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Power Project Fund 1999
DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS DIVISION OF ENERGY POWER PROJECT FUND AS 42.45.010 Loans to Non-Named Borrowers* Policy Memo September 6,1994 BACKGROUND Statutes and regulations governing the Power Project Fund (PPF)identify the types of organizations that are eligible borrowers from the fund and the eligible uses for which PPF loans can be issued.Before the PPF was transferred from the Alaska Energy Authority to the Department of Community and Regional Affairs,Division of Energy (the Division),requests for PPF loans were considered ona first come / first served basis:if a loan applicant could demonstrate the feasibility and public benefit of a project,if sufficient money was available in the Power Project Fund, and if the applicant met all of the eligibility criteria,then the PPF loan was issued. PPF funds were available for new loans only on an irregular basis following those occasions when the Legislature appropriated funds for the program. Upon transfer of the PPF loan program to the Division,the Legislature changed the funding mechanism for the program in a manner that is expected to provide funds for new loans on a regular basis.Repayments of outstanding PPF loans were previously deposited in the State general fund but are now retained by the program and are available for new loans.In addition,the transfer legislation provides intent that 20 percent of annual debt service payments from the Four Dam Pool will also be deposited in the PPF and become available for new loans.Together,these provisions would result in the availability of several million dollars per year for lending under the program. Particularly in view of these changes in program funding,the Division has concluded that allocating PPF loan funds on a first come /first served basis is neither workable nor fair to the population of eligible borrowers.Consequently,an annual solicitation will be issued by the Division providing notice to eligible *"Loans to Non-Named Borrowers"are loans that have not been specifically authorized by the Legislature. Power Project Fund September 6,1994 Page 2 borrowers that funds are available for new loans and providing each potential borrower an equal opportunity to submit a loan application.This annual solicitation may result in the submission of loan applications exceeding the level of funds available in the PPF for new loans.Although existing statutes and regulations provide criteria to determine whether a loan application can be approved,they do not provide criteria that the Division can use for comparative evaluation of a potentially large number of loan applications that qualify for consideration. POLICY The purpose of this policy memo is to set out a process and criteria under which the Division can evaluate PPF loan applications and develop its recommendations for approval in a manner that is fair to the applicants and that best serves the objectives of the Division.Final authority for loan approval rests with the Loan Committee established in AS 42.45.060. The Division's objectives are set out in a policy guide entitled "Alaska Energy Strategy,"adopted in April 1994.Based on these objectives,the following categories are hereby adopted as Division priorities for allocation of available PPF loan funds: e Projects that allow an isolated rural electric utility to join a regional or consolidated electric utility organization. e Projects that will result in reduction of power cost equalization (PCE) payments within five years of project completion. e Projects that provide a long-term solution for one or more bulk fuel storage facilities in rural Alaska that are presently out of compliance with applicable codes and regulations. e Projects that reduce or eliminate diesel generation in one or more rural communities,either by constructing an intertie to access generation elsewhere, or by constructing an alternative generation project that relies on local fuels or resources and is based on proven technology. e Projects that are needed to supply power to identified economic development ventures in rural Alaska. Power Project Fund September 6,1994 Page 3 These categories represent areas in which the Division plans to concentrate its limited resources.There is no significance,however,to the order in which these categories are listed above. The Division's review of loan applications will conform to the following process: 1.The Division will make a preliminary determination of financial feasibility for each loan application received by the due date specified in the annual solicitation.The basis for this preliminary determination will be as follows: a.Funds are available to the applicant to complete the project as described in the application. b.The loan,if issued at the minimum interest rate allowed by law,can be repaid without undue burden on energy consumers. c.Based on prior repayment history and/or future revenue projections,the Division has a high level of confidence that the applicant will repay the loan in full. 2.For all loan applications that remain after the first screen,the Division will determine whether alternative financing is available for the project.If the applicant can access reasonable financing other than the PPF for the project, then the Division will recommend that the application be given a low priority. By applying the first two tests described above,the Division is trying to identify proposed loans that have a high probability of being repaid,but for which alternative financing is not reasonably available. 3.To the extent possible,each application will then be assigned to one or more of the priority categories listed above.A single loan application may serve more than one objective.The Division will recommend that loan applications that fall outside the five priority categories be given a low priority. 4.Within each category,the applications will then be ranked by the Division. Following are principles that will guide the ranking: a.In all categories,construction projects will be given priority over studies or other pre-construction efforts. Power Project Fund September 6,1994 Page 4 For projects that allow an isolated rural electric utility to join a regional or consolidated electric utility organization,priority will be given to those applicants with formal commitments from all involved parties to join such organization upon completion of the project. For projects that result in savings to PCE during the five year period following completion of the project,priority will be given to those projects that are estimated to provide the highest ratio of average annual PCE savings to project capital cost.The average annual PCE savings will be estimated by the applicant for the first five years of the project,and will be subject to review and possible adjustment by the Division. For bulk fuel storage facilities,priority will be given to applicants with formal commitments,documented in the form of ownership and/or management agreements,to operate and maintain the facilities according to applicable codes and regulations over the long term. For projects that reduce or eliminate diesel generation in one or more rural communities,projects will be ranked on the basis of long-term economic feasibility.An economic benefit-cost ratio will be estimated by the applicant based on standard criteria to be obtained from the Division,and will be subject to review and possible adjustment by the Division. For projects needed to supply power to identified economic development proposals in rural Alaska,projects will be ranked according to the significance of the proposal in terms of employment opportunities for rural Alaskans and the degree of reliance of the proposal on issuance of the PPF loan. 5.The Division will recommend to the Loan Committee approval or disapproval of loan applications such that the total amount recommended does not exceed the amount of PPF funds available,based on the Division's rankings within each of the five categories and based on an allocation of available funds across categories that,in the Division's judgment,best serves the Division's objectives. Additional policies of the Division in developing its recommendations are: Power Project Fund September 6,1994 Page 5 1.The maximum loan amount available to any single borrower in a given fiscal year will be 20 percent of the available PPF funds at the time of the annual solicitation.For FY 95,the maximum amount the Division will recommend for any single borrower is $1.0 million. 2.The Division recognizes that the policies and criteria set out in this memo may not be adequate to resolve all issues that may arise in the allocation of PPF loan funds.As a result,the Division reserves the right to add to or modify the policies and criteria described above as new situations are encountered. Approved:KHERseca Date:9 -G-Y¥Herv Hensley,Director Division of Energy Department of Community and Regional Affairs ae eas¢ ae ae Crimp,PPeter 3:Subject:.PPF eligibility .-Date:;'Tuesday,March 07;1995"2:26PM: Recapping:."We need to determine how the potential ICP grantees fall into the categories in the 'PPE:...Statute--municipalities,regional and village corporations,village councils.”.And whichare REAASs and oth :".»,entities not mentioned in the law..We'll use this to determine how many institutions are 'eligible for.the:+=+tiw=PPF and a-starting point in deciding -whether-we should push,fora change inthe law:to-allow-financing,ae ret "You!go through the hospital and school lists and categorize.each building by.the 'above:'categories I's Irene.Its'up to you how much front end work'on your iinstitution inventory you:want to.do.here--eg:school ddistrict name,address,ICP.sligibilty:€etc.= gepene ini,lage goSonnyeWissUeso-thistn:EUR hosyeAnerkayLeisi”; e Crimp,Peter To:Lockard,David Subject:Power Project Fund/ICP institution eligibility |talked to Midge Clouse to get a better idea about to which ICP institutions the PPF applies.AS42.45.010 says that PPF loans can go to "municipalities"to pay costs of reconnaissance and feasibility studies and conservation facilities.Therefore,the questions are: 1.Which schools and hospitals are managed by municipalities? Munis include home rule municipalities,boroughs,and home rule,first class,and second class cities. Schools within a home rule muni or borough are part of the school district run by that muni or borough. ex:Anchorage ex:Talkeetna is an unincorporated community,but is within the Mat-Su Borough. Schools outside of a home rule muni or borough: If a school is in a first class city,it is part of the school district run by that city.The city must tax to support the school. ex:Dillingham If a school is in a second class city,it is part of a "rural education attendance area"(REAA),which is not part of the city government and has no taxing authority. The school is wholly supported by the state.The city could tax for the school,but likely wouldn't,since there is little incentive and it is a separate entity. ex:McGrath lf a school is in an unincorporated community,it is part of an REAA and is supported by the state. ex:Tok 2.Should we propose a statute change so that schools and hospitals which are not managed by muniscanreceivePPFloans? |lean toward no,since we would basically be lending money to the state (ourselves).Instead we should work with the Dept Education to prioritize funding for TAs and ECMs in school districts outside munis based on potential energy savings. In the ICP inventory we should include the status of the schools district--eg.non-REAA or REAA. The university system is sort of similar to REAA school districts.I'm not sure how this all plays out forhospitals.Lets discuss.Peter Page 1 GMREPORT.XLS (DCRA)Interest Page 2 GMREPORT.XLS POWER PROJECT FUND STATUS REPORT AS OF 4/1/94 (DCRA)Date Orig.Interest AEA #Loan #Borrower Name Issued Amount Balance **Rate Original Purpose for Loan 81617002]40901002 =|City of King Cove Aug-80 200,000 $110,640.93 7.00 Purchase and install diesel generation 81617003}40901003 _{Iliamna-Newhalen Oct-80 300,000 $285,451.74 8.60 Purchase 2 gensets,extend transmission/distribution system 81617004}40901004 _/AK Electric Light &Power Oct-80 1,000,000 $636,982.34 8.60 Construct substation,build/upgrade transmission/distribution system 81617005 40901005 _-*/AK Electric Light &Power Mar-81 200,000 $115,746.50 7.00 Rehab and semi-automation of Upper Salmon Creek Powerhouse 81617012}40901010 _|AK Electric Light &Power Aug-83 1,000,000 $475,861.69 9.95 Upgrade Lower Salmon Creek Hydro Project 81617013}40901011 |AK Electric Light &Power Aug-83 2,000,000 $1,903,446.86 9.29 Upgrade/Rebuild AEL&P Transmission Distribution system 81617014!|40901012 |AK Electric Light &Power Mar-84 500,000 $1,508,828.95 9.95 Upgrade Lower Salmon Creek Hydro Project 81617006 40901006 Bethel Cogeneration Utility Aug-81 1,000,000 $258,615.44 |5.00-11.00 |Construct Waste Heat system 81617009 40901009 [City of Sitka (Green Lake)Aug-82 15,000,000 $12,421,288.53 4.00 Construct Green Lake Hydro Project 81617013;40901013 _|AK Electric Light &Power Mar-84 2,000,000 $1,903,446.86 9.95 Upgrade Lower Salmon Creek Hydro Project 81617014}40901014 /AK Electric Light &Power Mar-84 2,000,000 $1,508,828.95 9.29 Modifymprove Lower Salmon Creek Hydro Project 81617015)40901015 /|G&kK,Inc.Jan-86 500,000 $288,158.64 6.00 Construct and acquire electrical system. 81617016}40901016 _jFar North Utilities Nov-85 200,000 $168,075.92 9.05 Powerhouse construction,land and equipment 81617017}40901017 |Tanana Power Company Aug-85 130,000 $101,197.75 10.28 |Powerhouse construction. 81617018}40901018 /G&K,Inc.Sep-85 1,283,836 $1,111,499.96 9.80 Renovate powerhouse/acquire,install fuel facilities 81617019;40901019 |Levelock Electric Aug-85 30,000.00 $8,247.69 8.90 Purchase new genset and repair old/existing genset. 81617020}40901020 _[Middle Kuskokwim Elec Coop Feb-86 200,860 $183,537.69 5.00 Red Devil new electrification 81617022)40901022 _{King Cove Apr-86 120,000 $96,805.78 7.95 To purchase and install new diesel generator. 81617023)40901023 |City of Clark's Point Sep-86 177,000 $130,269.63 7.50 Construct powerhouse,acquire switchgear,install generators 81617024|40901024 {|G &K,Inc.Sep-86 1,000,000 $440,928.21 8.11 Renovate buildings,acquire and install new fuel distribution facilities 81617025|40901025 =|Chitna Electric Sep-86 101,500.00 $84,062.16 7.65 Construct hydroelectric project &purchase standby diesel generator 81617033]40901033 _/City of Larsen Bay Aug-87 494,000 $529,825.61 7.65 Hydroelectric project construction/diesel to hydro transfer 81617034}40901034 ={City of Ouzinkie Aug-87 50,000.00 $36,092.66 7.34 New transmission to hydroelectric project;acquisition of new genset. 81617035;40901035 |Middle Kuskokwim Elec Coop Aug-87 153,000 $129,804.90 7.56 New line extension to Sleetmute and powerhouse improvement. 