
resolve issues presented by a failure of APAd to perform
such requirements. Purchasers shall also have an absolute
right to terminate the Agreement in the event APAd fails to
perform such requirements.
i. I f after the Transaction Date some event occurs which
prevents APAd from transferring title and beneficial use,
enjoyment and occupancy of Eklutna to the Purchasers, the parties
agree to discuss and implement appropriate remedies including
resolution through negotiation, arbitration or litigation, as
appropriate.
5. Price and Payment Terms.
a. If the Transaction Date is October 1, 1989, the selling
price shall be $10,435,000.
If the Transaction Date is October 1, 1990, the selling
price shall be $9,580,000.
If the Transaction Date is October 1, 1991, the selling
price shall be $8,631,000.
If the Transaction Date is other than one of the three
above dates, the selling price will be calculated by APAd as the
discounted present value as of the Transaction Date of all
remaining principal and interest payments after the Transaction
Date according to the payment schedule shown on Exhibit B of this
agreement plus $1,000,000 ($1 million). Exhibit B payments for
the first year will be prorated to reflect the portion of the
year remaining after the Transaction Date. Subsequent Exhibit B
payments will be assumed at mid-year (April).
Eklutna Purchase Agreement August 2, 1989
Page 5
The price determination is to be included in the
transition plan required under section 9 below.
b. The Purchasers shall pay the full selling price to the
United states Treasury within five years after the Transaction
Date. Any portion of the selling price paid after the
Transaction Date will carry interest ch~rges -~yable to the
united states Treasury as discussed below. If the full price is
paid by the Transaction Date, there will be no interest charges.
The purpose for allowing up to five years for the
payments is to provide some flexibility. to the Purchasers in
arranging for payment and start up costs so as to minimize
adverse impacts on Purchasers' ratepayers. The purpose of the
interest charges is to assure that the united states Treasury
receives the full value of the selling price. The Purchasers
shall not seek Federal financing for the purchase.
c. The discount rate to be used for determination of the
selling price shall be nine percent (9%).
The interest rate to be charged for payments after the
Transaction Date shall be nine percent (9%).
The sales price described above is full consideration
for all Eklutna assets described in section 4 (Assets to be Sold
and Transferred).
d. APAd shall not change its rate criteria for the purpose
of accelerating principal payments before the Transaction Date.
The Purchasers shall not delay their take of allocated power for
the purpose of shifting revenues beyond the Transaction Date.
6. Responsibilities.
a. As of the Transaction Date, the Purchasers shall assume
all ownership responsibilities for Eklutna and ownership
responsibilities of APAd and its successors for Eklutna shall
cease, except as follows:
(1) APAd shall be solely responsible for all costs to
close out APAd responsibilities including but not limited to
Federal employee entitlements and benefits for APAd
employees.
(2) The parties recognize that there may be unfinished
work as of the Transaction Date which is the responsibility
of APAd to complete. Such unfinished work could include
incomplete transfer of some assets to be completed by APAd
under sections 4 and 10 or specific APAd responsibilities
Eklutna Purchase Agreement August 2, 1989
Page 6
arising out of the joint determination of maintenance
activities to be completed by APAd under Sections 9 and 10.
APAd shall be solely responsible for such unfinished work.
(3) APA shall be solely responsible for any claims or
other legal proceedings arising from actions or alleged
actions by APAd while APAd managed or operated Ekll1+-na or
from actions or alleged actions by A:?Ad in carrying out
remaining APAd responsibilities under this agreement after
the Transaction Date."
7. Operation and Maintenance Expenses, Revenues.
Operation and maintenance expenses up to ,the
Transaction Date, including all obligations incurred by APAd
which require payments after the Transaction Date shall be the
responsibility of APAd. Subsequent operation and maintenance
expenses shall be the responsibility of the Purchasers. APAd
fund balances from Congressional appropriations as of the
Transaction Date shall remain with APAd.
All revenues for power sold up to the Transaction Date
will be returned to the United States Treasury. The Purchasers
shall be responsible for sales of power after the Transaction
Date, including the collection and disposition of revenues
therefrom.
8. Non-Power Users.
a. The parties do not intend to adversely affect non-power
users' rights as a result of transfer of ownership and control of
Eklutna from the Federal government to the Purchasers.
As of the Transaction Date, the Purchasers shall assume
all APAd responsibilities and benefits with respect to the
following agreements, including amendments and supplemental
agreements made or entered into prior to the Transaction Date,
provided that after the effective date of this Agreement,APAd
shall consult with the Purchasers prior to making additional
amendments and supplemental agreements:
(1) The agreement dated February 17, 1984, between
APAd and the Municipality of Anchorage concerning the
Eklutna Water Project; as amended by Supplemental Agreement
No. 1 dated August 24, 1988;
(2) The agreement dated November 1, 1982, between APAd
and Cook Inlet Aquaculture Association concerning the
Eklutna hatchery.
Eklutna Purchase Agreement August 2, 1989
Page 7
b. The Purchasers shall consult with BLM and ADNR to ensure
effective and proper management of lands required for Eklutna.
c. Except to the extent Purchasers determine public
recreational uses shall be limited by safety and operational
requirements, the Purchasers will continue to make Eklutna lands
and water available to the public for recreation uses.
9. Transition Plans and Activities.
a. within six months after the Congressional authorization
is obtained, the Purchasers and APAd shall adopt specific
transition plans setting forth the arrangements and a timetable
for completing the sale and transfer. The parties intend that
the transition plans shall foster an efficient, orderly and
expeditious transfer of Eklutna and its operation to the
Purchasers, m1n1m1ze transition costs and minimize adverse
impacts on employees. The transition plans and activities shall
be developed jointly by the Purchasers and APAd and, among other
items, shall include:
(1) The selection of a "Transaction Daten on which
ownership of Eklutna would transfer to the Purchasers:
(2) A schedule for payments to the United states
Treasury including provisions for reasonable grace periods:
(3) Arrangements and timetable for the transfer of
operations, maintenance, power marketing and administration
of Eklutna:
(4) A definition of activities and schedUles for
completing the sale and the assignment of responsibilities
for such activities:
(5) A continuation of the consultations and access to
records and data, and arrangements and timetable for
transfer of data and other records to the Purchasers:
(6) Provisions for environmental, engineering and
safety inspections by the Purchasers and APAd and a joint
determination by' the Purchasers and APAd of specific
maintenance activities, including procurement, to be
completed by the APAd:
(7) If necessary, provisions for completing any asset
transfer actions that may not be completed as of the
Transaction Date:
(8) A particularized listing of all the Eklutna assets
to be sold and transferred, including photocopies of all
Eklutna Purchase Agreement August 2, 1989
Page 8
rights-of-way obtained from BLM, accurate location maps of
the Eklutna facilities tied to public land surveys, and
suitable legal descriptions of all real property interest.
The parties to this Agreement recognize that the lands work
will not be completed before the date of the transition
plans.
(9) A description of th~ cohdi tion of title to the
Eklutna assets as of the date of the transition plans,
identifying with particularity third party interests and
rights and other matters affecting title that may materially
impair the ability of the Purchasers to have the full
beneficial use, enjoyment, occupancy and operation of the
Eklutna assets, and a description of APAd's intended course
of action prior to the Transaction Date to remove, resolve
or limit such matters.
(10) Transition staffing plans as necessary to assure
continuity of operations and minimizing adverse impacts on
APAd employees. In this regard, the parties agree that for
two years after the Transaction Date APAd Eklutna personnel
have first calIon post-transfer Eklutna jobs for which they
are qualified subject to the labor agreements of Purchasers.
The staffing plans shall also consider transferring portions
or all of the operations and maintenance functions to the
Purchasers in advance of the Transaction Date, if that
course of action is found to be feasible and helpful in
minimizing adverse impacts to employees. In a manner
consistent with. their personnel policies and staffing
requirements, the Purchasers will assist in locating
suitable employment opportunities for displaced APAd
employees for a period of two years after the Transaction
Date; and
(11) Other matters as may be considered necessary by
the parties.
10. Interim Activities.
The parties to this Agreement recognize that, in
addition to the transition plans and activities described above,
a number of actions need to be taken by the parties and other
entities. The asset transfer and sale involves several entities
including the Federal, state and local governments and two Alaska
Native corporations. The parties intend to maintain full
coordination with each of these entities and ensure that
legislation authorizing the sale and transfer provides
appropriate authority to implement the sale and transfer. The
parties shall take all actions necessary to complete the sale and
transfer including, but not limited to, the following listed
actions:
Eklutna Purchase Agreement August 2, 1989
Page 9
a. APAd shall prepare Congressional legislation needed to
implement this Agreement. The legislation, among other items,
shall include provisions to accomplish the following:
(1) Authorize in accordance with this Agreement the
sale and transfer of Eklutna to the Purchasers.
(2) Direct and authorize other Federal agencies,
including the united states Department of the Interior, to
assist and cooperate in sale implementation including
transfer of Eklutna assets under their jurisdiction.
(3) Authorize and direct the Secretary of Interior to
issue rights-of-way to Alaska Power Administration for
subsequent assignment to Purchasers at no cost to remain
effective for a period equal to the life of Eklutna as
extended by improvements, repairs, renewals or replacements,
sufficient for operation, maintenance, repair and
replacement of Eklutna facilities located on lands managed
by the BLM including land selected by the State of Alaska,
and military lands, including access; provided that if
Eklutna is further sold or transferred to private ownership,
the BLM may assess such reasonable and customary fees for
continued use of the rights-of-way on BLM managed lands and
military lands as consistent with current law or regulation;
provided further that at no additional cost fee title to
"lands at Anchorage Substation shall be transferred to
Purchasers if the Department of Interior determines that the
lands are available under law for conveyance to the
Purchasers.
(4) Authorize the state of Alaska (State) to select
and direct the Secretary of Interior to convey to the State
certain Eklutna lands identified in Exhibit A, including
the la:tte bed of Eklutna Lake if not navigable under the
submerged Lands Act and approximately 853 acres of improved
lands housing the powerhouse, intake structure, dam
facilities, and a portion of the power tunnel under the
provision of section 6 of the Alaska Statehood Act of July
7, 1958, Public Law 85-508, and the North Anchorage Land
Agreement of January 31, 1983, such conveyances to be
subject to the rights-of-way being provided to Purchasers
under section 10(a) (3) above.
(5) Exempt Eklutna and the Purchasers, including but
not limited to subsequent facilities modifications, from
jurisdiction of the Federal Energy Regulatory Commission
under the Federal Power Act ( 16 U. S • C. 791), unl ess such
modifications impact Federal lands other than those
presently used for Eklutna.
Eklutna Purchase Agreement August 2, 1989
Page 10
(6) Authorize expenditure of such sums as are
necessary to prepare Eklutna assets for sale and
conveyance, such preparations to provide sufficient
title to ensure the beneficial use, enjoyment and
occupancy to the Purchasers of the assets to be sold.
b. APAd shall, in addition to the responsibilities set
forth in section 4:
(1) Prepare all Eklutna assets including but not
limited to those assets described in section 4 (Assets to be
Sold and Transferred) for conveyance to the Purchasers
including all actions necessary to establish sufficient
title to ensure the beneficial use, enjoyment and occupancy
to the Purchasers of such assets.
(2) Apply for and obtain BLM rights-of-way necessary
for operation, maintenance, repair and replacement of
Eklutna facilities located on Federal lands, managed by the
BLM, such rights-of-way to be subsequently transferred to
the Purchasers.
(3) Provide'satisfactory assurance that the Purchasers
have sufficient ANCSA 17 (b) easement rights for continued
operation, maintenance, repair and replacement of Eklutna
facilities.
(4) continue to maintain Eklutna in accordance with
prudent utility practices, and Federal, and utility industry
standards.
(5) Appoint one person and an alternate to represent
APAd for all activities required of APAd after the execution
of this Agreement and prior to the Transaction Date.
(6) Manage and operate Eklutna in accordance with
prudent utility practices, and Federal and utility industry
standards in such a manner as to not diminish the capability
of Eklutna to produce energy and power at historic levels.
c. Purchasers shall:
(1) Establish organizational, functional and staffing
arrangements for operations, maintenance and administration
of Eklutna to be in effect on or before the Transaction Date
including the following:
(A) Purchasers agree with each other and the APAd
that each Purchaser shall appoint one person and an
Eklutna Purchase Agreement August 2, 1989
Page 11
alternate to represent that Purchaser for all activities
required of Purchasers after the execution of this Agreement
and prior to the Transaction Date.
(B) By the Transaction Date, Purchasers shall
agree in writing to have an effective organization which
shall be responsible for the sale of power, operation and
maintenance of Eklutna and, if necessary, Purchasers shall
execute power sales agreements to purchase power from
Eklutna.
(e) Purchasers shall provide in their
organizational agreements that if one or more of the
Purchasers are unable or unwilling to purchase its shar~ of
Eklutna, then the other Purchasers may purchase that share.
(2) Arrange for the payment of the amounts set out in
section 5 (Price and Payment Terms) to be paid to the United
states Treasury.
d. The Purchasers and APAd shall conduct engineering,
environmental and safety inspections at Eklutna and jointly
determine a list of items or matters they consider necessary to
be changed or modified prior to transfer. APAd shall make such
changes and modifications prior to the Transaction Date, or
provide appropriate assurances that those changes or
modifications shall be made. The Purchasers and APAd shall also
consensually and jointly determine the acceptability of Eklutna
for transfer to the Purchasers. Failure to reach agreement on
the joint determination of either the list of necessary changes
or modifications or the acceptability of Eklutna for transfer
shall constitute grounds for termination of the Agreement.
e. This Agreement may be terminated by Purchasers if, prior
to the Transaction Date, the value of Eklutna or its capability
to produce energy and power has been dimin~, shed by any cause
after the execution of this Agreement. Any notice of termination
shall be provided to APAd in writing.
f. The parties agree that the above-listed action in
SUbsections (a) through (d) are crucial to the sale and transfer
of Eklutna. The Purchasers may elect to terminate this Agreement
if the authorizing legislation does not contain substantially the
same provisions set forth in section lOCal or if APAd fails to
complete its obligations under sections 10 (b) and 10 (d) . APAd
may elect to terminate this Agreement if the Purchasers fail to
complete their obligations under sections 10(c) and 10(d).
11. Post-sale Operations.
Arrangements.
Maintenance and Power Marketing
Eklutna Purchase Agreement August 2, 1989
Page 12
The Purchasers shall establish appropriate
organizational, staffing and administrative arrangements for
Eklutna on or before the Transaction Date.
To assist in implementation of these post-sale
arrangements, APAd shall make available for inspection and use by
the Purcr ... sers all Eklutna records and data and shall consult
with the Purchasers on operation 'procedures, replacement
schedules, staffing plans and training on a continuing basis
starting on the effective date of this Agreement.
These provisions are intended to ensure that the
Purchasers have full opportunity to become fully familiar with
Eklutna and to help identify further specific actions that shall
facilitate the transfer of operation of Eklutna to the
Purchasers.
12. Effective Date.
This Agreement shall become effective as of the
calendar date on which all parties have executed this Agreement.
13. Environmental Management.
The parties intend that the transfer of ownership be
accomplished in a manner that assures continued compliance with
envi~onmental and public safety standards and laws including
appropriate dam safety measures. The parties note that, under
applicable Department of Energy instructions, APAd is required to
prepare a management plan for Eklutna covering environmental and
safety requirements.
APAd shall develop and implement such management plan
prior to the date on which the transaction plans are adopted and
in full consultation with the Purchasers. Failure by the
Purchasers to agree to such a plan shall be grounds for
termination of this Agreement by the Purchasers.
The Purchasers agree to continue the implementation of
such management plan after the Transaction Date, including
periodic updates of the plan as needed.
14. Term.
This Agreement shall remain in effect for such time as
is necessary to complete the sale of Eklutna to the Purchasers
and payments for such sale to the united states Treasury,
provided that this Agreement shall terminate two years after the
effective date if authorization by Congressional legislation has
not been obtained within those two years, and provided further
Eklutna Purchase Agreement August 2, 1989
Page 13
that this Agreement shall terminate two years after the date of
the Congressional authorization if transfer of Eklutna to the
Purchasers has not occurred by that time. The above termination
dates may be extended by mutual agreement of the parties.
The above termination p.rovl.sl.ons are intended to
provide ample ti-~ to obtain Congressional authorization and
com~ lete the transaction. However, it is the intent of the
parties to obtain such authorization as quickly as possible and
complete the sale as quickly thereafter as is reasonably
practicable.
This Agreement shall be terminated if, at any time
prior to the Transaction Date, the Purchasers determine they are
not able to meet the payment terms and so notify APAd in writing.
15. Dispute Resolution.
The parties shall attempt to settle any claim or
controversy arising out of this Agreement in good fai th. The
parties may agree to submit any claim or controversy to a
mutually-acceptable mediator, the cost of which shall be borne
equally by APAd and Purchasers. The use of such a procedure
shall not be construed to affect adversely the rights of either
party under the doctrines of laches, waiver or estoppel. Nothing
in this section shall prevent any party from resorting to
judicial procedures. Any judicial action shall be filed in the
Federal court at Anchorage, Alaska.
16. Notice.
All notices under this Agreement shall be in writing
directed to the Purchasers through the General Managers of the
Purchasers, and to the APAd through the Administrator of the APAd
or its successor.
17. Amendment.
This Agreement may be modified only by mutual agreement
in wri ting between the Purchasers and APAd. Any such
modifications must be consistent with applicable state and
Federal law.
18. Approvals.
Any final sale and transfer of Eklutna shall become
effective only on the obtaining of all required regulatory and
administrative approvals or on receiving satisfactory assurance
that such approvals are forthcoming.
Eklutna Purchase Agreement
19. Assignment.
August 2, 1989
Page 14
This Agreement shall inure to the benefit of, and be
binding upon the respective successors and assigns of the parties
to this Agreement, provided however, that neither this Agreement
nor any interest therein shall be transferred or assigned by any
party to any other. partv. except to the Uni ted states or an
agency thereof, without the written consent of the others whose
written consent shall not be unreasonably withheld.
However, any assignment by Purchasers must be made to a
successor in interest to the Purchasers and such assignment shall
provide that the power from Eklutna be used for the benefit of
customers in the service area of the Purchasers. Any of the
Purchasers may assign its interest to the Alaska Electric
Generation & Transmission Cooperative, Inc. (AEG&T) subject to
any existing agreements, including amendments, between Chugach,
AEG&T and MEA.
20. Force Majeure.
Failure by either APAd or the Purchasers to perform any
of the requirements of this Agreement brought about by causes
beyond their control and wi thout fault or negligence of the
parties shall constitute an excusable delay. In any instance
where excusable delay occurs, the time for completing the work
shalr be extended by negotiation of the parties.
