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HomeMy WebLinkAboutAEA Bradley Lake Project Management Committee Meeting May 29, 2015vz oa * *,© ALASKA ENERGY AUTHORITY Bradley Lake Project Management Committee Meeting May 29,2015 Sara Fisher-Goad Executive Director IN aes ge NADPYENYPEBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Friday,May 29,2015 9:30 a.m.-11:30 a.m. Alaska Energy Authority's Board Room 813 West Northern Lights Boulevard,Anchorage,AK To participate by teleconference,dial 1-888-585-9008 and use code 467 050 126. peesCALLTOORDER- ROLL CALL FOR COMMITTEE MEMBERS "erPUBLICROLLCALL 5 AGENDA COMMENTS /MOTION FOR APPROVAL "Boe PUBLIC COMMENTS les-APPROVAL OF MEETING MINUTES -March 19,2015 TO OLD BUSINESS Sy A.Approve O&D Committee recommendation of "no action required"for HEA on compliance to Resolution 2013-03 (Adoption of Railbelt Reliability Standards)O&D committee B.Consideration of HEA's disputes not addressed in the "Statement of Disputes”dates Jan.23,2014 per XY ot HirstResolution14-11 yy Somq@ oe Griffith TOR NEW BUSINESS '+Wwe A.Dynamic Scheduling ne Burke Wick B.Long Term Financing of Capital projects AEA ipCOMMITTEEREPORTS/IOareA.Budget Committee B.O&D Committee 4 OpesOPERATORSREPORT COMMITTEE ASSIGNMENTS 6Ww - MEMBERS COMMENTS >)NEXT MEETING DATE -July 30,2015 [eryé faeeADJOURNMENToOQO weer BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority,Anchorage,Alaska March 19,2015 1.CALL TO ORDER Chair Borgeson called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 9:33 a.m. 2.ROLL CALL (for Committee members) Cory Borgeson (Golden Valley Electric Association [GVEA]);Sara Fisher-Goad (Alaska Energy Authority [AEA]);Burke Wick (Chugach Electric Association [CEA]);Joe Griffith (Matanuska Electric Association [MEA]);Jim Trent (Anchorage yea Light &Power [ML&P});Hary.brose (Homer i AGENDA COMMENTS/MOTION FOR APPROVAL Mr.Ambrose requested adding an agenda item discussing the DNR Forestry request to install a eater in the AEA/HEA Bradley Road microwave site.Chair Borgeson placed this under Item The agenda was approved as amended. 5,PUBLIC COMMENTS None. 6.APPROVAL OF PRIOR MEETING MINUTES-Jan.23,2015 MOTION:Mr.Griffith made a motion to approve prior meeting minutes of January 23, 2015.Motion seconded by Mr.Wick. The motion passed. 7.OLD BUSINESS DRAFT BPMC Minutes 3/19/15 Page 1 of 7 A.Approve O&D Committee recommendation of "no action required" for HEA on compliance to Resolution 2013-03 (Adoption of Railbelt Reliability Standards)(Action item) Mr.Wick advised the O&D Committee requests more time before action on the recommendation is taken. MOTION:Mr.Wick made a motion to table Item 7A.Approve O&D Committee recommendation of "no action required"for HEA on compliance to Resolution 2013-03 until the next meeting.Motion seconded by Mr.Trent. Mr.Trent asked how much time does the O&D Committee need for this request.Mr.Wick hopes all information will be compiled by the next BPMC meeting. Mr.Ambrose commented HEA put forth considerable effort in responding promptly to the resolution.HEA requests clear direction from the Committee regarding the resolution. Mr.Griffith requested Mr.Ambrose consult with the Alaska State Wage and Hour Administration regarding the overtime rate and report back to the Committee.Mr.Griffith asked for an explanation of the amount of administrative overhead included in the budget.Mr. Ambrose explained he is the Director of Power and Bob Day is the Power Production Manager. The time for those positions has historically been charged to the Project.This is the first instance the budget has shown this level of detail.Mr.Ambrose informed the HEA portion of the FY16 O&M Budget is 3%less than HEA's portion of the FY15 Budget. Mr.Trent commented ML&P has the same questions as MEA regarding HEA's rates.Chair Borgeson asked if a discussion can occur with HEA if the Committee feels the rates are too much.Mr.Ambrose stated that discussion could occur. Ms.Fisher-Goad asked how the delineated estimated hours were determined for FY16.Mr. Ambrose stated the project employees'hours are directly tracked hour-by-hour,but his time is estimated as a percentage of his time for the amount of work he completes for the Bradley project,equalling about 26%of his total time,even though his budgeted amount is displayed as an hourly breakdown.Mr.Day's time is allocated also as a percentage,equalling about 50%of his total time.Mr.Ambrose believes Mr.Day spends more than half of his time on the Bradley DRAFT BPMC Minutes 3/19/15 Page 2 of 7 project,but HEA only charges 50%.Ms.Fisher-Goad suggested the Budget Committee discuss a different way to report Mr.Ambrose's budget allocation because Mr.Ambrose does not charge his time on an hourly basis.Ms.Hutchinson stated if Mr.Ambrose worked 80 hours in a time period,25%of that or 20 hours is allocated to the Bradley Project. Chair Borgeson requested a review of the actual time spent on the Bradley Project for both Mr. Ambrose and Mr.Day.Mr.Day suggested the desk audit be included in AEA's proposed management audit to determine if the budget numbers are reasonable. Mr.Griffith requested a per mile cost and dates of clearing HEA has contracted for the Bradley Project over the last five years,and the same information for the clearing performed on the segment from Bradley Junction to Soldotna,and to provide this information at the next meeting. Chair Borgeson asked if the right-of-way clearing goes out to competitive bid.Mr.Ambrose stated the clearing goes out to competitive bid. MOTION:Mr.Wick moved to approve the FY16 Operations and Maintenance Budget as i .Griffith. Mr.Wick explained the word transition does not preclude HEA from becoming the successful bidder of the operation going forward.The definition of transition refers to the preparation of documents to bid the operation of the Project going forward. The motion to amend line item 11 failed. MOTION:Mr.Ambrose moved to amend the FY16 Operations and Maintenance budget changing the overtime rate on line items 3 and 7 on page 11 from 190.00 to 100.00.Motion seconded by Mr.Wick. Mr.Wick commented the Budget Committee did a good job preparing the detail on this budget. He requested the Budget Committee be involved in reviewing the invoices as submitted on a monthly basis to compare detail to the budget. The motion to amend line items 3 and 7 on page 11 passed. A roll call vote was taken and the motion to approve the FY16 Operating and Maintenance Budget with amendments to line items 3 and 7 on page 11 passed,with CEA voting against. DRAFT BPMC Minutes 3/19/15 Page 3 of 7 MOTION:Mr.Wick moved that Bradley Lake Project Management Committee approve the FY16 Capital and R&C Budget.Motion seconded by Mr.Trent. Ms.Veech gave a summary of the Capital and R&C budget.Hard copies have been provided in Committee packets. Mr.Griffith and Mr.Ambrose requested explanation of why AGE&T is still included in the proposed budget.Mr.Bjorkquist explained there is a process in the Power Sales Agreement for the interest of AGE&T to be assumed by HEA and MEA for their respective interests.Mr. Bjorkquist will work with the BPMC counsel to see whether a formal change needs to be effected. Ms.Veech explained the disbursement and repayment schedules.The driving factor of the increase in the cost of Bradley is the SVC project of $7.2 million,which has to be repaid within four years. Mr.Ambrose noted these assets are owned by the state and maintenance is necessary.The SVCs provide the value of cycling the unit to the various participants.He recommended considering alternative financing options for the SVC before taking action on this budget. MOTION:Mr.Ambrose moved to amend the FY16 Capital and R&C Budget by postponing the SVC Project work line item until next year's budget cycle thus reducing the budget by $3.6 million and providing CEA time to refine the scope and estimates.Motion seconded by Mr.Trent. Mr.Wick stated he will vote against the amendment.The proposed budget does not mean the funds are spent.Contract proposals will be brought before the BPMC.He does not believe the amendment to postpone is in the best interest of maintaining the reliability of the system.Mr. Wick informed expenditures connected to signing contracts still have to occur and a complete reduction of the budgeted amount does not reflect the real exposure. Chair Borgeson requested Ms.Veech provide the estimated budget numbers for postponing the SVC Project work contribution one year.After a brief at ease,Ms.Veech explained the projected repayment schedules and budget after removal of the $3.6 million for the SVC Project work for FY 16. DRAFT BPMC Minutes 3/19/15 Page 4 of 7 Mr.Ambrose stated he is willing to make a friendly amendment leaving some amount of money in the SVC Project work line item to cover expenditures. Mr.Trent commented he agrees with Mr.Wick's position. A roll call vote was taken and the motion to amend FY16 Capital and R&C Budget failed, with MEA,AEA,ML&P,CEA,GVEA voting against. A roll call vote was taken and the motion to approve the FY16 Capital and R&C Budget as presented passed,with HEA voting against. B.FY15 Budget transfer correction (Action item) Ms.Veech provided the outline of the history and background on the FY15 Budget transfer correction. provide a licensed orderin approximately October or November of 2015.Bids could go out in 2016,with construction occurring in 2016/2017.Mr.Carey recommended a group or committee meet this spring to discuss the financing options available for the utilities. Mr.Griffith stated work needs to occur now regarding finance options and solutions. Mr.Ambrose asked if Mr.Carey anticipates any unfunded costs at this time in responding to FERC or other stakeholders.Mr.Carey believes there are sufficient funds remaining in the budget to bring Battle Creek up to the bid process,assuming FERC does not request additional environmental studies. D.Consideration of HEA's disputes not addressed in the "Statement of Disputes"dated Jan 23,2014 per Resolution 14-11 Chair Borgeson assigned the Consideration of HEA's disputes not addressed in the "Statement of Disputes"dated Jan 23,2014 per Resolution 14-11 to Mr.Griffith.The item will remain on the agenda. DRAFT BPMC Minutes 3/19/15 Page 5 of 7 E.Election of Vice-Chair Chugach Electric changed the designated representative replacing Brad Evans,which held the office of Vice-Chair.Under the Bylaws the Committee must elect a successor of the office at the next meeting. Mr.Ambrose nominated Mr.Trent for Vice-Chair. MOTION:Mr.Griffith moved to accept the nomination of Mr.Trent for Vice-Chair. Motion seconded by Mr.Ambrose. The motion passed,with Mr.Trent voting against. F.Discussion of DNR Forestry request to install repeater in the AEA/HEA Bradley Road microwave site This will also inform HEA regarding questions or concerns from the BPMC.Mr.Owens stated he has performed significant work with those two subcommittees and believed all the questions had been answered.He noted this meeting revealed additional concerns and questions of which he was unaware. Mr.Owens informed a significant amount of upgrades has occurred at Bradley Lake in the last five years.These would not have occurred without the management and personnel currently at Bradley Lake.Mr.Owens provided a report to the Committee on the upcoming projects and timelines.The two outages currently scheduled are July 15th-August 16th,and October 19th- November 20th.The nozzles will be removed from the turbine pit,rebuilt,and then reinstalled. The schedule is based on the previous time this was performed 13 years ago.Because we cannot observe the internal condition of the nozzles,the amount of work and schedule could change.If rechroming is required the nozzle parts would need to be shipped out of state. 11.COMMITTEE ASSIGNMENTS Mr.Bjorkquist will work with the BPMC counsel to see whether a formal change needs to be effected regarding the inclusion of AGE&T in the FY16 Capital and R&C Budget.This will be reviewed at the next meeting. DRAFT BPMC Minutes 3/19/15 Page 6 of 7 Mr.Griffith will refer to the O&D Committee for preparatory work while addressing the Consideration of HEA's disputes not addressed in the "Statement of Disuptes"dated Jan 23,2014 per Resolution.The item will remain on the agenda. AEA will report back to the Committee with financing options for larger projects. The Budget Committee will provide a monthly review of invoices from HEA,AEA,and CEA. HEA will report if they sought approval of management overtime from the State Wage and Hour Administration. HEA will report on the expenses for the past five years of the right-of-way clearing on the Soldotna segment,as well as the project transmission lines connecting the project to Bradley Junction. 12,MEMBERS COMMENTS 'be working wi h DNR XT:MEETING DATE The next meeting date is set for May 29th,2015. 14.ADJOURNMENT There being no further business for the committee,the meeting adjourned at 11:54 a.m. BY: Cory Borgeson,Chair Attest: Sara Fisher-Goad Alaska Energy Authority,Secretary DRAFT BPMC Minutes 3/19/15 Page 7 of 7 rem7a Q CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.2013-03 Adoption of Railbelt Reliability Standards WHEREAS,pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement")dated as of December 8,1987,by and among the Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage d/b/a Municipal Light and Power,the City of Seward d/b/a Seward Electric System,and Alaska Electric Generation &Transmission Cooperative,Inc.,and as Additional Parties Homer Electric Association,Inc.and Matanuska Electric Association,Inc.(as used herein collectively,the "Purchasing Utilities"),and the Alaska Energy Authority (the "Authority"),the Project Management Committee (the "Committee")has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement;and WHEREAS,pursuant to section 13 (c)(ii)(A)the committee is required to arrange...” for the operation and maintenance of the Project,and the scheduling,production,and dispatch of Project power...”;and, WHEREAS,Article 3 and Article 9 of the Alaska Intertie Agreement,dated December 23,1985 ("1985 Agreement”),provided that the Intertie Operating Committee ("IOC”)would be responsible for operating the interconnected Railbelt system and for developing operatingproceduresandstandardspracticeswithrespecttosuchoperations.The Intertie Management Committee ("IMC”)has assumed these responsibilities under the Amended and Restated Alaska Intertie Agreement,dated November 18,2011 (2011 Amended Agreement”).Further,that through Addendum No.1 to the 1985 Agreement entitled "Reserve Capacity and Operating Reserve Responsibility”(incorporated as Exhibit H of the 2011 Amended Agreement)the Utility Participants of that agreement would be responsible for reserve requirements for the interconnected system;and, WHEREAS,the IMC (and previously the IOC)has essentially been the Railbelt reliability coordinator for the interconnected Railbelt grid for over 25 years;and, WHEREAS,there has always been close coordination between the IOC/IMC and the Committee;and, WHEREAS,Section 3.1 of the 2011 Amended Agreement provides that the IMC shall determine the operating policies and procedures for handling the obligations and responsibilities for providing Reserve Capacity and Operating Reserves for the Intertie;and, WHEREAS,the IMC has the authority to adopt operating policies and procedures, reliability standards,and enforcement mechanisms,for the Intertie;and, WHEREAS,the IMC has adopted the "Intertie Management Committee's Railbelt Operating and Reliability Standards,updated October 1,2013,”as the Reserve Capacity and Operating Reserves for the Intertie and as the operating policies and procedures,reliability standards,and enforcement mechanisms,with one modification made at the request of the Alaska Energy Authority ("AEA”)respecting the Alaska Intertie assets and 2011 Amended Agreement: The "sanctions”portions of the enforcement mechanisms in the "Intertie Management Committee's Railbelt Operating and Reliability Standards,updated October 1,2013,” shall not become effective for purposes respecting the Alaska Intertie assets and 2011 Amended Agreement until separately approved by the IMC. WHEREAS,the IMC intends to submit these reliability standards as an informational filing to the Regulatory Commission of Alaska ("RCA”). WHEREAS,the IMC has requested that the RCA exercise the authority granted to it under AS 42.05.321 and other applicable authority and to enter an order 1.Finding that the approval of these standards will serve the public convenience and necessity; 2.Formally approving the standards and finding that they are just and reasonable;and 3.Providing for mechanisms and processes for periodic review of the standards. NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination.The Committee has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that the Intertie Management Committee's "Railbelt Operating and Reliability Standards,updated October 1,2013”be adopted and applied as required to all applicable Project assets,facilities and activities;and, BE IT FURTHER RESOLVED BY THE COMMITTEE,that the Committee desires that the Operator of the Project to abide by and follow the "Railbelt Operating and Reliability Standards, updated October 1,2013”in all aspects of the operation of the Project and deliver of energy from the Project;and, BE IT FURTHER RESOLVED BY THE COMMITTEE,that AEA and the Operator make the necessary amendments to the Project Operation and Maintenance Standards and/or Work Rules RES 2013-03 -RELIABILITY STANDARDS PAGE 2 OF 3 to accommodate and effectuate this purpose and objective of this Resolution as soon as practicable and report to the Committee when the Operator is complying with the purpose and objective of this Resolution. DATED at Anchorage,Alaska,this 12"day of December,2013. Chair N &ecretary RES 2013-03 -RELIABILITY STANDARDS PAGE3 OF3 Bradley Lake Hydro Project Compliance with BPMC Resolution 2013-03 Report from the Operator January 24,2014 The Bradley BPMC committee passed resolution 2013-03 directing the operator to bring the Bradley Lake Project into compliance with the IMC standards as identified as the IMC Intertie Management Committee's Railbelt Operating and Reliability Standards,updated October 1, 2013 and in resolution 2013-03 also stated: BE IT FURTHER RESOLVED BY THE COMMITTEE,that the Committee desires that the Operator of the Project to abide by and follow the "Railbelt Operating and Reliability Standards,updated October 1,2013”in all aspects of the operation of the Project and deliver of energy from the Project;and, BE IT FURTHER RESOLVED BY THE COMMITTEE,that AEA and the Operator make the necessary amendments to the Project Operation and Maintenance Standards and/or Work Rules to accommodate and effectuate he purpose and objective of this resolution as soon as practicable and report to the Committee when the operator is complying with this purpose and objective of this resolution. To comply with that directive the following report is prepared.Due to the short expanse of time between the enactment of the above resolution 2013-03 (12 December 2013)and this report (January 27,2014)this report may be lacking in depth and research,further study may result in additional activities requiring action. In order to comply with the wishes of the BPMC the Operator has identified the following areas where the Bradley Lake Hydro Installation is not in compliance with the standards of the IMC There are likely to be additional areas of non-compliance,but at this time we have identified the following: 1.The Project is required to construct a switchyard at the point of interconnection with the Transmission Provider. 2.Various reporting functions are required throughout the IMC standards.The BPMC is required to direct the Project Dispatcher to immediacy comply with those report requirements. 