81617037|40901037 |McGrath Light &Power May-88 339,000 $201,066.56 7.33 Purchase/installation of genset and related gear. 81617039}40901039 _/|Eagle Power Company Mar-89 32,000.00 $3,695.68 6.71 For the purchase of gensets. 81617041 40901041 }Tenakee Springs Oct-90 25,000.00 $20,257.47 6.99 Underground line extension. 81617042|}40901042 _ |Eagle Power Company May-91 55,000.00 $22,264.16 6.40 Powerhouse construction and gensets. 81617043!40901043 |McGrath Light &Power Jun-93 200,000 $147,174.66 6.36 To acquire and install new genset. Page 1 Sheet1 POWER PROJECT LOAN APPLICATIONS -SECOND SOLICITATION Deadline:April 14,1995 Applicant Amount Purpose | Cordova Electric Cooperative,Inc.$1,000,000.00 Power Creek Hydroproject: Continuation of FERC permitting;completion of design and engineering for project McGrath Light &Power $300,000.00 Bulk Fuel Upgrade Nome Joint Utility System $+,000,000.00 New Diesel Power Plant Power Alternative,The $250,000.06 Heat Pump Technology Sand Point Electric,Inc.$135,000.00 Distribution Line Upgrade City of Sitka Rewind Hydroelctric Generators and Upgrade Switchgear (Blue Lake Hydro Generating Facility) City of St.Paul Phase |-Traditional Diesel Power Plant | City of St.Paul -$2;852;134.00-|Diesel Power Plant Summit Lake Lodge $100,000.00 |Substation City of Wrangell $350,000.00 |Electrical Extension Project | Kodiak Island Borough $1,000,000.00 Hospital Complex Addition/Renovation ALES $9,160,720.00 PPFSOLIC.XLS Page 1 Pod ;penn le 4 . cfs fete Ade bilge co LE Ly congeyveblon! ME Ste Liane Lositalswbcorel2aseyeyMytolwwe; MWh cchele ty Ket cele flrs? cae net able Lo apply Low -oft hse relnl 4 yy y BV RAE - Duet ol liphy loaening °a oo ete MRADefregelaolCatRE :wt . :.3 . -.oF q v °.sos oe ces ses wie emere -woe Lee cee woe -- ee cee fe ee ee Bo cee bee a ' -*s = . :-\--- * . .mee ed .-wens sccm +eee ee ---:| eee we oe a .cones ce ' -:..TONY KNOWLES,GOVERNOR 4 "| DEPARTMENT OF COMMUNITY AN D i 333 WEST FOURTH AVE.,SUITE 220 ',O1-REGIONAL AFFAIRS ANCHORAGE,ALASKA 99501-2041 :DIRECTOR'S FAX:(907)269-4645DIVISIONOFENERGY-;ENGINEERING FAX:(907)269-4685 March 13,1995 To:Power Project Fund Loan Applicants From:Percy Frisby,Director 4\Division of Energy Subject:Loan Applications Enclosed is a loan application packet for the Power Project Fund loan programadministeredbytheDivisionofEnergy,Department of Community and RegionalAffairs(the "Division").In addition to this cover letter,the packet includes the following: 1.Loan Application Instructions. 2.Power Project Fund statutes.AS 42.45.010 provides the basic statutory framework for the program.AS 42.45.060 establishes a Loan Committee with final approval authority for Power Project Fund loans other than those specifically authorized by the Legislature. 3.Policy Memo dated September 6,1994,describing certain principles and guidelines that the Division intends to use in making recommendations to the Loan Committee regarding approval of loan applications. Complete loan applications,including all attachments and exhibits,must be received in the Anchorage office of the Division of Energy no later than 4:00 p.m., April 14,1995.Fax submissions will not be accepted.While the Division may request supplemental information from applicants as needed,all applicable questions and information requirements described in the Loan Application Instructions must be addressed and the application must be substantially complete in the Division's judgment by the April 14 deadline to be considered for approval. As provided in AS 42.45.060 (enclosed),a Loan Committee has been established with final approval authority for Power Project Fund loans other than those specifically authorized by the Legislature.The Loan Committee consists of seven members:the Commissioner of the Department of Community and Regional Affairs,the Commissioner of the Department of Commerce and Economic Development,the Director of the Office of Management and Budget,and four public members appointed by the Governor.The Division will review the loan applications and submit them to the Loan Committee along with the Division's recommendations. -Power Project Fund Loan Applicants March 13,1995 Page 2. In September 1994,the Division of Energy issued notice that approximately$5,000,000 was available for new loans from the Power Project Fund and established a deadline of December 15,1994 for receipt of new loan applications. After accounting for all loan applications received by that deadline,the DivisionhasnowdeterminedthatasubstantialbalancewillremainavailableinthePower Project Fund for additional loans.To accommodate prospective borrowers whomissedtheDecember15deadlinebutwhoseekfinancingintimeforthe1995 construction season,the Division is now providing a new and accelerated solicitation of loan applications under the Power Project Fund program The guidelines and priorities that will be used by the Division in recommending approval of loans to the Loan Committee will be unchanged from those set out in the prior solicitation: 1.The recommended limit per borrower will be $1.0 million. 2.The Division will recommend to the Loan Committee that the priorities described in the enclosed Policy Memo,which correspond with the Division's strategic objectives,be addressed first before applications for other eligible projects are considered for approval. The Division has initiated the process of revising the regulations for the Power Project Fund loan program consistent with the statutory changes that were adopted by the 1993 Legislature and with the change in policy focus that accompanied thetransferoftheprogramfromtheAlaskaEnergyAuthoritytotheDepartmentof Community and Regional Affairs.Until final regulations are formally approvedandadopted,the Policy Memo will be used by the Division in makingrecommendationstotheLoanCommitteeduringthistransitionalperiod. If you have questions regarding the loan application process for the Power ProjectFund,please contact Andrea Antoine,Loans Specialist,at 269-4628. Enclosures Chapter 18 *Sec.5.AS 42 is amencea by aading a new cnanter to reag: CHAPTER 45,RURAL AND STATEWIDE ENERGY PROGRAMS. ARTICLE !.POWER ASSISTANCE PROGRAMS. Seen.32.45010..POWER PROJECT:FUND-pia)The power protect fund is establishea as a separate rund.The fund shail be aisaner trom any otner money or funds of the deparment and inciudes oniy money appropnatea by tne legtsiature and money cepositea uncer (g)of this secuon. (b)Subtecs co AS 42.45.060.ine aeparmment may make ioans trom the power project una i)(0 e1eome caonuges.gion e:eeme sumontes,municipaunes. region ang vulage ccrporanons.village councus.«ndepenaent cower croducers.ana nonprotit marxegng cooperaaves to pay the costs of (A)reconnarssance studies.'feasibuicy studies.license and permut aoplicacons.preconsmuccon engineenng,and design of power projects: (B):consmucang,cauipping,modifying,.mproving,andexpanaingsmau-scaie power producaon facilities thar are designed to produce less nan 10 megawans of power.conservanon facilides.buik fuet storage facilines.nd cansmussion cad dismbuson facilides.nciuding energy produccon.cunsmussion and cismougon.ina waste energy conservacon racilides wat Geena on fossti fuei.wind power,adal.geomermai,biomass, hydroeiecenc,soiar.or other nonnuciear energy sources:and (C)reconnaissance studies.preconsmucnon engineenng,design, constucuon,equipping,modificanon.and expansion of potable water supply including surface storage and groundwater sources and transmussion of water from surtace storage to existing dismbucon systems: (2)to a borrower for a power project if (A)the loan 1s entered into under a leveragea lease financing arrangement. (B)the party that wiil be responsible for the power project is an elecmc unlity,regional elecaic authority,municipaliry,regional or village corporauon.viilage councii.independent power producer.or nonprofit -3-HCS CSSB 10Q(FIN) tnChapeer 18 markenng cooperanve:ing (C)-ne «borrower seexing ne loan demonsrates to the deparoment tat ine financing arrangement fcr tne power protect wil reduce project {inancing costs D¢iow costs of comparanie puodlic power projects. (¢)-Before maxing a ioan from tne power protect fund.the ceparonenr shail. by reguiagon.specify (1)stanaaras for the ei:gibiliry or borrowers and the types of projects to be financea win loans: (2)standaras regaraing tne tecnica:and economic vianilitv ana revenue seif-sumiciency of eLgiple crorects: (3)cotlateras:or other secunty requireat for toans: (4)the terms and conainons of loans: (5)cmtena to establish financiai feas:oriiry and to measure the amount of Stare assistance necessary for parocular projects 1o meer the financial feaszbiliry THe:ond £ (6)other reievant crema.standards,or procedures. (d)A loan mage by the deparmment shail be rmade accoraing to the standards. emtema.and procedures esuolished by reguianon unaer this secaon. 'e}Repayment or the toans snail be securea in anv manner that ne ceparmmenr determines 15 reasiole to assure prompt repayment uncer 2 joan agreement entered into with the borrower.The cepamment may make an unsecured loan from the power project fund to a borrower reguiated by the Alaska Public Utilides Commussion under AS 42.05 if the borrower has a substannal history of recaying long-term loans and the Capacity to repay the loan.Under a loan agreement.repayment may be deferred for 10 years or unni the project for which the joan is made has achieved earnings from its operanons sufficient to pay the loan.whichever is eartier. (f)Power projects are sudject to the following limitagons on interest ana specific resmicuons: (1)power projects for which loans are outstanding from the former water resources revoiving loan fund (former AS 45.86)on July 13,1978.may receive additionai financing trom the power project fund:if granted. HCS CSSB 106(FIN)"be. taapprooriacons for costs of administering the fund. Chapter 18 (A)tne term of the acdidonai financing may not exceea £0 years: (B)the interest of the acdimonat financing must be ar a rate of tot less tan uiree cr more than five percent a year on te unpaid balance: (C)the grant of the addigonai financing must be conditionea on the recayment of loan principal and interest to begin on the eariier of (i)the dase of the start of commercial operanon of the project:or (ii)LQ years trom te care ine ioan ts grantea: (2)2 ioan ror a power prorect Car pay not be grantea :cr a term inat exceeas £0 vears:ana (B)snail be granted at an interest rate tnat is not less tnan zero percent and that is the lesser or (1)2 rave equai to the percentage chat is the average weekly vieid of municipal bonds for tne 12 monus preceaing the dae ot the joan.ag determmned by the ceparcnent trom municipal bond vieid rates reported in the 30-year revenue index or the Weexiy Bond Buver. or (ii)a rate determined fv the ceparment mat allows tne project tO meet criteria of financia:feasipuify estidlisnea under tc}or this secaon. (g)Loan repayments and interest earned by ioans from the power project fund shall be deposited in the power project fund uniess an appropriacon to fund the loan directs otherwise. (h)The legisiature may forgive the repayment of a loan made from the power project fund for a reconnaissance study or a feasibiliry study when the department finds thar the power project for which the loan was made is not feasible. (i)Money in the power project fund may be used by the legisiamure to make Chanter 18 cower COS €Cuanziuon ing mural elecmms oro hyaroerecats 5: Sec.+2.45.060.APPROVAL S3Y LOAN COMMITTEE AND LEGISLATU?.4)A loan commumee consisung Of seven members ts establishea. The communes :s composed or the commrussioner cr community ana remonai affairs.2 * rywecommussionercfcommerceineconomic<SveToorncen'.me caector cwie Tlanadgement o1d oudges.cr me ceésignees OF the CommuvTussioners or the airector,ang tour DUOLIC members. (b)The puolic sempers or the commumee ore 2opointed by ana serve at the pleasure or the governor.Public memoers serve suggered four-vear terms.Only one public memoer say 7 appointed Tom esen _saicial dsmict desembed inAS22.20.010.Public members of the communes serve without Compensagon bur are enaued to raver ing per diem as provided for mempers of boards and commmssions unaer AS 59.20.180.A pudlic memper of the comrmaes serves uni 2 successor 1s appointed.=aspoincment to mil a vacancy among ine cublic memoers on ne cOMuTumeS :$ior ihe remaincer cr the unexcuea term. (c)The comumussioner of community and regionas affairs serves as chair of the comumutree.Tne comumumee may etect other officers as necessary..\muyjonty of the members of the communes consume 2 quorum and may exercise the powers of the comumurtee. (d)A meeang oy an eiecrronic medium 33 provided in this supseczon has the same legal effect as a meetng in person.The comurimee may meet and transact business by an ejecrronic medium if (1)public nonce of the ame and locacons where the meeung will be heid by an elecronic medium has been given in the same manner as if the meenng were held in a singie locauon: -9-HCS CSSB 106(FIN) wmChapter 18 2)pameioants anda memoers of the cudiic in anenaance can hear ang have tne same ment to parmcieate in the meenng as if the mecang were conductea in person:ana (3)copies of permnent reterence muaienus.siamnes,reguianons.and quGlO-visual MatemuUs are reasonapiv avatiable to paracicants and to the puolic. (¢)A memoer or the comrmmnee may not vou on a resotunon of the commutes relanng {o a jease or contract to be entered into oy tne deparment under this chaorer if the memoer ts a party to the jease or conmact or Nas a direct ownership or equity interest in a fLrm.,partnersnip,corporanon.or 1SSOClad0N (har is a party to the conmact or lease.When 2ostiining trom voang,the memiper must disciose tne reason for the ipstentuon..:memoer wno is a member OF an e:ecmc Cooverzave that 1s organizes ander or suoiect :0 AS 10.2§(Elecone ana Telecnone Cooverzave Act)mav vote en 2 resolugon re:agng (0 2 conmract or fe2tse to WAiICcn wnat Cooveraave ts a party.Ts memiper snail disciose the cooperauve memoersmip il ie cme ot vonng.A resoiucon of the comumutiee «nats approved by a majonty of the memoers present who are nor bartea Som vonng under this suOsecrnon 1s a vaiid acaon of the cormumm«©ee for al £purposes.. (f)Excest tor loans from we bulk fuel revoiving loan tund (AS 42.45.2£9), the decarament snail subrurt the ioans that the cesartmment croposes (0 approve uncer this cnapter :o (ne communes for me Communes s review."he ceparament may nor enter tnso 2 loan for an amount ecuai to or grearer wan $500.000 umess the comra:::re approves tne joan or uniess ine foan nas rece:vea iegisiauve isproval under tg)of this secuon.The ceparmnent may not enter into a ioan for an amount less than $500.000 for a penod of 20 days after subrassion of the croposai to the commmmnes.