21. Continuing support and Assistance.
The parties 'agree to support and assist each other in
the mutually satisfactory resolution of any unforeseen problems
associated with the transfer. APAd and the Purchasers recognize
that new issues involving the transfer process may arise prior to
and after transfer, or that issues considered resolved may need
further clarification, implementation or other resolution. APAd
and the Purchasers agree that open lines of communication are
desirable after the date of this Agreement and after transfer to
facilitate the transfer process. To that end, APAd and the
Purchasers each agree to exercise their good faith efforts in
implementing the terms of this Agreement expeditiously. APAd
further agrees to use its best efforts to make available an
appropriate Federal entity to implement this section in the event
that APAd as an identifiable Federal entity ceases to exist.
22. Relationship of Purchasers.
The covenants, obligations and liabilities of the
Purchasers are intended to be several and not joint or
collective, and nothing contained herein shall be construed to
Eklutna Purchase Agreement August 2, 1989
Page 15
create an association, joint venture, trust or partnership, or to
impose a trust or partnership covenant, obligation or liability
on or with regard to any of the Purchasers. Each Purchaser shall
be individually responsible for its own covenants, obligations
and liabilities as provided in this Agreement. No Purchaser
shall, by virtue of this Agreement, :be under the control of, or
be deemed to control, the other ~1rchaser. No Purchaser shall be
the agent of, or l£ave a right or power to bind, the other
Purchasers without its express written consent, except as may be
expressly provided in this Agreement, or as may be otherwise
provided by existing law. The provisions of this Section may be
modified by the final approved agreements provided for under
section 10(c) (1).
23. Agreement for Benefit of Parties Only.
As provided in Section 8, above, the parties intend to
protect fully the rights of non-power users of Eklutna land and
water. The parties do not intend by this Agreement to create
rights in, or to grant remedies to, any third party as a
beneficiary of this Agreement, or as a beneficiary of any duty,
covenant, obligation or undertaking established by, or performed
pursuant to, this Agreement.
24. Miscellaneous Provisions.
a. The parties agree, upon request of the other parties, to
make, execute and deliver any and all documents reasonably
required to implement this Agreement.
b. Captions and headings appearing in this Agreement are
included to facilitate reference to the Agreement, and they are
not to be read as a part of this Agreement, nor shall they have
bearing on its interpretation.
c. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREFORE, the parties have caused this
Agreement to be executed the day and year written hereafter.
Eklutna Purchase Agreement
DATED this 2nd day of August, 1989.
CHUGACH ELECTRIC ASSOCIATION, INC.
by:
Lace Walls
President
MATANUSKA ELECTRIC ASSOCIATION, INC.
by:
President
MUNICIPALITY OF ANCHORAGE
D/B/A MUNICIPAL LIGHT AND
by: o POWER
ALASKA POWER ADMINISTRATION
by:
Robert J. Cross
Administrator
August 2, 1989
Page 16
Eklutna Purchase Agreement
Exhibit A
August 2, 1989
Page 1 of 2
Lands, Easements and Rights-of-Way
Exhibit A consists of this narrative (pages 1 and 2 of 2) and the
map prepared by BLM, signed and dated February 3, 1989.
This exhibit describes and displays present land status for the
Eklutna Hydroelectric Project and describes in ge~~ral terms the
conveyances of land and land rights contemplated in the purchase
agreement.
1. BLM -managed lands and military lands used for Eklutna
Project for which BLM is to provide APAd rights-of-way
sufficient for operation, maintenance, repair and
replacement of Eklutna facilities, such rights-of-way to be
assigned by APAd to the Purchasers.
Legend Symbols and Description.
o withdrawals. Refers to approximately 863 acres of
public lands withdrawn for Eklutna at the "Intake
Area," "Power Tunnel," "Eklutna Powerplant" and
"Anchorage Substation." The total acreage is
comprised of tpe following land:
a. Approximately 320 acres withdrawn for the
"Power Tunnel" under Publ ic Land Order 1231
dated September 28, 1955.
b. Approximately 230 acres utilized for the
"Intake Area" and approximately 60 acres for
a portion of "Eklutna Powerplant" as
described by ANCSA 3(e) determination
AA-51183 dated July 30, 1986.
c. Approximately 243 acres utilized
Powerplant II as described by
determination AA-42534 dated
1982.
for "Eklutna
ANCSA 3 (e)
September 1,
d. Approximately 10 acres withdrawn for
"Anchorage Substation" under Secretarial
Order dated April 4, 1952.
State Land-R/W. Refers to rights-of-way across
State-selected lands covering the transmission
line east of "Eklutna Powerplant" to the Knik
River.
Military Land-R/W. Refers to rights-of-way across
military lands used for Eklutna transmission
lines.
Eklutna Purchase Agreement
Exhibit A
August 2, 1989
Page 2 of 2
2.
o Acquired-3(e). Refers to approximately 2.5 acres
of acquired land used for "Reed Substation" as
described by ANCSA 3(e) determination AA-45155
dated July 30, 1985.
ANCSA 17(b) Easements.
Map symbol: LS;J Native Land -17(b) Easement~.
Refers to rights-of-way that are reserved for portions of
the 115kV transmission line, access roads and other Eklutna
facilities located on Native corporation lands, and exist as
easement reservations in the ANCSA conveyances to the Native
corporations pursuant to Section 17 (b) of ANCSA. These
easements will not be altered by the sale of Eklutna and the
Purchasers may use these easements for their intended
purposes.
3. APAd Acquired Land and Easements.
Refers to land and easements acquired by the Bureau of
Reclamation (predecessor of APAd) during construction of
Eklutna and now controlled by APAd. APAd will assign the
land and easements to the Purchasers.
Legend Symbols and Description:
Acquired. Refers to approximately 0.8 acres of
land owned by APAd at Palmer Substation.
Acquired-Easements. Refers to approximately 33
easements across pri vate lands acquired by the
Bureau of Reclamation (predecessor of APAd) and
now held by APAd.
4. Other Easements on Private Land.
Map [Symbol]: Note: Other Easements on Private
Lands To Be Acquired -See Exhibit
A Narrative
Refers to approximately two hundred and fifty (250) parcels
of private land located along the 115kV transmission line,
many of which require title curative action for purposes of
perfecting assignable easement rights or rights-of-way for
the Purchasers. APAd shall be responsible for acquiring
assignable easement rights or rights-of-way across these
lands, for subsequent assignment to Purchasers.
5. Reservoir.
Eklutna Lake as designated on the map is the reservoir
described in the body of the Agreement.
Exhibit B
Eklutna Purchase Agreement
Future Principal and Interest Payments.
(FY 1987 Power Repayment study Data)
FISCAL YEAR
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
TOTAL '89 -02
TOTAL '90 -02
TOTAL '91 -02
TOTAL '92 -02
Transaction
Date
Oct. 1, 1989
(start of FY 1990)
Oct. 1, 1990
(start of FY 1991)
Oct. 1, 1991
(start of FY 1992)
Units: $1000's
PRINCIPAL INTEREST TOTAL
693 346 1,039
1,316 316 1,632
1,383 283 1,666
0 265 265
629 258 887
1,476 231 1,707
0 213 213
1,318 196 1,514
1,548 160 1,708
1,586 121 1,707
1,624 81 1,705
0 61 61
1,472 43 1,515
952 12 964
$13,997 $2,586 $16,583
$13,304 $2,240 $15,544
$11,988 $1,924 $13,912
$10,605 $1,641 $12,246
projected Selling Price
Units: $1000's
Present Value of 1/
Remaining Payments
$9,435
$8,580
$7,631
Selling
Price
$10,435
$ 9,580
$ 8,6;31
1/ Discount Rate of 9.0%; payments assumed at mid year.
1. Purpose.
Eklutna Purchase Agreement
August 2, 1989
Amendment No. 1
This Amendment No. 1 reflects new information with
respect to lands, extends the term of the August 2, 1989, Eklutna
Purchase Agreement ("Agreement"), and states the selling price if
the Transaction Date is october 1, 1992, or October 1, 1993.
2. Amendments to section 10. Interim Activities.
section 10a.(4) of the Agreement is amended to read as
follows:
"10.a. (4) Authorize the state of Alaska (state) to
select and direct the Secretary of the Interior to convey
to the state certain Eklutna lands identified in Exhibit
A, including approximately 853 acres of improved lands
housing the powerhouse, intake structure, dam facilities,
and a portion of the power tunnel under the provision of
section 6(a) of the Alaska Statehood Act of July 7, 1958,
Public Law 85-508, and the North Anchorage Land Agreement
of January 31, 1983, such conveyances to be subject to
the rights-of-way being provided to Purchasers under
Section 10(a) (3) above."
3. Amendment to section 5. Price and Payment Terms.
Section 5 (a) of the Agreement is amended to read as
follows:
"a. If the Transaction Date is October 1, 1991, the selling
price shall be $8,613,000.
If the Transaction Date is October 1, 1992, the selling
price shall be $9,022,000.
If the Transaction Date is October 1, 1993, the selling
price shall be $8,818,000.
If the Transaction Date is other than one of the three
above dates, the selling price will be calculated by APAd as
the discounted present value as of the Transaction Date of all
remaining principal and interest payments after the
Transaction Date according to the payment schedule shown on
Exhibit B of this agreement plus $1,000,000 ($1 million).
Exhibit B payments for the first year will be prorated to
reflect the portion of the year remaining after the
Transaction Date. Subsequent Exhibit B payments will be
assumed at mid-year (April).
Eklutna Purchase Agreement
Amendment No. 1
August 2, 1989
Page 2
The price determination is to be included in the
transition plan required under section 9 below."
4. New Exhibit B.
A new Exhibit B dated June 25, 1991, reflecting the above
amendment to section 5, Price and Payment Terms, is incorporated in
the Agreement in place of the original Exhibit B.
5. Extended Term.
The first paragraph of section 14 of the Agreement is
amended to read as follows:
"This Agreement shall remain in effect for such time as is
necessary to complete the sale of Eklutna to the Purchasers
and payments for such sale to the United states Treasury,
provided that this Agreement shall terminate four years after
the effective date if authorization by Congressional
legislation has not been obtained within those four years, and
provided further that this Agreement shall terminate two years
after the date of the Congressional authorization if transfer
of Eklutna to the Purchasers has not occurred by that time.
The above termination dates may be extended by mutual
agreement of the parties."
6. Effective Date
This Amendment No. 1 to the Agreement shall become
effective as of the calendar date on which all parties have
executed this Amendment.
Eklutna Purchase Aqreement
Amendment No. 1
DATED this 3c3*\ day of ~
CHUGACH ELECTRIC ASSOCIATION, INC.
By:
MATANUSKA ELECTRIC ASSOCIATION, INC.
By:
MUNICIPALITY OF ANCHORAGE
D/B/A MUNICIPAL LIGHT AND POWER
. ..---,---
By: :"'(\.",
Tom Fink
Mayor
ALASKA POWER ADMINISTRATION
By: ktt/g;l02 @~
Robert J. Cross
Administrator
Auqust 2, 1989
Paqe 3
, 1991.
Date r ;.
Date
)
Date
~~/7Z; Date I
APPENDIXB
The Fish and Wildlife Agreement
August 7, 1991
Fish and Wildlife Agreement
Snettisham and Eklutna Projects
Municipality of Anchorage
d/b/a Anchorage Municipal Light and Power
Chugach Electric Association, Inc.
Matanuska Electric Association, Inc.
Alaska Energy Authority
United States Department of Commerce
National Marine Fisheries Service
United States Department of Interior
Fish and Wildlife Service
State of Alaska
AGREEMENT
AGREEMENT BETWEEN
THE MUNICIPALITY OF ANCHORAGE,
DBA ANCHORAGE MUNICIPAL LIGHT AND POWER,
CHUGACH ELECTRIC ASSOCIATION, INC.,
MATANUSKA ELECTRIC ASSOCIATION, INC.,
U.S. FISH AND WILDLIFE SERVICE,
NATIONAL MARINE FISHERIES SERVICE,
ALASKA ENERGY AUTHORITY,
AND THE
STATE OF ALASKA,
RELATIVE TO THE EKLUTNA AND SNETTISHAM
HYDROELECTRIC PROJECTS
This Agreement is entered into on ~u~t r \'l q l ,
between The Municipality of Anchorage, dba~chora~e Municipal
Light and Power, Chugach Electric Association, Inc., and Matanuska
Electric Association, Inc. (hereinafter collectively "Eklutna
Purchasers"), the United states Fish and wildlife Service
(hereinafter "USFWS"), the National Marine Fisheries Service
(hereinafter "NMFS"), the Alaska Energy Authority (hereinafter
"AEA") and the State of Alaska (hereinafter "the State"), regarding
protection, mitigation of damages to, and enhancement of fish and
wildlife (including related spawning grounds and habitat) affected
by hydroelectric development of the Eklutna and Snettisham
Proj ects. Wi th respect to the implementation provisions called for
in this Agreement, the Eklutna Purchasers will be responsible for
the consultation, study and implementation provisions applicable
to the Eklutna Project and AEA shall be responsible for the
consultation, study and implementation provisions applicable to the
Snettisham Project.
WITNESSETH THAT:
WHEREAS, subj ect to the approval of Congress, the Ekl utna
and snettisham Projects will be transferred from the Federal Alaska
Power Administration to the Eklutna Purchasers and AEA
(collectively, "the Purchasers") without the necessity of their
having to obtain a Federal Energy Regulatory Commission (FERC)
License for project operation; and
WHEREAS, the Eklutna and snettisham hydroelectric
developments may have resulted in a yet to be quantified impact to
fish and wildlife resources; and
WHEREAS, concerns have been expressed that without FERC
licensing, there is no opportunity to determine the extent of that
fish and wildlife impact, develop measures to protect, mitigate
AGREEMENT - 1
damages to, and enhance fish and wildlife (including related
spawning grounds and habitat), and implement fish and wildlife
measures found to be in the public interest.
NOW THEREFORE, the parties agree as follows:
1. FERC Licensinq.
NMFS, USFWS and the state agree that the following
mechanism to develop and implement measures to protect, mitigate
damages to, and enhance fish and wildlife (including related
spawning grounds and habitat) obviate the need for the Eklutna
Purchasers and AEA to obtain FERC licenses.
2. study Plan.
The Purchasers agree to fund studies to examine, and
quantify if possible, the impacts to fish and wildlife from the
Eklutna and Snettisham Projects. The studies will also examine and
develop proposals for the protection, mitigation, and enhancement
of fish and wildlife affected by such hydroelectric development.
This examination shall consider the impact of fish and wildlife
measures on electric rate payers, municipal water utilities,
recreational users and adjacent land use, as well as available
means to mitigate these impacts.
3. carryinq Out The study Plan.
study Plans shall be developed by the Purchasers in
consultation with the USFWS, NMFS, the Alaska Department of Fish
and Game, the Alaska Department of Environmental Conservation and
the Alaska Department of Natural Resources (the "state Resource
Management Agencies"), or their successors to aid in the
formulation of the Program called for in this Agreement. Prior to
implementation, the parties to this Agreement shall review the
plans and concur with their scope of work.
The Purchasers shall conduct the studies and prepare the
evaluations called for in the plans, seeking input from the USFWS,
NMFS, the state Resource Management Agencies and other interested
parties as the studies progress. The USFWS, NMFS, and state
Resource Management Agencies shall have an opportunity to comment
on draft study reports, and their comments and a response to their
comments shall be included in the final study reports. All study
plans, data, reports and comments will be made available to the
parties and, upon request, to the public.
AGREEMENT - 2
4. Review of Findings.
After final study reports are prepared, the Purchasers
shall prepare a draft Summary of study Results and prepare a draft
Fish and wildlife Program. The draft Fish and wildlife Program
shall consist of the measures recommended by the Purchasers for the
protection, mitigation of damages to, and enhancement of fish and
wildlife (including related spawning grounds and habitat) and set
a tentative schedule for their implementation. The Purchasers
shall provide copies of the draft Summary and draft Fish and
wildlife Program to the USFWS, NMFS, and State Resource Management
Agencies for comments or recommendations. If USFWS, NMFS, or the
State Resource Management Agencies' comments or recommendations
differ from those of the Purchasers, the Purchasers will attempt
to resolve such differences giving due weight to the
recommendations, expertise, and statutory responsibilities of
USFWS, NMFS, and the State Resource Management Agencies.
Once comments and recommendations have been received, the
Purchasers shall hold at least one public meeting each in Anchorage
and the Matanuska Valley (with respect to the Eklutna Project) and
in Juneau (with respect to the snettisham Project) to receive
public comment on the draft Summary, the draft Fish and wildlife
Program, and the comments and recommendations of the USFWS, NMFS,
and the State Resource Management Agencies. At least thirty days
prior to the proposed public meetings, copies of the draft Fish and
wildlife Program, reports and recommendations will be distributed
to representative public libraries in the Anchorage and Matanuska
Valley areas (in the case of the Eklutna Project) and in the Juneau
area (in the case of the Snettisham Project). Public notice will
also be posted in at least two newspapers serving the Anchorage and
Matanuska valley areas (for Eklutna) and the Juneau area (for
Snettisham). The public notice shall specify meeting places, times
and dates; where studies, reports and recommendations may be
obtained for review; and where written comments may be sent. The
Purchasers will provide copies of the draft Summary, draft Fish and
Wildlife Program, and the comments and recommendations of the
USFWS, NMFS, and state to interested members of the public at no
charge.
5. Public Interest Determination.
The Purchasers shall compile all comments and testimony
received; prepare a summary and analysis of them: develop a
Proposed Final Fish and wildlife Program to protect, mitigate, and
enhance fish and wildlife resources; and prepare an explanatory
statement describing the basis for its Proposed Final Fish and
Wildlife Program. All comments, testimony, summary, and analysis
materials and the Proposed Final Fish and wildlife Program shall
be provided to the parties to this Agreement and to the Governor
AGREEMENT - 3
of Alaska. The parties shall have 60 days to submit written
comments on the proposed Fish and wildlife Program, and any
alternative recommendations for the protection, mitigation, and
enhancement of fish and wildlife resources, to the Governor. The
Purchasers shall have 30 days to submit written reply comments to
the Governor.