3.The Project must be made to comply with certain requirements imposed by the Transmission Provider at Bradley Junction. a.Spin Burden b.Studies to provide limitations and guidance for the proper operation of the Project so as "to do no harm”to the Transmission Providers system. c.Identify a means and method to prevent the voltage collapse problem as described by CEA that reportedly can be corrected by CEA having operational control of a Diamond Ridge breaker. d.Operating with common boundaries and metering points "so as not to be a burden”on the adjoining LBA. e.Operating in such a manner as to not cause problems in the adjoining LBA, The first order of business is to identify the nature of the Bradley Lake Project,.i.e.The Project. Bradley Lake is owned by the State of Alaska with a Power Sales Agreement to provide power to various utilities throughout the Alaskan Railbelt.The State of Alaska is not a load serving entity but is a generation Owner or generation entity. From the Standards: The Interconnection Standards for Generation and Transmission are documents developed strictly for the Railbelt.They are based on the principles that were used in the development of "Non-utility Generation Interconnection Standards"in place in the Railbelt utilities at the time of drafting (primarily GVEA and Chugach).These distributions system standards were modified to reflect Generation and Transmission and Generation Interconnection issues.These standards are applicable to entities/equipment,where a single contingency (Class B)could result in the net change of 10 or more MW's of generating capacity or load.This limit is based on our current system bias where loss of a 10 MW unit will cause the system frequency to drop 0.1 Hz.In most of our control centers,this is the level where the first level of frequency alarms are initiated indicating a major system disturbance. Clearly the Project qualifies both as a significant source (>10MW)and is a non-utility generator. So it follows that: These [IMC]standards are applicable to entities/equipment,i.e.Bradley Lake. In table T2-2014 of the IMC Standards AEA (the Owner)is shown to be a Generation Owner and a transmission Owner and in addition from the Glossary of terms an Independent Power Producer is defined as: Any entity that owns or operates an electricity generating facility that is not included in an electric utility's rate base.This term includes,but is not limited to,cogenerators and small power producers and all other nonutility electricity producers,such as exempt wholesale generators,who sell electricity Since these standards apply as directed by resolution 2013-03 and by the definitions cited above we then look to the next part of the standards: 1.The Project is required to construct a switchyard at the point of interconnection with the Transmission Provider. These Railbelt Standards supersede the previous reliability criteria found in the ASCC documents "ASCC Operating Guides for Interconnected Utilities and Alaska Intertie Operating Guides"and the "ASCC Planning Criteria for the reliability of interconnected electric utilities".Where this document is silent the ASCC documents should continue to be referenced. Looking to the requirements for interconnection contained in Exhibit F Section 5 Interconnection Standards for Railbelt Transmission we find a clear deficiency.The whole standard is too lengthy to be repeated here but a switchyard /substation is required at a minimum (emphasis mine)with full telemetering,and control with a Breaker and 4%scheme: From Section 5: These portions of the Interconnection Standards state the minimum interconnection (again my emphasis) requirements and equipment necessary for transmission facilities.Specific requirements for each individual proposedfacility may vary,depending on factors such as the location of the interconnection, the number and proximity of adjacent consumers,and the characteristics of the facility proposing to interconnect to the Railbelt system. The standards go on to define metering,control and a long list of required equipment to interconnect to the Transmission Provider (HEA).From page 35 of the Interconnection Standards: IX.Equipment Requirements Summary Table 5 Interconnection Equipment Requirements Summary Equipment Requirement All Installations Approved Disconnect Means Required In/Out Metering Required Interconnection Circuit Breaker Required Undervoltage Protection Required Overvoltage Protection Required Under frequency Protection Required Over frequency Protection Required Ground Fault Protection Required Transfer Trip Capability Required Phase-fault Protection Required Telemetry Capability Required Power Quality Monitoring See Note 1 Export Power Control Equipment See Note 1 Voice and Data Communication Capability Required Operational Data Logging Required (See Note 2) Automatic Synchronizing w/Relay Supervision Required Note 1:Requirements will depend on specific contractual agreements and will be assessed on an Individual basis. Note 2:A digital data logger is required;refer to Subsection 5.3.4.7 for specific requirements. As you can see the requirement is considerable and in order for the operator to comply as soon as practicable.The BPMC must immediately fund preliminary engineering design work required to construct the required substation/switchyard /interface at Bradley Junction.Please see the complete set of Interconnection standards as contained in Exhibit F of the IMC Standards incorporated by reference. From Section 412: The specific design of the protection system depends on the transmission type,size,and other site-specific considerations.The Provider must meet Transmission Owner's requirements,and all designs and equipment must conform to the National Electrical Code,the National Electrical Safety Code,IEEE standards,and all federal,state,local,and municipal codes...(Emphasis mine) Furthermore during the IMC meeting of January 16 2014 (agenda item E (iii)).Chairman Evans spoke at length and no fewer than two individual times in reference to the proposed interconnection of the Eklutna Generating Station (EGS)by MEA to the Eklutna Hydro Plant transmission lines Chairman Evans declared that "these standards (the IMC Standards)are the minimums and we must enforce the implementation of these standards”.As the operator of the project HEA wishes to obey the directive of the BPMC. From Section 413 413 Railbelt System Modifications Any modification to the Railbelt electric grid,such as the installation of additional equipment, reconductoring of all or a portion of the connecting Transmission Owners line,or reconfiguration of Transmission Owners protection systems necessary to permit in-parallel operation with the Railbelt electric grid,will be performed by the Transmission Owner.Where such system modifications are required to allow the interconnection of the Provider's facilities,the Transmission Qwner will perform these modifications,providing all labor,materials,and equipment necessary,at the Provider's expense. (Emphasis mine) 1.The Project must comply with the Interconnection Standards for Railbelt Generation when the governors are replaced. When the governors are replaced this summer the project will be required to operate for a 45 day test period.During that test period the Project will need to be 100%backed up as described in the Interconnection Standards for Railbelt Generation as described in Section 200 step 4 (d)page 14. The facility will undergo a trial operating period of the greater of 45 days or the projects declaration of being "commercial”.During this period,Online Reliability must meet or exceed the 12 month rolling average of the remainder of the Railbelt interconnection generating units Online Reliability and have no deleterious effects on CPSI,CPS2 or the Disturbance Control Standards Measures... 2.The Project must be made to comply with certain requirements imposed by the Transmission Provider at Bradley Junction. The first of the overarching goals contained in the Standards: First,these standards set the minimum requirements for interconnection to the System;the local entity at the point of interconnection may have additional or more stringent interconnection standards. I call the BPMC's attention to the last sentence.The local entity is empowered by the IMC Standards to require "...additional or more stringent interconnection standards”. In addition the fifth overarching principal states: Fifth,the interconnecting entity,as a condition of interconnection,shall abide by this and all other applicable Railbelt standards as they may be modified or implementedfrom time to time.A Balancing Authority having jurisdiction shall ascertain that the new entity agrees to these Standards prior to interconnection or that another entity will absorb the new entity's obligations as additional obligations to their own.The new entity may have additional obligations imposed by the local Transmission Owner. I call the BPMC's attention to the last sentence.The Project is required by the IMC Standards to be subject to "additional obligations imposed by the local Transmission Owner” Since the Project is directed to become compliant with the standards and two of the five overarching goals require adherence to requirements imposed by the Transmission Provider,we must look to the local Transmission Owner for their requirements for interconnection. 3.The Project must be made to comply with certain requirements imposed by the Transmission Provider at Bradley Junction. a.Spin Burden HEA/AEEC has its own set of standards (RRO Standards)and these standards,according to the IMC Standards,are applicable to the Project.The Project represents a significant generation resource on the entire grid and in addition represents one of the largest generation installations on the Kenai Peninsula.HEA/AEEC has identified a method where by spin burden is assessed according to size;the Transmission Provider therefore places on the Project a spin burden of 120/84 of HEA's spin burden (Bradley Peak output divided by HEA peak load).This would be 11 MW *120/80 or 15.71 (16 MW)under the current spin burden carried by HEA.The project will be required,at all times to carry a spin requirement accordingly.This will be a spin burden to the project itself (Generation entity AEA)and cannot be comingled with spin burden carried by the remaining Railbelt utilities but is separate and distinct from the individual utilities individual spin requirement.This will ensure sufficient spin is carried on the Kenai Peninsula to avoid as far as practicable system blackouts.The carrying of additional spin by the participants on the Project will be allowed once studies have shown that doing so will not cause issues for the Transmission Provider or the Kenai transmission system. In addition Alaska Standard AKRES-001-0 -Reserve Obligation and Allocation applies to generation owners (4.3) Alaska Standard AKRES-001-0 -Reserve Obligation and Allocation R2.Responsibility for Operating Reserve R2.1_Each Load Serving Entity and/or Generation Owner shall provide,or contract for,Spinning Reserve and Non-Spinning Reserve as required by Section R3 equal to or greater than the Operating Reserve Obligation of the entity.As soon as practicable,but not to exceed four hours,after the occurrence of an incident which uses Operating Reserves,each entity shall restore its Operating Reserve Obligation. 4.The Project must be made to comply with certain requirements imposed by the Transmission Provider at Bradley Junction. a.Studies to provide limitations and guidance for the proper operation of the Project so as "to do no harm”to the Transmission Providers system. From Alaska Standard AKFAC-001-0 -Facility Connection Requirements ...R2.The Transmission Owner's facility connection requirements shall address,but are not limited to,the following items: R2.1.Provide a written summary of its plans to achieve the required system performance as described above throughout the planning horizon: R2.1.1.Procedures for coordinatedjoint studies of new facilities and their impacts on the interconnected transmission systems. R2.1.2.Procedures for notification of new or modified facilities to others (those responsible for the reliability of the interconnected transmission systems)as soon as feasible. R2.1.3.Voltage level and MW and MVAR capacity or demand at point of connection... The BPMC must immediately provide budget to fund system studies to identify the Project operational issues and studies to provide guidance as to the correct spin levels allowed at the project,as well as system stability studies to reflect the new and different conditions now present at the project and identify a method and procedure to eliminate control issues with the Transmission Provider to prevent voltage collapse and other system issues caused by the interconnection of the Project. In Looking to the standards in: Alaska Standard AKFAC-002-0 -Coordination of Plans for New Facilities A,Introduction I.Title:Coordination of Plans For New Generation,Transmission,and End User Facilities 2.Number:AKFAC-002-0 3.Purpose: To avoid adverse impacts on reliability,Generator Owners and Transmission Owners and electricity end- users must meet facility connection and performance requirements.These requirements are spelled out in detail in The Railbelt Standards for Generation and Transmission Interconnection.All Entity's proposing to interconnect and operate within the Railbelt will be required to adhere to these standards. 4.Applicability: 4.1.Generator Owner 4.2.Transmission Owner 4.3,Distribution Provider 4.4,Load-Serving Entity 4.5.Transmission Planner 4.6.Planning Authority AKFAC-002-0 makes it again clear that a generation owner (4.1)must comply with the Railbelt Standards for Generation and Transmission Interconnection.The AEA will be required to comply with these stated standards.In addition AKFAC-002-0 requires the Generation owner to provide evidence of compliance and various studies (Please see AKFAC-002-0 R1.1 through R1.5). 1.The Project must be made to comply with certain requirements imposed by the Transmission Provider at Bradley Junction. a.Identify a means and method to prevent the voltage collapse problem as described by CEA that reportedly can be corrected by CEA having operational control of a Diamond Ridge breaker. In recent discussion with CEA,CEA has made an assertion that during certain system conditions or operational levels of the Project CEA needs to have control of a circuit breaker at Diamond Ridge transmission station.This is not acceptable to the Transmission Provider.The BPMC must provide either a remedial action scheme at the Project to prevent such an occurrence or install additional relaying such that the system will correctly operate without CEA exercising control of the Diamond Ridge Breaker.HEA reserves the right to approve and accept any such scheme proposed. 2.The Project must be made to comply with certain requirements imposed by the Transmission Provider at Bradley Junction. a.Operating with common boundaries and metering points "so as not to bea burden”on the adjoining LBA. Both the RRO standards and those of the IMC require that the adjoining LBA's operate with common interchange points,with common metering points so as to limit the imposition on the adjoining LBA.HEA has identified those exchange points as Bradley Junction,Soldotna SVC and Quartz Creek.The BPMC must immediately direct the dispatcher of the project to begin using those metering points as required by the Transmission Provider and AKBAL -006-0. There are additional requirements contained in Alaska Standard AKBAL-006-0 -Inadvertent Interchange the dispatcher of the Project must comply with. 3.The Project must be made to comply with certain requirements imposed by the Transmission Provider at Bradley Junction. a.Operate in such a manner as to not cause problems in the adjoining LBA. The Transmission Provider requires that until such time as Dynamic Scheduling of the Project can be implemented,tested and is fully operational according to all the interested parties;that the Project be operated as the current contract requires;to an hourly day ahead schedule.Excursions for system disturbances are allowed but those excursions and deviations from the day ahead schedule should be the exception not the norm.Varying schedules at the Project place an undue burden on the Transmission Providers LBA,requiring constant manual adjustments.These manual adjustments make it difficult,if not impossible,to correctly calculate inadvertent.The action of the Project dispatcher in rapidly varying the scheduled output of the Project is prohibited as identified in: Alaska Standard AKBAL-006-0 -Inadvertent Interchange R.4-Adjacent Balancing Authority Areas shall operate to a common Net Interchange Schedule and Actual Net Interchange value and shall record these hourly quantities,with like values but opposite sign. Each Balancing Authority shall compute its Inadvertent Interchange based on the following: It is impossible to operate with a common Net Interchange Schedule and Actual Net Interchange value if there is no common schedule. Alaska Standard AKBAL-005-0 -Automatic Generation Control R.11.Balancing Authorities shall include the effect oframp rates,which shall be identical and agreed to between affected Balancing Authorities,in the Scheduled Interchange values to calculate ACE. It is impossible to operate with identical and agreed to ramp rates if there is no common schedule. In summary and In accordance with resolution 2013-03 the BPMC is required to provide budget to perform the following as soon as practicable: e Various reporting functions are required throughout the IMC standards.The BPMC is required to direct the Project Dispatcher to immediacy comply with those report requirements. e Preliminary engineering work to design and build a substation at Bradley Junction o Placeholder budget cost for Preliminary engineering work $300,000. e Require the Project to carry a spin burden according to the Transmission Providers interconnect requirement. Immediately fund system studies to clarify the normal operation parameters of the Project. Immediately fund system studies to understand the abnormal operational parameters of the project. Immediately fund system studies to provide for mitigation and control measures required to minimize the impact of the connecting Transmission Provider and neighboring LBA (CEA). Immediately fund studies to eliminate the need for a foreign utility to exercise control on a Breaker within the Transmission providers'ownership and control Boundary for Project miss-operation. The Project must comply with the Interconnection Standards for Railbelt Generation when the governors are replaced. Agree to and enforce system control boundaries as required by Alaska Standard AKBAL- 006-0 -Inadvertent Interchange. Direct the project dispatcher to immediately conform to AKBAL-006-0 by requiring that the adjoining LBA not place an undue burden on the Transmission Provider's LBA by random variation in Bradley output schedules. Direct the project dispatcher to immediately conform to the LBA boundaries (Bradley Junction and Quartz Creek as well as the SVC at Soldotna)so as to agree and use common interface points of exchange and metering as required by AKBAL-006-0. BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE Resolution 14-11 RESOLUTION RESOLVING THE DISPUTED ISSUES BETWEEN THE DESIGNATED UTILITIES AND HOMER ELECTRIC ASSOCIATION,INC. Table of Contents THT.THE PARTIES'POSITIONS...esseeecesecesscecesecesseeseeseecsceeseseeaseececeseesseeeeesseeseeeeesA.HEA'S PoSition .0.....eeeescessssneeceessscssseseessesssesssseeacessaecoeseseessnsceaeeseessecseesseensseeeeneeseaaees B.The Designated Utilities'Position...esssescesnsceccscceceseeceecescesssseesesucceaeeesensenees IV.FINDINGS OF FACT AND CONCLUSIONS OF LAW........cecssssscssssssecseseeeeerereeseeeeeees A.The Disputed Issues Arise under the Bradley Lake Agreements ............cccessssssseceseeesesncensceseensessecsesecstenssessaseasessecncersecseneseeenssssesnenes B.The BPMC Has Authority to Consider and Resolve Issues Arising Under the Bradley Lake Agreements.............:.c:cssscssscesssessseeseesseseseaees C.The Bradley Lake Agreements Were Not Modified, Amended,or Terminated By the Expiration of the Lease and Chugach Is Still Entitled to Operate, Maintain,Repair,Dispatch,and Wheel Project Energy Over the S/Q Line ......cceeeccsssssscesesnssessessensssstceseescensseceseesnesseeceenesstesesseseresesesenseensenees D.HEA Will Be Permitted Some Additional Compensation for the Use of Its System Associated With the Transmission of Project Energy North of the Soldotna Substation............ccscsscseseeesssecreseeeeeeseseees V.RESOLUTION 0...ecccsesscssescseenecsscesccscenseseessseesseesstsnesscesssacensseseseessassnsensneeseseesnsseearens Resolution 14-11 Resolving Dispute between Utilities Page 1 of 18 BY THE BPMC: I.SUMMARY On February 7,2014,we found that this Bradley Lake Project Management Committee ("BPMC”)has authority to consider and decide on their merits the disputed issues between the Designated Utilities!and Homer Electric Association,Inc.("HEA”),regarding the continuing effect of the Bradley Lake Agreements and bonding documents?after the expiration of the Lease? and whether HEA is entitled to any additional compensation for Chugach's continued use of certain electrical facilities north of the Soldotna Substation for the purpose of wheeling energy from the Bradley Lake Hydroelectric Project ("Project”)under the terms of the Bradley Lake Agreements.'Our analysis in support of our finding on authority is contained herein. Now,after having provided all parties with the opportunity to fully advance evidence,and brief and argue their positions with regard to the disputed issues,we find that (1)the Bradley Lake Agreements were not modified,amended,or terminated by the expiration of the Lease;(2)the Chugach Electric Association,Inc.("Chugach”),Golden Valley Electric Association, Inc.("GVEA”),Matanuska Electric Association,Inc.("MEA”),and the Municipality of Anchorage d/b/a Municipal Light &Power (""ML&P”'). 2 The Bradley Lake Agreements include (1)the Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”),(2)the Agreement for the Wheeling of Electric Power and for Related Services ("Services Agreement”),(3)the Agreement for the Sale of Transmission Capability,dated December 8,1987,and the Amendment to Agreement for Sale of Transmission Capability,dated March 7,1989 ("Transmission Sharing Agreement”)(hereinafter "Bradley Lake Agreements”or "Agreements”);and (4)Alaska Power Authority Power Revenue Bond Resolution ("Bond Resolution”). Agreement for the Lease of Facilities,executed by and between Chugach and HEA in September 1985. 4 See Transcript of February 7,2014,BPMC Meeting at 104:15-106:6. Resolution 14-11 Resolving Dispute between Utilities Page 2 of 18 Bradley Lake Agreements continue to provide Chugach with the contractual right and obligation to operate,maintain,repair,dispatch,and wheel Project energy over the electrical facilities owned by HEA from the Soldotna Substation north to the Quartz Creek Substation;and (3)HEA is being adequately compensated for Chugach's continuing operation,maintenance,repair,dispatching, and wheeling of Project energy over the electrical facilities owned by HEA from the Soldotna Substation north to the Quartz Creek Substation but will receive additional compensation as a reasonable resolution of the disputes.