[f.witnin the 30 days.the commmittee noufies the deparnoment tnat it intends to review a loan for less than $00,000.the department:may not enter :nto the !oan uniess it is approved by the committee. (g)The deparmment may not enter into a joan for a maior project unless 1t has legisiauve approval of the project and the amount An approonacon for the loan thar names the project subject to this subsection consumes approvai under this subsecnon. Projects subject :o legisianve approvai under this subsection include HCS CSSB 106(FIN)-10- <" 5 as Pi %Chapeer18 I a (1)2 proyecs in which the cumutagve state monetary invoivement 5s-"ae:Posars=niei;t_-througn loans.grants.and bonas.1s at least $5.000.000:or (2)2 project tor which a loan of more than $5,000.000 has been +Lerequestec. nee| MEMORANDUM State of Alaska Department of Community &Regional Affairs TO:Dick Emerman DATE:September 13,1995 Senior Economist FILE NO: THRU:Peter Crimp TELEPHONE NO: Development Specialist II FROM:David Lockard S.f. Development Specialist I SUBJECT:PPLF Proposed Change At Peter Crimp's suggestion,I have prepared the following proposal for your review. PROPOSAL Add the following institutions to the list of eligible Power Project Loan Fund (PPLF)applicants: "All Alaskan public schools,including state vocational schools and the University of Alaska system” JUSTIFICATION Under the current PPLF Statute language,only those public school districts run by municipalities are eligible to apply for loans.20 school districts organized as Rural Education Attendance Areas (REAAs),including 158 'school buildings,and all state-operated schools are not run by municipalities and are therefore ineligible for Power Project loans.This proposed change to the eligibility requirements would allow all Alaskan public schools to apply for PPLF loans. Since the state vocational schools and the University of Alaska system offer educational services to all Alaskans,they are a part of the state educational system and should also be eligible for PPLF loans. This proposal supports the stated goal of the DCRA to address the needs of rural Alaskans,since most of these schools are located in rural areas and all of them serve rural Alaskans. OF ALASKA 1993 Source Chapter No. HCS CSSB_106(FIN)18 AN ACT Transferring certain projects of and amending and transferring programs of the Alaska EnergyAuthoritytotheDepartmentofCommunityandRegionalAffairs;relating to the AlaskaEnergyAuthority;permitting the Alaska Industrial Development and Export Authority to issuerevenuebondsforcertainplantsorfacilitiesforenergyresources,permitting utilities to formjointactionagencies;authorizing the Alaska Industrial Development and Export Authonty toissuerevenuebondsforpowertransmissioninterties;relating to rates for a public utility thatsendsorreceivespowerovercertainpowertransmissioninterties:relating to the power costequalizationandcapitalimprovementfund:amending the purpose of the Railbelt energy fund. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: THE ACT FOLLOWS ON PAGE 1 Approved by the Governor:May 13,1993 Actual Effective Date:August 11,1993 comm mee le ty10 ll Chapter 18 AN ACT Transferring certain projects of and amending and transferring programs of the Alaska Energy Authority to the Department of Community and Regional Affairs;relating to the Alaska Energy Authority;permitting the Alaska Induscial Development and Export Authontty to issue revenue bonds for certain plants or facilities for energy resources;permitting utilides to form joint action agencies;authorizing the Alaska Industrial Development and Export Authority to issue revenue bonds for power transmission interties;relating to rates for a public utility that sends or receives power over certain power transmission interties;relating to the power cost equalization and capital improvement fund;amending the purpose of the Railbelt energy fund. *Section 1.FINDINGS AND INTENT.(a)The legislature finds that adequate,reliable, -l-HCS CSSB 10QFLN) eoOoYDMH&|]NwMmoeees©eRI AAROKHESChapter 18 electric service at affordable rates is a necessary ingredient of a modem society and a prosperous developing economy.The legislacure further finds that at the current stage of social and economic development in the state,direct participation by the state is necessary to assist in the development of a regional electric ransmission infrastructure and to assist in holding rates in high cost service areas to affordable levels. (b)The legislature recognizes the high cost of electric power in rural Alaska and intends that funding for power cost equalization from the general fund and from the power. cost equalization and rura,electric capitalization fund remain at a minimum of $17,000,000 annually through the year 2013.The legislature further intends that this long-term commitment to the power cost equalization program will permit and encourage the electric. utility industry and its lenders to develop the plans,make the invesunents,and take other actions that are necessary or prudent to meet the utility needs of residents in rural Alaska.- *Sec.2.AS 37.05.520is amended to read: Sec.37.05.520.RAILBELT ENERGY FUND.There is established in thegeneralfundtheRailbeltenergyfund.The fund consists of money appropriated to itbythelegislarure.The Department of Revenue shall manage the fund.Interestreceivedonmoneyinthefundshallbeaccountedforseparatelyandmaybeappropriatedintothefundannually.The legislature may appropriate money from thefundforprograms.projects,and other expenditures to assist in meeung Railbelenergyneeds,including projects for retrofitting state-owned buildings and facilitiesiforenergyconservation.3*Sec.3.AS 42.05.141(b)is amendedtoread::(b)The commission shall perform the duties assigned to it undef,AS 42.45.1090-42.45.190 (AS 44.83.162}. *Sec.4.AS 42.05.431 is amended by adding a new subsectiontoread: responsible for the construction of the intertie to have been incurred for the syst a existing on the effective date of this subsecuon. HCS CSSB 106(FIN)-2- FogmgmorrreeAndnOBOoaAvavpDaBas|Chapter 18 *Sec.§.AS 42 is amended by adding a new chapter to read: CHAPTER 45.RURAL AND STATEWIDE ENERGY PROGRAMS. ARTICLE |.POWER ASSISTANCE PROGRAMS. Sec.42.45.010.POWER PROJECT FUND.(a)The power project fund is established as a separate fund.The fund shall be distinct from any other money or funds of the department and includes only money appropriated by the legislarure and money deposited under (g)of this section. (b)Subject to AS 42.45.060,the department may make loans from the power project fund (1)to electric utilines,regional electric authorities,municipalities, regional and village corporations,village councils,independent power producers,and nonprofit marketing cooperatives to pay the costs of (A)reconnaissance studies,feasibility studies,license and permit applications,preconstruction engineering,and design of power projects;| (B)constructing,equipping,modifying,improving,and expanding small-scale power production facilities that are designed to produce less than 10 megawatts of power,conservation facilities,bulk fuel storage facilities,and transmission and distribution facilities,including energy production,transmission and distribution,and waste energy conservation facilities that depend on fossil fuel,wind power,adal,geothermal,biomass, hydroelectric,solar,or other nonnuclear energy sources;and (C)reconnaissance studies,preconstruction engineering,design, construction,equipping,modification,and expansion of potable water supply including surface storage and groundwater sources and transmission of water from surface storage to existing distribution systems; (2)to a borrower for a power project if (A)the loan is entered into under a leveraged lease financing arrangement, (B)the party that will be responsible for the power project is an electric utility,regional electric authority,municipality,regional or village corporation,village council,independent power producer,or nonprofit -3-HCS CSSB 106(FIN) ooOoNDR&&NRom= S3BR8RVRERROKRRESTSERDRAEEEREESChapter 18 marketing cooperative;and (C)the borrower seeking the loan demonstrates to the department that the financing arrangement for the power project will reduce project financing costs below costs of comparable public power projects. (c)Before making a loan from the power project fund,the department shall, by regulation,specify (1)standards for the eligibility of borrowers and the types of projects to be financed with loans; (2)standards regarding the technical and economic viability and revenue self-sufficiency of eligible projects; (3)collateral or other security required for loans; (4)the terms and conditions of loans; (5)criteria to establish financial feasibility and to measure the amount of state assistance necessary for particular projects to meet the financial feasibility CTiteria;and (6)other relevant criteria,standards,or procedures. (d)A loan made by the department shall be made according to the standards, criteria,and procedures established by regulation under this section. (e)Repaymentoftheloans shall be secured in any manner that the department determines is feasible to assure prompt repayment under a loan agreement entered into with the borrower.The department may make an unsecured loan from the power project fund to a borrower regulated by the Alaska Public Utilines Commission under AS 42.05 if the borrower has a substandal history of repaying long-term loans and the capacity to repay the loan.Under a loan agreement,repayment may be deferred for 10 years or until the project for which the loan is made has achieved earnings from its operations sufficient to pay the loan,whichever is earlier. (f)Power projects are subject to the following limitations on interest and specific restrictions: (1)power projects for which loans are outstanding from the former water resources revolving loan fund (former AS 45.86)on July 13,1978,may receive additional financing from the power project fund;if granted, HCS CSSB 106(FIN)-4- ooOBODH&|NwomERORBRSSCREURRESORoSChapter 18 (A)the term of the additonal financing may not exceed 50 years; (B)the interest of the additional financing must be at a rate of not less than three or more than five percent a year on the unpaid balance; (C)the grant of the additional financing must be conditioned on the repayment of loan principal and interest to begin on the earlier of (i)the date of the start of commercial operation of the project;or (ii)10 years from the date the loan is granted; (2)a loan for a power project (A)may not be granted for a term that exceeds 50 years;and (B)shall be granted at an interest rate that is not less than zero percentandthatis the lesserof (i)a rate equal to the percentage that is the average weekly yield of municipal bonds for the 12 months preceding the date of the loan,as determined by the department from municipal bond yield rates reported in the 30-year revenue index of the Weekly Bond Buyer, or (ii)a rate determined by the department that allows the project to meet criteria of financial feasibility established under (c)of this section. (g)Loan repayments and interest earned by loans from the power project fund shall be deposited in the power project fund unless an appropriation to fund the loan directs otherwise. (h)The legislature may forgive the repayment of a loan made from the power project fund for a reconnaissance study or a feasibility study when the department finds that the power project for which the loan was made is not feasible. (i)Money in the power project fund may be used by the legislature to make appropriations for costs of administering the fund. Sec.42.45.020.RURAL ELECTRIFICATION REVOLVING LOAN FUND. (a)The rural electrification revolving loan fund is established in the department.The -5-HCS CSSB 106(FIN) %ooBoDAW&-&WwMm10 4Chapter 18 fund consists of (1)appropriations made to the fund;and (2)repayments of principal and interest on loans made under this secuon._ (b)Subject to AS 42.45.060,the department may make loans from the rural electrification revolving loan fund to electric utilities certified by the Alaska Public Usilities Commission.A loan from the fund may be made only for the purpose of extending new electric service into an area of the state that an electric utility may serve under a ceruficate of public convenience and necessity issued by the Alaska Public Utilities Commission.A loan may be made from the fund to an electric utility if the utility invests the money necessary to provide one pole,one span of line,one transformer,and one service drop for each consumer for whom immediate service would be provided by the extension of electric service.However,a loan may not be made from the fund unless (1)the loan is recommended by a loan advisory committee appointed under AS 42.45.030;and (2)the extension of electric service would provide immediate service to at least three consumers. (c)A loan from the rural electrification revolving loan fund shall bear an annual rate of interest of two percent of the unpaid balance of the loan. (d)When the department makes a loan under this section,the electric utility receiving the loan shall, (1)in addition to the rates that it is authorized to charge,charge the consumers served by the electric service extended with the loan proceeds an amount sufficient to pay the interest costs of the loan; (2)pay to the department annually an amount equal to (A)interest of two percent on the unpaid balance of the loan; and (B)payments on the unpaid balance of the principal of the loan for each new consumer served by the electric service extended with the loan proceeds;payments on the unpaid balance of the principal of the loan shall be HCS CSSB 106(FIN)-6- Ae NE ER aE LTT We Sade nt Oia as afeoBNDn&|]No=- SSRBNURKERRORHKSSRURREGKROSChapter 18 made at a rate equal to the difference between the actual cost of making the service connection to the consumers and the minimum invesunent per consumer required of the uality before a loan is made under (b)of this section. (e)The department shall (1)adopt regulations necessary to carry out the provisions of this section; (2)administer the rural electrification revolving loan fund;and (3)submit to the legislarure within the first 10 days of each regular legislative session a report of actions taken by the department under this section and an accounting of the rural electrification revolving loan fund. (f)Money in the rural electrification revolving loan fund may be used by the legislature to make appropriations for costs of administering the fund. (g)On June 30 of each fiscal year the unexpended and unobligated cash balance of the fund that is attributable to loans owned by the fund lapses into the general fund. (h)In this section, (1)"consumer”means a person or a governmental agency,if the person or governmental agency requests and offers to pay for electrical service to a facility or part of a facility;the department shall consider a person who,or a governmental agency that,offers to pay for electrical service to several