The Governor shall review the Proposed Final Fish and
wildlife Program, the comments, testimony, summary and analysis
materials, and any alternative recommendations for the protection,
mitigation, and enhancement of fish and wildlife resources. The
Governor shall attempt to reconcile any differences between the
parties, giving due weight to the recommendations, expertise, and
statutory responsibilities of USFWS, NMFS, the state Resource
Management Agencies and the Purchasers. In order to ensure that
Eklutna and snettisham are best adapted for power generation and
other beneficial public uses, the Governor shall give equal
consideration to the purposes of efficient and economical power
production, energy conservation, the protection, mitigation of
damage to, and enhancement of fish and wildlife (including related
spawning grounds and habitat), the protection of recreation
opportunities, municipal water supplies, the preservation of other
aspects of environmental quality, other beneficial public uses, and
requirements of state law. Based on his/her review and
consideration, the Governor shall establish a final Fish and
Wildlife program that adequately and equitably protects, mitigates
damage to, and enhances fish and wildlife resources (including
affected spawning grounds and habitat) affected by the Eklutna
project and the Snettisham project.
6. Implementation.
The Purchasers shall implement the Fish and Wildlife
Program established by the Governor, subject to their right to
jUdicial review as provided in section 9 hereof. However, the
Purchasers will implement all provisions of the Program that do not
require major capital expenditures pending judicial review, unless
otherwise agreed among the Parties or unless a stay is granted by
the Court.
7. Schedule.
The consultation process leading to the Programs shall
be initiated no later than 25 years after the Transaction Date
specified in the respective Eklutna and Snettisham Agreements. The
study Plans shall include a schedule for the consultation, comment,
and decision making, called for in this Agreement, which shall be
adopted by the parties in consultation with the Governor. The
schedule shall call for implementation of all provisions of the
Fish and Wildlife Program by the Eklutna Purchasers to begin no
AGREEMENT - 4
later than 30 years after the Transaction Date, and to be completed
no later than 35 years after the Transaction Date. The schedule
shall call for implementation of all provisions of the Fish and
Wildlife Program by AEA (Snettisham) to begin no later than 35
years after the Transaction Date, and to be completed no later than
40 years after the Transaction Date. The schedules shall call for
the issuance of the Fish and wildlife Program by the Governor at
least three years prior to the commencement of the period for
implementation.
The Purchasers shall repeat the process called for in
Sections 2 through 6 of this Agreement on a recurring basis every
35 years, beginning within 25 years of the time implementation of
the Fish and wildlife Program has been completed for the prior
consultation process. In addition, prior to undertaking any major
structural or operational modification substantially affecting
water usage or fish and wildlife at the projects, the Purchasers
shall follow the process called for in Sections 2 through 6 of this
Agreement. compliance with the terms of the Agreement for Public
water Supply and Energy Generation from Eklutna Lake, Alaska,
entered into between the Alaska Power Administration and the
Municipality of Anchorage on February 17, 1984, as amended by a
Supplemental Agreement dated August 2, 1988, shall not be construed
to be a major structural or operational modification. However,. the
Eklutna Purchasers will discuss maj or structural or operational
changes from current operations with NMFS and USFWS and will
consider any recommendations they have for fisheries mitigation
related to such changes.
8. Dam Construction, Modification, Removal or Abandonment.
The Purchasers agree to comply with 11 AAC 93.151-.201
with respect to safety inspections, new construction or
modifications to existing structures,removal and/or abandonment
of all or part of the project.
9. Enforcement of Fish and wildlife Program and Agreement.
The provisions of this Agreement, including the decisions
of the Governor and the provisions of the Fish and wildlife
Program, shall be reviewable and enforceable in the United states
District Court for the District of Alaska and the Court may order
specific performance thereof.
At least thirty days prior to seeking review or
enforcement in the United States District Court for the District
of Alaska, a party shall send written notice of its concerns to all
parties and hold a meeting to attempt informal resolution of its
concerns. During the period of informal resolution, any statute
of limitations shall toll.
AGREEMENT - 5
10. Authority of Parties.
Each party to this Agreement warrants that it has the
legal authority to sign this Agreement and be fully bound by its
terms, subject to any administrative or regulatory approval, if
required. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns.
11. Term of Agreement.
This Agreement shall be effective, as to each project,
upon the Transaction Date specified in the respective Purchase
Agreement and shall remain in full force and effect so long as that
project remains in operation. The Agreement shall terminate, as
to either project, if that Project becomes subject to the
provisions of the Federal Power Act.
12. severability.
If any section, paragraph, clause or prov1s10n of this
Agreement or any agreement referred to in this Agreement shall be
finally adjudicated by a court of competent jurisdiction or
administrative agency to be invalid or unenforceable as to either
project, the Agreement shall nonetheless remain in full force and
effect as to the other project.
13. cooperation With Studies.
The Parties agree that they will cooperate with one
another in conducting studies pertaining to fish and wildlife other
than those called for in this Agreement by:
a. Notifying and consulting with the other parties
before beginning a new fish and wildlife study,
b. providing each other with data on flows,
populations, and other data already in
possession,
fish
their
c. Having the option of funding fish and wildlife
studies before the process called for in Sections
2 and 3 of this Agreement would otherwise require,
whether such studies are conducted by the parties
themselves, or by third parties.
AGREEMENT - 6
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the day and year first above
written.
By:
MUNICIPALITY OF ANCHORAGE, DBA ANCHORAGE MUNICIPAL LIGHT & POWER
~ tV
Tom Fink, Mayor Date
CHUGACH ELECTRIC ASSOCIATION, INC.
By: ~,~
Thomas D. Humphrey, President Date J
MATANUSKA ELECTRIC ASSOCIATION, INC.
Date
ALAS~)iii\:~
By: V~
Charles Bussell, Executive Director Date
U.S. DEPARTMENT OF COMMERCE, NATIONAL MARINE FISHERIES SERVICE
~Ah By: __ ~~ __________________________________ _
A. Knauss, Under Secretary of Commerce for Oceans Date
JUL ') '001
L .... " ... 1
Atmopshere
By:
.OF INTERIOR, FIS/)D WILDLIFE SERVICE
~"",~.-..c. ~
S. cott Sewell, Principal Deputy Assistan I 7 Date ---r dl Ish and Wildlife and Parks
STATE OF ALASKA
Date
AGREEMENT - 7
APPENDIXC
AP A Information and Legislative Authorities
This Appendix Contains:
• Principal Legislation Governing Alaska Power Administration
• Organization and Function Charts
• Project Maps and Sketches
• Sales and Revenues, 1987-1993
• FY 1990 Audit Report and Financial Statements
Principal Legislation Governing AP A
Alaska Power Administration
December 1985
Principal Legislation Governing Alaska Power Administration
1. Eklutna Project Act of 1950 as amended.
a. Eklutna Project Act of July 31,1950 (64 Stat. 382).
b. Amending Act of August 13,1953 (67 Stat. 574).
o Raised cost limit to $33 million from initial
estimate of $20.4 million.
o Made completion contingent upon obtaining an
agreement with Anchorage to convey old Eklutna
power project to Federal Government.
o Eliminated a $200,000 contingency fund established
in the initial authorization.
c. Section 4 of Public Law 98-552, 98 Stat. 2824 (1984).
Authorizing Anchorage to use a portion of the Eklutna
water supply for M & I purposes, subject to February,
1984 agreement between Anchorage and Alaska Power
Administration.
(See also Act of September 26, 1968 (82 Stat. 875) concerning
Eklutna earthquake rehabilitation costs of repairing damages
were made non-reimbursable.)
2. Snettisham Project Authorization, 1962 Flood Control Act, as
amended.
a. Section 204 of 1962 Flood Control Act, (76 Stat. 1194)
authorizing Crater-Long Lakes Division of Snettisham
Project.
b. Section 201 of 1976 Water Resources Development Act,
Public Law 94-587, provides for:
o reimbursable costs to exclude costs of replacing
and relocating the original Salisbury Ridge
section of the transmission line.
o amending repayment requirement to permint interest
deferrals in an initial 10-year period and
requiring repayment of all costs including the
deferred interest in a subsequent 50-year period.
3. Department of Energy Organization Act of August, 1977, (91
Stat. 565). Section 302 of the A~t transferred all the
functions of the Alaska Power Administration to Energy ana
requires:
o preserving APA as a separate and distinct entity within
DOE, headed by an Administrator with principal offices
in Alaska.
o that the DOE Secretary is to exercise his functions with
respect to APA acting by and through the APA
Administrator.
Notes: The DOE Act was the first authorizing legislation for
APA. Between 1967 and 1977, APA operated under authorities
delegated by the Secretary of the Interior (Secretarial Order
2900, June, 1967). A copy of that order is attached. It
references other legislative authorities delegated to APA: a 1955
Alaska Investigations Act, Sections 5 and 8 of the 1944 Flood
Control Act which concerns power marketing and irrigation
facilities at Corps of Engineers projects. These other
authorizations do not have bearing on operations, maintenance,
and marketing for the Eklutna and Snettisham projects.
Eklutna Project Act and Amendments
EXLUTNA :PROn:CT
AD ad to authorh:. coD,t'nIc:HoD or tb~ 1:klDtaa proJ.ct .Jc1~l~trle J;eDtratla: -pInt
and tr:lD,mlnioD fIleJlltln In eollllec:tlOD therewith. aDd lo~ vtb~r purp",~. (Act
.1ats" 31. 1930. ch. 510, '" Stat. 882) .
SEC. 1. [Secretary authorized to construct Eklntna project-Interest at
rate of 2~ per centum-Disposition of minerals discovered-Reservation
of waters.]-That in order to encourage and promote the economic
development of the Territory of Alaska, to foster the establishment
of essential industrie$ in said Territory, and to further the self-
sufficiencl of national defense installations located therein, the Sec-
retary 0 the Interior (hereinafter referred to as the "Secretnl1")
is authorizecl to construct, operate, and maintain the Eklutna proJect
in the vicinity of Anchorage, Alaska, consisting of a low dam at Lake
Eklutna, a dIversion tunnel and penstock, a power plant with an in-
stalled capacity of thirtr thousand kilO\\"atts, transmission lines to
Anchorage and other load centers, and related works (except recrea-
tional facilities) substantially in accordance with the plans nnd rec-
ommendations in the report adopted by the Secretary of the Interior
on January 18, 1949, on file with the Committee on Public Lamls of
the House of Representatives and the Committee on Interior and
Insular Affairs of the Senate at nn estimated cost of $20,305,400.
The capital investment properly allocable to ench unit of said proj-
ect, as determined by the Federal Power Commission shall be amor-
tized over a reasonable period of years, and interest shall be chargea
c,J.l the unamortized balance of the lull capital investment in said
project at a ·rate of 2* p~r centum per annwn and shall be covered
moo the TreasuI7 of the United States to the credit of miscellaneous
receipts. All mmerals discovered in the course of constructing the
Eklutna project are hereby reserved to the United Stntes nnd may
be sold or otherwise disposed of in such manner as may be prescribed
by the Secretary, if he finds and so reports to the Congress m writing
that the onl1 econom!cally; practicable method of. recovering tlIe ore
so reserved IS to prOVide for the salvage of any mmerals that may be
contained in the excavated materials removed from the tunnel duriDp
the normal process of construction. The net proceeds from any SUCh
sale or other disposition shall be covered into the Trensury of the
United States to the credit of miscellaneous receiJ>ts. TIle waters
of Eklutna Lake and its tributaries which nre required for the oper-
ation of the Eklutna J>roject Pre hereby reserved for that purpose.
SEC. 2. [Disposition of power Ileveloped-:Revennes to miscellaneous re-
ceipts of the Treasmy-Continuhlg-fand.l-Electric po\ver and energy
generated at the Eklutna project, except that portion required in the
operation of such project, shall be disposed of in such manner
as to enconrnge the mo.st widespread use tllereof at the lowest possible
rates to consumers consistent with sound business principles anel the
maintennnce of ndeql1ate electric service, the rate schedules to become
effective upon confirmation an·} approval by the Federal Power
6
EKLUTNA PRO.JECT
Commission. Such rate schedules shall be drawn having regard to tho
recovery (upon the basis of the aJ?J>lication of such rate schedules
to the capacity of the electric facllities of the project) of the cost
of producing and transmitting the power nnd energy mcluding the
amortization of the capital investment as provided in section 1 hereof.
Preference in the sale of such power and -energy shall be given to
all public bodies and cooperatives on the same terms, and to Federal
ngencies. It shall be a condition of every contract made under this
Act for the sale of power and energy -that the purchaser, if it be a
purchaser for resale, will deliver power and energy to Federal agencies
or facilities thereof within its transmission area at a reasonable charge
for the use of its transmission facilities. All receipts from the trans-
mission and sale of electric power and energy generated nt said proj-
ect s11a11 be covered into ilie Treasury of the United States to the
credit of miscellaneous receipts, save and except that the Tre:lSUry
shall set up and maintain from the receipts for said project a con-
tinuing fund of $200,000 to the creclit of the Secretary and subject
to expenditure by him, to defray emergency expenses and to insure
continuous operation.-.
SEC. 8. [Agreements and conhacts.)-The Secretary is nuthorized to
perform any nnd all acts and enter into such agreements ns may be
appropriate for the purJ?ose of carrying the provisions of this Act
into full force and effec~ lDcluding the ac<}.uisihon of rights and prop-
erty, and the Secretary, when an approprIation shall ha.te been made
for the commencement of construction or operation and maintenance
of said I?roject, may, in connection with the construction or operation
and mamtenance of sucb }>roject, enter into contracts for miscel-
laneous services for materials and supplies, as well as for constnlc-
tion, which may cover such periods of bme as the Secretary may con-
sider necessary but in ,vhich. the liability of the United States shall be
contingent. upon appropriations being made therefor.
SEC. 4. [Report to Congress on transfer of project to public owner-
sldp.)-Upon completion of amortization of the capital investment
allocated to power, the Secretary is authorized nnd directed to report
to the Congress upon the feasibility and desirability of transferring
the Eklutna project to public o\vnershiE. and control in Alaska.
SEC. 5. [Delegation of authority.)-Wherever in this Act authority
is vested in, or functions aTe to be performed by, the Secretary, such
authority may be exercised, and functions performed, through such
agencies of the Department of the Interior as he may desirrnate.
SEC. 6. [$20,365,400 authorized to be appropriated.]-There aro nu-
thorized to be appropriated the sum of $20,365,400 for the construc-
tion of t1le Eklutna projec~ and, in addition, such sums as may be
necessary for the operation and maintenance of such project.
Legislative history.-H. R. 940, Public Law &28 In the 81st Congress. House
Report 856; SeDate Report 1754.
7
EKLUTNA PROJECT, ALASKA
AD act to .m~nl! tb~ act Clf 1017 8t, 111:50 (64 Stat. 8S!!), r~laHD: to appropriations for
.construction b7 tbe S~r?tar7 of tb~ Interior of the EklutDll proJ~t. Alaska. (Act
. Au~.t 13. 1953. ch. 430. 67 Stat. Gi4) .
SEC. 1. [Watna project, Alaska.]-That the Act of July 31, 1950
(64 Stat. 382), be amended as follows:
(1) By amending the first sentence of section 1 to read as follows:
~'That in order to encourage and promote the economic development
of the Territory of Alaska, to foster the establishment of essential
industries in said Territory, and to further the self-sufficiency of
national defense installations located therein, the Secretary of the
Interior (hereinafter referred to as the 'Secretary') is nuthorized to
construct, operate, and maintain the Eklutna project in the vicinity
of Anchorage, Alaska, consisting of a low dam at Lake Eklutna, n
diversion tunnel and penstock, a power plant with an installed
cn~acity of thirty thousand kilowatts, transmission lines to Anchorage
nnd other load centers, and related works (e:s:cept recreational facili-
ties) substantially in accordance with the plans and recommendations
in the report adopted by the Secretary of the Interior on January 18,
1949, on file with the Committee on Public Lands of the House of
Representatives and the Committee on Interior and Insular AiIairs
of the Senate at an estimated cost not to exceed $33,000,000."
(2) [Continuation of construction.]-By adding a new para~aph to
section 1, as follows: "The continuation of construction of the Eklutn8
project beyond December 1, 1953, is hereby made contingent upon
there being 0. findin a by the Secretary by that date that Jie and the
proper officials of d~e city of Anchornge, Alaska, have approved n
form of contract whereby the city would agree to convey to the United
States such hydroelectric and other properties, includin$ water rights,
as the Secretary has detennined should be acquired Dy the United
States in connection with the Eklutna project, and whereby in con-
sideration therefor the United States would a~ee to deliver to said
city electric energy upon terms which 'in the Secretary's judgment
would accord said city just compensation for the properties agreed to
be conveyed."
(3) By amending the last sentence of section 2 to read as follows:
"All receipts from the transmission and sale of electric power and
ener~_generated at said project shall be covered into the Treasury
of the United States to the credit of miscellaneou~ receipts."
(4)[Appropriation.]-Bl' amending section 6 t.) read as follows:
"There nre authorized to be appropriated the sum of $33,000,000 for
the construction of the Eklutna project, and, in addition, such sums
as may be necessary for the operation and maintenance of such
project."
Legislative hhtoJy.-S. 2097, Public Law 260 in the sad Congress, 1st Session.
Senate Report 383; House Report 835.
EKLUTNA PROJECT, ALASKA-REHABILITATION
PUBLIC LAW 90-523; 82 STAT. 875
(s. 124)
An Ac:t to provide for the rehabilitation of the Eklutna proJec:t, Alaska, and
for other purpoles.
Be it.. enacted bV the Senate and House of Representatives of the United
States of America in Congress assembled, That:
The total sums expended by the Secretary of the Interior in re-
habilitation of the Eklutna project, Alaska, from damage caused by
the earthquake of March 27, 1964, Jess the difference between the
actual cost of the new dam and the estimated cost of rehabilitating
the old dam, shall be nonreimbursable and nonreturnable, and not
snbject to the provisions of the second sentence of section 1 of the
Act of July 31, 1950, as amended: Provided, however, That the non-
reimbursable and nonreturnable expenditures sha)) not exceed
$2,805/'{7.
Approved September 26, 1968.
16. 10 U.S.C.A. I J7S3(b) (4), (el.
EKLUTNA PROJECT -ALASKA PUBLIC WATER SUPPLY
Section 4, Public Law 98-552, October 39, 1984
98 Stat 2824
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, that the
first section of the Act entitled "An Act to authorize
construction of the Eklutna project, hydroelectric generating
plant and transmission facilities in connection therewith, and
for other purposes", approved July 31, 1950 (64 Stat. 382; 48
U.S.C. 312), is amended in the last sentence by striking out
"purpose," and inserting in lieu thereof "purpose: Provided,
that a portion of the waters so reserved may be diverted from
Eklutna Lake for public water supply purposes, if compensation
for reduced electric energy production due to such diversions is
made as required by the February 1984, agreement between the
Municipality of Anchorage and the Alaska Power Administration".
.Alul;a.
1I,e] roelectrle
p" .... er
dr,.elopmtDL
16 Stat. 119-1.
Sale or power
ADd tDero.
COllttaet
authorltr.