° II.BACKGROUND The Project was made possible through a series of integrated contracts referred to as the Bradley Lake Agreements and bonding covenants.Under the Bradley Lake Agreements,among other things,power is sold and transmitted from the Project across Project facilities to the Bradley Junction,where it then enters the transmission system of Alaska Electric and Energy Cooperative, Inc.('AEEC”),°a wholly owned HEA asset.From Bradley Junction,Project energy flows north along AEEC's transmission line running from Bradley Junction to the Soldotna Substation ("Soldotna Segment”).The transmission of Project energy across the Soldotna Segment is governed by the Transmission Sharing Agreement.Under the Transmission Sharing Agreement, Chugach,GVEA,ML&P,and MEA contributed to the cost of constructing the Soldotna Segment in exchange for secure transmission capacity on the Soldotna Segment. HEA raised other technical disputes regarding Chugach's performance under the Bradley Lake Agreements in HEA's Statement Regarding Dispute Resolution Procedures filed with the BPMC on January 23,2014.Those disputes are not addressed in this Resolution and will be considered and resolved by the BPMC through a separate resolution. A single-member generation and transmission cooperative owned by HEA. Resolution 14-11 Resolving Dispute between Utilities Page 3 of 18 From the Soldotna Substation,Project energy then flows north through AEEC's transmission line running from the Soldotna Substation to the Quartz Creek Substation ("S/Q Line”).For the past 25 years,Chugach has operated,maintained,repaired,dispatched,and wheeled Project energy north of the Soldotna Substation through certain electrical facilities, including the S/Q Line,pursuant to the Services Agreement,'which continues in effect for another 25 years.®There is no provision in the Services Agreement that refers to the Lease or that suggests the expiration of the Lease will impact the rights and obligations of any party to the Services Agreement or any of the Bradley Lake Agreements. The Lease was associated with Chugach's wholesale power sales to HEA,and the Lease expired on January 1,2014.2 HEA believes that,when the Lease expired on January 1,2014, Chugach lost the right and the obligation to operate and maintain the electrical facilities north of the Soldotna Substation owned by HEA (including the S/Q Line).The Designated Utilities disagree.The Designated Utilities believe that,despite the expiration of the Lease,the Services Agreement provides Chugach with the nght and the obligation to operate and maintain all electrical facilities north of the Soldotna Substation used to wheel Project energy (including the S/Q Line). On December 12,2013,the BPMC passed Resolution 2013-02,preliminarily finding that the disputed issues are within the BPMC's authority to resolve and beginning the dispute resolution process by appointing a Dispute Resolution Committee to address the disputed issues raised by HEA and the Designated Utilities.The Dispute Resolution Committee scheduled and held five 7 See Services Agreement at 7-8. 8 See Services Agreement at 3,28-29. 9 See Lease at 2. Resolution 14-11 Resolving Dispute between Utilities Page 4 of 18 meetings at the offices of the Alaska Energy Authority ("AEA”)to address the issues identified in BPMC Resolution 2013-02.!°On January 24,2014,the Dispute Resolution Committee asked all interested parties to file briefs addressing three issues:(1)whether the BPMC has the authority to address the underlying disputed issues;(2)whether Chugach has the right and obligation to continue operating,maintaining,and repairing the electrical facilities used to wheel Project energy from the Soldotna Substation north under the terms of the Services Agreement;and (3)whether HEA is entitled to any additional compensation for Chugach's continuing use of certain of HEA's electrical facilities north of the Soldotna Substation used for wheeling Project energy. On January 27,2014,the BPMC passed Resolution 2014-02 requiring that "{a]l1 Project participants shall act in good faith to maintain the status quo and permit Chugach to continue to dispatch,operate,maintain,and repair,the S/Q Line under the terms of the Services Agreement and the other Bradley Lake Agreements during the pendency of the dispute.”On February 4,2014, the Designated Utilities!!and HEA”both filed briefs addressing the issues identified in Resolution 2013-02.On February 7,2014,based upon consideration of the arguments presented by both the Designated Utilities and HEA,the BPMC found that it has authority to consider and decide the disputed issues on their merits.'The supporting analysis for the BPMC's decision on authority is detailed below.On April 11,2014,the Dispute Resolution Committee made specific findings regarding the disputed issues in Resolution 14-09.Those findings have been considered by the 10 Those meetings were held on the following dates:January 24,2014;January 27,2014; February 7,2014;April 11,2014;and April 17,2014. Designated Utilities'Brief on Disputes with Homer Electric Association,Inc. ("Designated Utilities'Br.”). 11 12 Position Statement of Homer Electric Association,Inc.("HEA's Br.”). '3 See Transcript of February 7,2014,BPMC Meeting at 104:15-106:6. Resolution 14-11 Resolving Dispute between Utilities Page 5 of 18 BPMC and are incorporated into the findings in this Resolution.On April 17,2014,the Dispute Resolution Committee passed Resolution 14-10 declaring that the parties had reached an impasse and recommended that the BPMC move forward with formal dispute-resolution procedures.On April 17,2014,the BPMC approved the Dispute Resolution Committee's Resolutions 14-09 and 14-10.Now,in accordance with the dispute-resolution obligations under the Services Agreement and the BPMC's Bylaws,the BPMC has determined to decide the disputed issues on their merits.'* 14 Certain matters were referred to the Bradley Lake Operations and Dispatch Committee ("O&D Committee”).The technical and operational information provided by the O&D Committee in response has been duly considered by the BPMC and is incorporated into this Resolution. Resolution 14-11 Resolving Dispute between Utilities Page 6 of 18 Ill.THE PARTIES'POSITIONS A.HEA's Position. HEA asserts that the BPMC does not have the authority to consider or decide the disputed issues on their merits.HEA further asserts that the BPMC's authority derives from the Power Sales Agreement and that the Power Sales Agreement does not give the BPMC authority to resolve the underlying disputed issues.'°Specifically,HEA argues that the BPMC does not have the authority to consider or resolve the issue of compensation to HEA for wheeling Bradley power.!” HEA argues that "{nJo provision in any of the [Bradley Lake Agreements]speaks to”the compensation issue.'®Instead,HEA states that the ultimate decision regarding compensation will be made by the Regulatory Commission of Alaska ("RCA”)or by a court.!” Moreover,HEA's position is that Chugach's right to access and transmit Project energy over HEA's facilities arose entirely from the Lease,not the Bradley Lake Agreements.2°?HEA asserts that the "expiration of both the [Lease]and the HEA-[Chugach]power sales agreement” terminated Chugach's right to receive power at HEA's Soldotna Substation and to operate any of HEA's transmission facilities.?!HEA explains that upon the expiration of the Lease,HEA began operating as an independent load-balancing authority and assumed the responsibility of providing !5 See HEA's Br.at 2. 16 See HEA's Br.at 2. 17 See HEA's Br.at 2. 18 HEA's Br.at 2. 19 HEA's Br.at 2. 20 See HEA's Br.at 3. 21 HEA's Br.at 3. Resolution 14-11 Resolving Dispute between Utilities Page 7 of 18 transmission services between Bradley Junction and Quartz Creek.””Finally,HEA argues that the Services Agreement does not require HEA to maintain the December 31,2013,status quo.”? B.The Designated Utilities'Position. The Designated Utilities assert that the disputed issues arise out of the Bradley Lake Agreements,and the status quo must be maintained until the disputes are resolved.*4 The Designated Utilities argue that the BPMC has the authority to consider and decide the disputed issues on their merits.Specifically,the Designated Utilities argue that the Power Sales Agreement creates and defines the BPMC's broad rights and obligations with respect to the management, operation,and improvement of the Project,and the Power Sales Agreement requires the BPMC to adopt procedures for resolving disputes that arise under the Bradley Lake Agreements.?>The Designated Utilities assert that,pursuant to the Power Sales Agreement,the BPMC adopted the Bradley Project Management Committee Bylaws ("Bylaws”),which contain specific procedures for dispute resolution.”®The Designated Utilities further argue that the Bylaws'dispute-resolution procedures give the BPMC the authority to decide,on their merits in accordance with Article 12 and Section 5.10 of the Bylaws by majority vote,those issues the BPMC determines are within its authority to consider.?”The Designated Utilities point out that the Services Agreement similarly provides that all disputes arising thereunder are subject to resolution in a manner consistent with 22 See HEA's Br.at 4. 23 See HEA's Br.at 4. 24 See Designated Utilities'Br.at 1-7;see also Tr.67:18-24 (Feb.7,2014,Dispute Resolution Committee Meeting). 25 See Designated Utilities'Br.at 6. 26 See Designated Utilities'Br.at 6. 7 See Designated Utilities'Br.at 6. Resolution 14-11 Resolving Dispute between Utilities Page 8 of 18 the BPMC's adopted dispute-resolution procedures.*®The Designated Utilities,therefore, conclude that pursuant to the Power Sales Agreement,the Bylaws,and the Services Agreement, the BPMC has the authority to (1)determine whether it has authority to consider the disputed issues,and (2)to resolve,on their merits by a majority vote,those issues the BPMC determines are within its authority to resolve.?? Moreover,the Designated Utilities argue that the Services Agreement and the Lease are unrelated agreements and that the termination of the Lease did not terminate Chugach's rights and obligations under the Services Agreement to operate,maintain,and repair the electrical facilities north of the Soldotna Substation,including the S/Q Line,for wheeling Project energy.*°The Designated Utilities assert that Chugach's rights and obligations with regard to the S/Q Line are governed by the Services Agreement,not the Lease.*!Further,the Designated Utilities assert that HEA has been and is still being fairly compensated for the use of its facilities to wheel Project energy north as a part of the "net economic benefits”all Project Participants recognized and receive under the Bradley Lake Agreements.*? 28 See Designated Utilities'Br.at 6. 29 See Designated Utilities'Br.at 6-7. 30 See Designated Utilities'Br.at 2-5. 31 See Designated Utilities'Br.at 2-5. 32 See Designated Utilities'Br.at 7. Resolution 14-11 Resolving Dispute between Utilities Page 9 of 18 IV.FINDINGS OF FACT AND CONCLUSIONS OF LAW A.The Disputed Issues Arise Under the Bradley Lake Agreements. The BPMC finds that the disputed issues between the Designated Utilities and HEA are essentially a disagreement over Chugach's and HEA's relative rights and obligations with regard to electrical facilities owned by HEA and operated by Chugach to dispatch and wheel Project energy under the Services Agreement.The BPMC finds that this dispute is governed by the terms of the Services Agreement and the Bradley Lake Agreements.Further,the BPMC finds that there exists a dispute as to whether HEA is entitled to any additional compensation for the use of HEA's electrical facilities north of the Soldotna Substation for wheeling Project energy.The BPMC finds that this dispute is also governed by the terms of the Services Agreement and the other Bradley Lake Agreements. B.The BPMC Has Authority to Consider and Resolve Issues Arising Under the Bradley Lake Agreements. Upon consideration of the Bradley Lake Agreements,the Bylaws,and the arguments put forth by both the Designated Utilities and HEA,the BPMC finds that it has authority to consider and resolve the disputed issues on their merits by a majority vote.*?>The BPMC finds that the disputed issues between the Designated Utilities and HEA concern Chugach's continuing contractual rights and obligations to operate,maintain,repair,dispatch and wheel Project energy over the electrical facilities north of the Soldotna Substation and are within the BPMC's authority to address and resolve under both the Power Sales Agreement and the Services Agreement. 33 If the resolution of such a dispute also involves an amendment to any of the Bradley Lake Agreements,then such an amendment would also have to be made consistent with the language for amendment of the Bradley Lake Agreements. Resolution 14-11 Resolving Dispute between Utilities Page 10 of 18 The Power Sales Agreement and the Services Agreement place a broad range of rights and obligations upon the BPMC.**Section 13(c)of the Power Sales Agreement requires the BPMC to oversee the "management,operation,maintenance,and improvement”of the Project and requires the BPMC to "[a]rrange for the operation and maintenance of the Project,and the scheduling,production,and dispatch of Project power.”This language requires the BPMC to address operation and management issues as well as issues associated with the scheduling and dispatch of power.The current disputes between the Designated Utilities and HEA concern each of these areas of the BPMC's authority.Further,Section 13(b)requires the BPMC to adopt "procedural rules”for "dispute resolution.” Similarly,Section 10(b)of the Services Agreement expressly incorporates and designates the BPMC as the entity responsible for resolving disputes under the Services Agreement. Specifically,the Services Agreement provides: At the meetings referred to in Section 10(a),the Parties shall also review performance under this Agreement,including difficulties encountered under the Agreement by any of the Parties and allegations (if any)of failure of any Party to perform the Agreement in good faith in accordance with its terms or intent. The Parties agree that any further procedures for dispute resolution under this Agreement shall be entrusted (if the Authority concurs)to good faith negotiation and adoption by the [BPMC],with Chugach's affirmative vote required for adoption of such procedures.*> This language requires the BPMC to address difficulties encountered with,and the failure of any Party to perform in accordance with,the terms of the Services Agreement.The current disputes between the Designated Utilities and HEA concern each of these areas of the BPMC's authority. 34 See Power Sales Agreement at 19-23;see also Services Agreement at 18. 35 Services Agreement at 18. Resolution 14-11 Resolving Dispute between Utilities Page 11 of 18 The BPMC's authority over the issues in dispute between the Designated Utilities and HEA is also consistent with the exemption of the Bradley Lake Agreements from any regulatory oversight under AS 42.05.431(c).Absent such an exemption,the rights and responsibilities of utilities over electrical facilities and rates would be resolved by the RCA.In the case of the Bradley Lake Agreements,however,the Legislature exempted all such matters from the RCA and permitted them to be addressed and resolved by the industry through the specialized experience and expertise of the BPMC. This ruling on the authority of the BPMC is required under Article 12 of the Bylaws entitled "Procedures for Dispute Resolution.”Article 12.2 of the Bylaws states that "in the event the authority of the [BPMC]to act is at issue,the [BPMC]shall first make a finding as to its authority.” Once such a finding is made,the BPMC has the authority to decide,on their merits,those issues the BPMC determines are within its authority to consider.Finally,with regard to these particular disputes,Article 5.10.2 of the Bylaws provides that "the act of a majority of votes taken during a meeting at any time when a quorum is present,shall be an act of the [BPMC],and binding on the members.”*° The BPMC,therefore,concludes that (1)the disputed issues between the Designated Utilities and HEA arise under the Bradley Lake Agreements;and (2)the Power Sales Agreement, the Services Agreement,and the Bylaws provide the BPMC with the authority and the responsibility to resolve the disputed issues between the Designated Utilities and HEA. C.The Bradley Lake Agreements Were Not Modified,Amended,or Terminated by the Expiration of the Lease,and Chugach Is Still Entitled to Operate, Maintain,Repair,Dispatch,and Wheel Project Energy Over the S/Q Line. 36 Emphasis added. Resolution 14-11 Resolving Dispute between Utilities Page 12 of 18 Upon consideration of the Bradley Lake Agreements and the evidence and arguments put forth by both the Designated Utilities and HEA,the BPMC finds that Project energy enjoys priority status for transmission services from the Project north to the Project Participants.The expiration of the Lease did not modify,amend,or terminate the Services Agreement or the priority status that Project energy enjoys thereunder.Instead,transmission services across the S/Q Line continue to be governed by the Services Agreement.The Services Agreement requires Chugach to operate,maintain,repair,dispatch and wheel Project energy over the electrical facilities from the Soldotna Substation north.2”And,the Services Agreement requires Chugach to perform those 38servicesfor50years.°°The shorter term of the Lease is never mentioned in the Services Agreement.°?Significantly,the Services Agreement does not limit Chugach's rights or obligations to operate,maintain,repair,dispatch and wheel Project energy over HEA's facilities north of the Soldotna substation to the term of the Lease.Instead,the Services Agreement requires Chugach to exercise such rights and obligations throughout the 50-year term of the Services Agreement without any qualification or limitation relating to the Lease.Notably,the Services Agreement was executed two years after the Lease.*°Thus,if the parties had intended that the expiration of the Lease would terminate Chugach's rights and obligations under the Services 37 See Services Agreement at 2 ("At the request of any Wheeling Utility,Chugach will provide wheeling,storage,and energy purchase services to such Utility for that Utility's Bradley Lake Energy in accordance with the provisions of this Agreement.”);see also Services Agreement at 7-8 ("Chugach will in good faith and at all times:...operate, maintain,and repair the electrical facilities used to perform the services provided hereunder....”). 38 See Services Agreement at 3,28-29. 39 The Lease expired on January 1,2014.See Lease at 2. 40 The Lease was approved by the Commission in Order U-85-013(3),June 4,1985.The Services Agreement was executed on Dec.8,1987.Services Agreement at 1. Resolution 14-11 Resolving Dispute between Utilities Page 13 of 18 Agreement,they would have expressly qualified or limited those rights and obligations to the term of the Lease.Further,such a limitation would not be reasonable to imply,given the Services Agreement's express requirement that Chugach operate,maintain,repair,dispatch and wheel Project energy over HEA's facilities north of the Soldotna substation for 50 years,the length of time the bonds would be outstanding.Finally,GVEA,MEA,and ML&P were not parties to the Lease between Homer and Chugach and,thus,expiration of the Lease could not be deemed to affect GVEA's,MEA's,and ML&P's rights under the Services Agreement. Additionally,the Services Agreement can only be amended,renegotiated,or terminated at an earlier date by unanimous agreement.*!As such,the Chugach delivery point for Project energy may only be changed from the Soldotna Substation to the Quartz Creek Substation as a "successor facility”through the "written consent of all Parties.”4*HEA's attempts to unilaterally terminate, amend,or renegotiate the Services Agreement through its Tariff Filings and actions impeding Chugach's ability to operate,maintain,repair,dispatch and wheel Project energy over the S/Q Line are improper. The BPMC,therefore,concludes that the expiration of the Lease,which was neither referenced in nor related to the Bradley Lake Agreements,does not affect the continuing rights and obligations under the Services Agreement or the priority status Project energy enjoys thereunder. Instead,HEA must act in good faith to honor its commitments under the Services Agreement and allow Chugach to continue operating,maintaining,repairing,dispatching,and wheeling Project energy over HEA's facilities north of the Soldotna Substation. 41 See Services Agreement at 3-4. 42 See Services Agreement at 3.As the Designated Utilities point out,at least ten sections of the Services Agreement would have to be amended in order to effectuate such a change in delivery point.See Designated Utilities'Br.at 2,n.5. Resolution 14-11 Resolving Dispute between Utilities Page 14 of 18 D.HEA Will Be Permitted Some Additional Compensation for the Use of Its System Associated With the Transmission of Project Energy North of the Soldotna Substation. The BPMC finds that the parties to the Services Agreement and the Transmission Sharing Agreement anticipated that the Project would produce "net economic benefits”for all the parties,including HEA.”Specifically,all parties received the benefit of being able to purchase cheap power from the Project.Further,HEA received contribution from the other Project Participants to build the Soldotna Segment.