facilities to be a separate consumer for each facility,if each facility is physically separate from another facility, other than through electric service lines,and if the person or governmental agency requests and offers to pay for electrical service to each facility; (2)"facility”means a structure capable of receiving and using electrical energy;and (3)"governmental agency”includes,with respect to the state or federal government or a municipal government,a legislative body,board of regents, administrative body,board,commission,committee,subcommittee,authority,council, agency,public corporation,school board,department,division,bureau,or other subordinate unit,whether advisory or otherwise,of the state,federal,or municipal government. -7-HCS CSSB 106(FIN) %OoOoNDUN&w™NwmMNNNOelt-- SveWAAROKES2=sSsSsRBRUrnrenChapter 18 Sec.42.45.030.LOAN ADVISORY COMMITTEE.When an application for a rural electrification loan is submined to the department under AS 42.45.020,the department shall appoint a local advisory committee from persons residing in the area that the applicant utility is certufied to serve.The loan advisory committee shall consider the loan application and shall recommend whether the loan application is to be approved or disapproved.The loan advisory committee may make a favorable recommendation only if it determines that development in the area of the proposed extension of electric service is likely to provide for full repayment of the loan under AS 42.45.020(d)within 10 years.In making that determination,the committee shall consider (1)permanence of the premises to be served by the extension; (2)land use patterns in the area; (3)access for the line that would be installed with loan proceeds; (4)availability of other utility service in the area;and (5)the economic feasibility of the extension of electric service with the proceeds of the loan. _Sec.42.45.040.SOUTHEAST ENERGY FUND.The Southeast energy fund is established as a separate fund.The fund consists of money transferred to it under AS 42.45.050.The department may make grants from the Southeast energy fund to utilities participating in the power transmission intertie between the Swan Lake and Tyee Lake hydroelectric projects for power projects,for repayment of loans,and for payments on bonds. Sec.42.45.050.FOUR DAM POOL TRANSFER FUND.(a)The four dam pool transfer fund is established in the department.The fund consists of repayments of principal and income that would have been deposited in the former power development revolving loan fund under former AS 44.83.500. (b)Subject to appropriation,the department shall transfer the balance of the four dam pool transfer fund each month in accordance with this subsection.Subject to appropriation (1)40 percent of the balance in the four dam pool transfer fund shall be cransferred to the power cost equalization and rural electric capitalization fund to HCS CSSB 106(FIN)-8- | 1 2 3 4aC 6aC; 8i, 10 Il 12 pmaAfmw&_pmsoOo©==aSluClle-oe"aAChapter 18 be used for power cost equalization and rural electric projects; (2)40 percent of the balance in the four dam pool transfer fund shall be transferred to the Southeast energy fund to be used for power projects for utilicies parucipating in the power transmission intertie berween the Swan Lake and Tyee Lake hydroelectric projects;and (3)20 percent of the balance in the four dam pool transfer fund shall be transferred to the power project fund to be used for statewide utility projects. Sec.42.45.060.APPROVAL BY LOAN COMMITTEE AND LEGISLATURE.(a)A loan committee consisting of seven members is established. The committee is composed of the commissioner of community and regional affairs, the commissioner of commerce and economic development,the director of management and budget,or the designees of the commissioners or the director,and four public members. (b)The public members of the committee are appointed by and serve at the pleasure of the governor.Public members serve staggered four-year terms.Only one public member may be appointed from each judicial district described in AS 22.10.010.Public members of the committee serve without compensation but are entided to travel and per diem as provided for members of boards and commissions under AS 39.20.180.A public member of the commitee serves until a successor is appointed.An appointment to fill a vacancy among the public members on the committee is for the remainder of the unexpired term. (c)The commissioner of community and regional affairs serves as chair of the committee.The committee may elect other officers as necessary.A majority of the members of the committee constitute a quorum and may exercise the powers of the committee. (d)A meeting by an electronic medium as provided in this subsection has the same legal effect as a meeting in person.The comminee may meet and transact business by an electronic medium if (1)public notice of the time and locations where the meeting will be held by an electronic medium has been given in the sare manner as if the meeting were held in a single location; -9-HCS CSSB 106(FIN) ©GBHDAOO&|WweSweNSlllevemSoeOBIARARaUNESBAURKESChapter 18 (2)participants and members of the public in attendance can hear and have the same right to participate in the meeting as if the meeting were conducted in person;and (3)copies of pertinent reference materials,statutes,regulations,and audio-visual materials are reasonably available to participants and to the public. (e)A member of the committee may not vote on a resolution of the committee relating to a lease or contract to be entered into by the department under this chapter if the member is a party to the lease or contract or has a direct ownership or equity interest in a firm,partnership,corporation,or association that is a party to the contract or lease.When abstaining from voting,the member must disclose the reason for the abstention.4 member who is a member of an electric cooperative that is organized under or subject to AS 10.25 (Electric and Telephone Cooperative Act)may vote on a resolution relating to a contract or lease to which that cooperative is a party.The member shall disclose the cooperative membership at the ame of voting.A resolution of the committee that is approved by a majority of the members present who are not barred from voting under this subsection is a valid action of the committee for all purposes. _ (f).Except for loans from the bulk fuel revolving loan fund (AS 42.45.250), the department shall submit the loans that the department proposes to approve under this chapter to the committee for the committee's review.The department may not enter into a loan for an arnount equal to or greater than $500,000 unless the committee approves the loan or unless the loan has received legislative approval under (g)of this section.The department may not enter into a loan for an amount less than $500,000 for a period of 30 days after submission of the proposal to the committee.If,within the 30 days,the committee notifies the department that it intends to review a loan for less than $500,000,the department may not enter into the loan unless it is approved by the committee. (g)The department may not enter into a loan for a major project unless it has legislative approval of the project and the amount.An appropriation for the loan that names the project subject to this subsection constitutes approval under this subsection.} -Projects subject to legislative approval under this subsection include HCS CSSB 106(FIN).10 ooeoNDAhm|WWYMm-_pos=©Chapter 18 (1)a project in which the cumulative state monetary involvement, through loans,grants,and bonds,is at least $5,000,000;or (2)a project for which a loan of more than $5,000,000 has been requested. ARTICLE 2.POWER COST EQUALIZATION AND RURAL ELECTRIC CAPITALIZATION. Sec.42.45.100.POWER COST EQUALIZATION AND RURAL ELECTRIC CAPITALIZATION FUND.(a)The power cost equalization and rural electric capitalization fund is established as a separate fund for the purpose of (1)equalizing power cost per kilowatt-hour statewide at a cost close to or equal to the mean of the cost per kilowatt-hour in Anchorage,Fairbanks,and Juneau by paying money from the fund to eligible electric utilities in the state;and (2)to make grants to eligible utilities under AS 42.45.180 to improve the performance of the utility. (b)The fund shall be administered by the department as a fund distinct from the other funds of the department.The fund is composedof (1)money appropriated to provide power cost equalization to eligible electric ualities and to provide grants for utility improvements;and (2)interest earned on those appropriations. (c)The fund is not a dedicated fund. Sec.42.45.110.ENTITLEMENT TO POWER COST EQUALIZATION.(a) The costs used to calculate the amount of power cost equalization for all electric utilides eligible under AS 42.45.100 -42.45.150 include all allowable costs,except "return on equity,used by the Alaska Public Utilities Commission to determine the revenue requirement for electric utilities subject to rate regulation under AS 42.05. The costs used in determining the power cost equalization per kilowart-hour shall exclude any other type of assistance that reduces the customer's costs of power on a kilowatt-hour basis and that is provided to the electric utility within 60 days before the commission determines the power cost equalization per kilowatt-hour of the electric utility.In calculating power cost equalization,the commission may not consider validated costs or kilowatt-hour sales associated with a United States Department of -I1-HCS CSSB 106(FIN) oOeNDWH&|NWom_-__=>lllot-_-CVoenrRtARADORESSChapter 18 Defense facility. (b)An eligible electric utility is ended to receive power cost equalizarion .(1)for sales of power to local community facilities,calculated in the aggregate for each community served by the electric utility,for actual consumption of not more than 70 kilowatt-hours per month for each resident of the community;the number of community residents shall be determined under AS 29.60.020;and (2)for actual consumption of not more than 700 kilowart-hours per month sold to each customer in all classes served by the electric udility except (A)customers of the utility under (1)of this subsection;and (B)customers that are state or federal offices or state or federal facilities other than public schools. (c)The amount of power cost equalization provided per kilowatt-hour under (b)of this section may not exceed 95 percent of the power costs,or the average rate per eligible kilowart-hour sold,whichever is less,as determined by the department. However, (1)during the state fiscal year that began July 1,1993,the power costs for which power cost equalization were paid to an electric udlity were limited to minimum power costs of more than 9.5 cents per kilowatt-hour and less than 52.5 cents per kilowatt-hour, (2)during each following state fiscal year,the department shall adjust the power costs for which power cost equalization may be paid to an electric udility based on the weighted average retail residential rate in Anchorage,Fairbanks,and Juneau;and (3)the power cost equalization per kilowatt-hour may be determined for a utiliry without historical kilowatt-hour sales data by using kilowatt-hours generated. (d)An electric utility whose customers receive power cost equalization under AS 42.45.100 -42.45.150 shall set out in its tariff the rates without the power cost equalization and the amount of power cost equalization per kilowatt-hour sold.The rate charged to the customer shall be the difference between the two amounts.Power cost equalization paid under AS 42.45.100 -42.45.150 shall be used to reduce the cost HCS CSSB 106(FIN)- +12- ooeosDA&|]NHme|tlgrtcodano_o©ertAwAREBRESChapter 18 of all power sold to local community facilides,in the aggregate,to the extent of 70 kilowatt-hours per month per resident of the community,and to reduce the cost of the first 700 kilowatt-hours per customer per month for all other classes served by the electric utility except state and federal offices and state and federal facilides other than public schools. (e)The power cost equalization program shall be administered by the | department based on a determination by the deparunent under (a)and (c)of this section of power cost equalization per kilowart-hour for each eligible electric utlity. (f)The department may not deny an eligible electric utility power cost equalization because complete cost information is not available.The department shall assist an eligible electric utility that is exempt from rate regulation under AS 42.05 to provide the cost information the department considers necessary to comply with AS 42.45.100 -42.45.150.Only power costs that are supportable may be considered in calculating power cost equalization.Each electric utility is responsible for keeping records that provide the information necessary to comply with AS 42.45.100 - 42.45.150 including records of monthly kilowart-hour sales or generation,monthly fuel balances,fuel purchases,and monthly utility fuel consumption. (g)The department shall determine the cost of fuel for each eligible electric utility using the procedure for approving fuel cost rate adjustments of electric utilities subject to rate regulation under AS 42.05. (h)Each electric utility receiving power cost equalization approved by the department shall (1)report monthly to the department within the time and in the form the department requires;and (2)use operational equipment designed to meter individual utility customer power consumption and to determine and record the utility's overall fuel consumption. (i)The department shall review the report required under (h)of this section. After review and approval of the report,the department shall,subject to appropriation, pay to each eligible electric utility an amount equal to the power cost equalization per kilowatt-hour determined under (a)and (c)of this section,multiplied by the number -13-HCS CSSB 106(FIN) aoeNDAWH&|&Wweeeeeeeeeeranrneaose=&sChapter 18 _of kilowam-hours eligible for power cost equalization that were sold during the preceding month to all customers of the utility under (b)of this section.Payment shall be made by the department within 30 days after receipt from the utility of the report required under (h)of this section.If appropriations are insufficient for payment in full, the amount paid to each electric udlity is reduced on a pro rata basis.) Sec.42.45.120.NOTICE TO CUSTOMERS.If an electric utility receives power cost equalization under AS 42.45.100 -42.45.150,the utility shall either give to its electric service customers eligible under this program,for each period for which the payment is received, (1)the following notice: NOTICE TO CUSTOMER For the current billing period the utility will be paid under the State of Alaska's power cost equalization program (AS 42.45.100)to assist the utility and its customers in reducing the high cost of generation of electric energy.Your total electrical service cost $...... Less state equalization $...... Your charge $......;0F (2)a notice approved by the department that provides electric service customers the same information provided by the notice in (1)of this section. Sec.42.45.130.COST MINIMIZATION.