Snettisham Project Authorization
Section 204 of the Flood Control Act of 1962
SE~. 204. (n) For tile purpose of de.eloping hydro-
elect.rJc power and to enCO\lrllge nnd promote the eco-
nomic development of nnd to fostl"r the estnblishment of
essentinl industries in the State of Alaskn, and for other
purposes, the Secretary of the Army, acting through the
Chief of Engineei';, is authorized to construct and the
Secretary of the Interior is nuthorized to operate and
ma.intain the Crater-Long Lakes division of the f:;nc~tti
sham project near J\meau, .A.1nskn. The '\'\or1.-s of the din-
sion shall consist of pressure tunnels, surge tanks, pen-
stocks, n powerplant, transmission bcilities, and l·ehlted
facilities,nU nt II.n estimated cost of $U,634,OOO.
(b) Electric power nnd energy generated at the divi-
sion except that portion required in the operntion of the
dhision, shall be disposl'd of by the Secretary of the In-
terior in such n manner as to encourage the most wide-
spread use thereof at the lo' .... est possIble rntes to con-
sumers consistent with sound busmess principles. Rate
schedules shall be drn wn ha.ing regard to the reCOl'"erJ of
the costs of producing nnd trnnsmitting the p()\t'"er nnd
energy, including the nmortizntion of the capItal ilwest-
ment o'·er II. reasonable period of years, with interest
(\t the ayernge rate (which rn~e shall be .. ~rtified b~· the
SecretarY of the Treasury) paId by the Umted States on
its mar~etable lon;-term securities outstnnding on the
date of this Act nna adjusted to the nenrest one-eighth of
1 per centum. In the sale of such power nnd energ.·~ pref~
erene& shall be given to Federal a$encies, public·oodies,
and cooperatives. It shallbe a condition of every contract
mnde under this Act for the sa Ie of power and energy that
the purchaser, if it be 0. purchaser for resale, ,"11 ae1i.er
pc?wer nnd energy to Federal ngencies or fncilities thereof
within its transmission area at II. reasonnble charlte for the
use of its tronsmission facilities. All receipts Irom tll.e
transmission and sale of electric power and energy gen-
ernted nt said division shn11 be cOl'"erecl into the Tl·easury
of the United Stntes to the credit of miscellaneous
receipts.
(C) TJle approprinte Secretnry is authorized to per-
form 1I.n'" and all ncts and enter mto such agreements as
mav be appropria.te for the purpose of cn~ryinO' the pro-
visions of this Act into full force and effect, mci':lding the
acquisition of rights nnd pr~pe:ty, and the Secl·~h\l:y of
the Armv, ~llen an a pproprlahon shall have been made
for the commencement of construction or the Secretary
of the Interior in the ease of operntion and mnintenauce
of said (livjsion. mny, in connection \vith the construction
or operation and maintenance of SUell division, enter into
contrncts for miscelhlneolls services for materin):; and
supplies, as well as for constructionz whic11 may cover
such periods of time us the o.ppropI·Jate Secretary mny
consider necesary but in which the liabilitv of the united
States shall be CUll' i .. ~ent upon npproprilltiollS being
made therefor.
9
Section 201, Water Resources Development Act of 1976
Public Law 94-587
Section 201. (a) Section 204 (b) of the Act of Octo-
ber 23, 1962 (76 Stat. 1173, 1774), is am~nded by striking
the period at the end of the second sentence and insert the
following: ": Provided, That the Secretary of the Interior,
in determining reimbursable costs, shall not include the
costs of replacing and relocating the original Salisbury
Ridge section of the l38-kilovolt transmission line: Provided
further, that the Secretary of the Army, acting through the
Chief of Engineers, shall relocate such transmission
lines, at an estimated cost of $5,641,000.".
{b} The Crater-Long Lakes divi ·.on of the Snettisham
Project near Juneau, Alaska, as authu:::·ized by section 204 of
the Flood Control Act of 1962, is modified with respect to
the reimbursement payments to the united States on such
project in order to provide (1) that the repayment period
shall be sixty years, (2) that the first annual payment
shall be 0.1 per centum of the total principal amount to be
repaid, (3) thereafter annual payments shall be increased by
0.1 per centum of such total each year until the tenth year
at which time the payment shall be 1 per centum of such
total, and (4) subsequent annual payments for the remaining
fifty years o~ the sixty-year repayment period shall be one-
fiftieth of the balance remaining after the tenth annual
payment (including interest over such sixty-year period).
91 STAT. 578 PUBLIC LAW 9S-91-AUC. 4. 1917
by law in the oflico:rs amI (,oJlll>0nent~ of cith('r sudl A(llllinistrntion .
• ·edcrlll r"wrr (b) Exc('.pl. as provided in title IV, there are hereby trnllsferrc(l
C.(lmmi!'sioll, to, anel "csted in, the Secretary tho function of the l~e(leml Power
Commission, or of thb members, ofiiccrs, or cornponents the'rcof. 'I'llc
Secretary lIlay exercise any power described in section 402(a) (2) to
tlle cxtent the Secretary determines such power to be necessary to thc
exercise of nny function ,vi thin his jurisdiction l>ursuant to. tlte pre-
ceding sentence.
42 USC 7152.
16 USC 825"
16 USC 832.
16 USC 838 note,
68 Stat, 255.
77 Stat. 475.
Feder .. ) IrOl:.es,
43 lise )331
note.
30 USC 131 note,
351 note.
"RANsFt:r.s rRO)I ,.JlE Dt;\'AR'D[EST OF TJIE INTEr-lOr.
SEC. 302. (a) (1) There are hereby transferred to, and "csted in, the
Secretary all functions of the Secretary of the Interior under section 5
of the 1<'Jood Control Act of 1944, and all other functions of the Secre-
tary of the Interior, and offict'rs and cornponents of tbe Department of
the Interior, with respect t~
t
A) the Southeastern Power Administration;
B) the Southwestern Power Administration;
C the Alaska Power Administration; D~ the Bonneville Power Administration including but not
)imitt-d to the authority contained in the Bonneville Project Act
of 1931 and the Fcderal Columbia niver Transmission Systcm
Act;
(E) the power marketing functions of the Bureau of Reclama-
tion, induding the construction, operation, and maintenance of
trnnsmi$ion lines and attendant facilities; and
(F) the transmission and disposition of the electric power and
energy gt'nerated at Falcon Darn and Amista(l Dam, international
stOl1l:!C reservoir projects on the Uio Grande, pursuant to the Act
of June 18, 1954, as amended by the Act of December 23, 1963.
(2) The Southeastern PQ\ver A(lministration, the Southwestern
)'ow('r Ac1ministration, the Bonneville Power Administration, and the
Ala .... ka. Power Administration shall be pres('n"c(l as separate and (lis-
tinct organizational entities within the DeJ>artment. Each such entity
shall be hea(led by an A(lministrator appomted by tllC Secretary. The
functions tl1lnsferred to the Secretary m para,!!raphs (1) (A), (1) (B),
(l)(e), and (l)(D) shalllJe. ('xt'rdsed by the &cretnry, acting by
and throug11 sudl Administratol"S. Each 5nr11 .Admini!'itrator shall
maiutain his prindpal office at a plarf' locatt"<1 in tllC' l"C'g!On St'l"\"e(l by
his re..sprdh'e Feclernl pow('rmar).etillgentit\',
(3) '}'lI(' functions transfer ..... (l in l)arn~r;J.!lls (1) (E) anc1 (1) (F)
of this subsE'ction shall be f'xer'C·isec:1 by tile Sec ..... tary, acting I,," and
through a s('pamt(' amI distin('t ...\.(lministration within the Depart-
ment which shall be h~(ll"d by an Administrator appointe(l by the
Sccr('tan". ThE' A(lministrntor shall mablisb and shall Illuintnin
such r('iional offi('('S as nect'SSnI'V to facilitnt(' the Performance of
such functions. Neitller the tr'mlsfer of functions ('fTecte(l by IJara-
g.'aph (1) (E) of this subsection nor any c1mnges in cost allocation or
pl'oject c\'nluation standanls shall be det'mcd to authorizc the reallo-
cation of joint costs of multipurpose fnciliti('s therdofore nllorated
unl('5.." nnd to the extent tlmt such changC\ is ht-rcafter approved by
ColIg.·e$.
(b) Thel'('. arc hereby transferrcd to,and \'est('d ill, the S('cr'('tnry the
{lIlldiollS of the &cret}l1)' of the lull'l'ior to prolllull!ilte l"(':!1I1ntions
lInd('r the Outer Conhnental Shelf Lands Act, the Mineral J .. an<ls
Leasing Act, the)[inmll uasing Act for Acquire(l J..a.nds, thc Gco-
PiJHUC LAW 95-91-AUG . .,.. 1977
t.hcrmal 8ft'am Act of 1970, and the Encrgv Polil'Y nml Con!';cn·ation
Act, which n~l:ltc to thc---••
(1) fostrrillg of competition for Federnlleasc5 (including, but
not }!mited to'I)!"~llibition on bidding for cle\-elollnlent rights by
c('rlnm types 0 )omt \-entures) ;
(2) implemcntation of alternative bidding systrms nuthoriz('d
for the nward of FCllcmlle:tses;
(3) rst:lhlishment of cliligcncc requirements for operations con-
ducted on Fcderal leases (including, but not limited to, procedures
relating-to the gr:mtin~ or ordering by the Sr.crctnry of the
Interior of suspension of op£'rntions or l)roduction as thry relate
to such requirements) ; .
(-1) selt ing-rntes of production for J.'edernl lrascs; nnd
(!i) specifyino-the procedures, terms, lind conditions for the
acquisition and dispoSItion of Frdernl royalty interests tahell in
kind.
(e) There arc hereby transferred to, and ycsted in, thc Secrt'tary al1
the functions of the Secretary of the Interior to estnblish prodllrtioll
rates for all Federal lenses.
(d) Thl'l·e arc herehy transfcrred to, and Ycst('d in, the SecrrtnQ-
those fnnrtions of the Secretary of th(' Interior, thr Drpartmrnt of lhe
Interior, and oflicers :md components of that Department under the
Act of )Iny 15, uno, and otht'r authoritil's, excrci~cd by the nu)'rau of
Mines, unt limited to-
(1) _ fllel supply and demand analysis and data gathering;
(2) t"r~arch nnd clc\-clopmcnt rplating to increnS<'d efficiency of
production technology of solid fuel minel'lIls, (\'hrr thnn research
rclating to mine health find s:tfety and rcsenrdl l"('lnting to the
eudl·onmrutlll nnd lrasing eonsrquencl'S of solid f\1el mining
(which f;hall remaiT. in the Depnrtment of nle 1ntrl'ior); nnd
(3) coal preparation and flnalysis.
SJ-:C_ 303, (11) 'rhe Secretary of the 1nt<-rior shall rctain any nuthori-
ti.l's not h'nllsfl'lTCd lUldel' SC'ction 3O-2(b) of this Act and shaH be
f;olll~Y l·csponsible for tIle is;;uallce flucl SUl)CTl·isioll of Fedcral lenses
n.ncI the t'llforc('mrnt of nn l'E'~lllatjolls applicable to the Jcnsing of
ntlllt'l"nl r('sources, including but not-iimited to lense trrms nnd concli-
tions lind Ilroclnction rnt('s. No l't>J!u1ation )romlllsr;ltE'cl by the Sccre-
tnr\" shall I·('sh;ct or limit nny nntllol;tY l"('tninl'd by tht' &:crchll)" of
thr·)nteriol· ullcI('l· ~tion a02(h) of thIS Act "ith l"('spect to the issu-
n1\(·(' or sn}lC'l'\-ision of Fe(lern 1 1 ('n5('s. Xothin:r in ~tion 3O-2(b) of this
. Act. Fhall be cOllstntec1 to nn-eet Indian lands Bnd resources or to
transfrl' an~' functions of tile St'cretnry of the 1ratt'rior concerning such
1nmls :nul r('~ourcrs.
(b) Tn rxercisin rr the nufllOrity uuder section ao-2(b) of this Act
to'}lrolllUI;!atr n.{!nYntions. tht' Sre),l'tllry sh:tJ] consult wi'.h the Secre-
t:u:y of tIm Tutrl"ior dnrill~ the llT('paratioll of snell rt'gu1ations :mcI
shall :tn-onl thr 5(,('I1'tory (If thc 1ntt'rior !IOt less tlulU thirty d:tys,
prior to tllr c1at(' 011 wllidl tht, 1>l'pnrtlllent first pn1,lisht's or otherwlsc
pn's('l"ill('~ n':!ul:ttions. to COllllllrnt 011 the coutt'llt nml "fl'l'('( of such
n'l!"ulat 1011":_
«:) (1) The Srcrrtar\' of the TIII('rior 511all afford the &'C)1'tnry not.
It':-:l' than thili,-clays, prior to tllr datc on which tht' J)('pnrtment of thc
Interior Ih·;.:t jmhiishrs or otherwise prescribt's the terms :mcl cOJ)cli-
tions 011 whi<.-h a FcdN-al1eRse will be issued, to clisnppro\-c nny t('nn
9] STAT. 579
30 USC )001
illite.
42 USC C,201
lIotc_
Production rate,_
30 USC 1,3,5-7_
Fedcralleasing or
mineral
resources.
42 USC 7153_
Indian lands .
Regulations.
Term~ alld
conditions,
disapproval.
TEXT OF ORDER CREATING
ALASKA POWER ADMINISTRATION
OHlce of the Secretary
Order No. 2900
ALASKA POWER ADMINISTRATION
Establishment
SECTION 1 Purpose. This order, issued
pursuant to the authority of the Secretary
of the Interior under Reorganization Plan
No. 3 of 1950. 5 U.S.C. 133z-15 (note),
establishes the Alaska Power Administra-
tion as a Bureau of the Department of
the Interior, defines its organization and
functions, and provides for the related
delegation of authority of the Secretary
of the Interior under various acts of
Congress.
SEC. 2 Organization. The head of the
Alaska Power Administration shall be
the Administrator, who shall administer
the functions of the Administration sub·
ject to the supervision and direction of
the Assistant Secretary -Water and
Power Development.
SEC. 3 Functions. The functions of
the Alaska Power Administration arc as
follows:
(a) Promote the development and utili-
zation of the water, power, and related
resources of Alaska;
(b) Operate and maintain the Eklutna
project and the Crater-Long Lakes divi-
sion of the Snettisham project;
(c) Dispose of Federal power and
energy not needed for project or agency
purposes in such manner as to encour-
age the most widespread use' thereof at
the lowest possible rates to consumers
consistent with sound business principles;
(d) Cooperate with all agencies of
government in "Alaska; including the
Federal Field Committee for Develop-
ment Planning in Alaska, established by
Executive Order 11182 (Oct. 2, 1964);
(e) Investigate, plan, and submit to
the Secretary recommendations for Fed-
eral projects and programs;
(f) Represent the Secretary of the In-
terior in Alaska on power matters.
SEC. 4. Delegation of Authority. The
Administrator, Alaska Power Adminis-
tration, Is authorized, except as provided
in 200 DM 1.4 and 1.5 and in section 5 of
this order to exercise the authority of
the Secretary of the Interior pursuant
to the following, Insofar as they relate
to activities within the State of Alaska:
(a) The Eklutna Project Act of July
31,1950,64 Stat. 382, as amended:
(b) Section 204 of the Flood Control
Act of 1962 (Crater-Long Lakes diVision
Snettisham project), 76 Stat. 1193; ,
(c) Sections 5 and 8 of the Flood Con-
trol Act of 1944, 58 Stat. 890, 16 U.S.C.
825"5, 58 Stat. 891, 43 U.S.C. 390;
(d) The Act of August 9, 1955, 69 Stat.
618 (Alaska water resources investiga-
tions);
(e) Appropriation acts or other statu-
tory provisions respecting Investigations
relating to projects for the development
and utilization of water, power, and re-
lated resources in Alaska;
(f) Land and Water Conservation Act
of 1965 (78 Stat. 897) and Executive Or-
der 11200' (30 F.R. 2645). The authorities
of the Administrator under this Act and
Executive order shaH be restricted to the
following;
(1) The authority to designate areas
under his jurisdiction at which recreation
fees will be charged as specified by sec·
tions I, 2, and 3 of Executive Order 11200.
(2) The authority to post such desig-
nated areas as specified by section 4 of
Executive Order 11200.
(3) The authority to select from the
fees established by 43 CFR Part 13 (30
F.R. 3265) the specific fees to be charged
at the designated areas in accordance
with section 5(a) of Executive Order
11200. .
(g) Section 7(c) of the Federal Water
Project Recreation Act of July 9, 1965
(79 Stat. 213).
SEC. 5 Limitations. Excepted from the
foregoing delegation is the authority to:
(a) Act for the Secretary of the In-
terior in approving and adopting project
feasibility reports as the Secretary's pro-
>Dsed reports or as his reports to the
President and to the Congress;
(b) Promulgate rate schedules or fix
rates for the sale of electric power and
energy;
(c) Make finding and reports to the
Congress respecting minerals, as pro-
vided in section 1 of the Eklutna Project
Act, supra, as amended;
(d) Make the report to the Congress
upon the feasibility and desirability of
transferring the Eklutna Project to pub-
lic ownership and eontrol in Alaska, as
provided In section 4 of the Eklutna
Project Act, Supra.
SEC. 6 Contracts. The Administrator
may, without Secretarial approval, eon-
summate contracts for the sale. inter-
change. purchase, or wheeling of power
and energy, if such contracts are com-
posed entirely of standard provisions
which have previously received Secre-
tarial approval. If such a contract is not
composed entirely of standard provisions,
the Administrator may only execute the
contract subject to Secretarial approval.
SEC. 7 Revocation. Delegations of au-
thority previously made to the Commis-
sioner of Reclamation are revoked to the
extent they are inconsistent with the
delegations herein.
SEC. 3 Transfer. Effective at the close
of business on the day of the signing of
this order, all personnel, property, funds,
and equipment formerly employed by the
Bureau of Reclamation in the State of
Alaska are transferred to Alaska Power
Administration.
STEWART L. UDALL
Secretary of the Interior.
Organization and Function Charts
u.s. DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ORGANIZATION CHART
ASSISTANT SECRETARY
CONSERVATION AND RENEWABLE ENERGY
J. Michael Davis
ADMINISTRATOR
Robert J. Cross
Revised October 18, 1991
POWER DIVISION
Gordon J. Hallum
ADMINISTRATIVE DIVISION
Joseph M. Malinovsky
I
EKLUTNA PROJECT
Thomas Wilde
*will retire effective December 27, 1991.