**HEA was designated as the operator of the Project and receives compensation for its services provided as such.HEA's system is more reliable as a result of having the Project located on the southern edge of HEA's system.HEA receives the ongoing benefit of Chugach operating and dispatching Project energy at less than Chugach's actual costs of providing such services.And,HEA is benefited as a result of its right to pay for the scheduled dispatch of its Project power on an energy-delivered basis as opposed to an energy- reserved basis.The BPMC finds that,in exchange for those benefits,HEA committed its system to be used for the transmission of Project energy to the Project Participants in accordance with the Bradley Lake Agreements.Thus,HEA is adequately compensated under the Bradley Lake Agreements for the use of HEA's system and is entitled to no additional compensation. Nonetheless,in the interest of reaching a resolution among the Project Participants,the BPMC orders that HEA is to receive additional payments from the other Project Participants for the continuing use of HEA's facilities north of the Soldotna Substation throughout the term of the Services Agreement.While HEA is not entitled to any additional compensation under the controlling Bradley Lake Agreements,the BPMC holds that permitting HEA some additional "3 Services Agreement at 1;Transmission Sharing Agreement at 1. 44 Transmission Sharing Agreement at 2-3. Resolution 14-11 Resolving Dispute between Utilities Page 15 of 18 compensation would be the most efficient and reasonable resolution of the disputes.Such a resolution,while providing HEA with additional compensation,preserves the structure and terms of the Bradley Lake Agreements by maintaining and continuing Chugach's responsibility and obligation to operate,maintain,repair,dispatch,and wheel Project energy over HEA's facilities north of the Soldotna Substation.Such a resolution also provides the most efficient continuing means to dispatch Project energy to the Project Participants. The amount of additional compensation shall consist of both a fixed and a variable component.The fixed component is to be an amount of Three Hundred Thousand Dollars ($300,000)per year,which provides additional compensation to HEA to resolve the disputes concerning the Project Participants'continuing use of HEA's transmission facilities from the Soldotna Substation north under the Bradley Lake Agreements.The variable component is to consist of reasonable costs incurred by Chugach in fulfilling its responsibilities under the Services Agreement to maintain and repair HEA's transmission system from the Soldotna Substation north when such maintenance is performed by or through HEA's own efforts.Chugach has the continuing obligation under the Services Agreement to authorize and approve all such variable maintenance costs.Such fixed and variable amounts are consistent with the maximum compensation HEA has recovered historically from Chugach through the formula elements set forth in the Bradley Lake Agreements and represent a reasonable remedy under the circumstances of these disputes.These fixed and variable payments are effective and required from January 1, 2014,until the expiration of the Services Agreement. Resolution 14-11 Resolving Dispute between Utilities Page 16 of 18 V.RESOLUTION THE BPMC FURTHER RESOLVES: 1.As discussed in the body of this Resolution,the BPMC has the jurisdiction and obligation to resolve the disputes at issue. 2.As discussed in the body of this Resolution,the expiration of the Lease had no effect on the operation of the Services Agreement. , 3.As discussed in the body of this Resolution,Chugach will continue to operate in accordance with the rights and obligations agreed to in the Services Agreement.Accordingly, Chugach will continue to operate,maintain,repair,dispatch,and wheel Project energy over HEA's facilities north of the Soldotna Substation in accordance with the terms of the Services Agreement. 4.As discussed in the body of this Resolution,HEA is violating BPMC Resolution 14-02 by not maintaining the status quo while this dispute is being resolved by the BPMC. 5.HEA shall take all reasonable steps to provide Chugach with the information and physical capability (where HEA cooperation is needed)to continue to perform its responsibilities in the same manner as Chugach did prior to January 1,2014. 6.HEA shall act in good faith to provide such cooperation as Chugach may from time to time request to allow Chugach to fulfill its responsibilities to operate,maintain,repair,dispatch, and wheel Project energy over HEA's facilities north of the Soldotna Substation under the Services Agreement,as those responsibilities have been clarified in the body of this Resolution. 7.HEA shall amend its tariff filings designated TA355-32 and TA356-32 ('"HEA's Tariff Filings”)with the RCA to expressly provide that HEA's Tariff Filings shall not apply to any and all services or rates covered by the Bradley Lake Agreements,as those services and rates have been interpreted and more fully identified in the body of this Resolution.Additionally,such amendment shall specifically and expressly provide that (a)HEA's Tariff Filings shall not apply Resolution 14-11 Resolving Dispute between Utilities Page 17 of 18 _to any services associated with the transmission of Project energy;(b)HEA's Tariff Filings shall not affect the priority status that Project energy currently enjoys under the Bradley Lake Agreements;and (c)HEA's Tariff Filings shall not apply to or require compensation for the use of HEA's facilities associated with the transmission of Project energy.HEA shall file such an amendment to its Tariff Filings in accordance with this Resolution of the BPMC within 15 days from the date of this Resolution. 8.HEA is to submit its request for variable component cost recovery to the BPMC in accordance with terms announced in section IV.D.of this Resolution within 15 days from the date of this Resolution. 9.Chugach is to submit appropriate payments to HEA,consistent with compensation terms announced in section IV.D.of this Resolution,within 30 days of the date of this Resolution. 10.__All parties are entitled to seek immediate judicial enforcement of the terms of this Resolution before the Superior Court for the State of Alaska,Anchorage District. DATED ANDene anthis _9_dayof_™au ,2014, =foic:.ta45 SJHaems:ptt hen E cand=Evans %,",.1 978 a air "sepea®KY lia!--ed_Sara Fisher-Goad Secretary Resolution 14-11 Resolving Dispute between Utilities Page 18 of 18 HOMER ELECTRIC ASSOCIATION,INC. STATEMENT REGARDING DISPUTE RESOLUTION PROCEDURES Homer Electric Association,Inc.("HEA”)as a member of the Bradley Lake Project Management Committee (""BPMC'”),has participated in the adoption of certain dispute resolution procedures pursuant to Section 10(b)of the Agreement for the Wheeling of Electric Power and for Related Services ("Services Agreement”)and Section 14 of the Amendment to Agreement for Sale of Transmission Capability ("Transmission Agreement”).The process for identifying disputes to be treated with under the procedures is unclear,and HEA is unsure of the scope of the issues that are intended to be addressed by the BPMC. HEA recognizes the value of attempting to resolve issues informally,and is willing to participate in the dispute resolution process in an effort to minimize unnecessary and counterproductive strife.For the avoidance of doubt,however,by its participation in the dispute resolution process,HEA does not thereby agree that the BPMC has the contractual authority to resolve,or even consider,some or all of the issues identified by the participants in the process, including those set forth in Resolution No.2013-02,nor does HEA acknowledge that the allegations in the resolution or which may be otherwise identified even give rise to bona fide disputes.HEA reserves the right to have any dispute that may arise in the context of the BPMC dispute process resolved by the appropriate judicial or regulatory authority. STATEMENT OF DISPUTES Services Agreement.Section 10(b)of the Services Agreement limits dispute resolution to matters involving "performance under (the)Agreement.”HEA has identified certain disputes that arise under the specific terms of the Services Agreement and they are as follows: Services Agreement,Section 8 Performance Failures Section 8(a)(i)requires the Dispatcher to "(dispatch)power generation at the Bradley Lake Project in accordance with the requests of the Parties,...and the applicable operating criteria or guidelines adopted by the Project Management Committee.”The BPMC has adopted Allocation and Scheduling Procedures (Procedures)for the Project as the applicable operating criteria or guidelines.With respect to its obligations under Section 8(a)(i)and the Procedures the Dispatcher has failed to perform as follows: 1.In violation of Sections 5(b),(c),(d),(e),(f),and (g)of the Procedures the Dispatcher routinely utilizes energy from the Project to regulate Fire Island Wind (FIW)output. 2.The Project has spilled water in each of the past two years as a direct result of both action and inaction on the part of the Dispatcher as follows: a.Acting in violation of Section 5(h)of the Procedures,the Dispatcher used the Project to load-follow its own system rather than dispatching the Project to prevent spill and imminent spill conditions. .Acting in violation of Section 5(j)of the Procedures,the Dispatcher scheduled its share of Project capacity to load-follow its own system rather than scheduling its share to prevent spill and imminent spill conditions.Further,the Dispatcher failed to mitigate the adverse effects on the Project in scheduling extensive outages in performing maintenance and repairs on its transmission system. In violation of Sections 5(j)of the Procedures the Dispatcher failed to notify Participants of Capacity and Energy to be made available to them at no cost under section 5(h)of the Procedures,as a result of its and other Participants'inability or refusal to take their fully allocated shares of energy during imminent and actual Spill conditions,thus extending and exacerbating the amount of and the duration of spill and imminent spill. 3.The Dispatcher is violating Section 5(g)of the Procedures by routinely loading Project generation units to levels well in excess of its own share,and failing to provide an accounting proving whether or not it has thereby effectively taken Project Capability belonging to other Participants. 4.The Dispatcher is violating Section 5(g)of the Procedures by routinely loading Project units to levels well in excess of its own share,to the extent that spin carried on Bradley at the time is being used by the Dispatcher to provide real energy,and failing to provide an accounting proving whether or not such loading has effectively taken Project Spin Capability belonging to other Participants,thereby potentially leaving the system deficient in spin. 5.The Dispatcher is violating Section 5(b)of the Procedures by failing to publish the week- ahead,hour by hour schedule of Bradley output. Section 8(a)(iv)of the Services Agreement requires the Dispatcher to "(coordinate)with HEA in order that the Dispatcher and HEA alike will minimize,to the extent reasonably practicable,any potential conflicts between and among (A)HEA's system operations,(B)Chugach's system operation,and (C)the dispatch of Project generation and the provision of services to the Wheeling Utilities ...” With respect to its obligations under Section 8(a)(iv)the Dispatcher,in violation of Sections 5(b),(c),(d),(e),(f),and (g)of the Procedures the Dispatcher continuously fails to adhere to the wheeling schedule it provides to HEA. STATEMENT Page 2 Transmission Agreement.Section 14 of the Transmission Agreement provides for dispute resolution of matters "under (the)Agreement.”HEA has identified certain disputes that arise under the specific terms of the Transmission Agreement and they are as follows: Transmission Agreement,Section 3(b)Performance Failures Section 3(b)of the Transmission Agreement provides that HEA shall be compensated for line losses resulting from the flow of Bradley Lake power over the Soldotna Segment and requires the BPMC to determine the amount of line losses and the appropriate amounts and manner of compensation. With respect to their obligations under Section 3(b)of the Transmission Agreement the Purchasers,through the BPMC,have failed to perform as follows: 1.The Purchasers through the BPMC have violated Section 3(b)of the Transmission Agreement by failing to act upon HEA's request of January,2012 to review and correct Loss Tables for the Soldotna Segment. 2.The Purchasers through the BPMC,despite repeated requests from HEA to the Project Dispatcher,have refused to provide the technical calculations underlying the Loss tables for the Soldotna Segment currently in use. 3.The Purchasers through the BPMC have failed to review and update Loss calculations for the Soldotna Segment as required under Section 8(c)of the Procedures, Dated at Kenai,Alaska,this 23 day of January,2014. Bradley P.Janorschke General Manager STATEMENT Page 3 DEM 90 From:Kirk Gibson <kirk@mcd-law.com> Sent:Wednesday,May 27,2015 10:05 AM To:_Teri Webster;Alan Owens;Ambrose,Harvey;Bernie Smith;Brian Bjorkquist;Brian Hickey;Bryan Carey;Cory Borgeson;Dawn M.Baham;Day,Bob;Divina Portades,CEA; Emily Hutchison;Evans,Brad;Foutz,John;Gary Dixon,Swalling &Assoc.;Gary Kuhn (gary.kuhn@mea.coop);Heather Smith;Janorschke,Brad;Jeff Estes,City of Seward;Jeff Waller (RAPA);Jeff Warner;Jim Trent;Jocelyn B.Garner;Jody Wolfe;Joe Griffith; Katherine Beale;Kelli L.Veech;Larry Jorgensen;Thibert,Lee;Lou Agi (agile@muni.org); Lynn Ragle,Swalling &Associates,CPA;Lynn Thompson (Inthompson@gvea.com);Mark Johnston -MLP;Owens,Connie;Richard Miller;Ron Woolf;Sara Fisher-Goad;Sherri McKay-Highers;Sunny Morrison;Susan Redlin,Exec.Secretary,GVEA;TW Patch;Wick, Burke Subject:AEG&T/MEA Matter -RE:BPMC agenda for Friday's meeting Attachments:Execution Version -Assignment AEGT to MEA and Consents.docx All - At the BPMC at the March 19,2015,meeting,HEA and MEA representatives raised questions regarding why AEG&T remained on the BPMC budget.See page 4 of 7 of the Minutes of the March 19,2015 meeting of the BPMC that were distributed by Teri Webster on 5-26. AEG&T signed the Bradley Lake Power Sales Agreement on behalf of HEA and MEA.At that time,AEG&T provided all power requirements for each utility,respectively.At the March 19th meeting of the BPMC,Counsel for BPMC and AEA agreed to review whether any formal action was necessary to replace AEG&T with HEA and MEA. Counsel found the following: 1.AEG&T in 2003 assigned HEA's interests in Bradley Lake project to Alaska Electric and Energy Cooperative (AEEC),which is HEA's wholly owned G&T.A copy of that documentation is attached, including opinions from HEA's counsel,HEA certifications,and consents from each member of the BPMC.No further action appears necessary. 2.AEG&T could similarly assign to MEA,all of MEA's interests in the Bradley Lake project. Attached is a formal Assignment,with form Consents for each member of the BPMC to accommodate such an assignment of AEG&T's remaining interests to MEA that was prepared by Counsel.Please note that MEA would still need to prepare appropriate opinions &certifications. Counsel will be prepared to discuss these documents and any questions the members may have regarding this matter at the upcoming BPMC meeting scheduled for Friday,May 29".In the interim,please do not hesitate to contact me or Brian Bjorkquist (907-269-5150)should you have any questions or desire further information. Thanks. Best, Kirk ASSIGNMENT OF BRADLEY LAKE HYDROELECTRIC PROJECT AGREEMENT FOR THE SALE AND PURCHASE OF ELECTRIC POWER This agreement for assignment is made effective as of the 30th day of June,2015, between Alaska Electric Generation and Transmission Cooperative,Inc.("Assignor")and Matanuska Electric Association,Inc.("Assignee"or "MEA”). WHEREAS,on December 8,1987,Assignor entered into a contract with the Alaska Power Authority ("APA"),Chugach Electric Association,Inc.("Chugach"), Golden Valley Electric Association,Inc.("GVEA"),the Municipality of Anchorage d/b/a Municipal Light and Power ("ML&P"),the City of Seward d/b/a Seward Electric System ("SES"),Homer Electric Association,Inc.("HEA")and MEA,titled the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement"),wherein APA agreed to sell,and Chugach,GVEA,ML&P,SES,and Assignor (on behalf of HEA and MEA),agreed to purchase,electric service from the Bradley Lake Hydroelectric Project under the terms set forth in the Power Sales Agreement; WHEREAS,Assignor on June 30,2003,assigned to the Alaska Electric and Energy Cooperative,Inc.,Assignor's rights,interest and duties in the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement")as were then held or owed by Assignor on behalf of HEA. WHEREAS,Assignor has used the electric power purchased from the Bradley Lake Project on behalf of MEA,as well as power from other sources,to provide the wholesale power needs of MEA pursuant to the terms of a wholesale power agreement between Assignor and MEA; WHEREAS,under Section 17 of the Power Sales Agreement,the Power Sales Agreement is assignable by its terms if: (1)the assignment accords with the terms of any of the Purchaser's covenants or agreements with the holders of the Purchaser's bonds,notes or other evidences of indebtedness relating to the abandonment,sale,mortgage,lease or other disposition of property of the Purchaser's System;and (2)the assignment is: (A)consented to in writing by a majority of the Bradley Project Management Committee,including AEA's representative;or Assignment to MEA (6-30-2015)-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 1 of 9 (B)made to another utility that is already a Purchaser under this Agreement and is able to meet the obligations resulting from the disposal or assignment; WHEREAS,under Section 17 of the Power Sales Agreement,an assignee of the Power Sales Agreement must: (1)assume in writing all of the assigning Purchaser's obligations under the Power Sales Agreement, (2)pay any amounts due and owing from the assigning Purchaser under the Power Sales Agreement,and (3)provide the Authority and the Purchasers with an opinion of counsel that this Agreement is enforceable against the assignee (unless the assignee is already a Purchaser); WHEREAS,under Section 30 of the Power Sales Agreement,MEA has all of the rights and obligations of a Purchaser under Section 17 of the Power Sales Agreement; WHEREAS,a majority of the Bradley Project Management Committee,including AEA's representative,has consented in writing to the assignment of Assignor's interest in the Power Sales Agreement to MEA; WHEREAS,Assignee desires to acquire the rights and is willing to assume the obligations of Assignor on behalf of MEA under the Power Sales Agreement;and WHEREAS,MEA,as Assignee,has provided the Authority and the Purchasers with an opinion of counsel that the Power Sales Agreement is enforceable against the assignee,and has otherwise complied with the conditions required under Section 17 of the Power Sales Agreement for the assignment of Assignor's interest in the Power Sales Agreement to MEA. NOW,THEREFORE,the parties agree as follows: 1.Assignor assigns Assignor's rights,interest and duties in the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement")to Assignee as are held or owed by Assignor on behalf of MEA. 2.Assignee assumes and covenants to perform all the obligations of Assignor owed on behalf of MEA under the Power Sales Agreement,and guarantees to hold Assignor harmless from any claim or demand made under the Power Sales Agreement to the extent such claim or demand relates to obligations owed by Assignor on behalf of MEA. tI Assignment to MEA (6-30-2015)-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 2 of 9 IN WITNESS WHEREOF,the parties have executed this agreement as of the date set forth above. ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE,INC. By: [Title] MATANUSKA ELECTRIC ASSOCIATION,INC. By: [Title] Assignment to MEA (6-30-2015)-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 3 of 9 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement"),dated December 8,1987. ALASKA ENERGY AUTHORITY By: (Formerly known as the Date: Alaska Power Authority) Assignment to MEA (6-30-2015)-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 4 of 9 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement"),dated December 8,1987. CHUGACH ELECTRIC By: ASSOCIATION,INC.Date: Assignment to MEA (6-30-2015)-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 5 of 9 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement"),dated December 8,1987. GOLDEN VALLEY ELECTRIC By: COOPERATIVE,INC.Date: Assignment to MEA (6-30-2015)-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 6 of 9 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement"),dated December 8,1987. MUNICIPALITY OF ANCHORAGE By: d/b/a MUNICIPAL LIGHT Date: AND POWER Assignment to MEA (6-30-2015)-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 7 of 9 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement"),dated December 8,1987. CITY OF SEWARD d/b/a By: SEWARD ELECTRIC SYSTEM Date: Assignment to MEA (6-30-2015)-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 8 of 9 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement"),dated December 8,1987. ALASKA ELECTRIC AND By: ENERGY COOPERATIVE,INC.Date: (on behalf of HOMER ELECTRIC ASSOCIATION,INC.) Assignment to MEA (6-30-2015)-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 9 of 9 PARTIAL ASSIGNMENT OF BRADLEY LAKE HYDROELECTRIC PROJECT AGREEMENT FOR THE SALE AND PURCHASE OF ELECTRIC POWER This agreement for partial assignment is made as of the 30"day ofJune,2003, between Alaska Electric Generation and Transmission Cooperative,Inc.