(a)In order to qualify for power cost equalization,each electric utility shall make every reasonable effort to minimize administrative,operating,and overhead costs,including using the best available technology consistent with sound utility management practices.In reviewing applications for power cost equalization,the department may require the elimination of unnecessary operating expenses.Each eligible electric utility shall cooperate with appropriate state agencies to implement cost-effective energy conservation measures and to plan for and implement feasible alternatives to diesel generation. (b)In this section,"energy conservation measures”include weatherization and other insulating methods,utilization of waste heat,appropriate sizing of new generating equipment,and other programs of the state or federal government intended and HCS CSSB 106(FIN)-14- eoOoNADR&|NH=m-_-_-_-=-|hlUrhlO©SUAAEOHRES20 Chapter18 -available for energy conservation. Sec.42.45.140.CUSTOMER PETITIONS.If the department receives a petiaon requesting power cost equalization,signed by at least 25 percent of the customers of an electric utility that is subject to rate regulation under AS 42.05 and that has not applied for power cost equalization under AS 42.45.100 -42.45.150,the department shall require the utility to submit a power cost equalization application. Upon a determination of eligibility for power cost equalization,the utility,as a part of its service,shall receive power cost equalization and pass power cost equalization benefits to its customers under AS 42.45.100 -42.45.1590. Sec.42.45.150.DEFINITIONS FOR AS 42.45.100-42.45.150.In AS 42.45.100 -42.45.150, (1)"community facility”means a water and sewer facility,public outdoor lighting,charitable educational facility,or community building whose operations are not paid for by the state,the federal government,or private commercial interests; (2)"eligible electric utility”or "electric utility”means a public, cooperative,or other corporation,company,individual,or association of individuals, and includes the lessees,trustees,or receivers appointed by a court,that (A)owns,operates,manages,or controls a plant or system for the furnishing,by generation,transmission or distribution,of electric service to the public for compensation; (B)during calendar year 1983,had a residencial consumption level of power eligible for power cost equalization under former AS 44.83 of less than 7,500 megawatt hours or had a residential consumption level of power eligible for power cost equalization under former AS 44.83 of less than 15,000 megawatt hours if the utility served two or more municipalities or unincorporated communities;and (C)during calendar year 1984,used diesel fired generators to produce more than 75 percent of the electrical consumption of the utility;an electric utiliry thar is a subsidiary of another electric utility is an "eligible electric utility”if the operations of the subsidiary,considered separately,meet -15-HCS CSSB 106(FIN) oeNHDONH&|]hom-=hurlOl©eAAREDN=©Chapter 18 the eligibiliry requirements of AS 42.45.100 -42.45.150;if an electric utility did not receive power cost assistance in 1983 but is otherwise eligible for power cost equalization under AS 42.45.100 -42.45.150,the utility is an "eligible elecuric uality”; | (3)"power costs”means costs used in determining power cost equalization under AS 42.45.110(a)and (c). Sec.42.45.160.ADJUSTMENTS TO POWER COST EQUALIZATION.(a) The commission may adjust the power cost equalization per kilowatt-hour,determined under AS 42.45.100 -42.45.150,payable to an electric utility that is subject to rate regulation under AS 42.05 if the (1)commission has approved a fuel cost rate adjusmment caused by an increase or decrease in the electric utility's cost of fuel; (2)commission has approved a permanent or interim rate increase or decrease that establishes a higher or lower power cost, (3)authority has discovered,in reviewing the monthly data submitted by the electric utility,discrepancies that require adjustment of the power cost equalization;or ) (4)authority determines that appropriations are insufficient to finance full payments to eligible electric utilities. (b)An electric utility that is eligible to receive power cost equalization under this section and that receives power cost equalization per kilowatt-hour approved by the department shall report monthly to the department within the ime and in the form the department requires.An electric utility shall report (1)the power cost equalization per kilowatt-hour approved by the department, (2)the total kilowatt-hours sold to each class of customer during the preceding month; (3)the total kilowatt-hours eligible for power cost equalization under this section sold to each class of customer during the preceding month; (4)the total kilowatt-hours generated during the preceding month,if available; HCS CSSB 106{FIN)-16- eooNDA&|BWeeeeeeCeerIaneeunwnroChapter 18 ; (5)any department approved amendments to the schedule of rates in effect during the preceding month;and (6)an increaseordecreasein the current unit price of fuel fromthe base price used by the department in determining power costs if the change is expected to result in a subsequent power cost equalization adjustment. (c)The provisions of AS 42.45.100 -42.45.150 relating to the determination of the amount of power cost equalization and payment of the equalization assistance apply to equalization assistance under this section. Sec.42.45.170.EQUALIZATION ASSISTANCE TO UNREGULATED UTILITIES.(a)An electric utility that is not subject to rate regulation by the Alaska Public Utilities Commission under AS 42.05 may receive power cost equalization if the utility is otherwise eligible for equalization assistance under AS 42.45.100 - 42.45.150 and if the utility (1)files with the department financial data necessary to determine the power cost equalization per kilowaz-hour as prescribed by the department and that is in compliance with AS 42.45.100 -42.45.150, (2)reports monthly to the department,within the time and in the form required,the information required in (b)of this section; | (3)sets rates (A)that consider the power cost equalization provided under AS 42.45.100 -42.45.150 by subtracting from its revenue requirements for electric services the power cost equalization per kilowatt-hour that it is eligible to receive;and (B)under which the power cost equalization provided in AS 42.45.060 -42.45.110 is applied as a credit only against the cost of kilowatt-hours eligible for equalization assistance under AS 42.45.100 - 42.45.150 that are consumed by each customer in any month; (4)allows audits that the department determines are necessary to ensure compliance with this section;and (5)furnishes its electric service customers eligible under this program a notice as specified in AS 42.45.120. e17-HCS CSSB 106(FIN) Chapter 18 (b)An electric utility that is eligible to receive power cost equalization under this section shall report in accordance with (a)(2)of this section(1)the power cost equalization per kilowatt-hour approved by the department,(2)the total kilowatt-hours sold to each class of customer during the preceding month;(3)the total kilowatt-hours eligible for power cost equalization underthissectionsoldtoeachclassofcustomerduringtheprecedingmonth;(4)the total kilowatt-hours generated during the preceding month,if available;(5)any amendments to the schedule of rates in effect during the preceding month;and(6)an increase or decrease in the current unit price of fuel from thebasepriceusedbythedeparmnentindeterminingpowercostsifthechangeisexpectedtoresultinasubsequentequalizationassistanceleveladjustment.(c)An electric utility that is eligible to receive power cost equalization underthissectionmayhaveitspowercostequalizationperkilowatt-hour determinacon changed by the department if the department(1)has verified an increase or decrease in the electric utiliry's cost of fuel;(2)has verified an increase in rates based on an increase in costs:(3)has discovered,in reviewing the monthly data submitted by theelectricutility,discrepancies that require adjustment of the power cost equalization:or ,(4)determines that appropriations are insufficient to finance full payments to eligible electric utilides.(d)The provisions of AS 42.45.100 -42.45.150 relating to the determinationoftheamountofpowercostequalizationandpaymentoftheequalizationassistance apply to equalization assistance under this section. | (e)An application for power cost equalization by an electric utility that isostunderthissectiondoesnotextendthejurisdictionoftheeligibletoreceivepower¢Alaska Public Utilities Commission beyond that established by AS 42.05. HCS CSSB 106(FIN)-18-| omeAA&|bom=-_-==lleriauweausse-s= SSRRRERREORRSSChapter18 Sec.42.45.180.GRANTS FOR UTILITY IMPROVEMENTS.(a)The department may make a grant from the fund for an eligible uciliry for a small power project that will reduce the cost of generating or wansmitting power to the customers of the utility.The amount of the grant may not exceed 75 percent of the cost of the project.The department may not make a grant under this section unless the eligible utiliry has secured financing for 25 percent of the cost of the project from a source other than the power cost equalization and rural electric capitalization fund,as provided under (c)of this section. (b)The department may not allocate more than three percent of the balance in the fund to grants under this section in a fiscal year. (c)In determining whether an eligible utility has secured financing for 25 percent of the cost of the project from a source other than the power cost equalization and rural electric capitalization fund,the department shall accept solicited and unsolicited proposals for third party financing or for a joint venture between the utility and an entity from the private sector provided that the private sector participant has (1)a valid state business license;a (2)a resolucion or letter of agreement executed by the eligible utility agreeing to participation by the private sector participant (3)a business plan that illustrates how the proposed project will reduce the cost of generating or transmitting power to the customers of the utility. (d)In this section, (1)"eligible utility”has the meaning given in AS 42.45.150, (2)"project”includes (A)power generation systems; (B)transmission systems; (C)distribution systems; (D)metering systems, (E)energy store systems; (F)energy conservation programs;and (G)bulk fuel storage facilities; (3)"small power project"means a new or modified projectthatwill -19-HCS CSSB 10&FiN) ©co4AHW&|]Nw=gmt-=©Chapter 18 either generate,store,or conserve no more than 1.5 megawatts of power or provide a metering system,transmission system,distribution system,or bulk fuel storage facility that has an estimated cost of less than $3,000,000. Sec.42.45.190.DEFINITION FOR AS 42.45.100 -42.45.190.In AS 42.45.100 -42.45.190,"fund”means the power cost equalization and rural electric capitalization fund established under AS 42.45.100. ARTICLE 3.ELECTRICAL SERVICE EXTENSION FUND. Sec.42.45.200.ELECTRICAL SERVICE EXTENSION FUND ESTABLISHED.(a)The electrical service extension fund is established as a separate fund in the department.The fund consists only of money appropriated to it by the legislature. (b)The department may make grants from the electrical service extension fund to certificated electric utilities and to electric utilities exempt from certification under AS 42.05.711,as a first priority,to pay for costs of site preparation and construction for the extension of electrical service to private residences and small businesses not currently served by an electric utility and,as a second priority,for making improvements to existing utlides.The amount of a grant made under this section may not exceed 60 percent of the total cost of construction of the project.The costs considered in making a grant may not include costs of planni-:,feasibility studies,or design. (c)An electric utility that has received a grant under this section may charge a connection fee for initial connection to the electrical service made available because of the construction.The connection fee for each residential or commercial structure shall conform to the line extension policy of the utility. (d)The department shall adopt regulations under AS 44.62 (Administrative Procedure Act)to implement this section. (e)In this section,"certificated”means holding a certificate of public -convenience and necessity issued by the Alaska Public Utilines Commission under AS 42.05. ARTICLE 4.BULK FUEL REVOLVING LOAN FUND. Sec.42.45.250.BULK FUEL REVOLVING LOAN FUND.