I
SNETTISHAM PROJECT
Michael Deihl
EEO STAFF
Carolyn Bergeron*
Personnel Officer
FUNCTIONAL CHART
Alaska Power Administration
u.s. Department of Energy
Revised October 18, 1991
OFFICE OF THE ADMINISTRATOR
Administrator APA Programs
I
POWER DIVISION
o Operation and maintenance of Eklutna and
snettisham hydroelectric plants, including
power production, transmission, and sub-
station.
o Power marketing, power sales contracts.
o Rate and repayment studies, rate schedules.
o Planning and scheduling project replacements
and improvements.
o Maintain coordination with customer utilities.
o Engineering support for operating projects.
o Preparation of budget estimates and
justifications.
o ADP management.
I
ADMINISTRATIVE DIVISION
o Administrative support for APA programs.
o Fiscal operations, accounting, billing,
payroll.
o Personnel management.
o Property management, procurement,
contract management.
o Records management.
o Internal controls.
o Environmental, Safety and Health
compliance
Hallum
Willis
Linke
Ferguson
Davenport
VACANT
Cross
Holmberg
VACANT
POWER DIVISION
Chief of Division
Civil Engineer
Electrical Engineer
Budget Officer
Computer Specialist
Division Assistant
*Stay-in-school Program
u.s. DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
HEADQUARTERS
ADMINISTRATOR'S OFFICE
Administrator
Assistant to the Administrator
student Aide
I
Revised October 18, 1991
SES
GS-318-08
GW-322-01
ADMINISTRATIVE DIVISION
GM-801-15
GS-810-13
GS-850-13
GS-560-12
GS-334-07
GS-318-06
Malinovsky
Wetherall
Waldman
Bergeron
White
Bishop
Madison
Metzgar
Castillo
Zajac
Saceda
Chief of Division
Budget/Accounting Off.
Environmental Manager
Personnel Officer
Contract specialist
Accountant
Accounting Technician
Personnel Mgmt. Spec.
Division Assistant
Office Services Asst.
Student Trainee
GM-341-13
GS-505-12
GS-028-12
GS-201-11
GS-1102-09
GS-510-09
GS-525-07
GS-201-07
GS-318-06
GS-322-04
GW-322-03
Deihl
Boone
I
OPERATIONS
Dohrn Supervisory Electronics
Technician
Revised October 18, 1991
u.s. DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
SNETTISHAM PROJECT
PROJECT MANAGER
(Supervisory Electrical Engineer) GM-850-13
Purchasing Agent GS-1105-06
I
I
MAINTENANCE
GS-856-12 Cox Lineman/Electrician/Oper.
Boothe Hydroelectric Powerplant
Mechanic/Operator
Pittman Hydroelectric Powerplant
Mechanic/Operator
Pickle Mechanic/Operator
Doty Pwrplant Electrician/Operator
Osborn Pwrplant Electrician/Operator
WB-2810
WB-5324
WB-5324
WB-5803
WB-2810
WB-2810
Wilde
Dillon
Foster
Adams*
I
OPERATIONS
Toothaker SCADA Operator
*Stay-in-School Program
u.s. DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
EKLUTNA PROJECT
AREA POWER MANAGER
Revised October 18, 1991
(Supervisory Electrical Engineer) GM-850-13
Electronics Technician GS-856-12
Purchasing Agent GS-1105-06
Student Aide GW-322-02
I
MAINTENANCE
WB-5407 Rivera Electrician/Relief Oper. WB-5407
Plumley Hydroelectric Mechanic WB-5324
Murphy General Maintenance Worker WB-4749
Project Maps and Sketches
I~ 148'
A.P.A. FACILtTIES
Seol. in miles
---..
---'---"j.
I
\ ----1\:-----_.-
\
/
I
I
/ 1 ----) ;----i
! I :
i GULF I OF .AlL.AlSK.Al+-----·
. I "1 :
\
164' 160' I~ 1152' . 148" 144' 140" 132'
-.. , ',I
VJ!jjjj;"" _ •• __ i'~~~~~~~=~~l~B
AQLI! RIVER ___ /
TAP ".K"-
ANCHORAGE ~
SUBSTATION _ • .....",. 1 , "'-'-'~ 7 \
'" A'1I5 KV TRANSMISSION LINE
SeAL[ ',N MILU I \
cF*i446810
Location Mag -Eklutna Project
_Lo ....... c---"a ___ t .......... io ........ n____.M;..,;::;.:ag -S nett; sham Project
OOUCH.AS
l"M *'. seA LE IN MILES Mil! 'ft' fl. \,. w •• e 7= '\;
2 .. 6 8 d o 10
Sales and Revenues, 1987 -1993
FY
1987
1988
1989
1990
1991
1992 (est)
1993 (est)
FY
1987
1988
1989
1990
1991
1992 (est)
1993 (est)
POWER SALES
(kWh X 1,000)
Eklutna
146,271
188,264
176,238
210,427
169,765
164,000
164,000
Snettisham
189,177
194,668
204,195
216,301
230,180
239,000
248,000
TOTAL REVENUES ($)
Eklutna
2,837,185
3,476,190
3,240,562
3,496,702
2,880,000
2,790,000
2,790,000
Snettisham
5,466,207
5,614,764
5,809,049
6,105,723
6,483,000
7,477,900
7,724,600
Total
335,448
382,932
380,433
426,728
399,945
403,000
412,000
Total
8,303,392
9,090,954
9,049,611
9,602,425
9,363,000
10,267,900
10,514,600
FY 1990 Audit Report and Financial Statements
OFFICE OF msPErIOR GEm::RAL
OFFICE OF AUDITS
WliSlERN REmCli
~, NEl'l MEXICO 87115
FINANCIAL AND a::MPLIANCE AUDIT
AIASKA R:MER AIJ.fiNIS'IRATICIi
FEDERAL FGlER :m:x;RAM
JUNFAU, ~
FISCAL YEAR 1990
Audit Report No: WR-BC-91-1
PARI' I: REroRl' ON FINANCIAL S'I'ATEMENI'S
Irxleperrlent Auditor IS q>inian
May 14,1991
At the request of the Alaska Power Administration (APA), we have audited
the ac:x::arpanyin;J statements of assets, Federal investment arxi liabilities
of APA as of September 30, 1990 arxi 1989, arxi the related statements of
revenues arxi expenses arxi accumulated net revenues, arxi sources arxi uses
of funjs for the years then ern.ed. 'Ihese financial statements are the
responsibility of APA management. em-responsibility is to e>q>ress an
opinion on these financial statements base:i on our audits.
We corrlucted our audits in accordance with generally accepted auditin;J
st:ardards arxi the st:ardards for financial audits in the U.S. General
Accamtin;J Office "Governrrent Auditin;J Sta.rx:3ards." 'Ihese st:ardards
require the audits give reasonable assurance that the financial
statements are free of material misstatement. To provide a reasonable
basis for our opinion, the audit included ~, on a test basis,
evidence supportiIq the arrO.mts arxi disclosures in the financial
statements; assessiIq management I s acx::a.mtin;J principles arxi significant
estimates; an:i, evaluatiIq the overall financial statement presentation.
Our audits were made for the ~ of fonnin;J an opinion on the basic
financial statements taken as a whole. '!he supplementary information
included in Schedules 1 t:hrI:xlgh 3 is presented for p.n:poses of additional
analysis an:i is not a required part of the basic financial statements.
SUch infonnation has been subjected to the auditin;J procedures applied in
the audits of the basic financial statements an:i, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
As described in note 3 to the financial statements, management ~ed
its method of aOCOln'ltin;J for unc::arpleted projects beirg constructed by
the U.S. Anny Corps of Erqinee.rs.
In our cpinial, the financial statements :referred to above present
fairly, in all material respects, am in cxmfonnity with generally
accepted acccuntin;J prilci.ples, the assets, Federal investment am
liabilities at SeptaIi)er 30, 1990 am 1989: am its reverrues am mcpenses
am sources am uses of funds of APA fer the years then err3ed.
2
~ R:MER AIMINISmATICtl
statements of Assets, Federal Investment ani Liabilities
Sept:eDiJer 30, 1990 ani 1989
Assets
utility plant (notes 3 ani 4):
Plant in service
ACX"mDll ated depreciation
Construction \to'Ork in pnxJress
Net utility plant
current assets:
unexperrled awropriations:
Power projects
Administration
Accounts receivable
Advances to enployees
Materials am supplies
Total current assets
Deferred interest on Federal investment
Total assets
Federal InvestIrent am Liabilities
Federal investment:
Invest:nmlt of U. S. Government (note 3):
Congressional appropriations:
Power projects
Administration
Interest durin;J construction
Transfers fran other Federal agencies
Interest on Federal invesbnent
Less furrls returned to U. S. Treasur.y
Net investItent of U. S. Government
Accumulated net revenues
Total Federal invest:nmlt
$ 115,369,587
(11,566,228)
103,803,359
1,478,803
101,059
628,454
629
26,253
2,235,198
19,273,741
$ 125,312,298
$ 72,363,025
101,059
11,051,497
69,981,093
59,340,754
(110,874,871)
101,962,557
23,172,964
125,135,521
current liabilities -ac:x:amts payable am
aCCJ:'Ued liabilities 176,777
Total Federal invest:Irent ani
liabilities $ 125,312,298
See accatpanyin:J notes to financial statements.
3
1989
As Restated
(Note 3)
114,887,481
(10,839,510)
156,194
104,204,165
997,727
691,819
761,682
9,117
17,565
2,477,910
19.273,741
125,955,816
68,648,184
691,819
11,051,497
69,981,093
56,358,033
(101.360,839)
105,369,787
20.410,868
125,780,655
175.161
125,955,816
statements of Revenues am ExpeJ1Ses
am AI'"omvl ated Net Revenues
Years en:3ed SepteDi:)er 30, 1990 am 1989
1990
Revenues (note 2):
sales of electric por.ver:
Cooperatives $ 1,641,843
Municipalities 1,774,439
Privately c:Mne:l utilities 6,036,795
other 55,164
Wheel:in:j 78,756
other operat.in:1 reverrues 15,429
Total revenues 9,602,426
Expenses (note 4):
Operation am maintenance 3,100,572
Depreciation 766,718
other, net (9,681)
Total expenses before interest 3,857,609
Net revenues before interest expense 5,744,817
Interest ~ (note 4) 2,982,721
Net revenues 2,762,096
Accumulated net revenues (note 4):
Balance at begi.nnin3' of year 20,410,868
Balance at ern of year $ 23,172,964
See aCXXllpU1y:in:j notes to finarx:ial statements.
4
1989
1,539,359
1,723,723
5,604,216
86,141
65,264
30,909
9,049,612
2,907,933
726,177
(4,123)
3,629,987
5,419,625
3,097,990
2,321,635
18,089,233
20,410,868
statements of Scm:ces an:! Uses of rums
Years ended septerd:ler 30, 1990 an:! 1989
1989
As Restated
1990 (Nate 3)
F\n'ds provided by cp!rat.in; activities:
F\n'ds received fran c:ust:aDers
F\n'ds paid for operations an:! mai.ntenalx2
Net funds provided by cp!rat.in; activities
Fun:1s used in investin;J activities:
Additions to utility plant
F\n'ds provided by (used in) financin;J activities:
FI.u'¥Js returned to the treasury
Con3reSSional awropriations:
Power projects
Administration
Transfers to other federal agencies
Net funds used in financin;J activities
Net increase (decrease) in funjs
F\mj balance, beginrlirx] of year
F\mj balance, erxl of year
Reconciliation of net revenues to funjs provided
by operatirg activities:
Net revenues
Interest on federal investment
IDss on sale of assets
Depreciation
(Increase) decrease in:
Ac:c:ounts receivable
Advances to enployees
Materials and supplies
Increase (decrease) in:
Accounts payable and acx::rue1 liabilities
$ 9,735,654
(3.089.475)
6,646,179
(365,912)
(9,514,032)
3,714,841
(590,760)
(6,389,951)
(109,684)
1.689,546
$ 1,579,862
$ 2,762,096
2,982,721
766,718
133,228
8,488
(8,688)
1,616
8,975,415
(2.790,436)
6,184,979
(411.608)
(8,762,469)
2,944,716
214,284
(18,586)
(5,622,055)
151,316
1,538,230
1,689,546
2,321,635
3,097,990
108,069
726,177
(74,197)
(7,827)
(3,392)
16,524
Net funds provided by operatirg activities $ 6,646,179 6,184,979
see aC'XXMp'nyin;J notes to financial statements.
5
Notes to Finarx::ial statements
Sept:eniJer 30, 1990 ani 1989
1. SUImrari of Significant Aco:mrtim Policies
(a) General am. Basis of Preparation of Financial statensrt:s
'!he accarpmyiIg financial statements of Alaska PcMer
Administration (APA) .in::lme the accamts of the Eklutna Project
am. the snettisham Project (collectively, the Projects),
divisions of APA. As described in note 5, management accounts
for the administrative activities of APA separately fram the
Projects; allocatiIg such costs to the Projects only as these
funjs are experx:led. 'Iherefore, the accarpmyiIg financial
stateIrents reflect unexperrled co~ional appropriations
allocated to these adrninistrati ve divisions.
Accolmts are kept in accordance with accamtiIg principles and
stan:lards established by the Department of Energy of the United
states, the uniform system of accamts prescribed for electric
utilities by the Federal Energy Regulatory Commission, am. the
requi.renents of specific legislation and executive directives
issued by goverrnnent agencies.
(b) utility Plant and Depreciation
Plant in service consists pr.in::ipally of generatiIg and
transmission facilities as follows:
September 30,
1990
Generating facilities $ 83,108,256
Transmission facilities 32,261,331
$ 115,369,587
6
September 30,
1989
83,108,256
31,779,225
114,887,481
Notes to Financial statements
September 30, 1990 an:! 1989
Plant in sezvice is stated at original cost or at awraisal
value at date of transfer for prq:erty transferred from other
government agencies. Cost includes direct laoor an:! materials,
payments to contractors, in:lirect charges for erqineerin;},
supervision arx:i similar ovemead items, arx:i allowance for furrls
used durin;} constl:uction. 'lhe costs of additions, renewals arx:l
bettennents are capitalizerl. Repairs an:! minor replacements are
dlargerl to operation arx:i maintenance e>cpense. Generally, the
cost of utility plant retired, together with reIrOVal costs less
salvage, is chargerl to aCCl.mlU.lated depreciation when it is
rem::werl fram sezvice. Gains arx:l losses are recognizerl only on
sales of significant identifiable assets.
Depreciation of utility plant is computed based on the estimaterl
sezvice lives of the various classes of prq:erty using the
ccmpoun:i interest methcxi. Service lives currently average
approxilnately 87 years for the Eklutna Project arx:l 75 years for
the Snettisham Proj ect.
'lhe campoun:i interest methcxi was adopted pursuant to executive
directives of government agencies. '!his methcxi contains an
annuity ccnp.rtation which results in annual increases in
depreciation expense charges. Olarges in the later years of
depreciable life can be expected to greatly exceed charges in
the early years of depreciable life.
(c) Unexperrlerl Appropriations arx:l F'L1rrls Returned to u.S. TreasUl:y
Unexpended appropriations consist of the unexpenderl balance of
funis appropriaterl by Con:JrE!SS for construction arx:i operation
arx:l maintenance p.u:poses arx:i cash balances with the U. S.
Treasury.
(d) Revenues
Operating revenues are recorderl on the basis of sel:Vice
rerrlered. Rates are establisherl for each project based on
repayment studies which reflect leqislative repayment studies
arx:l are to provide sufficient revenues to meet all required
payments for system costs, includ.i.rg operation arx:l maintenance
expenses arx:i payment to the u. S. _ Treasury for debt sel:Vice on
borrowings relaterl to utility plant. Rates are interrlerl to
provide for rect:Nery of the Ferleral investment in transmission
arx:l generati..n;J facilities within 50 years for the Eklutna
Project arx:l 60 years for the Snettisham Project frau the date
7
AIASRA FaiER AtMINIS'IRATICN
Notes to Finan::ial statements
September 30, 1990 am 1989
placed in sezvice. As set forth above, these assets are be~
depreciated in the acx:nmt:s usin} a c::arpamd interest method
aver their est.iJnated sezvice lives which currently average
~roximately 87 years for the Eklutna Project am 75 years for
the Snettisham Project. 'lhus, annual depreciation charges are
not matched with the rea:Nerj of the related capital costs am
will, in the case of these projects, contimle beyond the pericx:i
within which such costs will have· been recovered through
revenues.
'!be Projects have net bill~ arrargements with power ~
which are offset against operation am maintenance expense am
revenue.
'!be practice followed by the Projects is in conformity with the
aCCOlm~ principles am st:ardards established by the
Deparbnent of Enel:m' of the united states am the requirements
of specific legislation am executive ctirectives issued by
gavernment agencies.
(e) Interest on Federal Investment
Interest on Federal investment is an i:np.rt:ed cost marrlated by
authoriz~ legislation for each project. APA canp.rt:es interest
in accordance with OOE order RA 6120.2 which provides that
interest be CCIlpIt.ed on the remai.nirg investment after revenues
have been applied to rea:Nerj of costs dur~ the year, any
prior year unpaid costs, ani then to Federal investrrent, bearing
the highest interest rate first (see note 4).
(f) Allowance for FlJrxjs Used D..lrim Construction (AFl]OC)
'!he practice of capitalizing AFUOC is followed for roth
generatin;J am transmission facilities. Rates are set by law,
administrative order or administrative policy. '!he rates use::l
are 2.5% am 3% for the Ekluna am snettisham Projects,
respectively. Rates used for replacements are based upon the
rates established for the fiscal year dur~ which the
construction cxmnenced. SUch rates were 8.75% am 9.25% for
1990 am 1989, respectively.
8
AIASKA ~ AtMINISTRATICN
Notes to Financial statements
September 30, 1990 am 1989
(g) Retirenent Benefits
SUbstantially all employees en;aged in APA activities
participate in one of ttNO Federal Government retirement f'urxis
whidl are contributozy defined benefit pension plans. Retirement
benefit expense is equivalent to approximately 7% of eligible
errployee canpensation am ocul.d charge in the :future under the
Federal. Errployee Retirement system. Actuarial data regarding
~ is not available.
(h) F\.Inls statement
'!he statements of sources am uses of f'urxis detail charges in
unexperrled funjs dur~ the fiscal year.
(i) Reclassifications
Certain 1989 annmts have been reclassified to confonn with the
1990 presentation.
2. Confinnation am Approval of New Rates
On September 28, 1990, the ~ Secretazy of Energy approved. rate
schedules on an interim basis for the period October 1, 1990 through
September 30, 1991 for the Eklutna Project. '!bese rates are still
perxi.i.n;J FERC confinnation an:i approval. D.lr~ the current year, the
project operated urxier the previous rate schedules which had expired
in September 1989.