("Assignor'”) and Alaska Electric and Energy Cooperative,Inc.("Assignee”). WHEREAS,on December 8,1987,Assignor entered into a contract with the Alaska Power Authority ("APA”),Chugach Electric Association,Inc.("Chugach”), Golden Valley Electric Association,Inc.("GVEA”),the Municipality of Anchorage d/b/a Municipal Light and Power ("ML&P”),the City of Seward d/b/a Seward Electric System ("SES”),Homer Electric Association,Inc.("HEA”)and Matanuska Electric Association,Inc.("MEA”),titled the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement'), wherein APA agreed to sell,and Chugach,GVEA,ML&P,SES,and Assignor (on behalf of HEA and MEA),agreed to purchase,electric service from the Bradley Lake Hydroelectric Project under the terms set forth in the Power Sales Agreement (a copy of which is attached to this agreement); WHEREAS,Assignor has used the electric power purchased from the Bradley Lake Project on behalf of HEA,as well as power from other sources,to provide the wholesale power needs of HEA pursuant to the terms of a wholesale power agreement between Assignor and HEA; WHEREAS,Assignee has obtained from the Regulatory Commission of Alaska ("RCA”)a certificate of public convenience and necessity to serve as the wholesale power provider of HEA; WHEREAS,Assignee and Assignor also have obtained approval from the RCA of a new wholesale power agreement between Assignee and HEA under which Assignee will serve the wholesale power needs of HEA,and rescission of the current wholesale power agreement between Assignor and HEA; WHEREAS,Assignor intends to transfer the majority of its assets held for the benefit of HEA to Assignee;and WHEREAS,the Power Sales Agreement is by its terms assignable with the consent of the Bradley Lake Hydroelectric Project Management Committee,and Assignment -Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 1 of 13 Assignee desires to acquire the rights and is willing to assume the obligations of Assignor on behalf of HEA under the Power Sales Agreement. NOW,THEREFORE,the parties agree as follows: 1.Assignor assigns to Assignee such of Assignor's rights,interest and duties in the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”)as are held or owed by Assignor on behalf of HEA. 2.Assignee assumes and covenants to perform all the obligations of Assignor owed on behalf of HEA under the Power Sales Agreement,and guarantees to hold Assignor harmless from any claim or demand made under the Power Sales Agreement to the extent such claim or demand relates to obligations owed by Assignor on behalf of HEA. IN WITNESS WHEREOF,the parties have executed this agreement as of thedatesetforthabove. ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE,INC. a»MbN.L.Story,Class A@anager ALASKA ELECTRIC AND ENERGY COOPERATIVE,INC. tr fhoegla ZL'Huet'Chumley,President 7 Assignment -Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 2 of 13 OPINION OF COUNSEL BALDWIN &BUTLER,uc ATLVORNEYS AT LAW 125 N.Willow Street,Suite 100,Kenai,Alaska 99611 CR.Baldwin (907)283-7167JamesN.Butlee,117 (907)283-8435 (i'as) June 30,2003 Alaska Energy Authority 480 W.Tudor Road Anchorage,AK 99503 Alaska Electric Generation and Transmission Cooperative,Inc. 3977 Lake Street Homer,AK 99603 Chugach Electric Association,Inc. P.O.Box 196300 Anchorage,AK 99519-6300 Golden Valley Electric Association,Inc. P.O.Box 71249 Fairbanks,AK 99707-1249 Homer Electric Association,Inc. 3977 Lake Street Homer,AK 99603 Matanuska Electric Association,Inc. P.O.Box 2929 Palmer,AK 99645 Assignment -Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 3 of 13 Anchorage Municipal Light &Power 1200 East First Avenue Anchorage,AK 99501 City of Seward Light &Power Division P.O,Box 167 Seward,AK 99664 Re:Assignment of Agreement for the Sale and Purchase of Electric Power from the Bradley Lake Hydroelectric Project dated December 8,1987 ("PSA”)by Alaska Electric Generation and Transmission Cooperative, Inc.(""AEG&T”)to Alaska Electric and Energy Cooperative,Inc. ("AEEC”) Ladies and Gentlemen: We have acted as counsel to AEEC in connection with the authorization and execution by AEEC of the Partial Assignment of Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power dated as of June 30,2003 (the "Assipnment”),entered unto between AEEC and AEG&T. This opinion is being delivered to you at the direction of the assignee,AEEC. In connection with this opinion,we have examined originals,or copies identified to our satisfaction as being true copies,of the following-desctibed records, documents and instruments which in our judgment are necessary or appropriate to enable us to render this opinion.In this examination,we have assumed the genuineness of all signatures on original documents,the authenticity of all documents submitted to us as originals,the conformity with the original of all documents submitted to us as copies,and the due execution and delivery of all documents when due execution and delivery are a prerequisite to the effectiveness thereof.These records,documents and instruments consist of the following: 1.The articles of incorporation of AEEC; 2.The bylaws of AEEC; Assignment -Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 4 of 13 3.All records of proceedings and actions of the board of directors of AEEC relating to the transactions contemplated by the Assignment; 4.The Assignment; 5.Certificate of existence relating to AEEC issued by the Alaska Commissioner of Commerce and Economic Development on November 5, 2002; 6.The PSA. We have relied upon certificates of officers of HEA with respect to certain factual matters material to this opinion.In addition,we have relied upon such certificates and assurances from public officials as we have deemed necessary or approptiate to enable us to render this opinion. This opinion is limited to the federal laws of the United States and the laws of the State of Alaska. Based upon the foregoing and our examination of such questions of law as we have deemed necessaty or appropriate for the purpose of this opinion,and subject to the limitations and qualifications set forth herein,it is our opinion that the PSA is enforceable against AEEC in accordance with its terms. This opinion is subject to (i)bankruptcy,insolvency,reorganization, arrangement,moratorium and other laws of general applicability relating to or affecting creditors'rights or contractual obligations heretofore and hereafter enacted, (i)general principles of equity,whether such enforceability is considered in a: proceeding in equity or at law,(iii)those additional qualifications described as "Other Common Qualifications”in the Third-Party Legal Opinion Report,including the Legal Opinion Accord,of the Section of Business Law,American Bar Association (1991). This opinion is for the sole benefit of the Authostty,and the Purchasers,as those entities are defined in the PSA.Neither this opinion nor any extract from this letter or reference to this letter shall be furnished to,quoted from,or relied upon by any other person,firm or corporation,without our express written permission. This opinion is provided to you as a legal opinion only,and not as a guaranty or warranty of the matters discussed herein.No opinions may be inferred or implied Assignment -Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric PowerPage5of13 beyond the matters expressly stated herein.No qualification,limitation or exception contained herein shall be construed in any way to limit the scope of the other qualifications,limitations and exceptions.For purposes of this opinion,the terms "law”and "laws”do not include unpublished judicial decisions,and we disclaim the effect of any such decision on the opinions expressed. We express no opinion about matters which occur subsequent to the date of this opinion and we disclaim any undertaking or obligation to advise you of any changes that thereafter may be brought to our attention. Very truly yours, BALDWIN &BUTLER,LLC C.R.BALDWIN CRB/hs Assignment -Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 6 of 13 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale aad Purchase of ElectricPower("Power Sales Agreement'),dated December a.987. ALASKA ENERGY AUTHORITY By Iw -Gee.tue hectic(Successor In Interest to the Date:0/27/63 Alaska Power Authority)v a Assignment Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 7 of 13 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”),dated December 8, 1987.e CHUGACH ELECTRIC By: ASSOCIATION,INC. Date: Assignment-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 8 of 13 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ('Power Sales Agreement”),dated December 8,1987. GOLDEN VALLEY ELECTRIC ASSOCIATION,INC. By:LZPresidentCee Date:cer.be F Zeer CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”),dated December 8,1987. MUNICIPALITY OF ANCHORAGE d/b/a/MUNICIPAL LIGHT AND fameamesM.Posey,a,_F-13,#3 mal 12 Assignment-Bradlcy ]ake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 10 of 13 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ('Power Sales Agreement”),dated December 8,1987. CITY OF SEWARD Assignment-Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of ElectricPower Page 11 of 13 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”),dated December 8,1987. HOMER ELECTRIC ASSOCIATION,INC. By:&é Date:_5-2 2 /22 Assignment-Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Pape 12 of 13 CONSENT TO ASSIGNMENT The entity identified below,as a member of the Bradley Lake Hydroelectric Project Management Committee consents to the foregoing partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”),dated December 8, 1987. We ny. MATANUSKA ELECTRIC te by Laud.ConmnomyASSOCIATION,INC.Date:Swe,(%_2003 Assignment -Bradley Lake Hydroelectric Project, Agreement for the Sale and Purchase of Electric Power Page 13 of 13 BALDWIN &BUTLER,ux ATTORNEYS AT LAW 125 N.Willow Street,Suite 100,Kenai,Alaska 99611 CR Baldwin (907)283-7167 James N.Butler,11 (9077)283-8435 (I-ax) June 30,2003 Alaska Electric Generation and Transmission Cooperative,Inc.(O PY3977LakeStreet Homer,AK 99603 Chugach Electric Association,Inc. P.O.Box 196300 Anchorage,AK 99519-6300 Golden Valley Electric Association,Inc. P.O.Box 71249 Fairbanks,AK 99707-1249 Homer Electric Association,Inc. 3977 Lake Street Homer,AK 99603 Matanuska Electric Association,Inc. P.O.Box 2929 Palmer,AK 99645 Anchorage Municipal Light &Power 1200 East First Avenue Anchorage,AK 99501 City of Seward Light &Power Division P.O.Box 167 Seward,AK 99664 Re:Assignment of Agreement for the Sale and Purchase of Electric Power from the Bradley Lake Hydroelectric Project dated December 8,1987 ("PSA”)by Alaska Electric Generation and Transmission Cooperative,Inc.(""AEG&T”)to Alaska Electric and Energy Cooperative,Inc.(""AEEC”) Ladies and Gentlemen: We have acted as counsel to AEEC in connection with the authorization and execution by AEEC of the Partial Assignment of Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power dated as of June 30,2003 (the "Assignment'),entered unto between AEEC and AEG&T. This opinion is being delivered to you at the direction of the assignee, AEEC. In connection with this opinion,we have examined originals,or copies identified to our satisfaction as being true copies,of the following-described records,documents and instruments which in our judgment are necessary of appropriate to enable us to render this opinion.In this examination,we have assumed the genuineness of all signatures on original documents,the authenticity of all documents submitted to us as originals,the conformity with the original of all documents submitted to us as copies,and the due execution and delivery of all documents when due execution and delivery are a prerequisite to the effectiveness thereof.These records,documents and instruments consist of the following: 1.The articles of incorporation of AEEC; 2.The bylaws of AEEC,; 3.All records of proceedings and actions of the board of directors of AEEC relating to the transactions contemplated by the Assignment; 4.The Assignment, 5.Certificate of existence relating to AEEC issued by the Alaska Commissioner of Commerce and Economic Development on November 5,2002; 6.The PSA. We have relied upon certificates of officers of HEA with respect to certain factual matters material to this opinion.In addition,we have relied upon such certificates and assurances from public officials as we have deemed necessary or appropriate to enable us to render this opinion. This opinion is limited to the federal laws of the United States and the laws of the State of Alaska. Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion, and subject to the limitations and qualifications set forth herein,it is our opinion that the PSA is enforceable against AEEC in accordance with its terms. This opinion is subject to (1)bankruptcy,insolvency,reorganization, aftangement,moratorium and other laws of general applicability relating to or affecting creditors'rights or contractual obligations heretofore and hereafter enacted,(ii)general principles of equity,whether such enforceability is considered in a proceeding in equity or at law,(iii)those additional qualifications described as "Other Common Qualifications”in the Third-Party Legal Opinion Report,including the Legal Opinion Accord,of the Section of Business Law,American Bar Association (1991). This opinion is for the sole benefit of the Authority,and the Purchasers, as those entities are defined in the PSA.Neither this opinion nor any extract from this letter or reference to this letter shall be furnished to,quoted from,or relied upon by any other person,firm or corporation,without our express written permission. This opinion is provided to you as a legal opinion only,and not as a guaranty or watranty of the matters discussed herein.No opinions may be inferred or implied beyond the matters expressly stated herein.No qualification,limitation or exception contained herein shall be construed in any way to limit the scope of the other qualifications,limitations and exceptions. For purposes of this opinion,the terms "law”and "laws”do not include unpublished judicial decisions,and we disclaim the effect of any such decision on the opinions expressed. We express no opinion about matters which occur subsequent to the date of this opinion and we disclaim any undertaking or obligation to advise you of any changes that thereafter may be brought to our attention. Very truly yours, BALDWAS&BUTLER,LLC < .R.BALDWIN CRB/hs BALDWIN &BUTLER,uc ATTORNEYS AT LAW 125 N.Willow Street,Suite 100,Kenai,Alaska 99611 C.R.Baldwin (907)283-7167 James N.Butler,III (907)283-8435 (Fax) June 30,2003 Alaska Industrial Development &Export Authority Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage,AK 99503 Re:Assignment of a portion of AEG&T's interest under the Agreement for the Sale and Purchase of Electric Power from the Bradley Lake Hydroelectric Project dated December 8,1987 among Alaska Energy Authority and the Purchasers and Additional Parties Ladies and Gentlemen: We have acted as counsel to Homer Electric Association,Inc.("HEA”)in connection with the assignment (the "Assignment”)of an interest in the Agreement for Purchase and Sale of Electric Power dated December 8,1987,as amended (the "Power Sales Agreement”)by and among the Alaska Energy Authotity (the "Authority”)(as Seller),Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage doing business as Municipal Light and Power,the City of Seward doing business as Seward Electric System,and Alaska Electric Generation &Transmission Cooperative,Inc.(""AEG&T”)(as Purchasers) and Homer Electric Association,Inc.and Matanuska Electric Association,Inc. ("MEA”)(as Additional Parties)relating to the Bradley Lake Hydroelectric Project. This opinion is being delivered to you at the direction of HEA.For purposes of this opinion,we have assumed that,with respect to all parties other than HEA,the patties are duly organized,validly existing,and in good standing under the laws of the state of Alaska;that the respective parties have the general power and authority to execute and perform the Assignment and that the Assignment has been dulyauthorized,executed and delivered by the respective parties thereto and constitutes a legal,valid and binding obligation thereof,enforceable against said parties in accordance with its terms;and we exptess no opinion with respect to these matters. Opinion of Counsel re Assignment June 30,2003 Page 2 of 4 In connection with this opinion,we have examined originals,or copies identified to our satisfaction as being true copies,of the following-desctibed records, documents and instruments which in our judgment are necessary or appropriate to enable us to render this opinion.In this examination,we have assumed the genuineness of all signatures on original documents,the authenticity of all documents submitted to us as originals,the conformity with the original of all documents submitted to us as copies,and the due execution and delivery of all documents when due execution and delivery are a prerequisite to the effectiveness thereof.These records,documents and instruments consist of the following: 1.The articles of incorporation of HEA,as amended to date; 2.The bylaws of HEA,as amended to date; 3.All records of proceedings and actions of the board of directors of HEA relating to the transactions contemplated by the assignment; 4.The official Board Policy Manual of HEA,as amended to date; 5.The Assignment; 6.The Power Sales Agreement. We have relied upon certificates of officers of HEA with respect to certain factual matters material to this opinion.In addition,we have relied upon such certificates and assurances from public officials as we have deemed necessary or approptiate to enable us to render this opinion. This opinion is limited to the federal laws of the United States and the laws of the State of Alaska. Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion,and subject to the limitations and qualifications set forth herein,it is our opinion that: 1.HEA is duly organized and validly existing as an electric cooperative in good standing under the laws of the State of Alaska with full legal rights, Opinion of Counsel re Assignment June 30,2003 Page 4 of 4 We express no opinion about matters which occur subsequent to the date of this opinion and we disclaim any undertaking or obligation to advise you of any changes that thereafter may be brought to our attention. Very truly yours, BALD UTLER,LLC a ALD CRB/hs BALDWIN &BUTLER,uc ATTORNEYS AT LAW 125 N.Willow Street,Suite 100,Kenai,Alaska 99611 C.R.Baldwin (907)283-7167JamesN.Butler,II ;(907)283-8435 (Fax) June 30,2003 Alaska Industrial Development &Export Authority Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage,AK 99503 Re:Assignment of a portion of AEG&T's interest under the Agreement for the Sale and Purchase of Electric Power from the Bradley Lake Hydroelectric Project dated December 8,1987 among Alaska Energy Authority and the Purchasers and Additional Parties Ladies and Gentlemen: We have acted as counsel to Alaska Electric and Energy Cooperative,Inc. ("AEEC”)in connection with the assignment (the "Assignment”)of an interest in the Agreement for Purchase and Sale of Electric Power dated December 8,1987,as amended (the "Power Sales Agreement”)by and among the Alaska Energy Authority (the "Authority”)(as Seller),Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage doing business as Municipal Light and Power,the City of Seward doing business as Seward Electric System,and Alaska Electric Generation &Transmission Cooperative,Inc.(""AEG&T”)(as Purchasers)and Homer Electric Association,Inc.and Matanuska Electric Association,Inc.("MEA”)(as Additional Parties)relating to the Bradley Lake Hydroelectric Project. This opinion is being delivered to you at the direction of AEEC.For purposes of this opinion,we have assumed that,with respect to all parties other than AEEC, the parties are duly organized,validly existing,and in good standing under the laws of the state of Alaska;that the respective parties have the general power and authority to execute and perform the Assignment and that the Assignment has been duly authorized,executed and delivered by the respective parties thereto and constitutes a legal,valid and binding obligation thereof,enforceable against said parties in accordance with its terms;and we express no opinion with respect to these matters. Opinion of Counsel re Assignment June 30,2003 Page 2 of 4 In connection with this opinion,we have examined originals,or copies identified to our satisfaction as being true copies,of the following-described records, documents and instruments which in our judgment are necessary or appropriate to enable us to render this opinion.In this examination,we have assumed the genuineness of all signatures on original documents,the authenticity of all documents submitted to us as originals,the conformity with the original of all documents submitted to us as copies,and the due execution and delivery of all documents when due execution and delivery are a prerequisite to the effectiveness thereof.These records,documents and instruments consist of the following: 1.The articles of incorporation of AEEC,as amended to date; 2.The bylaws of AEEC,as amended to date; 3.All records of proceedings and actions of the board of directors of AEEC relating to the transactions contemplated by the assignment, 4,The Assignment; 5.Certificate of existence relating to AEEC issued by the Alaska Commissioner of Commerce and Economic Development on May 27, 2003; 6.The Power Sales Agreement. We have relied upon certificates of officers of AEEC with respect to certain factual matters material to this opinion.In addition,we have relied upon such certificates and assurances from public officials as we have deemed necessary or appropriate to enable us to render this opinion. This opinion is limited to the federal laws of the United States and the laws of the State of Alaska. Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion,and subject to the limitations and qualifications set forth herein,it is our opinion that: Opinion of Counsel re Assignment June 30,2003 Page 3 of 4 1.AEEC is duly organized and validly existing as an electric cooperative in good standing under the laws of the State of Alaska with full legal rights, power and authority to enter into the Assignment and to perform all of its obligations and covenants thereunder, 2.AEEC's obligations under the Power Sales Agreement following the ptoposed assignment will be identical to those of AEG&T execpt that AEEC's Percentage Share of Project Capacity (as defined in the Power 'Sales Agreement)will be 12.0%;and 3.The proposed assignment will be in accord with the requirements of section 17(c)of the Power Sales Agreement. This opinion is subject to @)bankruptcy,insolvency,reorganization, atrangement,moratorium and other laws of general applicability relating to or affecting creditors'rights or contractual obligations heretofore and hereafter enacted, (i)general principles of equity,whether such enforceability is considered in a proceeding in equity or at law,(iii)those additional qualifications described as "Other Common Qualifications”in the Third-Party Legal Opinion Report,including the Legal Opinion Accord,of the Section of Business Law,American Bar Association (1991). This opinion is for the sole benefit of the Authority.Neither this opinion nor any extract from this letter or reference to this letter shall be furnished to,quoted from,or relied upon by any other person,firm or corporation,without our express written permission. This opinion is provided to you as a legal opinion only,and not as a guaranty or warranty of the matters discussed herein.No opinions may be inferred or implied beyond the matters expressly stated herein.No qualification,limitation or exception contained herein shall be construed in any way to limit the scope of the other qualifications,limitations and exceptions.For purposes of this opinion,the terms "law”and "laws”do not include unpublished judicial decisions,and we disclaim the effect of any such decision on the opinions expressed. Opinion of Counsel re Assignment June 30,2003 Page 4 of 4 We express no opinion about matters which occur subsequent to the date of this opinion and we disclaim any undertaking or obligation to advise you of any changes that thereafter may be brought to our attention. Very truly yours, BALD B R,LLC .R.BALD CRB/hs BALDWIN &BUTLER,uc | ATTORNEYS AT LAW 125 N.Willow Street,Suite 100,Kenai,Alaska 99611 C.R.Baldwin (907)283-7167 James N.Buder,DiI (907)283-8435 (Fax) June 30,2003 Alaska Industrial Development &Export Authority Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage,AK 99503 Re:Assignment of a portion of AEG&T's interest under the Agreement for the Sale and Purchase of Electric Power from the Bradley Lake Hydroelectric Project dated December 8,1987 among Alaska Energy Authority and the Purchasers and Additional Parties Ladies and Gentlemen: We have acted as counsel to Alaska Electric Generation &Transmission Cooperative,Inc.(""AEG&T”)in connection with the assignment (the "Assignment'') of an interest in the Agreement for Purchase and Sale of Electric Power dated December 8,1987,as amended (the "Power Sales Agreement”)by and among the Alaska Energy Authority (the "Authority”)(as Seller),Chugach Electric Association, Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage doing business as Municipal Light and Power,the City of Seward doing business as Seward Electric System,and Alaska Electric Generation &Transmission Cooperative,Inc. (as Purchasers)and Homer Electric Association,Inc.("HEA”)and Matanuska Electric Association,Inc.("MEA”)(as Additional Parties)relating to the Bradley Lake Hydroelectric Project. This opinion is being delivered to you at the direction of AEG&T.For purposes of this opinion,we have assumed that,with respect to all parties other than AEG&T,the parties are duly organized,validly existing,and in good standing under the laws of the state of Alaska;that the respective parties have the general power and authority to execute and perform the Assignment and that the Assignment has been duly authorized,executed and delivered by the respective parties thereto and constitutes a legal,valid and binding obligation thereof,enforceable against said patties in accordance with its terms;and we express no opinion with respect to these matters. Opinion of Counsel re Assignment June 30,2003 Page 2 of 4 In connection with this opinion,we have examined originals,or copies identified to our satisfaction as being true copies,of the following-described records, documents and instruments which in out judgment are necessaty or appropriate to enable us to render this opinion.In this examination,we have assumed the genuineness of all signatures on original documents,the authenticity of all documents submitted to us as originals,the conformity with the original of all documents submitted to us as copies,and the due execution and delivery of all documents when due execution and delivery are a pretequisite to the effectiveness thereof.These records,documents and instruments consist of the following: 1.The articles of incorporation of AEG&T,as amended to date; 2.The bylaws ofAEGS&T,as amended to date; 3.All records of proceedings and actions of the board of directors of AEG&T telating to the transactions contemplated by the assignment; 4,The official Boatd Policy Manual of AEG&T,as amended to date; 5.The Assignment, 6.Certificate of existence relating to AEG&T issued by the Alaska Commissioner of Commerce and Economic Development on May 27, 2003; 7.The Power Sales Agreement. We have relied upon certificates of officers of AEG&T with respect to certain factual matters material to this opinion.In addition,we have relied upon such certificates and assurances from public officials as we have deemed necessaty or appropriate to enable us to render this opinion. This opinion is limited to the federal laws of the United States and the laws of the State of Alaska. Opinion of Counsel re Assignment June 30,2003 Page 3 of 4 Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion,and subject to the limitations and qualifications set forth herein,it is our opinion that: 1.AEG&T is duly organized and validly existing as an electric cooperative in good standing under the laws of the State of Alaska with full legal rights, power and authority to enter into the assignment and to perform all of its obligations and covenants thereunder; 2.AEG&T's obligations under the Power Sales Agreement will not be ; affected by the proposed assignment except that (a)AEG&T's Percentage Share of Project Capacity (as defined in the Power Sales Agreement)will be reduced to 13.8%.In all respects other than as aforesaid,the proposed assignment will not alter the obligations of AEG&T under the Power Sales Agreement,and 3.The proposed assignment will be in accotd with the requirements of section 17(©)of the Power Sales Agreement. This opinion is subject to @ bankruptcy,insolvency,reorganization, arrangement,moratorium and other laws of general applicability relating to or affecting creditors'rights or contractual obligations heretofore and hereafter enacted, (ii)general principles of equity,whether such enforceability is considered in a proceeding in equity or at law,(iit)those additional qualifications described as "Other Common Qualifications”in the Third-Party Legal Opinion Report,including the Legal Opinion Accord,of the Section of Business Law,American Bar Association (1991). This opinion is for the sole benefit of the Authority.Neither this opinion nor any extract from this letter or reference to this letter shall be furnished to,quoted from,or relied upon by any other person,firm or corporation,without our express written permission. This opinion is provided to you as a legal opinion only,and not as a guatanty or watranty of the matters discussed herein.No opinions may be inferred or implied beyond the matters expressly stated herein.No qualification,limitation or exception contained herein shall be construed in any way to limit the scope of the other Opinion of Counsel re Assignment June 30,2003 Page 4 of 4 qualifications,limitations and exceptions.For purposes of this opinion,the terms "law”and "laws”do not include unpublished judicial decisions,and we disclaim the effect of any such decision on the opinions expressed. We express no opinion about matters which occur subsequent to the date of this opinion and we disclaim any undertaking or obligation to advise you of anychangesthattheteaftermaybebroughttoourattention. Very truly yours, BALD UTLER,LLC s BALDWIN CRB/hs Alaska Industrial Development and Export AuthorityAIDEA/ABRAlaskaEnergyAuthority June 27,2003 VIA FACSIMILE:(907)283-8435 Mr.Rick Baldwin Baldwin &Butler,LLC Attorneys at Law 125 N.Willow Street,Suite 100 Kenai,Alaska 99611 Dear Rick: Enclosed is an executed Consent to Assignment,by which the Alaska Energy Authority ("AEA”) consents to the partial Assignment of the Bradley Lake Hydroelectric Project,Agreement for the Sale and Purchase of Electric Power dated December 8,1987 ("PSA”)by Alaska Electric Generation and Transmission Cooperative,Inc.("AEG&T")to Alaska Electric and EnergyCooperative,Inc.("AEEC'). As we have previously agreed,you will not release nor use AEA's consent,as part of the closing of the assignment or otherwise,until after the following documents,each in the form approved by AEA,are fully executed: Certificate of Homer Electric Association,Inc.("HEA”) Certificate of AEEC Certificate of AEG&T Opinion of Counsel for HEA Opinion of Counsel for AEEC Opinion of Counsel for AEG&TOAOkWON>Please contact me if you have any questions regarding this matter. n Miller Executive Director RWiMbH H:\Aiibfuglestad\Ron Millen\Letter to Rick Baidwin.doc Cc:Norm Story,HEA 813 West Northern Lights Boulevard *Anchorage,Alaska 99503 QN7 1 949.2000 *FAX 907 1769-3044 *Toll Free (ALASKA ONLY)888 /300-8534 *www.aidea-org BALDWIN &BUTLER,LLC ATTORNEYS AT LAW 125 N.Willow Street,Suite 109,Kenai,Alaska 99611 C.R.Baldwin (907)285-7167 James N.Butler,Ii (907)283-8435 (Fax) June 30,2003 Alaska Industrial Development &Doe Export Authority Alaska Energy Authority Ke 813 West Northern Lights Blvd. Anchorage,AK 99503 Attention:Ron Miller Dear Ron: Consistent with your letter of June 21,2003,I enclose the following documents: Certificate of Homer Electric Association,Inc.("HEA”) Certificate of AEEC Certificate of AEG&T Opinion of Counsel for HEA Opinion of Counsel for AEEC Opinion of Counsel for AEG&TAMALPo Thank you for your cfforts to allow this transaction to move forward. Very truly yours, BAIDWISL&BUILER,LLC Ach©.R.Baldwin CRB/tm cc:Brian Bjorkquist Enclosures HOMITR HLECTRIC ASSOCIATION,INC. CERTIFICATE The undersigned officer of Homer Lectric Association,Inc.(the Association')hereby certifies as follows:J 1.tour'This certificate is being cxecuted and delivered to the Alaska Linergy Authority (the "Authority”)on the date hereof for the purpose of obtaining the Authority's consent to the assignment of an interest in the Agreement for the Sale and Purchase of Electric Power dated as of December 8,1987,as amended,(the "Power Sales Agreement”)by and among the Authority (as Seller)and Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage doing busincss as Municipal Light and Power,the City of Seward doing business as Seward Electric System, and the Alaska Electric Gencration &Transmission Cooperative,Inc. ("AEG&T'?(as Purchasers)and the Association and Matanuska Electric Association,Inc.(as Additional Parties)relating to the Bradley Lake Hydroelectric Project. The assignment of interest to which the aforesaid consent is sought is an assignment by AEG&T to the Alaska Electric and Energy Cooperative,Inc. ("AEEC”)of AEG&T's interest in the Power Sales Agreement as it relates to the Association. The Association's obligations under the Power Sales Agreement will not be affected in any way by the aforcsaid assignment,except that following the assignment the Association will purchase power through AEEC and will only be responsible for a failure by AEEC under Section 30 of the Power Sales Agreement.'The Association's Percentage Share of Project Capacity for purposes of said Section 30 shall remain 12.0 percent. The proposed assignment will be in accord with the requirements of section 17(c)of the Power Sales Agreement. The undersigned is an officer of the Association authorized to execute this certificate on behalf of the Association. Dated:June 30,2003 HOMER ELECTRIC ASSOCIATION,INC. By:NL.Story 44 Its:General Manager 1 ALASKA ELECTRIC GENERATION AND 'TRANSMISSION COOPERATIVE,INC. CER ITFICATL! 'The undersigned officer of the Alaska Flectric Generation &Transmission Cooperative,Inc."AEG&T”)hereby certifies as follows: 1.tvThis certificate is begin executcd and delivered to the Alaska Energy Authority (the ".Authority”)on the date hereof for the purposc of obtaining the Authority's consent to the assignment of an interest in the Agrecment for the Sale and Purchase of Electric Power dated as of December 8,1987,as amended,(the "Power Sales Agreement”)by and among the Authority (as Seller)and Chugach Lilectric Association,Inc.,Golden Valley Electric «Association,Inc.,the Municipality of Anchorage doing business as Municipal Light and Power,the City of Seward doing business as Seward Electric System, and AEG&T (as Purchasers)and Homer Electric Association,Inc.("HEA”) and Matanuska Electric Association,Inc.("MILLA”)(as Additional Partics) relating to the Bradley Lake Hydroelectric Project. The assignment of interest to which the aforesaid consent is sought is an assignment by AEG&T to the Alaska [Electric and Energy Cooperative,Inc. ("AEEC”)of AEG&T's interest in the Power Sales Agreement as it relates to HEA, AEG&T's obligations under the Power Sales Agreement will not be affected in any way by the aforesaid assignment,except that following the assignment AEG&T's Percentage Share of Project Capacity for purposes of the Power Sales Agreement will be reduced to 13.8%. 'Lhe proposed assignment will be in accord with the requirements of section 17(c)of the Power Sales Agreement. The undersigned is an officer of AEG&T authorized to execute this certificate on behalf of the ALG&T. Dated June 30,2003 Alaska Electric Generation & Transmission Coopcrative,Inc. By:N.L.Story Its:Class A Manager ALASKA ELIECTRIC AND EXERGY COOPERATIVE,INC. CURTIVICATE 'The undersigned officer of the Alaska Electric and Energy Cooperative,Inc. ("ALEC”)hereby certifies as follows: 1.tvunThis certificate is being executed and delivered to the Alaska Linergy Authority (the "Authority”)on the date hereof for the purpose of obtaining theAuthority's consent to the assignment of an interest in the Agrecment for theSaleandPurchaseofElectricPowerdatedasofDecember8,1987,as amended,(the "Power Sales Agreement”)by and among the Authority (as Seller)and Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage doing business as Municipal Light and Power,the City of Seward doing business as Seward Electric System, and Alaska Electric Generation &Transmission Cooperative,Inc.(""AEG&T”) (as Purchascts)and Homer Electric Association,Inc.("HEA”)and Matanuska Electric Association,Inc.("MEA”)(as Additional Partics)relating to the Bradley Lake Hydroelectric Project. The assignment of interest to which the aforesaid consent is sought is an assignment by AEG&T to AEEC of AEG&T's interest in the Power Sales Agrecment as it relates to HEA.AEEC's obligations under the Power Sales Agrccment following the aforesaidassignmentwillbeidenticaltoAEG&I's obligations,except that AEEC's Percentage Share of Project Capacity for purposes of the Power Sales Agreement will be 12.0%. Subject to consent by the Authority the proposed assignment will be in accord with the requirements of section 17(c)of the Power Sales Agreement. The undersigned is an officer of AEEC authorized to execute this certificate on behalf of the AEEC. Dated Junc 30,2003 Alaska Electric and Energy Cooperative,Inc. [hued ¢clBy:Hdgh Chumley Its:President BALDWIN &BUTLER,uc ATTORNEYS AT LAW' 125.N.Willow Street,Suite 100,Kenai,Alaska 99611 C.R.Baldwin (907)283-7167 James N.Butler,ITI (907)283-8435 (Fax) June 30,2003 Alaska Industrial Development &Export Authority Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage,AK 99503 Re:Assignment of a portion of AEG&T's interest under the Agreement for the Sale and Purchase of Electric Power from the Bradlcy Lake Hydroclectric Project dated December 8,1987 among Alaska Energy Authority and the Purchasers and Additional Parties Ladies and Gentlemen: Wre have acted as counsel to Alaska Electric and Energy Cooperative,Inc. ("AEEC')in connection with the assignment (the ""Assignment”)of an interest in the Agrecment for Purchase and Sale of Electric Power dated December 8,1987,as amended (the "Power Sales Agreement”)by and among the Alaska Energy Authority (the "Authority”)(as Seller),Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage doing business as Municipal Light and Power,the City of Seward doing business as Seward Electric System,and Alaska Electric Generation &Transmission Cooperative,Inc.(""AEG&T”)(as Purchascrs)and Homer Electric Association,Inc.and Matanuska Electric Association,Inc.("MEA”)(as Additional Partics)relating to the Bradley Lake Hydroclectric Project. This opinion is being delivered to you at the direction of AEEC.For purposes of this opinion,we have assumcd that,with respect to all parties other than AEEC, the parties are duly organized,validly existing,and in good standing under the laws of the state of Alaska,that the respective parties have the general power and authority to execute and perform the Assignment and that the Assignment has been duly authorized,executed and delivered by the respective parties thereto and constitutes a legal,valid and binding obligation thereof,enforceable against said parties in accordance with its terms;and we express nu opinion with respect to these matters. Opinion of Counsel re Assignment June 30,2003 Page 2 of 4 In connection with this opinion,we have examincd originals,ot copies identified to our satisfaction as being truc copics,of the following-described records, documents and instruments which in our judgment are necessary or appropriate to enable us to render this opinion.In this examination,we have assumed the genuinencss of all signatures on original documents,the authenticity of all documents submitted to us as originals,the conformity with the original of all documents submitted to us as copies,and the due execution and delivery of all documents when due cxecution and delivery are a prerequisite to the effectiveness thercof.These records,documents and instruments consist of the following: 1,The articles of incorporation of AEREC,as amendcd to date; 2,The bylaws of AEEC,as amended to date; 3,All records of proceedings and actions of the board of directors of AFEC relating to the transactions contemplated by the assignment; 4.The Assignment; 5.Certificate of existence relating to AEEC issued by the Alaska Commissioner of Commerce and Economic Development on May 27, 2003; 6.The Power Sales Agreement. We have relied upon certificates of officers of ARFC with respect to certain factual matters material to this opinion.In addition,we have relied upon such certificates and assurances from public officials as we have dcemed necessary or appropriate to enable us to render this opinion. This opinion is limited to the federal laws of the United States and the laws of the State of Alaska. Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion,and subject to the limitations and qualifications sct forth hercin,it is our opinion that: Opinion of Counsel re Assignment June 30,2003 Page 3 of 4 1.AEEC is duly organized and validly existing as an electric cooperative in good standing under the laws of the State of Alaska with full Icgal rights, powcr and authority to enter into the Assignment and to perfonm all of its obligations and covenants thereunder; 2.AEEC's obligations under the Power Sales Agrcement following the proposcd assignment will be identical to those of AEG&T execpt that AEEC's Percentage Share of Project Capacity (as defined in the Power Sales Agreement)will be 12.0%;and 3.The proposed assignment will be in accord with the requirements of section 17(c)of the Power Sales Agreement. This opinion is subject to (i)bankruptcy,insolvency,reorganization, arrangement,moratorium and othcr laws of general applicability relating to or affecting creditors'rights or contractual obligations heretofore and hereafter enacted, (ii)general principles of equity,whether such enforceability is considered in a proceeding in equity or at law,(iii)those additional qualifications described as "Other Common Qualifications”in the Third-Party Legal Opinion Report,including the Legal Opinion Accord,of the Section of Business Law,American Bar Association (1991). This opinion is for the sole benefit of the Authority.Neither this opinion nor any extract from this letter or reference to this letter shall be furnished to,quoted from,or relied upon by any other person,firm or corporation,without our express written permission. This opinion is provided to you as a legal opinion only,and not as a guaranty or warranty of the matters discussed hercin.No opinions may be inferred or implied beyond the matters expressly stated herein.No qualification,limitation or exception contained herein shall be construed in any way to limit the scope of the other qualifications,limitations and exceptions.For purposes of this opinion,the terms "law”and "laws”do not include unpublished judicial decisions,and we disclaim the effect of any such decision on the opinions expressed. Opinion of Counsel re Assignment Junc 30,2003 Page 4 of 4 We express no opinion about matters which occur subsequent to the date of this opinion and we disclaim any undertaking or obligation to advise you of any changes that thereafter may be brought to our attention. Very truly yours, BALDWEN &BUTLER,LLCo[LZ "a ».R.BALDWIN CRB/hs BALDWIN &BUTLER,ttc ATTORNEYS AT LAW 125 N.Willow Street,Suite 100,Kenai,Alaska 99611 C.R.Baldwin (907)283-7167 James N.Butler.1](07;283-8435 (Fax) June 30,2003 Alaska Industrial Development &Export Authority Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage,AK 99503 Re:Assignment of a portion of AEG&1s interest under the Agreement for the Sale and Purchase of Electric Power from the Bradley Lake Hydroelectric Project dated December 8,1987 among Alaska Energy Authority and the Purchasers and Additional Parties Ladics and Gentlemen: We have acted as counsel to Alaska Electric Generation &Transmission Cooperative,Inc.("AEG&T”)in connection with the assignment (the "Assignmenv') of an interest in the Agrcement for Purchase and Sale of Electric Power dated December 8,1987,as amended (the "Power Sales Agreement”)by and among the Alaska Energy Authority (the "Authority”)(as Seller),Chugach Electric Association, Inc.,Golden Valley Electric Association,Inc.,the Municipality of .\nchorage doing business as Municipal Light and Power,the City of Seward doing business as Seward Electric System,and Alaska Electric Generation &Transmission Cooperative,Inc. (as Purchasers)and Homer Electric Association,Inc.("HEA”)and Matanuska Electric Association,Inc.("MEA”)(as Additional Partics)relating to the Bradley Lake Hydroelectric Project. This opinion is being delivered to you at the direction of AEG&T.For purposes of this opinion,we have assumed that,with respect to all parties other than AEG&T,the parties are duly organized,validly existing,and in good standing under the laws of the state of Alaska;that the respective partics have the general powcr and authority to execute and perform the Assignment and that the Assignment has been duly authorized,executed and delivered by the respective parties thereto and constitutes a legal,valid and binding obligation thereof,enforceable against said parties in accordance with its terms;and we express no opinion with respect to these matters. Opinion of Counsel re Assignment June 30,2003 Page 2 of 4 In connection with this opinion,we have examined originals,or copics identified to our satisfaction as being truce copies,of the following-described records, documents and instruments which in our judgment are necessary or appropriate to enable us to render this opinion.In this examination,we have assumed the genuinencss of all signaturcs on original documents,the authenticity of all documents submitted to us as originals,the conformity with the original of all documents submitted to us as copies,and the due execution and delivery of all documents when due execution and delivery are a prerequisite to the effectivencss thereof.These records,documents and instruments consist of the following: 1.The articles of incorporation of AEG&T,as amended to date; 2.The bylaws of AEG&T,as amended to date; 3.All records of proceedings and actions of the board of directors of AEG&T relating to the transactions contemplated by the assignment; 4,The official Board Policy Manual of AEG&T,as amended to date; 5.The Assignment; 6.Certificate of existence relating to AEG&T issued by the Alaska Commissioner of Commerce and Economic Development on May 27, 2003; 7.The Power Sales Agreement. We have relied upon certificates of officers of AEG&T with respect to certain factual mattcrs material to this opinion.In addition,we have relied upon such certificates and assurances from public officials as we have dcemed necessary or appropriate to enable us to render this opinion. This opinion is limited to the federal laws of the United States and the laws of the State of Alaska. Opinion of Counsel re Assignment June 30,2003 Page 3 of + Based upon the foregoing and our cxamination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion,and subject to the limitations and qualifications set forth herein,it is our opinion that: 1.AEG&T is duly organized and validly existing as an electric cooperative in good standing under the laws of the State of Alaska with full legal rights, power and authority to entcr into the assignment and to perform all of its obligations and covenants thereunder; 2.AEG&T's obligations under the Power Sales Agreement will not be affected by the proposed assignment exccpt that (a)AECG&T's Percentage Share of Project Capacity (as defined in the Power Sales Agreement)will be reduced to 13.8%.In all respects other than as aforesaid,the proposed assignment will not altcr the obligations of AEG&T under the Power Sales Agreement;and 3.The proposed assignment will be in accord with the requirements of scction 17(c)of the Power Sales Agrecment. This opinion is subject to (@)bankruptcy,insolvency,reorganization, arrangement,moratorium and other laws of general applicability relating to or affecting creditors'rights or contractual obligations herctofore and hereafter enacted, (i)general principles of equity,whether such enforceability is considered in a proceeding in equity or at law,(iil)those additional qualifications described as "Other Common Qualifications”in the Third-Party Legal Opinion Report,including the Legal Opinion .Accord,of the Scction of Business J.aw,American Bar Association (1991). This opinion is for the sole benefit of the Authority.Neither this opinion nor any extract from this Ictter or reference to this letter shall be furnished to,quoted from,or relied upon by any other person,firm or corporation,without our express written permission. This opinion is provided to you as a legal opinion only,and not as a guaranty or warranty of the matters discussed herein.No opinions may be inferred or implicd beyond the matters expressly stated herein.No qualification,limitation or exception contained hercin shall be construed in any way to limit the scope of the other Opinion of Counsel re Assignment June 30,2003 Page 4 of 4 qualifications,limitations and exceptions.For purposes of this opinion,the terms "law”and "laws”do not include unpublished judicial decisions,and we disclaim the effect of any such decision on the opinions expressed. We express no opinion about matters which occur subsequent to the date of this opinion and we disclaim any undertaking or obligation to advise you of any changes that thereafter may be brought to our attention. Very truly yours, BALDWIN&BUTLER,LLCACfopr R.BALDWIN CRB/hs BALDWIN &BUTLER,uc ATTORNEYS AT LAW 125 N.Willow Street,Suite 100,Kenai,Alaska 99611 C.R.Baldwin (907)283-7167 James N.Butler,HT (907)283-8435 (Fax) June 30,2003 Alaska Industrial Development &Export Authority Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage,AK 99503 Re:Assignment of a portion of AEG&T's interest under the Agreement for the Sale and Purchase of Electric Power from the Bradley ake Hydroelectric Project dated December 8,1987 among Alaska Encrgy Authority and the Purchasers and Additional Parties Ladies and Gentlemen: We have acted as counsel to Homer Electric Association,Inc.("HEA”)in connection with the assignment (the "Assignment”)of an interest in the .\greement for Purchase and Sale of Electric Power dated December 8,1987,as amended (the "Power Sales Agreement”)by and among the Alaska Energy Authority (the "Authority”)(as Seller),Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage doing business as Municipal Light and Power,the City of Seward doing business as Seward Electric System,and Alaska Electric Generation &'l'ransmission Cooperative,Inc.("AEG&T”)(as Purchasers) and Homer Electric Association,Inc.and Matanuska Electric Association,Inc. ("MEA”)(as Additional Parties)relating to the Bradley Lake Hydroclectric Project. This opinion is being delivered to you at the direction of HEA.For purposcs of this opinion,we have assumed that,with respect to all parties other than HEA,the parties are duly organized,validly existing,and in good standing under the laws of the statc of Alaska;that the respective parties have the general power and authority to execute and perform the Assignment and that the Assignment has been duly authorized,executed and delivered by the respective parties thereto and constitutes a legal,valid and binding obligation thereof,enforceable against said parties in accordance with its terms;and we express no opinion with respect to these matters. Opinion of Counsel re Assignment June 30,2003 Page 2 of 4 In connection with this opinion,we have cxamincd originals,or copics identified to our satisfaction as being truc copies,of the following-described records, documents and instruments which in our judgment are necessary or appropriate to enable us to render this opinion.In this examination,we have assumed the genuineness of all signatures on original documents,the authenticity of all documents submitted to us as originals,the conformity with the original of all documents submitted to us as copics,and the due execution and delivery of all documents when due exccution and delivery are a prerequisite to the effectiveness thcreof.These records,documents and instruments consist of the following: 1.The articles of incorporation of HEA,as amendcd to date; 2.The bylaws of HEA,as amended to date; 3.All records of proceedings and actions of the board of directors of HEA relating to the transactions contemplated by the assignment; 4,The official Board Policy Manual of HEA,as amended to date; 5.The Assignment, 6.The Power Sales Agreement. We have relied upon certificates of officers of HEA with respect to certain factual matters material to this opinion.In addition,we have relicd upon such certificates and assurances from public officials as we have deemed necessary or appropriate to enable us to render this opinion. This opinion is limited to the federal laws of the United States and the laws of the State of Alaska. Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion,and subject to the limitations and qualifications set forth herein,it is our opinion that: 1.HEA is duly organized and validly existing as an electric cooperative in good standing under the laws of the State of Alaska with full legal rights, Opinion of Counsel re Assignment June 30,2003 Page 3 of 4 power and authority to enter into the .\ssignment and to perform all of its obligations and covenants thereunder,tvHEA\'s obligations under the Power Sales Agreement will not be affected by the proposed assignment except that (a)any obligations HEA may have under Section 30 of the Power Sales Agreement will apply only with respect to,and to the extent of,any failure to pay by Alaska Electric and Energy Cooperative,Inc.(""AEEC”)and (b)HEA will have no obligation whatsoever with respect to a failure by AEG&T to pay.In all respects other than as aforesaid,the proposed assignment will not alter the obligations of HEA under the Power Sales Agreement;and 3.The proposed assignment will be in accord with the requirements of section 17(c)of the Power Sales Agreement. This opinion is subject to @)bankruptcy,insolvency,reorganization, arrangcment,moratorium and other laws of general applicability relating to or affecting creditors'rights or contractual obligations heretofore and hercafter enacted, (ii)general principles of equity,whether such enforceability is considered in a proceeding in equity or at law,(iti)those additional qualifications described as "Other Common Qualifications”in the Third-Party Legal Opinion Report,including the Legal Opinion Accord,of the Section of Business Law,American Bar Association (1991), This opinion is for the sole benefit of the Authority,Neither this opinion nor any extract from this letter or reference to this letter shall be furnished to,quoted from,or relied upon by any other person,firm or corporation,without our express written permission. This opinion is provided to you as a legal opinion only,and not as a guaranty or warranty of the matters discussed herein.No opinions may be inferred or implied beyond the matters expressly stated herein.No qualification,limitation or exception contained herein shall be construcd in any way to limit the scope of the other qualifications,limitations and exceptions.For purposes of this opinion,the terms "law”and "laws”do not include unpublished judicial decisions,and we disclaim the effect of any such decision on the opinions expressed. Opinion of Counsel re Assignment June 30,2003 Page 4 of 4 We express no opinion about matters which occur subsequent to the date of this opinion and we disclaim any undertaking or obligation to advise you of any changes that thereafter may be brought to our attention. Very truly yours, BALDWAWN_&BUTLER,LICfeeali.-Cef K.BALDWIN CRB/hs CHUGA<; POWERING ALASKA'S FUTURE CHUGACH ELECTRIC ASSOCIATION,INC. Anchorage,Alaska May 20,2015 TO:Cory Borgeson,Chair,Bradley Project Management Committee (BPMC)FROM:\|Burke Wick,Chugach Electric Association representative,Bradley Operation andDispatchCommittee(Bradley O &D Committee) SUBJECT:BPMC Resolution No.2013-04,Adoption ofDynamic Scheduling On December 23",2013 the BPMC adopted the above reference resolution regarding adoption of dynamic dispatching for the Bradley Lake Hydroelectric Project.Specifically the O&D Committee was tasked with developing a scope,schedule,and budget for the implementation of master dynamic scheduling as quickly as reasonably practical. Chugach as the dispatcher of the Bradley Lake Project has evaluated dynamic scheduling of the Project and determined that this function can be carried out by its existing SCADA system.This will be handled by treating the Bradley Project as a Joint Owned Unit (JOU)by each of the Bradley participants.JOU operation is a standard feature of Chugach's SCADA system (OSI).JOU operation can be activated with minimal cost.Each utility will Gare'eir own costs for anyinternalSCADAworkneeded.Bradley costs are estimated to be less than $10,000 in project support and integration of each utility is expected to take one to two weeks.The project will not require any amendment to existing project budgets. To that end,the O&D committee has agreed that dynamic scheduling can be implemented beginning in the month of June 2015.There are currently several transmission and plant outages that may affect the actual operation of the Bradley plant but the intent is to begin joint dynamic scheduling first with ML&P and Chugach as they have the same SCADA systems.It is anticipated that MEA,HEA and GVEA will be added once any initial issues are worked out during the first integration of the JOU operations. cc:Joe Griffith,Matanuska Electric Association Jim Trent,Anchorage Municipal Light and Power Brad Evans,Chugach Electric Association,Inc. John Fouts,City of Seward i,Homer Electric Association,Inc. t:\Power Controf\CORRESPO\2015\BPMC Dynamic Scheduling Memo_051915.docx Chugach Electric Association,Inc. 5601 Electron Drive,P.O.Box 196300 Anchorage,Alaska 99519-6300 e (907)563-7494 Fax (907)562-0027 (800)478-7494 www.chugachelectric.com e info@chugachelectric.com CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO.2013-04 Adoption of Dynamic scheduling WHEREAS,pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power (the "Power Sales Agreement")dated as of December 8,1987,by and among the Chugach Electric Association,Inc.,Golden Valley Electric Association,Inc.,the Municipality of Anchorage d/b/a Municipal Light and Power,the City of Seward d/b/a Seward Electric System,and Alaska Electric Generation &Transmission Cooperative,Inc.,and as Additional Parties Homer Electric Association,Inc.and Matanuska Electric Association,Inc.(as used herein collectively,the "Purchasing Utilities"),and the Alaska Energy Authority (the "Authority"),the Project Management Committee (the "Committee")has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement;and WHEREAS,pursuant to section 13 (c)(ii)(A)the committee is required to arrange...” for the management,operation,maintenance and improvement of the Project”... WHEREAS,Bradley lake is within the Chugach Load Balancing Area (LBA);and, WHEREAS,dynamic scheduling provides the capability for parties outside of the Chugach LBA to dispatch there Bradley shares in Real time through the Chugach SCADA/EMS System;and, WHEREAS,dynamic scheduling of the Project will provide each of the purchasers maximum flexibility in efficiently using their respective shares of the Projects energy and capacity;and, WHEREAS,Chugach,as the Project dispatcher,has the technical capabilities within its existing SCADA/EMS master station to implement dynamic scheduling; NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination.The Committee has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that dynamic scheduling be implemented for the Project.To that end,the Committee directs the Operations and Dispatch Subcommittee to work closely with Chugach to develop a scope,schedule,and budget for the implementation of master station dynamic scheduling as quickly as is reasonably practical.This review shall include recommended changes to existing contracts (i.e.,the Bradley Lake Hydroelectric Project Allocation and Scheduling Procedures agreement and the Agreement for Bradley Lake Resource Scheduling)and any applicable standards necessary to allow dynamic scheduling without violation of the documents.The review must also include methods to apportion losses caused on all of the Purchasing Utilities when a Participant changes their >weeny 4 2rors%. *,.: .,7978 e ' 4 Poouaa®Si"in,:iLtinysnr [N77*\_a dispatched amount.And further,the Operations and Dispatch Subcommittee will develop a budget amendment for this project and submit this amendment to the Committee at the next quarterly Committee meeting. wit,DATED at Anchorage,Alaska,this 23"day of December,2013. gotten,a. -One,"x nk ot Arca Secretary RESOLUTION 2013-04 DYNAMIC SCHEDULING ITEM8B ax> tS) @@E>ENERGY AUTHORITY Alaska Energy Authority Bradley Lake Hydroelectric Project Financial Considerations Relating to Potential Battle Creek Diversion Project White Paper -August 2014 Purpose The Bradley Lake Project Management Committee ("BPMC”)is considering the Battle Creek Diversion Project ("Battle Creek Project”)as an enhancement to the Bradley Lake Hydroelectric Project ("Bradley Lake Project”).As part of that effort,the Alaska Energy Authority (the "Authority”or "AEA”)desires to identify potential financing options for the Battle Creek Project,and analyze potential impacts from those financing options. The Battle Creek Project would enhancethe production of energy from the Authority ownedBradleyLakeProject!by diverting water into Bradley Lake from the west fork of Upper Battle Creek.Among other things,the Battle Creek Project would include a concrete diversion dam, two miles of canals,four miles of roads,and other facilities as may be required to complete the intended diversion of water. The Bradley Lake Project provides electric energy to the Railbelt area of Alaska,including the Kenai Peninsula,the Municipality of Anchorage,the Matanuska-Susitna Borough and the Fairbanks area.In an average year,the Bradley Lake Project generates 380,000 megawatt hours ("MWh”)of energy,which represents approximately eight percent of the electric energy used in the Railbelt,although the percentage can range from five to ten percent,depending on system demand and actual Bradley Lake Project generation.The Battle Creek Project is anticipated to increase energy generation from the Bradley Lake Project by an average 37,000 MWh annually. Conclusion The Battle Creek Project can most effectively be financed as parity debt.Under the Bond Resolution (described in Appendix A),the parity debt could arise from the issuance of bonds, notes or other indebtedness,with the power purchasing utilities responsible for debt payments. The debt payments would presumably extend beyond July 1,2021,the final date all currently outstanding bonds are scheduled to be redeemed.After current bonds are redeemed,the purchasing utilities become obligated to annually make "excess payments”of approximately $12.5 million?to AEA for deposit in the State of Alaska Railbelt Energy Fund (AS 37.05.520). The issuance of debt will not reduce nor postpone the obligation to make excess payments.The issuance of parity debt,however,would extend the effective life of the Bond Resolution until all debt issued under it is retired.Amending provisions of the Bond Resolution is currently difficult,as amendments would apply to outstanding debt and require bondholder approval. Amendments could be implemented with the issuance of new parity debt through "springing amendments”.These would be amendments that become effective only after all currently outstanding bonds have been retired.While the adoption of springing amendments would not require current bondholder approval,it would require approval by the purchasing utilities under the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”). 