(a)The bulk fuel HCS CSSB 106(FIN)-20- ooOoNAA&&NwoeCOIAREORESS7 Chapter 18 revolving loan fund is established in the department to assist communities in purchasing bulk fuel.A community,or a private individual who has written endorsement from the governing body of the community,is eligible for a loan from the bulk fuel revolving loan fund for a bulk fuel purchase. (b)Money in the fund may be used by the legislature to make appropriations for costs of administering this section. (c)The foreclosure expense account is established as a special account within the bulk fuel revolving loan fund.This account is established as a reserve from fund equity. . (d)The department may spend money credited to the foreclosure expense account when necessary to protect the state's security interest in collateral on loans made under this section or to defray expenses incurred during foreclosure proceedings after a default by an obligor. (e)Loans made from the bulk fuel revolving loan fund to one borrower in any fiscal year are not subject to AS 42.45.060 and (1)may not exceed $100,000; (2)shall be repaid in one yearorless;and (3)may not exceed 90 percent of the wholesale price of the fuel purchased. (f)Interest may be charged on a loan made from the bulk fuel revolving loan fund.Interest shall be charged on a loan at a rate equal to the percentage of the average weekly yield of municipal bonds for the 12 months preceding the date of the loan,as determined by the department from municipal bond yield rates reported in the 30-year revenue index of the Weekly Bond Buyer.However,if the department finds that a community cannot afford to repay a portion of interest on a loan,and makes a determination in writing,the department may reduce or eliminate the interest rate applicable to the loan. (g)Repayments of the principal,the interest,and the money chargeable to principal or interest that is collected through liquidation by foreclosure or other process on a loan made under this section shall be paid into the bulk fuel revolving loan fund. The fund is noc a dedicated fund. -21-.HCS CSSB 106(FLN) 4oooDAW&WYWw=eeeeeeoewARADNReSSChapter 18 (h)The department may contract for the adminiszration of the bulk fuel loan program established in this section. (i)The department shall dispose of property acquired through default or foreclosure of a loan made under this section.Disposal shall be made in a manner that serves the best interests of the state,and may include the amortization of payments over a period of years. (j)The department may adopt regulations necessary to carry out the provisions of this section,including regulations to establish reasonable fees for services provided and charges for collecting the fees. (k)The department may collect the fees and collection charges established under (i)of this section and shall deposit the money in the general fund. (1)In this section, (1)"bulk fuel storage faciliry”means a storage tank capable of holding at least 10,000 gallons of petroleum fuel;and - ) (2)"community”means an organized municipality or an unincorporated village that is a social unit,with a population of less than 2,000 people. ARTICLE $5.JOINT ACTION AGENCIES. Sec.42.45.300.JOINT ACTION AGENCIES.Two or more public utilities may form a joint action agency for the purpose of participation in the design, construction,operation,and maintenance of a generating or transmission facility and to secure financing for carrying out the design,construction,operation,and maintenance of the facility.A joint action agency may request the Alaska Industrial Development and Export Authority to issue revenue bonds for projects of the agency. A joint action agency has the powers of a public utility under AS 42.05. ARTICLE 6.MISCELLANEOUS PROVISIONS. Sec.42.45.400.ASSISTANCE TO RURAL UTILITIES.The department shall provide technical assistance to rural utilities including catastrophe prevention programs and other training programs for utility projects.The departmentshallproviderural utilities with the technical assistance and training that the utilities need to improve the efficiency,safety,and reliability of their power systerns and to prevent emergency situations from developing.At a minimum,the assistance and training must include HCS CSSB 106(FIN)-22- efoofoNDAhm|NW|ntlendladilon,aaaYCetAwaWH=Oweezy&Chapter 18 information on (1)reduci-z diseribution line losses; (2)installacion of generators that are more fuel efficient, (3)preventative maintenance programs; (4)safety inspections; (5)installing and maintaining waste heat systems; (6)improved metering systerns; (7)improved management and administration;and (8)coordinating regional activities,including circuit rider maintenance programs.| (b)In providing rural utilities with technical assistance and training,the department shall give priority to contracting with the private sector for these services. Sec.42.45.410.RELATIONSHIPWITHPRIVATE SECTOR.The department shall,to the maximum extent feasible,carry out its powers and duties under this chapter by entering into contracts with appropriate entities in the private sector. /ARTICLE 7.GENERAL PROVISIONS. Sec.42.45.990.DEFINITIONS.In this chapter,unless the context otherwise requires, (1)"department”means the Department of Community and Regional Affairs; | (2)"feasibility study” (A)means a study conducted to establish the economic and environmental practicality of completing a proposed power project; (B)includes engineering and design work to meet the requirements for submission of a license application for a proposed new project to the Federal Energy Regulatory Commission; (3)"power”includes electrical energy generated,distributed,bought, or sold for lighting,heating,power,and every other useful purpose; (4)"power project”or "project”means a plant,works,system,or facility,together with related or necessary facilities and appurtenances,including a divided or undivided interest in or a right to the capacity ofa power project or project, -23- | HCS CSSB 106(FIN) owONADA”A&|GWB=e|EL>inllIey= SvCanriawadBdbnres2OBChapter 18 that is used or is useful for the purpose of 7 (A)electrical or thermal energy production other than nuclear { energy production; (B)waste energy utilization and energy conservation;or (C)transmission,purchase,sale,exchange,and interchange of electrical or thermal energy,including district heating or interties; _(5)"reconnaissance study"means a study conducted to assess the present and future electrical and thermal energy needs of an area. *Sec.6.AS 44.47.050(a)is amended to read: (a)The deparunent may (1)advise and assist local governments; (2)serve as staff for the Local Boundary Commission; (3)conduct studies and carry out experimental and pilot projects for the purpose of developing solutions to community and regional problems; (4)promote cooperative solutions to problems affecting more than one.community or region,including joint service agreements,regional compacts,and other y forms of cooperation; (5)serve as a clearinghouse for information useful in solution of community and regional problems,and channel to the appropriate authority requests for information and services; (6)advise and assist community and regional governments on matters of finance,including but not limited to bond marketing and procurement of federal funds;) (7)prepare suggested guidelines relating to the content of notice of bond sale advertisements,prospectuses,and other bonding matters issued by local governments; (8)administer state funds appropriated for the benefit of unorganized regions within the state,allowing for maximum participation by local advisory councils and similar bodies; |(9)carry out those administrative functions in the unorganized borough (that the legislamure may prescribe; HCS CSSB 106(FIN)-24- oofoeNtDHkh|NHme|endlagricmtanSn)CeeriawadsteesCkapter 18 -(10)study existing and proposed laws and stase activities thar affect community and regional affairs and submit to the governor recommended changes in chose laws and activides; (11)coordinate activities of the state that affect community and -regional affairs; (12)assist in the development of new communities and serve as the agent of the state for purposes of participation in federal programs relating to new communities; (13)supervise planning,management,and other activities required for local eligibility for financial aid under those federal and state programs that [WHICH] provide assistance to community and regional govetnments; (14)administer state and,as appropriate,federal programs for revenue sharing,grants,and other forms of financial assistance to community and regional governments; (15)provide staff assistance,as requested,to the Rural Affairs Commission; (16)apply for,receive,and use funds from federal and other sources, public or private,for use in carrying out the powers and duties of the department; (17)=request and utilize the resources of other agencies of state government in carrying out the purposes of this chapter to the extent such utilization is more efficient than maintaining departmental staff,reimbursing the other agencies when appropriate; (18)(REPEALED (19)]advise and assist municipalities on procedures of assessment, valuation,and taxation,and notify municipalities of major errors in those procedures; the i 42.45; (20)carry out other functions and duties,consistent with law,necessary Or appropriate to accomplishthepurposeofthischapter. *Sec.7.AS 44.83.030 is repealed and reenacted to read: Sec.44.83.030.MEMBERSHIP OF THE AUTHORITY.The directors of the Alaska Energy Authority are the members of the Alaska Industrial Development and -25-HCS CSSB 106(FLN) ooNDNHh|YW-== ©12 Chapter 18 Export Authority. ®Sec.&AS 44.83.040(a)is amended to read: (a)The chair and vice-chair of the Alaska Industrial Development_and Export Authority shall_serve_as_officers_of the Alaska Energy Authority (DIRECTORS SHALL ELECT ONE OF THEIR NUMBER AS CHAIRMAN AND MAY ELECT OTHER OFFICERS THEY DETERMINE DESIRABLE].The powers of the Alaska Energy Authority [AUTHORITY]are vested in the directors,and three {FOUR}directors of the authority constmite a quorum.Action may be taken and motions and resoludons adopted by the Alaska Energy Authority [AUTHORITY]ar a meeting by the affirmative vote of a majority of the directors.The directors of the Alaska Energy Authority [AUTHORITY]serve without compensation,but they shall receive the same travel pay and per diem as provided by law for board members under AS 39.20.1809. *Sec.9.AS 44.83.070 is amended to read: ) Sec.44,83.070.PURPOSE OF THE AUTHORITY.The purpose of the authority is to promote,develop,and advance the general prosperity and economic welfare of the people of the state by providing a means of (CONSTRUCTING, ACQUIRING,}financing and operating power projects and facilities thar recover and use waste energy. . *Sec.10,AS 44.83.080 is amended to read: Sec.44.83.080.POWERS OF THE AUTHORITY.In furtherance of its corporate purposes,the authority has the following powers in addition to its other powers: (1)to sue and be sued; (2)to have a seal and alter it at pleasure; (3)to make and alter bylaws for its organization and internal management; (4)to adopt regulations governing the exercise of its corporate powers; (5)to (ACQUIRE,WHETHER BY CONSTRUCTION,PURCHASE, GIFT OR LEASE,AND TO]improve,equip,operate,and maintain power projects; (6)to issue bonds to carry out any of its corporate purposes and HCS CSSB 106(FIN).°26- ©ONDRA&|wm-etekttCoerIANBRDHESChapter 18 powers,including [THE ACQUISITION OR CONSTRUCTION OF A PROJECT TO BE OWNED OR LEASED,AS LESSOR OR LESSEE,BY THE AUTHORITY,OR BY ANOTHER PERSON,OR THE ACQUISITION OF ANY INTEREST IN A PROJECT OR ANY RIGHT TO CAPACITY OF A PROJECT,]the establishment or "increase of reserves to secure or to pay the bonds or interest on them,and the payment of all other costs or expenses of the authority incident to and necessary or convenient to Carry out its corporate purposes and powers; (7)to sell,lease as lessor or lessee,exchange,donate,convey,or encumber in any manner by mortgage or by creation of any other security interest,real or personal property owned by it,or in which it has an interest,when,in the judgment of the authority,the action is in furtherance of its corporate purposes; (8)to accept gifts,grants,or loans from,and enter into contracts or other transactions regarding them,with any person; (9)to deposit or invest its funds,subject to agreements with bondholders; (10)to enter into contracts with the United States or any person and, subject to the laws of the United States and subject to concurrence of the legislature, with a foreign country or its agencies,for the financing,(CONSTRUCTION, ACQUISITION,]operation,and maintenance of all or any part of a power project, either inside or outside the state,and for the sale or transmission of power from a projectorany right to the capacity of it or for the security of any bonds of the authority issued or to be issued for the project,| (11)t0 enter into contracts with any person and with the United States, and,subject to the laws of the United States and subject to the concurrence of the legislature,with a foreign country or its agencies for the purchase,sale,exchange, transmission,or use of power from a project,or any right to the capacity of it; (12)to apply to the appropriate agencies of the state,the United States, and to a foreign country and any other proper agency for the permits,licenses,or approvals as may be necessary,and to [CONSTRUCT,]maintain and operate power _projects in accordance with the licenses or permits,and to obtain,hold,and use the licenses and permits in the same manner as any other person or operating unit; -27-HCS CSSB 106(FLN) afChapter 18 (13)[TO PERFORM RECONNAISSANCE STUDES,FEASIBLITY STUDIES,AND ENGINEERING AND DESIGN WITH RESPECT TO POWER PROJECTS; (14)]to enter into contracts or agreernents with respect to the exercise of any of its powers,and do all things necessary or convenient to carry out its .corporate purposes and exercise the powers granted in this chapter, (14)[((15)TO EXERCISE THE POWER OF EMINENT DOMAIN IN ACCORDANCE WITH AS 09.55.240 -09.55.460; (16)]to recommend to the legislature . (A)(THE ISSUANCE OF GENERAL OBLIGATION BONDS OF THE STATE TO FINANCE THE CONSTRUCTION OF A POWER PROJECT IF THE AUTHORITY FIRST DETERMINES THAT THE PROJECT CANNOT BE FINANCED BY REVENUE BONDS OF THE AUTHORITY AT REASONABLE RATES OF INTEREST; (B)]the pledge of the credit of the state to guarantee repayment of all or any portion of revenue bonds issued to assist in construction of power projects;. (B)[(C)]an appropriation from the generalfund (i)for debt service on bonds or other project purposes; (ii)to reduce the amount of debt financing for the project, ((D)AN APPROPRIATION TO THE POWER PROJECTFUNDFORAPOWERPROJECT: (E)REPEALED , (F)DEVELOPMENT OF A PROJECT UNDER FINANCING ARRANGEMENTS WITH OTHER ENTITIES USING LEVERAGED LEASES OR OTHER FINANCING METHODS; (G)AN APPROPRIATION FOR A POWER PROJECT ACQUIRED OR CONSTRUCTED UNDER AS 44.83.380 -44.83.425 (ENERGY PROGRAM FOR ALASKA)]. HCS CSSB 106(FIN)-28- "Wy Chapter18 *Sec.11.AS 44.83.090(a)is amended to read: (a)The authority shail,in addition to the other methods tha¢[WHICH]i:may find advantageous,provide a method by which municipal electric,rural electric, cooperative electric,or private electric utilides and regional electric authorities,or other persons authorized by law to engage in the discibution of electricity may secure a reasonable share of the power generated by a project,or any interest in a project,or for any right to the power and shall sell the power or cause the power to be sold at the lowest reasonable prices that (WHICH]cover the full cost of the electricity or services,including capital and operating costs,debt coverage as considered appropriate by the authoniry,and other charges that may be authorized by this chapter.Except for a contract or lease entered into under former AS 44.83.380 -44.83.425,a contract or lease for the sale,transmission,and distribution of power generated by a project or any right to the capacity of it shall provide:. (1)for payment of all operating and maintenance expenses of a project and costs of renewals,replacements,and improvements of ir; (2)for interest on and amortization charges sufficient to retire bonds of the authority issued for the project and reserves for them,plus a debt service coverage factor as may be determined by the authority to be necessary for the marketability of its bonds; |(3)for monitoring of the project by the authority or its agents; (4)for full and complete disclosure to the authoriry of all factors of costs in the transmission and distribution of power,so that rates to any persons may be fixed initially in the contract or lease and may be adjusted from time to time on the basis