'!he rate schedules for the snettisham Project were confinned by FERC
on Mardl 5, 1987 for the period November 1, 1986 through September
30, 1989. Interim rates were approved. by FERC am became effective
for the period October 1, 1989 through September 30, 1991-
3. Restatement of Crater Lake Allocations
'!be Crater Lake phase of the Snettisham Project was designed by am
is in the process of be~ constnlcted by the U. S. Anrr:l COrps of
En;ineers (CDE). In previous years, certain costs incurred in site
preparation had been aCCOlDlted for as construction \tJOrk in p:rccess.
Management elected to charge its method of accountin;J for these costs
in fiscal 1990, deferrirg recognition of the asset until c::cmpletion.
Prior reportirg periods have been :restated to :reflect this charge,
:resultin:;J in a $1,999,998 reduction in construction \tJOrk in process
am construction in process perxi.i.n;J transfer. Upon CCllpletion of the
project, the CDE will transfer the assets, at cost, to the snettisham
Project.
9
AIASl(A FQtlER AJ:HINIS'mATICfi
Notes to Financial statements
5epteDi::er 30, 1990 am 1989
'!he oonstruction costs thra.r;Jh 5epteDi::er 30, 1990 are ~roximately
$61,243,000 am total cost at carpletion is estimated to be
awraximately $64,882,000. '!he Crater lake ~ is expected to be
caIpleted am transferred to the Snettisham Project in late fiscal
year 1991 or 1992. For rate maJd.nJ p.n:poses, the repayment period
for the Crater lake project will be 50 years beginrliIg in the year
placed in sezvice.
4. Investment of U. S. Government
Construction am operations of the Projects' transmission system,
generatinq plants am operations are financed, in whole or in part,
through ~ional awropriations. '!he U. S. Government
investment in each generatinq project am each year's investment in
the transmission system is to be repaid to the u.s. Treasury within
50 years for the Eklutna arx:i 60 years for the snettisham Proj ect from
the time the facility is placed in service. '!here is no requirement
for repayment of a specific annmt on an amrual basis. Annual
revenues are first applied to the current year operatinq expenses
(less depreciation) am interest expense. All amrual annmts for such
expenses have been paid for fiscal years 1990 am 1989. Remaining
revenues are to be first applied to repayment of operatinq deficits
(which include all expenses except depreciation), if a:rr:/, arx:i then to
repayment of the Federal investment. To the extent possible, while
still c:arcplyinq with the repayment period established for each
increment of investment arx:i unless otllenvise required by legislation,
repayment of the investment is to be aCOJrnplished by repayment of the
highest interest-bearinq investment first.
Interest rates applied to the \.ll'lalOC)rtized investment of U. s.
Government in the hydroelectric plants are 2.5% am 3% for the
Eklutna am Snettisham Projects, respectively. '!hese rates were set
by law am were not meant to recover the interest costs, based on
fixed current rates in effect at that time, to the U. S. Treasury to
finance the investment.
5. Oongressional Appropriations
Oo~ional appropriations received by APA are allocated to the
irxlividual projects at management's discretion. Certain allocations
are made to administrative, continqency am project overhead
divisions whidl are prorated for the benefit of the two projects.
Experx:ied :ftJrxJs fran these divisions are transferred to the
appropriate project at year ern. To the extent these costs were
incurred for the benefit of both projects, they are allocated
equally. It is the intent of APA management to distribute
COI~essional ~ropriations in annmt:s ~roximat:in;J estimated
current year expen:litures arx:i to adjust the distr:il::ution as necessary
within the limits of the transfer authority resid:in;J at the
headquarters level.
10
THE SNETTISHAH AND EKLUTNA PROJECTS
(Divisions of Alaska Power Administration)
Combining Statements of Assets, Federal Investment,
Liabilities and Contributions in Aid of Construction
Septenber 30, 1990 and 1989
COIfbined Totals
Assets
Uti! i ty plant:
Plant in service
Accumulated depreciation
Construction work in progress
Net utility plant
Current .. ssets:
Unexpended appropriations
Accounts receivable
Advances to employees
Materials and supplies
Total current assets
Deferred interest on Federal investment
Total assets
Federal Investment and Liabilities
Federal investment:
Investment of U. S. Government:
Congressional appropriations
Interest during construction
Transfers from other Federal agencies
Interest on Federal investment
Less funds returned to U. S. Treasury
Net investment of U. S. Government
Accumulated net revenues
Total Federal investment
Current liabilities' accounts payable and
accrued liabilities
Total Federal investment and liabilities
$ 115,369,587
(11,566,228)
103,803,359
1,478,803
628,454
629
26,253
2,134,139
19,273,741
S 125,211,239
===========
72,363,025
11,051,497
69,981,093
59,340,754
(110,874,871 )
101,861,498
23,172,964
125,034,462
176,777
S 125, 21 I , 239
:==========
114,~7,481
(10,839,510)
156,194
104,204,165
997,727
761,682
9,117
17,565
1,786,091
19,273,741
125,263,997
===:======:;1
68,648,184
11,051,497
69,981,093
56,358,033
(101, 360,839)
104,677,968
20,410,868
125,088,836
175,161
125,263,997
===========
11
1990
34,545,488
(5,629,546)
28,915,942
756,533
222,243
78
978,854
29,894,796
55,390,583
1,909,047
(1,531,149)
19,527,500
(64,039,874)
11,256,107
18,567,925
29,824,032
70,764
29,894,796
==========
Snettisham
80,824,099
(5,936,682)
74,887,417
722,270
406,211
629
26,175
1. 155,285
19,273,741
95,316,443
==========
16,972,442
9,142,450
71,512,242
39,813,254
(46,834,997)
90,605,391
4,605,039
95,210,430
106,013
95,316,443
==========
Supplementary Schedule 1
1989
~
34,364,616
(5,408,093)
28,956,523
581,399
356,384
428
328
938,539
29,895,062
==========
53,817,883
1,909,047
(1,531,149)
19,248,024
(60,432,276)
13,011,529
16.805, lSI
29,816,680
78,382
29,895,062
=z=======s:
Snettisham
80,522,865
(5,431,417>
156,194
75,247,642
416,328
405,298
8,689
17 ,237
847,552
19,273,741
95,368,935
====s::.==a:
14,830,301
9,142,450
71,512,242
37,110,009
(40,928,563)
91,666,439
3,605,717
95,212,156
96,779
95,368,935 ........... :: ..
THE SNETTISHAH AND EKLUTNA PROJECTS
(Divisions of Alaska Power Administration>
Combining Statements of Revenues and Expenses and
Accumulated Net Revenues
Years ended September 30, 1990 and 1989
Revenues:
Sales of electric power:
Cooperatives
MlI"Iicipal hies
Privately owned utilities
Other
Wheel ing
Other operating revenues
Total revenues
Expenses:
operation and maintenance
Depreciation
Other, net
Total expenses befOre interest
Net revenues before interest expense
Interest expense:
Interest on Federal investment
Net revenues
Accumulated net revenues:
Balance at beginning of year
Balance at end of year
Conbined Totals
S 1,641,843 1,539,359
1,774,439 1,723,723
6,036,795 5,604,216
55,164 86,141
78,756 65,264
15,429 30,909
9,602,426 9,049,612
3,100,572 2,907,933
766,718 726,177
~9,681> ~4,123)
3,857,609 3,629,987
5,744,817 5,419,625
2,982,721 3,097,990
2,762,096 2,321,635
20,410,868 18,089,233
S 23,172,964 20,410,868
========== ==========
12
Supplementary Schedule 2
1990 1982 Eklutna Snettisham Eklutne Snettl.h!!
1,641,843 1,434,686 104,673
1,774,439 1,723,723
6,036,795 5,604,216
1,665 53,499 2,032 84,109
78,756 65,264
15,429 14,8~7 ]6,~~
3,496,703 6,105,723 3.240,562 5·802,050
1,189,094 1,911,478 1,192,512 1,715,421
261,453 505,265 248,947 477,230
3,906 ll1,587) 7,405 Ul,~ZAJ
1,454,453 2,403,156 1,448,864 2.1!].]i}
2,042,250 3,702,567 1,791,698 3,627,927
279,476 2,703,245 ~43.017 2.n4 .9n
1,762,774 999,322 1,448,681 872,954
16,805,151 3,605,717 ]5.356.470 Z.n~.76~
18,567,925 4,605,039 16,805,151 3,605,717
========== ===a=a===a •• ===a== •• ~= ••••••••
THE SNETTISHAH AND EKlUTNA PROJECTS
(Divisions of Alaska Power Administration) supplementary Schedule 3
Combining Statements of Sources and Uses of Funds
Years ended September 30, 1990 and 1989
Combined Totals 1990 ]9§9·
~ 1989 eklutna Snettish8111 Eklutna Snett i sh8111
Funds provided by operating activities:
Funds received from customers S 9,735,654 8,975,415 3,630,844 6.104,810 3,139.621 5.835,794
Funds paid for operations and maintenance (3.089,475) (2,790.436) (1.199.940) (1.889.535 ) Cl.'42,330) (1.648.106)
Net funds provided by operating activities 6.646,179 6.164.979 2,430,904 4,215,2Z2 ].997.291 4,]87.iH
Funds used in investing activities:
Plant addi tions {365,912) ,411,608) ~220,872) H45,040) S212.~4) S]9!1~)
Funds provided by (used in) financing activities:
/i!f Funds returned to the treasury (9,514,032) (8,762.469) (3,607,598) (5,906.434) (3,131.899) (5,630,570)
Congressional appropnations 3,714,641 2,944,716 1,572,700 2,142.141 1.419.162 1.525,554
Transfers to other federal agencies ,,81586) l'I,a6)
Net funds used in financing activities (5,799,191) (~,836,339) (2,034,898) (;1,764,293) (1.71~ln7) (!1'21,~)
Net increase (decrease) in funds 481,076 (62,968) 175,134 305,942 64,610 (127,578)
Fund belance, begiming of year 997,727 1,060,695 581,399 416.32§ ~16.l§9 54~1906
Fund belance, end of year S 1,478,803 997,727 756,533 722,270 581.399 416,328
a.a:.:;:::::: ===-:==== ========= ....... :. • •••••••• ..... : ...
Reconciliation of net revenues to funds provided
by operating activities:
Net revenues S 2,762,096 2,321,635 1,762,n4 999,322 1,448,681 872,954
Interest on federal investment 2,982,721 3,097,990 279,476 2,703,245 343,017 2,754,973
Loss on sale of assets 108,069 50,911 57,158
Depreciation 766.718 726,177 261,453 505,265 248,947 4n,230
(Increase) decrease in:
Accounts receivable 133,228 (74,197) 134,141 (913) (100,941) 26,744
Advances to ~loyees 8,488 (7,827) 428 8,060 (94) (7.733)
Materials and supplies (8,688) (3,392) 250 (8,938) 514 (3,906)
Increase (decrease) in:
Accounts payable and accrued l i ab it i ties 1,616 16,524 ,7,618) 9,234 6.256 10.2~
Net funds provided by operating activities S 6,646,179 6,164,979 2,430,904 4,215,275 1,997,291 4,187,688
========= =::::::::::::== ========= ========= ........ :.: ••••• ac ••
13
APPENDIXD
Divestiture Personnel Management Plan
DEPARTMENT OF ENERGY (OOE)
PERSONNEL MANAGEMENT PlAN FOR EMPLOYEES
AFFECTED BY THE
AlASKA POWER ADMINISTRATION DIVESTITURE
This plan describes DOE Personnel Management policy for managing uncertainties
and mitigating employee impacts associated with the proposed Alaska Power
Administration divestiture. Broadly, the objectives of the plan are to:
• Maintain a well-qualified and effective Alaska Power Administration
(APA) work force for as long as APA is responsible for the Alaska
Federal power program;
• Facilitate an efficient and orderly transfer of responsibilities upon
author1zation of divestiture by Congress; and
• Provide opportunities for individual employees to pursue or continue
their personal career objectives and minimize adverse impacts, financial
and otherwise, to employees while continuing the generation and
provision of electric power to APA customers.
BACKGROUND
APA has responsibility for the operation, maintenance, transmission, and power
marketing for the two Alaskan Federal hydroelectric projects. The
responsibilities for generat1ng electr1c power are unique to the Alaska Power
Administration and are not performed by the other four Power Marketing
Administrations (Bonneville, Southeastern, Southwestern, and Western Area).
APA manages the 30,000 kilowatt (kW) Eklutna Project, which has served the
Anchorage and Matanuska Valley areas since 1955, and the 78,210 kW Snettisham
Project, which has been Juneau's main power source since 1975. The two
projects presently provide about 8 percent of the energy requirements for
Alaska's electr1c ut1lit1es (about 80 percent for Juneau and about 5 percent
for the Eklutna market area).
APA maintains 1ts headquarters office in Juneau and field offices at each of
the two project sites. Each project office is headed by a project manager who
1s responsible for the full range of operation and maintenance activities.
The headquarters office includes a Power Division which provides technical
supervision and oversight for operation and maintenance and conducts the power
marketing work; and an Administrative Division which handles functions such as
finance, accounting, procurement, property, personnel, environmental
management, and safety. The two Div1sions report to the Adm1nistrator who, in
turn, reports to the Assistant Secretary for Conservation and Renewable
Energy.
PLAN APPHOVED BY THE SECRETARY OF ENERGY ON APRIL 23, 1992.
PLAN SlH4ARY
Divestiture of APA projects and close out of APA has been proposed in each of
the last several Presidential budgets. The initiative has been pursued
through studies, public involvement, formal invitation for purchase proposals,
negotiation of purchase agreements, and development of a legislative proposal.
Throughout this process, fair and equitable treatment of career and career
conditional employees on board the date Congress authorized divestiture has
been a major consideration. We want to minimize adverse impacts on employees
and mitigate those impacts where possible. Existing personnel management
authorities provide the tools to accomplish this objective. The purchasers of
Eklutna are the Chugach Electric Association, Inc., Matanuska Electric
Association, Inc., and the Municipality of Anchorage. The purchaser of
Snettisham is the Alaska Energy Authority.
Key aspects of the plan include training and placement assistance in Federal
and non-Federal jobs. The Purchase Agreements specify that APA project
employees are to have first call for post-sale jobs at Snettisham and Eklutna
projects and that the Purchasers will assist in locating other non-Federal
jobs for displaced APA employees'. The four other DOE Power Marketing
Administrations and the U.S. Bureau of Reclamation have agreed informally to
assist with placement of APA employees impacted by the divestiture. This help
from other Federal power organizations is important because of similarities 1n
work and job classifications.
The plan has three stages:
Stage 1.
Stage 2.
Stage 3.
Pre-authorization: This covers the period from the present
through authorization of the sale by Congress.
Transition: This is the time period necessary to complete
tranSition plans and transfer operation, maintenance, and
marketing responsibilities to the new owner and close the sale.
Close out: During this period, activities necessary to wind up
the affairs of APA will be completed.
Stage I affords an opportunity to develop more detailed implementation plans
for the transition and close out.
The Purchase Agreements require that detailed transition plans be developed by
APA and the Purchasers within 6 months after Congress authorizes the sale.
The transition plan will fix the *transition date" for each project --the
date the new owners assume responsibilities for the projects. We expect that
all APA positions at Ek1utna and Snettisham and about half the APA
headquarters pos;tions will be eliminated through RIF procedures within a
period of a few weeks before to a few weeks after the transaction date
specified in the Purchase Agreements.
Stage 3 or closeout corresponds to the provision in the legislative proposal
requiring completion of business and close out of APA and a report to Congress
documenting the sales within 1 year after the sales are completed. The APA
positions remaining after Stage 2 are to be terminated by the end of Stage 3.
2
The plan recognizes that the timing and outcome of the divestiture will remain
uncertain until Congress decides the issue. During transition and close-out,
APA will use temporary hires, details, and contractor support to maintain
continuity of operations.
THE PlAN
Stage 1. Pre-authorization.
The following personnel management policies shall be adhered to by the Alaska
Power Administration during the pre-authorization stage:
• Major changes in organization and staffing plans are not expected, but
changes can be made to assure the best possible match of personnel with
responsibilities and workload requirements.
• APA will continue to utilize existing personnel authorit1es to conduct
dally operations.
• When vacancies occur, APA management will conduct an analysis of the
position to determine whether it should be filled. Once a determination
is made that the fi111ng of the position is critical to the continuation
of service, a decision will be made as to whether the position should be
filled with a Federal employee or contractor support labor.
• APA will provide counseling to individual employees, through meetings
and surveys, on career objectives and preferences.
• APA will continue to invest in employee development and training
including a pro·active cross-training program and career development
activities.
• All APA vacancy announcements will contain a statement advising
potential applicants of the proposed divestiture.
• For planning purposes, APA will establish a sign-up sheet for APA
employees who wish to consider options for continuing their Federal
careers at other DOE locations after the effective RIF date of their
position.
• APA and DOE will develop more detailed implementing plans for the
transition and closeout.
Stage 2. Transition.
The objective during this stage is to complete the sale and transition to new
owners/operators as quickly and effectively as possible.
During the transition period, APA will maintain high quality management,
technical, and administrative staff to operate and maintain APA facilities
3
through the transfer of ownership and operating responsibilities to the
Purchasers. The following steps will be taken:
• As vacancies occur, APA will, where feasible, utilize employees on
detail, temporary hires, or contract support.
• Accurate and timely information on transition plans and schedules will
be provided to all employees. Continuous dialogue will be maintained
among all employees, the wPurchasers,w and other Federal agencies on
current and anticipated employment opportunities.
• Tim1ng and application of RIF procedures will reflect the actual
transition plans developed under the Purchase Agreements as well as
results of on-g01ng out-placement efforts.
• Placement assistance will be provided as subsequently detailed.
Stage 3. Close-out.
The close-out work 1s primar1ly adm1nistrative 1n nature, i.e.t completion of
lands or asset transfers, completion of specific APA responsibilities such as
personnel or financ1al activities, and reports to DOE and Congress on close-
out activities, etc. During the close-out stage, remaining APA staff would be
augmented with details from other offices and short-term temporar'y hires as
necessary to complete the work.
A detailed plan for accomplishing the close out is to be in place before the
transaction dates. The plan for stage 3 is similar to Stage 2:
• When feasible, utilize details, temporary hires, or contract support.
• Provide accurate and timely information on close out plans to employees.
• Adjust the timing and application of RIF procedures to reflect the
actual close out plans as well as results of outp1acements efforts.
• Placement assistance will be provided as subsequently detailed.
Placement Assistance.
For permanent APA staff (career and career-conditional employees employed by
APA on the date Congress authorizes the sale) whose jobs are to be terminated
in Stage 2 or Stage 3, and who wish to continue their Federal careers, DOE and
APA will provide placement assistance as follows:
• APA employees wi" be encouraged to apply for DOE positions for which
they are eligible. If selected, the Department will use best efforts to
negot1ate release dates which will allow APA maximum coverage and/or
provide employees on reimbursable detail.
• Retention allowances may be requested by APA and authorized by DOE, on a
case-by-case basis, when the criteria contained in the Federal Employees
4
Pay Comparability Act of 1990, P.L. 101-509, and implementing
regulations and policies are met •.
• Career counseling
• Assistance in preparing SF-171s
• Retirement counseling
• Cross-training for likely placement opportunities
• Placement referral to other agencies and within DOE
• Commitment to ensuring that the cost of travel, transportation, and
relocation to a new post of duty will not preclude selection for
positions within or outside of DOE. To that end, APA will provide a
written memorandum to all employees for attachment to employment
applications stating that APA is in a Rlf mode and will pay all or part
of authorized travel, transportation, and relocation costs to allow
employees to accept employment within DOE or with other agencies.
• Priority consideration for vacancies within DOE in accordance with
applicable policies and regulations.
For permanent APA staff whose jobs are abolished through RIF in Stage 2 or 3
and who wish to relocate and continue their DOE careers, DOE will make an
offer of employment, subject to such management considerations as: (I)
avai1a~ility of funds and personnel ceiling; (2) performance, conduct, and/or
qualifications issues; and (3) placement does not cause a RIF in the receiving
DOE office. Assistance under this paragraph is limited to a single offer of
employment. Pay comparability is not guaranteed in these offers. Failure to
accept an offer under this paragraph would not diminish other employee rights.
Inability to place an individual under this paragraph does not create an
enforceable right against the Department of Energy.
I~lementation Activities.
APA in consultation with DOE, the Purchasers, and others will conduct
necessary preliminary planning so that this plan can be implemented as soon as
Congress authorizes the divestiture.
DOE will provide adequate funding and staffing to complete the divestiture.
The assistance offered under this Plan will be re-evaluated by the Assistant
Secretary for Conservation and Renewable Energy, APA, and the Office of
Administration and Human Resource Management on at least an annual basis to
identify specific needs of remaining employees.
Rights available to employees at d1fferent stages of the divestiture process
are outlined in the attached chart.
5
ISSUE
Employees can be given
I Non-Ca.petitive
Reassig,..nt
~loyee is eligible
for placeMent through
the DOE Re-employment
Priority List and the
OPM Displaced Employee
Program.
Employee is eligible
for consideration for
promotton through the
Merit Promotion
Process.
Employee is eligible
for retained grade and
pay_
Eligible employees may
take discontinued
service retirement.
Employee may appeal or
grteve a RIF.
PRIOR TO
GENERAL
NOTlCE*
x
x
AFTER
GENERAL
NOT ICE*
x
x
x***
AFTER
SPECIFIC
NOTICE*
x
x
x
X**
x
AnER RIF
x
x
x
x
* FPM Bulletin 351-52 requires that the combined general and specific notice
period for employees be at least 30 d~s. If the Agency chooses to give a
general not1c~ lOre than 90 days in advance of the RIF, OPM .ust be
notified.
** Within Agency discretion
*** OPM would need to approve involuntary nature of retirement.
APPENDIXE
Environmental Assessment and DOE's Finding
of No Signficant Impact
EHVIROHMBRTAL ASSESSMERT
SUBMITTAL OF A LEGISLATIVE PROPOSAL TO CONGRESS FOR
THE SALES OF THE EKLUTHA AND THE SNETTISBAM PROJECTS
MARCH 1992
(DOE/BA--0614)
Alaska Power Administration
2770 Sherwood Lane, Suite 2B
Juneau, Alaska 99801
(907) 586-7405
(FTS) 871-7405
I.
'rABLE OF COH'l'EH'l'S
Introduction . . . .
A.
b.
C.
Purpose and Need
Proposal (40 CFR 1508.23): Clear
statement of the Proposed Action
Background Infor.mation on APA's
operation of the Eklutna and Snettisham
Projects . . . . . . . . . . . . . . .
II. Alternatives For Implementing The Proposed Action
A.
B.
proposed Alternative -Includes discussion
on 1986-1990 Process to meet proposed
alternative . . . . .
No Action Alternative .
III. Consequences of Implementing the Proposed
Alternative and Associated Potential Issues
A.
B.
Analysis of Environmental Impacts For
the Proposed Action . . . . . . . . . .
l.
2.
3 .
4.
5.
6.
7.
8.
9.
Environmental Program Development
Environmental Permits . . . . . .
Environmental Restoration Activities . . .
Endangered Species . . . . . . . . . .
Cultural Resource Management . . . . .
Emissions to the Air, Water and Soil
WetlandS/Floodplain Management .
Fish and Wildlife Agreement . . . . .
Lands Issues . . . . . . . . . . . .
Analysis of Socio-Economic Impacts Proposed
Action . . . . . . . .
Rate Impact on Rate Payers
Loss of Jobs
i
1
1
1
1
4
4
5
6
6
6
6
7
7
7
8
8
8
11
11
11
12
IV. Mitigation Commitments Required for Implementation
of Proposed Alternative . . . . . .. ... 12
V. Review by the State of Alaska
ATTACHMENTS
I. Map of APA Facilities
II. Location Map--Eklutna Project
III. Location Map--Snettisham project
IV. zeimer memo: EA Determination for NEPA Process
V. Action Description Memorandum for the Sales
Snettisham and Eklutna Projects
VI. Contact List
VII. Fish and Wildlife Agreement
VIII. Eklutna Purchase Agreement
IX. Snettisham Purchase Agreement
X. Comments from State of Alaska Review
ii
13
I. IHTRODUCTIOH
A. PURPOSE AND NEED.
The Department of Energy (DOE) proposes to sell the Eklutna and
Snettisham Projects. These two hydroelectric projects and
associated transmission facilities represent Alaska Power
Administration's (APA) sole involvement in power marketing
activities in Alaska. There are no plans, proposals or
authorizations to expand the Federal power program in Alaska. It
is no longer necessary to have the separate small Federal power
program in Alaska. The Eklutna and Snettisham are well suited to
ownership and control within Alaska. This environmental assessment
will analyze the proposed alternatives for the sales and determine
whether significant environmental impacts and associated socio-
economic impacts may result from this Federal action. This
analysis includes the collection and review of data provided to APA
on local environmental factors by resource managing agencies
located within Alaska.
B . RROPOSAL .
The Department of Energy will submit a "Legislative Proposal" to
Congress for the sale of Alaska Power Administration facilities to
non-Federal organizations and the State of Alaska in fiscal year
1992. The proposed alternative involves changes of ownership for
operating power facilities. The ownership change does not involve
any planned changes in operational mode or major expansion or
alteration of facilities. This environmental assessment will
accompany that legislative package, as required by Council on
Environmental Quality (CEQ) regulation 40 CFR 1506.8.
The proposal will specifically ask that Congress approve the sale
of the Snettisham Project to the Alaska Energy Authority (AEA); and
the sale of the Eklutna Project to the Chugach Electric
Association, Inc. (CEA), Matanuska Electric Association, Inc.
(MEA), and Anchorage Municipal Light and Power (AMLP). With the
approval and completion of these sales, the Alaska Power
Administration will formally cease its activities. (Further
discussion on the range of alternatives for the proposed action
will follow.)
C. BACKGROUND DATA.
Eklutna Project
The 30 MW Eklutna Project is located about 34 miles northeast of
Anchorage, and about 8 miles south of Palmer, Alaska (Figures 1 and
2). It lies within the Matanuska Susitna Borough (Mat-Su) which
has a widely dispersed population of approximately 40,000, while
the entire service area which includes Anchorage has an approximate
1
population of 340,000. Using Lower-48 standards, the setting for
the Eklutna Project can be described as "rural". Environmentally
speaking, the facility is located in zones that are transitional
from sub-arctic forest and wetlands to an alpine-glacial lake. The
economics of the region is in a gradual upswing after having gone
through a recession in the late 1980's. Local income is primarily
derived from work in the Anchorage area, the oil industry, and
local community support industries.
The project was built by the U.S. Bureau of Reclamation and has
been in service since 1955. The project provides about 5 percent
of the service area's electrical energy, and is considered the
lowest-cost energy producer within its service area.
Major project features include a low earthfill dam at Eklutna Lake,
a 4.5 mile tunnel through Goat Mountain, two generating units with
a capacity of 15 megawatts each, 44 miles of 115,000 volt
transmission line extending to Palmer and Anchorage, three
substations, various shops, warehouses and maintenance facilities.
Non-power users of the project include: the Municipality of
Anchorage with its 35 mgd Eklutna water project, the Chugach State
Park of which Eklutna Lake is a major feature, and a privately-
owned and operated (non-profit) salmon hatchery that is located
just downstream from the power plant and takes its water from the
plant's tailrace.
Snettisham Project
The 78 MW Snettisham Project is located approximately 35 air miles
southeast of the City of Juneau (Figure 1 and 3) at the
northeastern end of the Speel Arm which is a northern terminus of
Port Snettisham (a fjord which is fed by rivers emanatinq from
glacial ice fields to the east and north). It lies within the
boundaries of the unified city and borough, which has a population
of approximately 30,000. The setting for the project can be
described as "wild and remote". Environmentally, the project is
located in zones that are transitional from sub-arctic marine and
coastal rain forest to alpine glacial lake. The project is
accessible only by boat or small plane. APA employees live on-site
and work for 10 days on and are flown to Juneau for 4 days of off
time. The Juneau economy is strong, and primary employers are the
State government, tourism industry, mineral development industry
and Federal agencies.
The Snettisham Project was constructed by the Corps of Engineers as
a staged project. The initial phase (Long Lake) was completed in
1975, and the second phase (Crater Lake) was completed in 1990.
The project provides the sole Juneau electrical utility with about
80% of the Juneau area's electrical energy needs (local utility has
its own generation capacity). Presently, Snettisham has a short-
term firm surplus of approximately 65 million kWh.
2
The Snettisham Project taps two lakes, Long Lake and Crater Lake.
Water is conveyed through two tunnels to an underground powerhouse.
Two generating units, rated at 23.5 megawatts each and a third
rated at 31 megawatts, generate the energy which is transmitted to
the Juneau area over 41 miles of overhead 138,000 volt transmission
line and 3 miles of underwater cable. Other features of the
project include: the Juneau Substation which serves as the
operations and dispatch center for the local utility system and the
Federal project, two submarine cable terminals, and a State of
Alaska operated salmon hatchery that is downstream of the power
plant and utilizes water from the tailrace.
Additional Information on APA Operations
• Power Generation Capacity:
Snettisham
Eklutna
78 megawatts
30 megawatts
• Present Book Value and Outstanding Debts of the Projects
(Based on estimates for October 1, 1992 in Millions of
Dollars) :
Snettisham
Eklutna
~
127
-ll
148
Unpaid Balance
153.5
8.2
161. 7
• Value of Annual Revenues (Estimates for FY 90-97 in
thousands of dollars):
Snettisham
Eklutna
FY 90
$6,097
$3,497
FY 97
$8,167
$2,790
• Annual Operating Expenses (FY 90 Actual Costs in thousands of
dollars) :
Snettisham
Eklutna
• Number of Employees:
Headquarter-s
Snettisham
Eklutna
$1,911
$1,189
~ Other
17
9
7
3
1
3
2
• Value of Projects to Associated Communities:
(projected Firm Energy Usage for 1991)
Snettisham
Eklutna
230 million kWh
153 million kWh
Eklutna and Snettisham provide roughly 8 percent of the utility
power supply in Alaska, with the balance furnished from utility-
and State-owned plants.
There are no other authorized or planned Federal power developments
in Alaska.
xx. ALTERRATXVES FOR XMPLEMERTXRG THE PROPOSED ACTXOR
A. Proposed Alternative.
Sale of the Eklutna Project to the AHL&P, CEA. and MEA; and
Sale of the Snettisham project to the AEA.
The proposed alternative is the result of a three year process
undertaken by DOE directed at determining what method of
divestiture would be appropriate for these two Federally-operated
facilities.
Divestiture Process
Sale of the APA projects was proposed formally in the President's
budgets for FY 1986 and subsequent years. The sale idea had been
discussed informally for several years previously.
A rather lengthy series of studies and reports have been prepared.
The process included provisions for public review and comment at
several key stages including:
• The April, 1986 "Alaska Power Administration Transfer Study"
which identified and discussed a wide range of divestiture
issues.
• July, 1986 reports on "Divestiture Work Plan" and "Alternative
Structures for Sale of Alaska Power Administration." These
reports provided objectives, guidelines, and alternatives for
approaching the divestiture.
• A January, 1987 report presenting a revised work plan and
proposed structure for the sale.
After obtaining comments, APA implemented the revised work plan and
proposed structure. proposals were solici ted and evaluated.
Detailed negotiations resulted in purchase agreements laying out
4
terms and conditions for the sales, subject to authorization by the
Congress.
Separate negotiations resulted in an agreement covering post-sale
management of fish and wildlife resources.
APA and DOE drafted legislation which would authorize the sale.
APA is compiling a supporting report which will present the
purchase agreements, the fisheries agreement, financial analyses,
and evaluations of all key issues. On completion of the supporting
report and appropriate NEPA documentation, DOE will request final
OMS clearance to submit the legislative proposal to Congress.
If Congress approves the measure, the sale would be implemented
pursuant to the purchase agreements and any additional guidance
contained in the authorizing legislation.
Under the new ownership, the projects would continue to serve the
same customers and beneficiaries without major financial impact.
The ownership changes do not involve any planned changes in mode of
operation or major expansion or alterations of project facilities.
In addition the proposed sales are neutral with respect to other
Federally-owned water and power projects in other states.
Fish and Wildlife Agreement
The proposed Alternative is enhanced by the The Fish and Wildlife
Agreement: Snettisham and Eklutna Projects (August 7, 1991), that
supports future fish and wildlife management (Attachment VII).
Specifically, the Fish and Wildlife Agreement encompasses
assessment of damages to resource, and provides for future resource
enhancement and mitigation procedures. APA was involved in the
negotiations: however, the participants in the agreement are the
Federal fisheries agencies, the Purchasers, and the State of
Alaska. Under the agreement, the Purchasers are responsible at
their cost for developing and implementing plans in a fashion
similar to that for Federal Energy Regulatory commission (FERC)
licensed projects.
B. No Action Alternative.
The no action alternative will require that ownership of both
projects remain with the Federal government. No changes in
management, operation and maintenance procedures are expected to be
required. Power marketing operations will also remain unchanged.
The primary objectives of the projects will remain to provide
reasonable power rates for the consumer and repayment of initial
costs to the government. There should be no effect on staffing.
5
III. Consequences of IlD.pleJDen~ing ~he Proposed Al~erna~ive and
Associa~ed Po~en~ial Issues
A. ADalysis of Environmental Impacts for the Proposed
Action.
Consultation concerning the effect of the proposed alternative on
local and regional resources was conducted with resource management
agencies. Attachment VI lists those contacts.
1. Enyironmenta1 Program Deye10pment.
Each purchase agreement contains requirements that APA develop
Environmental Management Plans in consultation with the
"Purchasers" and commitments by the "Purchasers" to implement those
plans. APA is presently in the second year developing its
Environmental Management and Compliance Program (EMCP). Policies
and standard operating procedures developed for the EMCP will be
incorporated within the environmental management plan required by
the sales agreement.
The work to date conducted by APA' s Environmental, Safety and
Health (ES&H) Office has identified a number of compliance issues,
/" but none involve particularly expensive or difficult corrective
measures. APA expects the environmental management plan will
provide adequate assurance of future compliance with the various
statutes and regulations including: air and water quality, solid
waste, hazardous wastes, wetlands, endangered species, and others.
2. Enyironmenta1 Permits.
There are no environmental permits that are required for the
operation of the Eklutna Project.
The operation of the Snettisham Project requires a solid waste
permit. A permit had been issued by the State of Alaska (ADEC) to
the U.S. Army Corps of Engineers for operation of the Snettisham
landfill during the construction phase of the project. The Corps
permit has expired, and the ADEC will issue a new permit to APA in
early 1992.
ADEC conducted a site visit to the Snettisham Project on
October 2, 1991, and reviewed the existing solid waste facilities
and their operation. Inspector Ed Emswiler found that the
facilities met current standards. In fact, APA was complimented
for its fine operation and told that Snettisham's facilities were
the cleanest in the southeast Alaska region (conununication ADEC--
Emswiler 10/2/91).
6
3. Environmental Restoration Activities.
Environmental audits have been conducted by APA's ES&H Office for
the Management of Hazardous Waste, Underground Storage Tanks,
Polychlorinated Biphenyls, and Oil Pollution. No major
programmatic deficiencies or contaminated sites were identified.
Minor deficiencies will be corrected during the course of normal
operation and maintenance procedures in conjunction with APA ES&H
oversight.
The U.S. Environmental Protection Agency (EPA) conducted TSCA--PCB
Inspections of both projects in the spring of 1991. No major
environmental contamination was identified at either project during
those inspections and no notice of violations pertaining to
~proper handling or historic spills were cited (EPA PCB Inspect.
Eklutna and Snettisham projects, 4/91 and 5/91 respectively).
According to the purchase agreements, the new owners will assume
all ownership responsibilities for Eklutna and Snettisham with the
exception of unfinished work as of the transaction date. .' All
environmental activities that are recognized as unfinished will be
discussed within final negotiations to determine the party
responsible for completing the required environmental activity
(Eklutna Purchase Agreement; Sections 6a(2)# 10d, 13).
4. Endangered Species.
There are no planned changes to operating procedures or no new
construction activities anticipated after change of ownership that
might impact endangered species.
Nevin Holmberg, the Field Supervisor at the U.S. Fish and Wildlife
Service (USF&W) Office in Juneau and David McGilviry of the USF&W
Anchorage Office were consulted in regard to effects of the
proposed divestiture upon fish and wildlife at both projects. Both
ind~viduals stated that there would be no ~pact upon fish and game
stocks by the proposed action, and that there were no identified
endangered species residing within either project area
(communications USF&W--Holmberg and McGilviry, 12/4/91).
5. Cultural Resources.
Evaluation of cultural resource documentation for the project areas
has been conducted. No present operation and maintenance activity,
or no operations under the new management is anticipated to
conflict with Native lands, Native American Religious Sites or
sites of significant historic importance.
The Alaska State Historic Preservation Office (SHPO) was consulted,
and no concerns relating to the divestiture were raised. However,
7
the SHPO would like to see protective language for cultural
resources within the final sales documentation (communication with
SHPO--Smith, 12/4/91).