of true cost data; (5)for periodic revisions of the service and rates to persons on the basis of accurate cost data obtained by the accountingmethodsandsystems approved by the directors and in furtherance and effectuation of the policy declared in this chapter, (6)for the cancellation and termination of a contract or lease upon violation of its terms by any person; (7)for security for performance as the authority may consider -29-HCS CSSB 106(FIN) eewe-_Seiaeeeeee-=_--_-_-_hllotoNAAhkEHRESw[-)C8Chapter 18 practicable and advisable,including provisions assuring the continuance of the distribution and transmission of power generated by a project and the use of its facilities for these purposes;and (8)other terms not inconsistent with the provisions and policy of this chapter as the authority may consider advisable. *Sec.12.AS 44.83.110(b)is amended to read: (b)Notwithstanding any other provisions of this chapter,the trust indenture, trust agreement,secured loan agreement,or other instrument or the resolution constituting a contract with bondholders shail contain a covenant by the authority that ic will at all times maintain rates,fees,or charges sufficient to pay,and that a contract entered into by the authority for the sale,transmission,or distribution of power shall contain rates,fees,or charges sufficient to pay the costs of operation and maintenance of the project,the principal of and interest on bonds issued under the trust agreement as the same severally become due and payable,to provide for debt service coverage as considered necessary by the authority for the marketing of its bonds and to provide for renewals,replacements,and improvements of the project,and to maintain reserves required by the terms of the trust agreement.This subsection does not require a covenant that varies from a covenant entered into in accordance with the provisions of former AS 44.83.380 -44.83.425. *Sec.13.AS 44.83.382(a)is amended to read: (a)A power development fund is established in the Alaska Energy Authority to carry out the purposes of former AS 44.83.380 -44.83.425. *Sec.14.AS 44.83.384(a)is amended to read: (a)The fund may be used by the authority to provide money for (1)[RECONNAISSANCE AND FEASIBILITY STUDIES AND POWER PROJECT FINANCE PLANS PREPARED UNDER AS 44.83.177 - 44.83.181; (2)THE COST OF A POWER PROJECT,INCLUDING BUT NOT LIMITED TO COSTS OF ACQUIRING NECESSARY LICENSES,PREPARING ENGINEERING DESIGNS,OBTAINING LAND,AND CONSTRUCTING THE POWER PROJECT; HCS CSSB 106(FIN)-30- { oooONDUN&WwONoo-empMaaWRAOUERESChapter 18 (3)]the defeasance of bonds,or the payment of debt service on loans for or on an issue of bonds sold in connection with a power project constructedor acquired before the effective date of this j (2)[(4)]the cost of operating and maintaining power projects constructed or acquired before the effective date of this section;and (3)[(5)]debe service on power projects constructed or acquired before the effective date of this section. *Sec.15.AS 44.83.388(a)is amended to read: (a)The authority shall maintain records of power project allocations from the fund for each power project '(1)approved in accordance with former AS 44.83.185;and (2)for which an allocation is made from an appropriation made by the legislature without specifying an appropriation to a project. *Sec.16.AS 44.83.396(a)is amended to read: (a)A power project that wag [IS]acquired or constructedaspartofthe former energy program for Alaska is owned,and shall be administered,by the authority.. *Sec.17.AS 44.83.398(a)is amended to read: (a)The authority shall sell power produced from power projects acquired or constructed under the former energy programforAlaska.For purposesofthissection, Tyee Lake,Swan Lake,Solomon Gulch,and Terror Lake hydroelectric facilities are consideredtobeonepowerproject.This power project is referred to as the inital project. *Sec.18.AS 44.83.398(f)is amended to read:(f)The provisions of (b)of this section do not apply to an intertie that is authorized as a separate project under former AS 44.83.380.The authority shall establish and maintain separate power rate schedules applicable to each intertie that it has acquired or constructed as a separate power project under the energy program for Alaska.The power rate schedules shall produce sufficient revenue from utiliues connected by the intertie to pay (1)operation,maintenance,and equipment replacement costs of the intertie;(2)debt service of the intertie;and (3)safety inspections and -31-HCS CSSB 106(FIN) eeooSDAhh|eNHeeeeIMaWBaARESwe=oo}wN-haoesChapter 18 -investigations of the intertie by the authority.If the authority determines that an intertie has ceased to function as a separate project and has become a part of one or more other power projects as a transmission line,the power rate schedules established under this subsection shall be terminated and a wholesale power rate applicable to the former intertie shall be calculated under (b)of this section for the project or projects of which it has become a part. *Sec.19.AS 44.83.510(a)is amended to read: (a)[THE AUTHORITY MAY BORROW FROM THE FUND FOR THE PURPOSE OF FINANCING A POWER PROJECT ACQUIRED OR CONSTRUCTED BY THE AUTHORITY UNDER THE ENERGY PROGRAM FOR ALASKA (AS 44.83.380 -44.83.425).]Repayment of a loan from the former power development revolving loan fund must be made with the proceeds from the sale of power from projects in the former energy program for Alaska.Except as provided -in AS 44.83.398(i),the payments required to be made by the authority on a loan from the fund constitute debt service for the purpose of calculating the wholesale power rate in AS 44.83.398(b)(1). *Sec.20.AS 44.83.530 is amended to read: Sec.44.83.530.DEFINITIONS.In AS 44.83.500 -44.83.530, (1)"fund”means the former power development revolving loan fund; and (2)"power project”means a project acquired or constructed under the former energy program for Alaska,AS 44.83.380 -44.83.425. *Sec.21.AS 44.83.930(a)is amended to read: (a)When a project is operated by the authority,the authority shall enter into one or more contracts for the sale of electrical power,energy,transmission capacity, or service from the project.Unless the contract is entered into under former, AS 44,.83.380 -44.83.425,a contract entered into under this section must meet all .requirements of AS 44.83.090. *Sec.22.AS 44.83.990(3)is amended to read: (3)"feasibility study” (A)means a study conducted for the purpose of establishing the HCS CSSB 106(FIN)132. ©OoNDHAh&&NHNNBomloweeet=SOSCeoIABRUNESSSRBUARREGR31 Chapter 18 economic and environmental practicality of completing a proposed power project under former AS 44.83.181; (B)includes engineering and design work to meer the requirements for submission of a license application for a proposed new project to the Federal Energy Regulatory Commission; *Sec.23.AS 44.88.105(d)is amended to read: (d)The chairman of the authority shall annually,no later than January 2, certify in writing to the governor and the legislature the amount,if any,required to restore a capital reserve fund to the capital reserve fund requirement.The legislarure may appropriate to the authority the amount certified by the chairman of the authority. The authority shall deposit the amounts appropriated under this subsection during a fiscal year in the proper capital reserve fund.Nothingin this section creates a debt or liability of the state.In this subsection,"capital reserve fund”means a capital reserve fund that (1)is created under this section on or before January 1,1989;[,OR] (2)secures refunding bonds if the refunding bonds are issued to refund bonds that are secured by a capital reserve fund created under this section on or before January 1,1989;o¢ |fter the effective date of this sectionforapowertransmissionintertie. *Sec.24.AS 44.88.155(d)is amended to read: (d)A loan participation purchased by the authority with assets of the enterprise development account or with proceeds of bonds secured by assets of the enterprise development account (1)muy not exceed $10,000,000;however,in the case of a loan (2)may not be purchasedunless (A)the project applicant is not,or,if the applicant is not a single proprietorship,all members of the business enterprise or eaterprises constitutingtheproject applicant are not,in default on another loan made by -33-HCS CSSB 106(FIN) ') eeowoeYIAA&|NmNeNYNOEeellletBRRSSeSRIAREREBRESChapter 18 -the state or by a public corporation of the state;and (B)at least 20 percent of the principal amount of the loan is retained by the loan originator, (3)may not be purchased if the loan to be purchased exceeds the cost of the project or 75 percent of the appraised value of the project,whichever is less, unless the amount of the loan in excess of this limit is federally insured or guaranteed or is insured by a qualified mortgage insurance company; (4)may not be purchased if the participation in the loan to be purchased is for a term longer than three-quarters of the authority's estimate of the life of the project or 25 years from the date the loan is made,whichever is earlier, however,in the case of a loan participation for a power transmission intertie,the term n longer than 50 years from the date the loan is made; (5)may be made only if the participation in the loan to be purchased contains amortization provisions,the amortization provisions (A)must be complete and satisfactory to the authority and require periodic payments by the borrower, (B)may allow the loan originatorto amortize the portion of the loan retained by the loan originator using a shorter amortization schedule than the amortization schedule for the portion of the loan held by the authority if (i)in the authority's opinion,the project financed can support the increased debt service;and (ii)the accelerated amortization schedule is required to induce the originatortomaketheloan; (6)may be made only if the participation in the loan to be purchased is in the form and contains the terms and provisions with respect to insurance,repairs, alterations,payment of taxes and assessments,default reserves,delinquency charges, default remedies,acceleration of maturity,secondary liens,and other matters the authority prescribes;and ) (7)may be made only if the participation in the loan to be purchased is secured as to repayment by a mortgage or other security instrument in the manner the authority determines is feasible to assure timely repayment under a loan agreement HCS CSSB 106(FIN)-34- oeceoNDON&|Nm--pe--©12 Chapter18 _entered into with the borrower. *Sec.25.AS 44.88.155(g)is amended to read: (g)Notwithstanding any other provision of this section,the authority may waive or modify the requirements of this section as it considers appropriate and prudent in order to finance a project if the authority intends to own the project or in order to finance apower transmission intertie project. *Sec.26.AS 44.88.900(10)is amended to read: (10)"project”means (A)a plant or facility used or intended for use in connection with making,processing,preparing,transporting,or producing in any manner, goods,products,or substances of any kind or nature or in connection with developing or utilizing a natural resource,or extracting,smelting,transporting, converting,assembling,or producing in any manner,minerals,raw materials, chemicals,compounds,alloys,fibers,commodities and materials,products,or substances of any kind or nature; (B)a plant or facility used or intended for use in connection with a business enterprise;a (C)commercial activity by a small enterprise; (D)a plant or facility demonstrating technological advances of new methods and procedures and prototype commercial applications for the exploration,development,production,transportation,conversion,and use of energy resources; (E)infrastructure for a new tourism destination facility or for the expansion of a tourism destination facility;, *Sec.28.AS 39.50.200(b)(46);AS 44.83.010,44.83.105,44.83.162,44.83.163,44.83.164, 44.83.165,44.83.170,44.83.177,44.83.179,44.83.181,44.83.183,44.83.185,44.83.1387, 44.83.189,44.83.300,44.83.310,44.83.320,44.83.325,44.83.330,44.83.340,44.83.350, -35-HCS CSSB 106(FLN) ooONDR&ewNwPoeeeeoeCeowriananwsaanntosChapter 18 44.83.360,44.83.361,44.83.363,44.83.370,44.83.380,44.83.384(b),44.83.384(c),44.83.390, 44.83.392,44.83.400,44.83.410,44.83.500,44.83.510(b),44.83.520,44.83.600,44.83.605. 44.83.610,44.83.615,44.83.620,44.83.625,44.83.630,44.83.650,44.83.990(8),and 44.83.990(9)are repealed. *Sec.29.The Alaska Industrial Development and Export Authority may issue bonds to finance the acquisition,design,and constuction of a power transmission intertie of at least 138 kilovolts between Healy and Fairbanks and owned,for the benefit of all of the utilities participating in the intertie,by Golden Valley Electric Association,Inc.The principal amount of the bonds may not exceed $60,000,000. *Sec.30.The Alaska Industrial Development and Export Authority may issue bonds to finance the acquisition,design,and construction of a power transmission intertie of at least 138 kilovolts between Anchorage and the Kenai Peninsula to be owned,for the benefit of all of the utilities participating in the interties,by Chugach Electric Associarion,Inc.The principal amount of the bonds may not exceed $60,000,000. | *Sec.31.The Alaska Industrial Development and Export Authority may issue bonds to finance the acquisition,design.and construction of a power transmission intertie of at least 115 kilovolts between the Swan Lake and Tyee Lake hydroelectric projects and owned,for the benefit of all of the utilines participating in the intertie,by Ketchikan Public Utilities.The principal amount of the bonds may not exceed $40,000,000. *Sec.32.The Alaska Induscrial Development and Export Authority may issue bonds to finance the acquisition,design,and construction of a power transmission intertie of at least 138 kilovolts between Sutton and Glennallen and owned,for the benefit of all of the utilities participating in the intertie,by Copper Valley Electric Association.The principal amount of the bonds may not exceed $25,000,000. *Sec.33.APPLICABILITY.The repeal of statutes by sec.28 of this Act does not affect existing bonds or actions that have been taken under the repealed provisions. *Sec.34.TRANSITION.All litigation,hearings,investigations,and other proceedings pending under a law amended or repealed by this Act,or in connection with functions transferred by this Act,continue in effect and may be continued and completed by the Alaska Energy Authority or the Department of Community and Regional Affairs,as appropriate, notwithstanding a transfer or amendment or repeal provided for in this Act.Cenificates, HCS CSSB 106(FIN)-36- veoOoDWH&|th|EEeeEEonoeCeWIAAEUNHESChapter 18 44.83.360,44.83.361,44.83.363,44.83.370,44.83.380,44.83.384(b),44.83.384(c),44.83.390, 44.83.392,44.83.400,44.83.410,44.83.500,44.83.510(b),44.83.520,44.83.600,44.83.605. 