6. Emissions to the Air. Water and Soils.
Neither project in the course of normal operation and maintenance
generates contaminates that could be emitted through the air, water
or soil. Both projects are not subject to the new stormwater
discharge permit requirements that went into effect in
September 1991 (communications with EPA and ADEC, 9/91).
7. Wetland and Floodplain Management.
There are no planned changes to operating procedures or no new
construction activities anticipated after change of ownership that
might have impacts to wetlands and floodplains.
The USF&W was consulted on this issue and no concerns were raised
in respect to the proposed alternative (communications with USF&W--
Ho~erg, McGilviry, 12/4/91).
8. Fish and Wildlife Agreement.
The Purchasers, the State of Alaska, the U. S . Department of
Commerce National Marine Fisheries Service, and the U.S. Department
of Interior Fish and Wildlife Service have entered into a formal
agreement providing for post-sale protection, mi tigation, and
enhancement of fish and wildlife resources affected by Eklutna and
Snettisham.
The Fish and Wildlife Agreement would become effective with respect
to each project on the Transaction Date established under the
purchase agreements. It sets up a process of consultation,
studies, and public involvement for development of a fish and
wildlife program which would be implemented by the Purchasers. It
assigns costs of the studies and implementation measures to the
Purchasers. The process is qui te similar to that under FERC
licensing of hydroelectric projects with the Governor of Alaska
assigned a role similar to FERC's in decisions on fish and wildlife
measures.
Specifically, the Agreement:
• Commits the Purchasers to fund studies to determine impacts
and propose measures for protection, mitigation, and
enhancement of fish and wildlife affected by the projects.
These studies will result in a Fish and Wildlife Program.
• Assures that the studies will be conducted in consultation
with State and Federal resource management agencies.
8
• Requires that the draft Fish and Wildlife Program be reviewed
by the Resource Management agencies as well as the public.
• Designates the Governor of Alaska to review the proposed Fish
and Wildlife Program, reconcile differences, and establish a
final Fish and Wildlife Program. In doing so, the Agreement
requires the Governor to give consideration to efficient power
production, energy conservation, protection to fish and
wildlife, recreation, municipal water supplies, other aspects
of environmental quality, public uses, and requirements of
law.
• Requires the purchasers to implement the Fish and Wildlife
Program subject to their rights of judicial review.
• Sets a schedule for these activities. The consultation
process to start no later than 25 years from the Transaction
Date; implementation of the Fish and Wildlife Program within
30 years from the Transaction Date at Eklutna and within 35
years at Snettisham.
• Requires the study and program development process described
above to be repeated every 35 years.
• The Purchasers agree to comply with specific Alaska statutes
concerning dams and dam safety.
• Makes this agreement binding as long as the projects continue
to operate or until the projects become subject to the Federal
Power Act.
No specific fish and wildlife measures were contemplated in the
earlier divestiture studies and reports or in negotiations for the
purchase agreements. This was because the projects were generally
viewed as not involving significant fish and wildlife problems.
During initial reviews of the legislative proposal, one significant
problem was identified; namely, loss of a sockeye sa~on run that
once spawned in Eklutna Lake. The loss was caused by a small
private power development constructed in 1929. This problem was
not identified in pre-authorization studies for the Federal Eklutna
Project and the Federal project does not include any mitigation.
This specific problem and the desires of the fish and wildlife
agencies to provide appropriate consideration to fish and wildlife
resources over the long run led first to recommendation that the
two projects be placed under FERC jurisdiction; and subsequently to
the August 7, 1991 Agreement that provides a process similar to
FERC's but without a requirement for Federal regulation.
The formal process to develop fish and wildlife programs is to
begin no later than 25 years after the Transaction Date with formal
fish and wildlife programs to be in place within 30 years for
9
Eklutna and 35 years for Snettisham. The agreement provides for an
earlier start if the parties find that to be desirable. These
timdng provisions are designed primarily to reduce uncertainties in
financing and repayment of new debt while recognizing that known
fish and wildlife concerns are not of the type that will require
near future action.
The approach for fish and wildlife measures is novel. Given the
nature of the projects and the river basins affected, there is good
reason to believe that the proposed arrangements will work at least
as well as Federal regulation for the intended purpose of
mitigation and enhancement of affected fish and wildlife resources.
InfOrmal Consultation
Despite the existence of this protective agreement, APA decided
that it was appropriate to gather additional data on fish and
wildlife management issues. Informal consultation was conducted
with field biologists in local offices of the USF&W, NMFS, and
ADF&G. Only two concerns surfaced and both related to the
fisheries issue at Eklutna, and are as follows:
• The time frames within the agreement for assessing damages to
the fish resources were judged to be too far in the future and
not realistic. It was fel t that by the time program
implementation was initiated, loss to the salmon resources
could not be adequately mitigated for (communications with
USF&W--Holmberg and McGilviry, NMFS--Smith, ADF&G--Trasky,
12/4-6/91).
Clarification: The time frames developed within the fish and
wildlife agreement were specifically done so for two reasons:
1. The time frames defined within the agreement permits
proper financing of the projects. It was expected that
financial institutions would not provide financing if
issues were outstanding and lacked resolution. By
developing a binding and protective agreement, and
putting off implementation dates, financing is an
achievable goal.
2 . Under existing Federal ownership, resolution of potential
fisheries issues would not occur because existing
legislation and regulations do not prescribe natural
resource damage type assessments, studies or mitigation.
Through the Fish and Wildlife Agreement, the fisheries
resource agencies were able to attain and require the
development of a fish and wildlife management planning
process that would have oversight by a regional
administrator and have implementation costs assumed by
the new owners.
10
• Loss of the Sockeye run was most likely staqed, initiatinq
with the 1929 dam construction and includinq the construction
of Eklutna Project facilities. However, the extent of APA
involvement in Sockeye run deqradation could not be assessed
due to the lack of fisheries backqround data. (Communications
with USF&W--Ho!mberq and MCGilviry, NMFS--Smith, ADF&G--
Trasky, 12/4-6/91)
Clarification: Complete loss of the anadromous salmon run
(Sockeye) undoubtedly occurred with the construction of the
1929 dam. Subsequent construction of Eklutna facilities miqht
have effected resident fish populations in the Eklutna River
above the 1929 dam, but had no effects upon the anadronomous
fish run.
One fisheries manaqer suqqested that over fishinq miqht have
wiped out or qreatly depleted the anadromous fish run prior to
construction of the 1929 dam. If so, this would substantiate
the lack of commercial fisheries data qoinq back as early as
1900 when commercial fisheries were beinq exploited throuqhout
the reqion.
9. Lands Issues.
Both purchase aqreements (Attachments VIII and IX) contain specific
provisions requirinq the Federal qovernment to provide clear title
or interest in project lands to the Snettisham and Eklutna
Purchasers after Conqressional approval to complete the sale. The
purpose of the land transfer is to provide sufficient riqhts and
interest to the purchasers required to operate and maintain each
project's power production, transmission, and reservoir facilities.
Lands provisions of the purchase aqreement and leqislation were
developed in full consultation with affected Federal and State land
manaqement aqencies. Those provisions should adequately protect
project lands and resources from ~pacts of any future planned or
unplanned actions.
B. Analysis of Socio-Economic Impacts of Proposed Action.
Rate Impact -Eklutna Project
The Eklutna sale is not expected to produce noticeable rate ~pacts
at the retail level.
The Eklutna Project provides approximately 5 percent of the power
supply for the three purchasers. Present wholesale revenues amount
to only 2 percent of the Purchaser's combined revenue.
11
The Purchasers expect to achieve some economies of scale in
operation, maintenance and overhead costs, but will likely see an
increase in debt service. The net result should be total annual
project cost similar to present Federal costs.
Rate Impact -Snettisham project
The Snettisham sales formula has been designed to have minimal
impact on the ratepayer at the retail level; increases should be
far below the rate of inflation. At the wholesale level, current
estimates suggest the rate increase will likely be less than
3 percent.
Loss of Jobs
The divestiture and closeout of APA will eliminate 33 or 34
permanent Federal positions. It is anticipated that 15 to 20
individuals will find employment with the State, private utilities,
other Federal agencies, or take an early retirement.
DOE and APA, with cooperation of purchasers, will attempt to
mitigate adverse impacts to affected Federal employees insofar as
possible. A Divestiture Personnel Management Plan is being
developed to that end.
The net job loss reflects efficiencies through combining similar
business entities. From an area economy standpoint, the loss is
not considered significant.
IV. Mi:tigat.ion co..u.t.m.ent.s required for Implement.at.ion of Proposed
Alt.ernat.ive
• The final Environmental Management Plan will include language
that affords protection to cultural resource that may be
identified in the future.
• Protection and enhancement of fish and wildlife is ensured
through the Fish and Wildlife Agreement; Snettisham and
Eklutna Projects (effective August 7, 1991). This agreement
encompasses assessment of damages to resource, and provides
for future resource enhancement and mitigation procedures. In
addition, the process includes public involvement that will be
utilized toward development of a fish and wildlife program.
Cost for the studies and implementation measures are assigned
to the purchasers.
• The Divestiture Personnel Management Plan will address effects
on APA staff through existing personnel management authorities
and legislative language.
12
v. Review by the state of'Alaska
A review of the EA by the State of Alaska was requested by the
Assistant Secretary for Conservation and Renewable Enerqy, DOE.
The Division of Governmental Coordination (DGC), Governors Office,
coordinated the review of the project and requested that State
aqencies and local qovernments review the action and determine
whether the sales were consistent with state and local requlations.
State of Alaska Comments,:
1. The sales are seen as beinq consistent with local Coastal
Manaqement Plans, and other environmental and resource
related requlations.
2. The Reqion II Habitat Division of the Alaska Department
of Fish and Game recommended that the timeframes within
the Eklutna Fish and Wildlife Aqreement be accelerated.
ADF&G recommends that the fish and wildlife mitiqation
analysis be initiated within three years.
As discussed above, the timeframes defined in the
aqreement are so desiqned to allow for proper financinq
of the projects. The aqreement set maximum limits for the
implementation period, but does not preclude the new
owner from initiatinq the fish and wildlife process at an
early date. In addition, there is no identifiable
impacts or no discernible difference in reqard to
resource deqradation for utilization of either timeframe.
3. The Katanuska-Susitna Borouqh (MSB) Parks and Recreation
Department submitted a comment that the Twin Peaks trail
should be reserved as part of the sale.
The KSB would like to protect the trail riqht-of-way, and
APA aqrees with this philosophy. However, the trail lies
outside of Eklutna' s property boundaries, and the housinq
area located near the trail head is no lonqer under
Federal control. It was transferred to an ANCSA (Alaska
Native Claim Settlement Act) Villaqe Corporation in the
1970' s. In addition, the sale of the Eklutna project and
future operations under non-federal ownership should not
impact the trail.
13
DEPARTMENT OF ENERGY
FINDING OF NO SIGNIFICANT IMPACT
FOR THE PROPOSED SALE OF THE EKLUTNA AND SNETTISBAM PROJECTS
AGENCY: Alaska Power Administration, Department of Energy
ACTION: Finding of No Significant Impact (FONSI) for the Submittal
of a Legislative Proposal to Congress on the Sale of the Eklutna and
Snettisham projects.
SUMMARY: The U. S. Department of Energy (DOE) has prepared an
environmental assessment (EA) (DOEjEA-0614) to evaluate the proposed
sale of the Snettisham project to the Alaska Energy Authority (AEA);
and the sale of the Eklutna Project to Chugach Electric Association,
Inc. (CEA), Matanuska Electric Association, Inc. (MEA) and Anchorage
Municipal Light and Power (AML&P).
Based on the analyses in the EA, DOE has determined that the proposed
action does not constitute a major Federal action significantly
affecting the quality of the human environment within the meaning of
the National Environmental Policy Act of 1969, 42 U.S.C. 4321 et seq.
Therefore, the preparation of an environmental impact statement (EIS)
is not required.
1
FOR FURTHER INFORMATION ON THIS PROJECT CONTACT:
Rob Waldman
NEPA Compliance Officer
Alaska Power Administration
Suite 2B
2770 Sherwood Lane
Juneau, Alaska 99801
Telephone (907) 586-7405
or
Rodney L. Adelman
Washington Liaison Office
1000 Independence Avenue, S.W.
Washington, D.C., 20585
Telephone (202) 586-2008
FOR FURTHER INFORMATION ON THE NEPA PROCESS CONTACT:
Carol Borgstrom
Office of NEPA Oversight
U. S. Department of Energy
1000 Independence Avenue, S.W.
Washington, D.C., 20585
Telephone 1-800-472-2756 or (202) 586-4600.
PUBLIC AVAILABILITY: Copies of this EA (DOE/EA-614) and FONSI are
available from:
Rob Waldman
Alaska Power Administration
Suite 2B
2770 Sherwood Lane
Juneau, Alaska 99801.
ALTERNATIVES CONSIDERED:
A. proposed Action (Preferred Alternative). The proposed action is
the divestiture of two Federally owned and operated hydroelectric
power systems which would involve the sale of the Eklutna Project
to the AML&P, CEA, and MEA; and the sale of the Snettisham
Project to the AEA. The proposed action is the result of a
three-year process undertaken by DOE to determine the method of
divestiture that would be appropriate for these two facilities.
2
The sales of the Eklutna and Snettisham Projects represent only a
change in ownership. Operation and maintenance procedures are
not e~pected to be altered in any manner that would affect
environmental resources. In addition, the sales agreements have
been specifically designed to assure protection of the
environment. If Congress approves the measure, the sales wpuld
be implemented pursuant to the purchase agreements and any
additional guidance contained in the authorizing legislation.
Under the new ownership, the projects would continue to serve the
same customers and beneficiaries without financial impact. The
ownership changes do not involve any planned changes in mode of
operation or major expansion or alteration of project facilities.
In addition, the proposed sales are neutral with respect to other
Federally-owned water and power projects in other states.
B. No Action Alternative. The no action alternative would require
that ownership of both projects remain with the Federal
government. No changes in management, operation and maintenance
procedures would be expected. Power marketing operations would
also remain unchanged. The primary objectives of the projects
would be to continue to provide reasonable power rates for the
consumer and repayment of initial costs to the government. There
should be no effect on staffing.
3
SUMMARY OF IMPACTS FOR THE PROPOSED ALTERNATIVE:
The following issues were analyzed in the attached EA to determine
their potential impacts:
1. Environmental Program Development
2. Environmental Permits
3. Environmental Restoration Activities
4. Endangered Species
5. Cultural Resource Management
6. Emissions to the Air, Water and Soil
7. Wetlands/Floodplain Management
8. Fish and Wildlife Agreement
9. Lands Issues
10. Rate Impact on Rate Payers
11. Loss of Jobs
Based on that analysis, the preferred alternative may result in
minimal impacts on power rates and employment, and no impact on the
other issues analyzed.
DETERMINATION: Based on the information in the EA, DOE has determined
that the proposed action will not significantly affect the quality of
the human environment within the meaning of the National Environmental
Policy Act, 42 U.S.C. 4321 et seq. Therefore, the preparation of an
EIS is not required.
Issued in Washington, D.C., this :J7i:f )1a.A(,{,-/9Cfl..-.
f:Paul L. Ziemer, Ph.D.
Assistant Secretary
Environment, Safety and Health
4
APPENDIXF
Other References
OTHER REFERENCES
The President's FY 1986 budget proposed the transfer of APA projects to State or other non-
Federal ownership within Alaska.
A May 22, 1985 Memorandum of Understanding between Alaska's Office of Management and
Budget and AP A provided for a joint study of the possible transfer of the Snettisham and Eklutna
hydroelectric projects to State or local ownership. Findings are reported in the April, 1986
"Alaska Power Administration's Transfer Study."
The "Transfer Study" and seven subsequent reports published by APA are listed under "Previous
Reports" in the "Introduction" to this summary report.
The public record includes a number of additional important documents containing information
and viewpoints on the APA divestiture which will be of value in Congressional consideration of
this matter.
1950
1981-1985
1986
1986
Section 4 of the Eklutna Project Act of July 31, 1950 (64 Stat. 382)
contemplated eventual transfer of Eklutna "to public ownership and control in
Alaska, " This is unique amongst the rather large body of law authorizing
Federal power developments.
As a part of the Sunset Review under Title X of the DOE Organization Act,
APA reviewed alternatives to continued Federal operation of AP A projects and
reported that change in ownership to State or local entities may become
alternative (APA Sunset Review Report, September 1981). The idea was
discussed informally within the Administration and with interested parties over
the next three years leading to the proposal to sell the APA Projects contained
in the President's Budget for FY 1986.
The President's Budget for FY 1987 proposed to sell all five power marketing
administrations. A hearing was held May 7, 1986 (Subcommittee on
Environment, Energy, and Natural Resources of the House Committee on
Government Operations). The Committee's Report (House Report 99-935,
99th Congress, 2nd Session) was issued October 1, 1986. The report is highly
critical of efforts to sell PMA's. It contains recommendations and comments
on APA's 1986 reports on "Work Plan" and "Alternative Structures" for the
APA sale. The comments and recommendations were considered in
preparation of APA's January 14, 1987 report, "Revised Work Plan and
Proposed Site Structure. II
City of Juneau. Snettisham Transfer Study, September 1986. This report was
written by City and Borough of Juneau staff after APA published its "Review
of Alternative Sale Structures." The report considered the City's options with
respect to the divestiture of the Snettisham Project.
1987
1987-1990
1992
2
The Snettisham Transfer, Report of the Ad Hoc Committee to the Assembly
of the City and Borough of Juneau, July 10, 1987. This report was written by
a committee composed of local utility representatives and city staff to the City
and Borough Assembly to recommend a response to APA's invitation for
proposal. The report treats the questions of who should make a proposal and
how it should be formulated.
General Accounting Office Review
Responding to Congressional requests, GAO reviewed and reported twice on
the AP A divestiture. In each case, GAO was requested to report without
obtaining DOE and APA responses to draft reports and findings, so these
responses are listed separately.
GAO March 23. 1987 letter report to DOE Secretary John S. Herrington.
This and the DOE and APA responses are published in APA's July 10, 1987
report, "The Purchase Proposal Process. It
GAO February 1990 Report to Congressional Requesters. "Federal Electric
Power. Views on the Sale of Alaska Power Administration Hydro.power
Assets. Congressman Mike Synar requested DOE views on this report by
letter of March 20, 1990; DOE Under Secretary John Tuck transmitted DOE's
response by letter of July 3, 1990.
Review by DOE Inspector General
DOE's Office of Inspector General initiated a separate review of APA
divestiture in late 1991, and issued the report Audit of the Proposed Sale of
Alaska Power Administration on March 16, 1992. It incorporates DOE and
APA responses on draft OIG findings.
v
30
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