43.83.610,44.83.615,44.83.620,44.83.625,44.83.630,44.83.650,44.83.990(8),and 4+4.83.990(9)are repealed. *Sec.29.The Alaska Industrial Development and Export Authoriry may issue bonds to finance the acquisition,design,and construction of a power transmission intertie of at least 138 kilovolts between Healy and Fairbanks and owned,for the benefit of all of the utilities participating in the intertie,by Golden Valley Elecaric Association,Inc.The principal amount of the bonds may not exceed $60,000,000. *Sec.30.The Alaska Industrial Development and Export Authority may issue bonds to finance the acquisition,design,and construction of a power transmission intertie of at least 138 kilovolts between Anchorage and the Kenai Peninsula to be owned,for the benefit of all of the utilities participating in the interties,by Chugach Electric Association,Inc.The principal amount of the bonds may not exceed $60,000,000. *Sec.31.The Alaska Industrial Development and Export Authority may issue bonds to finance the acquisition,design,and construction of a power transmission intertie of at least 115 kilovolts between the Swan Lake and Tyee Lake hydroelectric projects and owned,for the benefit of all of the utilities participating in the intertie,by Ketchikan Public Utilities.The principal amount of the bonds may not exceed $40,000,000. *Sec.32.The Alaska Induscrial Development and Export Authority may issue bonds to finance the acquisition,design,and construction of a power transmission intertie of ar least 138 kilovolts between Sutton and Glennallen and owned,for the benefit of all of the utilities participating in the intertie,by Copper Valley Electric Association.The principal amount of the bonds may not exceed $25,000,000. *Sec.33.APPLICABILITY.The repeal of statutes by sec.28 of this Act does not affect existing bonds or actions that have been taken under the repealed provisions. *Sec.34.TRANSITION.All litigation,hearings,investigations,and other proceedings pending under a law amended or repealed by this Act,or in connection with functions transferred by this Act,continue in effect and may be continued and completed by the Alaska Energy Authority or the Department of Community and Regional Affairs,as appropriate, notwithstanding a transfer or amendment or repeal provided for in this Act.Centificates, HCS CSSB 106(FIN)-36- efooeoNHDW&|]NHom©erWIawaeauntst2sChapter 18 orders;and regulations issued or adopted under authority of a law amended or repealed by this Act remain in effect for the term issued,or until revoked,vacated,or otherwise modified under the provisions of this Act.All concracts,rights,liabilides,bonds,notes,or other obligations created by or under a law amended or repealed by this Act,and in effect on the effective date of this Act remain in effect notwithstanding this Act's taking effect.The Department of Community and Regional Affairs shall assume,for those programs and projects transferred to it,the licenses,contracts,rights,liabilides,notes,or other obligations of the former Alaska Energy Authority with the same limitations and provisions as under a license, conrract,right.liability,note,or other obligation of the former Alaska Energy Authority.Real property,records,equipment,and other property of the Alaska Energy Authority related to the programs and projects transferred to the department shall be transferred to the Department of Community and Regional Affairs. _*Sec.35.TRANSITIONAL PROVISION CONCERNING EMPLOYEES OF THE ALASKA ENERGY AUTHORITY.When the Department of Community and Regional Affairs determines that continued employment of certain employees of the Alaska Energy Authority is necessary to continue uninterrupted service to programs,facilities,and power projects formerly owned by the Alaska Energy Authority that have been transferred to the department under this Act,the department may continue the employment of those employees. *Sec.36.INITIAL TERMS OF LOAN COMMITTEE.Notwithstanding AS 42.45.060(b), enacted by sec.5 of this Act,the initial terms of two of the public members of the loan committee established under AS 42.45.060 shall be for two years.The remaining two public members shall serve four-year terms as provided in AS 42.45.060. *Sec.37.CONTRACTS WITH PRIVATE SECTOR.The Alaska Energy Authority shail, to the maximum extent feasible,enter into contracts with public utilities and other entities to Carry out its duties with respect to the maintenance and operation of power projects owned -by the Alaska Energy Authority. *Sec.38.ORDERLY TRANSFER OF FUNCTIONS.(a)Notwithstanding the effective date of this Act,the governor,the Department of Community and Regional Affairs,the Alaska Energy Authority,and the office of management and budget shall implement this Act in an orderly fashion.The transfer of rural programs operated by the Alaska Energy Authority to the Department of Community and Regional Affairs must be completed no later than -37-HCS CSSB 106(FIN) veononDAWA&|Ww=Chapter 18 December 31,1993.Uncil a program is transferred under this section,the Alaska Energy Authority may continue to administer that program under the former provisions of AS 44.83, notwithstanding the repeal of provisions of AS 44.83 in sec.28 of this Act. (b)The Alaska Energy Authority shall assist the members of the Alaska Industrial Development and Export Authority to prepare for the powers and duties granted to them under this Act. *Sec.39.In accordance with AS 01.10.030,if a provision of this Act,or the application of a provision of this Act to a person or circumstance,is held invalid,the remainder of this Act and the application to other persons or circumstances shall not be affected thereby. HCS CSSB 106(FIN)-38- eeooOoNDOH&WwChapter 18 December 31,1993.Until a program is transferred under this section,the Alaska Energy Authority may continue to administer that program under the former provisions of AS 44.83, notwithstanding the repeal of provisions of AS 44.83 in sec.28 of this Act. (b)The Alaska Energy Authority shall assist the members of the Alaska Industrial Development and Export Authority to prepare for the powers and duties granted to them under this Act *Sec.39.In accordance with AS 01.10.030,if a provision of this Act,or the application of a provision of this Act to a person or circumstance,is held invalid,the remainder of this Act and the application to other persons or circumstances shall not be affected thereby. HCS CSSB 106(FIN)-38- MEMORANDUM STATE OF ALASKA Community and Regional Affairs TO:Lamar Cotten DATE:September 13,1995 Deputy Commissioner FILE: THRU:Percy Frisby,Director Division of Energy PHONE NO:269-4644 FROM:Richard Emerman SUBJECT:Proposed Statutory Senior Economist Amendments Proposed statutory amendments are attached for two loan programs:the Power Project Fund and the Rural Electrification Revolving Loan Fund.Briefly,the reasons for the proposed amendments are as follows: 1.Power Project Fund A.The list of eligible borrowers is expanded to include school districts.Although municipalities are already listed as eligible borrowers,the intent of this amendment is not only to ensure that school districts within first class cities can access the fund but also to include school districts organized as REAAs.Energy conservation measures and upgrade of bulk fuel storage facilities are among the projects that school districts may wish to finance. B.The list of eligible purposes is expanded to include acquisition of projects.This issue arose most recently in the case of Cordova --the utility has asked to borrow money to help finance the acquisition of a project planned for construction by a private firm.As the statutes presently read,a Power Project Fund loan could be issued to the private firm if it qualifies as an independent power producer,or a loan could be issued to the utility if it constructs,or contracts for construction,of the project.However,a previous opinion from the Department of Law indicates that we cannot lend money to the utility for acquisition of the project from the private firm unless the statute is amended. C.We propose to offer a zero percent interest rate for projects that fall within two high priority categories: i.projects that allow one or more isolated electric utilities to merge with another utility,and il.upgrades of bulk fuel storage facilities. RRRRRR LULL AA MM MM MM MM RR RR LL AAAA MMM MMM MMM MMM RR RR LL AA AA MMMMMMM MMMMMMM RRRRR LL AA AA MMMMMMM MMMMMMM RR RR LL L AAAAAA MM M MM MM M MM RR RR LL LL AA AA MM MM MM MM RRR RR LLLLLLL AA AA MM MM MM MM STATE OF ALASKA,DCRA 333 W.4TH AVE.,SUITE 220 ANCHORAGE,AK 99501 PHONE:(907)269-4500 FAX:(907)269-4520 DATE:1/24/1996TIME:2:09:08 PM EEEEEEE RRRRRR SSSS EE EB RR RR SS_SS EE E RR RR SSS EEEE RRRRR SSS EE E RR RR SSS EE E RR RR SS_SS EEEEEEE RRR RR SSSS Lamar Cotten September 13,1995 Page 2 Presently,we can offer zero percent loans only as needed for an eligible project to meet financial feasibility criteria.We would also like to use the incentive of a zero interest rate to encourage isolated utilities to consolidate with a larger organization and to encourage tank farm owners to undertake repair and upgrade of their facilities. 2.Rural Electrification Revolving Loan Fund We propose to delete the requirement that annual interest payments be paid exclusively from fees charged to new customers served by the line extension.In at least one recent case,this requirement has impeded development in the area the line extension was intended to serve.The appropriate allocation of charges amonga utility's consumers is a matter that can be handled in the normal course of business by APUC in the case of regulated utilities,or by the governing bodies of non-regulated utilities. Please contact me if more information is needed on these proposals. DDDDD LLLL 000 CCCC KKK KK AA RRRRRR DD DD LL 00 OO CC CC KK KK AAAA RR RR DD DD LL 00 00 CC KK KK AA AA RR RR DD DD LL 00 00 CC KKKK AA AA RRRRR DD DD LL L OO 00 CC KK KK AAAAAA RR RR DD DD LL LL OO 00 CC CC KK DDDDD LLLLLLL 000 CcCcC KKK STATE OF ALASKA,DCRA 333 W.4TH AVE.,SUITE 220 ANCHORAGE,AK 99501 PHONE:(907)269-4500 PAX:(907)269-4520 DATE:1/24/1996TIME:2:25:09 PM KK AA AA RR RR KK AA AA RRR RR DDDDD DD DD DD DD DD DD DD DD DD DD DDDDD Lamar Cotten September 13,1995 Page 3 POWER PROJECT FUND --PROPOSED STATUTORY AMENDMENT AS 42.45.010 (b)is amended to read: (b)Subject to AS 42.45.060,the department may make loans from the power project fund (1)_toelectric utilities,regional electric authorities,municipalities,school districts,regional and village corporations,village councils,independent power producers,and nonprofit marketing cooperatives to pay the costs of (A)reconnaissance studies,feasibility studies,license and permit applications,preconstruction engineering,and design of power projects; (B)constructing,acquiring,equipping,modifying,improving,and expanding small-scale power production facilities that are designed to produce less than 10 megawatts of power,conservation facilities,bulk fuel storage facilities,and transmission and distribution facilities,including energy production,transmission and distribution,and waste energy conservation facilities that depend on fossil fuel,wind power,tidal,geothermal,biomass,hydroelectric,solar,or other nonnuclear energy sources;and (C)reconnaissance studies,preconstruction engineering,design, construction,equipping,modification,and expansion of potable water supply including surface storage and groundwater sources and transmission of water from surface storage to existing distribution systems; AS 42.45.010 (f)(2)is amended to read: (2)a loan for a power project (A)may not be granted for a term that exceeds 50 years;and (B)except as provided in (C)of this subsection,shall be granted at an interest rate that is not less than zero percent and that is the lesser of (i)a rate equal to the percentage that is the average weekly yield of municipal bonds for the 12 months preceding the date of the loan,as determined by the department from municipal bond yield rates reported in the 30-year revenue index of the Weekly Bond Buyer;or EEBEEREEE MM MM AA RRRRRR EE E MMM MMM AAAA RR RR CC CC EE E MMMMMMM AA AA RR RR CC EEEE MMMMMMM AA AA RRRRR CC EE EB MM M MM AAAAAA RR RR CC EE E MM MM AA AA RR RR CC CC EEEEEEE MM MM AA AA RRR_RR STATE OF ALASKA,DCRA 333 W.4TH AVE.,SUITE 220 ANCHORAGE,AK 99501 PHONE:(907)269-4500 FAX:(907)269-4520 DATE:1/24/1996TIME:2:06:09 PM CCCC ecce HH HH HH HH HH HH HHHHHH HH HH HH HH HH HH EEEBREEE GGGG EE E GG GG EE E GG EEEE GG EE E GG GGG EE E GG GG EEEEEEE GGGGG IITII Il II II II Il IIII Lamar Cotten September 13,1995 Page 4 (ii)|arate determined by the department that allows the project to meet criteria of financial feasibility established under (c)of this section. (C)that enhances electric utility consolidation or upgrades bulk fuel storage facilities in a rural community shall be granted at a zero percent interest rate, AS 42.45.010 is amended by adding a new section to read: (j)In this section, (1)"enhance electric utility consolidation”means that,in the determination of the department,at least one electric utility qualifying for Power Cost Equalization will merge with another electric utility as a consequence of the project or upgrade financed by the loan,and as evidenced by an agreement signed by the affected utilities prior to issuance of the loan. (2)"rural community”means a community for which electric utility service qualifies for Power Cost Equalization payments. RURAL ELECTRIFICATION REVOLVING LOAN FUND --PROPOSED STATUTORY AMENDMENT AS 42.45.020 (d)is amended to read: (d)When the department makes a loan under this section,the electric utility receiving the loan shall[, (1)IN ADDITION TO THE RATES THAT IT IS AUTHORIZED TO CHARGE,CHARGE THE CONSUMERS SERVED BY THE ELECTRIC SERVICE EXTENDED WITH THE LOAN PROCEEDS AN AMOUNT SUFFICIENT TO PAY THE INTEREST COSTS OF THE LOAN; (2)]pay to the department annually an amount equal to [(A)]1)interest of two percent on the unpaid balance of the loan;and [(B)](2)payments on the unpaid balance of the principal of the loan for each new consumer served by the electric service extended with the loan proceeds;payments on the unpaid balance of the principal of the loan shall be made at a rate equal to the difference between the actual cost of making the service connection to the consumers and the minimum investment per consumer required of the utility before a loan is made under (b)of this section. RRRRRR LLLL AA MM MM MM MM RR RR LL AAAA MMM MMM MMM MMM RR RR Lb AAR AA MMMMMMM MMMMMMM RRRRR LL AA AA MMMMMMM MMMMMMM RR RR LL L AAAAAA MM M MM MM M MM RR RR LL LL AA AA MM MM MM MM RRR RR LLLLLLL AA AA MM MM MM MM STATE OF ALASKA,DCRA 333 W.4TH AVE.,SUITE 220 ANCHORAGE,AK 99501 PHONE:(907)269-4500 FAX:(907)269-4520 DATE:1/24/1996TIME:2:03:11 PM EEEEBEEE RRRRRR SSSS EE E RR RR SS_SS EE E RR RR SSS EEEE RRRRR SSS EE E RR RR SSS EE E RR RR SS_SS EEEEEBE RRR RR_SSSS