'More information regarding the Bradley Lake Hydroelectric Project,and its financing,is contained in Appendix A. 2 See Appendix B,calculation of excess payment. eamesen';purpesmaaees ioe 813 West Northem Lights Boulevard Anchorage,Alaska 99503 T 907.771.3000 Tolt Free (Alaska Only)888.300.8534 F 907.771.3044 kenergyauthority.orgi Theoretically,but probably not practically,non-parity debt could finance the Battle Creek Project.Due to restrictions under the Bond Resolution,non-parity debt would provide the lender with no security (i.e.,no pledge or lien on assets or revenues)and no payment of principal or interest until after all currently outstanding debt is redeemed.Issuing non-parity debt with any security or debt repayment prior to the final redemption of outstanding debt would likely require a majority of bondholders to approve amendments to the Bond Resolution.Because bondholder approval would presumably be difficult to obtain,non-parity debt is probably not a practical financing option. Prior to issuing debt,the Authority must comply with statutory notice requirements described below. Parity Debt The Battle Creek Project could be financed on a parity basis with bonds currently outstanding (i.e.,as parity debt).Parity debt would be treated on an equal basis as currently outstanding bonds with respect to rights to obtain project revenues and collateral/security for the repayment of the debt.Parity debt is issued pursuant to the Bond Resolution. The Power Sales Agreement provides for project revenues sufficient to pay debt service on all debt issued under the Bond Resolution.Under the Power Sales Agreement,all amounts necessary to pay principal,interest,and premium,if any,are added to the annual project budget and become part of the "take or pay”obligation of the power purchasing utilities.The utilities must pay the amounts necessary to repay the debt,regardless of the amount of power they receive from the Bradley Lake Project.The expectation is that the Battle Creek Project will increase energy generation sufficiently to more than offset the additional debt service and operational costs that will be added to the Bradley Lake Project's annual budget. The Bond Resolution provides for security for parity debt.This security includes a pledge of all project revenues plus the State's moral obligation on outstanding bonds.These are described more fully in Appendix C. The Bond Resolution and Power Sales Agreement each provide for,or allow,parity debt to finance the costs of a capital improvement related to the Bradley Lake Project.More specifically, they allow parity debt to finance the costs of Optional Project Work.Optional Project Work includes repairs,renewals and replacements,improvements,betterments,additions or expansions that are not Required Project Work.The Battle Creek Project fits the definition of Optional Project Work,and does not fit the definition of Required Project Work.? Under the Power Sales Agreement,the BPMC must approve any Optional Project Work.Prior to issuing parity debt,the bond Trustee must receive (i)evidence that the BPMC has approved the capital improvement and (ii)a written opinion of the Consulting Engineer that neither the 3 Required Project Work includes repairs,maintenance,renewals,replacements,improvements or betterments that are either: 1.Required by Federal or state law,a licensing or regulatory agency with jurisdiction over the Bradley Lake Project, or the Power Sales Agreement,or 2.Otherwise necessary to keep the Bradley Lake Project in good and efficient operating condition,consistent with national standards for the industry and sound economics for the Bradley Lake Project and Purchasers. Battle Creek Diversion White Paper Page 2 of 4 issuance of the additional bonds nor the payment for the capital improvement will impair the Authority's ability to pay debt service through the collection of revenues under the Power Sales Agreement. Non-Parity Debt,Creation of Liens and Sale and Lease of Property While Bradley Lake bonds are outstanding,the Bond Resolution substantially limits the ability to effectively issue non-parity project debt.The Authority may issue non-parity debt but the debt cannot be repaid from Bradley Lake Project revenues until after all outstanding bonds are retired. The Authority also may not secure the non-parity debt by a pledge of or other lien or charge on Bradley Lake Project revenues or on any amounts held under the Bond Resolution. The Bond Resolution'allows the Authority to issue non-parity debt solely repayable from project revenues received after outstanding bonds are redeemed.Likewise,non-parity debt could be issued if made subordinate to provisions of the Bond Resolution;meaning,the non-parity debt would receive neither payments from project revenues nor collateral security until after outstanding bonds are discharged and satisfied. Based on the forgoing,non-parity debt could be used to finance the Battle Creek Project only if a lender would be willing to lend funds with no repayment on debt (either principal or interest)and no collateral or security until after all bonds issued under the Bond Resolution have been discharged and satisfied (i.e.,redeemed or defeased).Because this does not appear to be practical,it does not appear that financing the Battle Creek Project with non-parity debt is a viable option. Statutory Notice Requirements Before issuing any additional debt,AS 44.83.910 requires the Authority to give 60 days'notice of its intent to issue bonds.The notice goes to the governor and to the legislature,if the legislature is in session,or to the Legislative Budget and Audit Committee,if the legislature is not in session. Before issuing debt intended to be secured by the State's moral obligation on a capital reserve fund securing bonds,AS 44.83.110(h)further requires 10 days notification to the State Bond Committee and the Legislative Budget and Audit Committee. If parity debt were issued to finance the Battle Creek Project,both statutory notice provisions would apply.Because currently outstanding Bradley Lake bonds are secured by the State's moral obligation,any parity debt issued would necessarily also include the State's moral obligation. If non-parity debt were issued,notice under AS 44.83.910 would always apply.Notice under AS 44.83.110(h)would only apply if the Authority provided the State's moral obligation on debt issued. 4 Section 707(1). Battle Creek Diversion White Paper Page 3 of 4 Other Considerations If the BPMC and the Authority decide to move forward with the Battle Creek Project,the Authority plans to research financing alternatives beyond "traditional”municipal bond financing, including exploring federal and State of Alaska loan programs.Ifa loan program offering lower interest rates exists,determining if a financing could be structured under the Bond Resolution may result in a lower cost borrowing benefitting the purchasing utilities and each of their ratepayers.As part of researching the lowest cost financing alternatives,the Authority will also determine if the federal tax exemption applicable to currently outstanding Bradley Lake bonds would apply to bonds issued to finance the Battle Creek Project. The Bradley Lake Project's Federal Energy Regulatory Commission license currently expires on November 30,2035.Unless the license is extended prior to any financing,the final maturity date of debt issued may need to be prior to November,2035,resulting in a term of approximately 20 years. For purposes of this paper,it is assumed that all participating utilities will agree and approve the Battle Creek Project with no changes to current percentage participation in the Bradley Lake Project. For more information contact Bryan Carey at the Alaska Energy Authority -907-771-3065. Battle Creek Diversion White Paper Page 4 of 4 APPENDIX A Bradley Lake Hydroelectric Project The Authority owns the Bradley Lake Project,which is located in south-central Alaska at the southern end of the Kenai Peninsula.The Bradley Lake Project includes a concrete-faced and rock-filled gravity dam,a power tunnel and steel-lined penstock;transmission lines connect the Project to a transmission system on the Kenai Peninsula.The Bradley Lake Project provides electric energy to the most populous areas of Alaska,including the Kenai Peninsula,the Municipality of Anchorage,the Matanuska-Susitna Borough and the Fairbanks area. Construction of the Bradley Lake Project was substantially completed in 1991,with the date of commercial operation declared to be September 1,1991. The financing concept for the Bradley Lake Project was based on a 50/50 sharing of construction costs.The State of Alaska funded 50%via cash appropriations to AEA.The other 50%of construction costs were funded through the issuance of general obligation bonds issued by the Authority under a Bond Resolution (described below).The power purchasing utilities are providing funds to repay the bond debt through payments to AEA for Bradley Lake Project energy sold pursuant to the Power Sales Agreement.The Power Sales Agreement has an initial 50 (fifty)year term from the date of commercial operation;the initial term expires August 31, 2041.The Power Sales Agreement can be renewed for unlimited successive additional terms at each purchaser's option!.AEA is required to renew the Power Sales Agreement only if 100%of the power will be sold to qualified utility purchasers. If the term of the Power Sales Agreement (including renewals)requires,AEA will cause the Federal Energy Regulatory Commission ("FERC”)license to be renewed.The Bradley Lake Project's FERC license currently expires on November 30,2035. The Power Sales Agreement provides for certain payments to be made by the power purchasing utilities,including annual operating costs,debt service,and costs associated with maintaining the Bradley Lake Project.The utilities are also responsible for paying an "Excess Payment Amount” which begins when bonds issued to pay Bradley Lake Project construction costs have been retired. Bradley Lake Hydroelectric Project Financing Background The permanent financing of the Bradley Lake Project consisted of State of Alaska appropriations and Authority issued general obligation bonds,with the full faith and credit of the Authority pledged to the payments on the bonds.The initial permanent financing of the Bradley Lake Project consisted of two series of bonds,the $105,001,142 Alaska Energy Authority Power Revenue Bonds,First Series (issued on October 5,1989)and the $60,259,015.10 Alaska Energy Authority Power Revenue Bonds,Second Series (issued on August 28,1990),issued pursuant to the Authority's Power Revenue Bond Resolution originally adopted on September 7,1989,and subsequently amended and supplemented (as amended and supplemented,the "Bond Resolution'). Subsequently,bonds were issued under the Bond Resolution to refund portions of then outstanding bonds.In April,1999,the $59,485,000 Alaska Energy Authority Power Revenue *Each term equal to 40 (forty)years or,if shorter,the remaining useful life of the Bradley Lake Project. Battle Creek Diversion White paper -Appendix A Page |of 2 Refunding Bonds,Third Series were issued to refund $59,110,000 of First Series bonds and the $30,640,000 Alaska Energy Authority Power Revenue Refunding Bonds,Fifth Series were issued to refund $28,910,000 of First Series bonds;those First Series bonds were redeemed on July 1,1999.In April,2000,the $47,710,000 Alaska Energy Authority Power Revenue Refunding Bonds,Fourth Series were issued to refund $46,235,000 of Second Series bonds, which were redeemed on July 1,2000.On July 1,2010,the $28,800,000 Alaska Energy Authority Power Revenue Refunding Bonds,Sixth Series were issued to refund $30,640,000 of Fifth Series bonds,which were redeemed on August 2,2010. Bonds Currently Outstanding At July 1,2014,$71,155,000 of bonds were outstanding under the Bond Resolution,comprised of $100,000 First Series bonds,$16,235,000 Third Series bonds,$26,020,000 Fourth Series bonds and $28,800,000 Sixth Series bonds.The bonds mature through July 1,2021 at rates ranging from 2.5%to 6.25%.The First Series bonds (Term Bonds with sinking fund payments of $25,000 each July 1 from 2018 through 2021,the date of final maturity)are currently callable at par,although the Authority currently desires those bonds remain outstanding through their maturity date.On and after July 1,2020,at the option of the Authority,$6,450,000 of Sixth Series bonds will be subject to redemption at par prior to their July 1,2021 maturity.Neither the Third Series bonds (with a final maturity of July 1,2017)nor the Fourth Series bonds (with a final maturity of July 1,2021)are subject to optional redemption prior to their maturity. Battle Creek Diversion White paper -Appendix A Page 2 of 2 APPENDIX B Calculation of Excess Payment Amount After the retirement of all bonds (including refunding bonds)issued to pay "recoverable construction costs”!for constructing the Bradley Lake Project,the Power Sales Agreement requires the Excess Payment Amount be included in annual project costs.The Excess Payment Amount is calculated as: >Average annual debt service on the retired bonds',less >Any debt service in annual project costs associated with bonds or other debt issued to fund Required Project Work >Limitation:No Excess Payment Amount will exceed $.04/kwh of delivered power to a purchaser The Excess Payment Amount will be approximately $12.5 million per year.(The cap limitation could result in a lesser amount if delivered power levels were to decline in any year.)The payment will begin when the last of currently outstanding bonds have been retired,resulting in no bond debt service component in annual project costs.The final maturity of currently outstanding bonds is July 1,2021;an earlier call or defeasance of the bonds may result in an earlier payment obligation. Effectively,the Excess Payment Amount should not significantly change the cost of Bradley Lake Project power.In determining power costs under the Power Sales Agreement,excess payments will replace the debt service that has been paid on outstanding bonds during the initial life of the Bradley Lake Project.The power purchasers will make payment to AEA for deposit into the Railbelt Energy Fund. Because the Battle Creek Project is Optional Project Work,the power purchasers will pay an amount equal to average annual debt service,with an annual cap of $.04/kwh for delivered power to each purchaser.The payment of debt service on any new debt issued for the Battle Creek Project would not reduce the amount of the Excess Payment and the power purchasing utilities would continue to be responsible for payment of the debt service on those bonds until their final maturity. Other Considerations The Excess Payment Amount currently only relates to the original construction cost of the Bradley Lake Project.If the State of Alaska provides appropriations or grants to AEA to fund a portion of the cost of the Battle Creek Project,consideration should be given to amending the Power Sales Agreement to reflect the Excess Payment Amount concept to those appropriations or grants. 'Recoverable Construction Cost is defined in the PSA as $175 million less one half the amount,if any,by which $350 million exceeds the Cost of Acquisition and Construction.Recoverable Construction Cost is approximately $354 million and is composed of: Construction Cost $3 14,500,000 Capitalized Interest 17,400,000 Required Reserves 14,900,000 Costs of Issuance 7,200,000 Total $354 In a Settlement Agreement dated as of December 9,1997 between the Purchasers and AEA,the parties agreed not to challenge that the $165,260,157 bond principal amount of the First and Second Series is within the maximum principal amount authorized in the Power Sales Agreement;the annual payment obligations of the Purchasers will be determined taking into account the debt service on the bonds;and the $165,260,157 is within Recoverable Construction Costs. 2 For purposes of the Excess Payment Amount computation,debt service includes amounts set aside for the payment of principal, premium,if any,sinking fund payments and interest on bonds,if not paid by reason of acceleration. Battle Creek Diversion White paper -Appendix B Page |of 1 APPENDIX C Security for the Bonds Under the Bond Resolution,all Series of bonds are secured (on a parity basis)by a pledge of all revenues from the operation of the Bradley Lake Project,including all payments made by the power purchasers under the Agreement for the Sale and Purchase of Electric Power (the "Power Sales Agreement”),dated as of December 8,1987,by and among the Authority (then known as the Alaska Power Authority)and five Purchasers and two Additional Parties (collectively,the "Power Purchasers”).AEA pledged,assigned and transferred its rights under the Power Sales Agreement to the bond trustee on behalf of bondholders. Also under the Bond Resolution,certain funds and accounts are required to be maintained.All moneys,securities and funds (except the Excess Investment Earnings Fund)held or set aside under the Bond Resolution are pledged and assigned to secure payments on the bonds,subject only to the Bond Resolution provision permitting the priority payment of Bradley Lake Project operating expenses or other purposes specified in the Bond Resolution.The First,Third and Fourth Series bonds are further secured by bond insurance.No other revenues or assets of the Authority are pledged as security for the payment of the bonds and there are no significant revenues,moneys or assets of the Authority available (or expected to be available)for payments on the bonds. Capital Reserve Fund and Moral Obligation of the State Pursuant to the Bond Resolution,the Authority is required to maintain a capital reserve fund in an amount at least equal to the "capital reserve requirement”(an amount equal to the lesser of maximum aggregate debt service on the bonds in any current or future bond year or ten percent of the proceeds of the bonds;or such lesser amount as is required in order to maintain the tax- exempt status on the bonds).The amount currently required to be maintained in the fund is $12,778,775,which was originally funded by bond proceeds.If parity debt is issued for the Battle Creek Project,the capital reserve requirement will increase accordingly;the increase will presumably be funded from proceeds of the financing. Alaska Statutes relating to the Authority require the Chair of the Authority's board at least annually,but no later than January 2 of each year,to certify in writing to the governor and the State legislature the sum,if any,required to restore the capital reserve fund to its required balance.The Bond Resolution requires the Chair to make such certification whenever amounts are transferred from the fund to pay principal of or interest on the bonds.If the State legislature appropriates any amounts to the Authority which are not vetoed by the governor,the Authority is required to deposit all amounts appropriated and received to the capital reserve fund. If non-parity debt is issued for the Battle Creek Project,any reserve requirement and any requirement for a capital reserve fund to have the moral obligation of the State of Alaska would be negotiated with the lender and must meet AS 44.83.110 requirements (among others,the Authority must determine that a capital reserve fund must enhance the marketability of the bonds and must provide for limitations on its use). Battle Creek Diversion White paper -Appendix C Page 1 of 1 I=/ALASKAGumpALSAUTHORITY Alaska Energy Authority Bradley Lake Hydroelectric Project Financial Considerations Relating to Replacement of Static Var Compensators May 2015 Purpose The Bradley Lake Project Management Committee ("BPMC”)has approved the replacement of the Bradley Lake Hydroelectric Project ("Bradley Lake Project”)Static Var Compensators ("SVCs”or "SVC”)along the transmission line for an estimated $7,200,000.At the request of the BPMC,the Alaska Energy Authority (the "Authority”or "AEA”)is evaluating long term financing options related to replacement of the SVCs. In August 2014,the Authority prepared a White Paper titled "Financial Considerations Relating to Potential Battle Creek Diversion Project”("White Paper”);see the attached White Paper for definitions used but not defined in this paper.The White Paper identified possible long term financing options for the Battle Creek Diversion Project under the governing documents relating to the Bradley Lake Project.The conclusions and concepts discussed in the White Paper also apply to financing the SVCs replacement (and any future capital improvements relating to the Bradley Lake Project). SVCs Replacement Required Project Work Both the Bond Resolution and Power Sales Agreement allow parity debt to finance the costs of a capital improvement related to the Bradley Lake Project.More specifically,they allow parity debt to finance the costs of Required Project Work!and Optional Project Work”.The White Paper concludes that the proposed Battle Creek Diversion Project meets the definition of Optional Project Work.In contrast,the SVCs replacement appears to fit the definition of Required Project Work. The SVCs at the Soldotna and Dave's Creek substations have been in operation for approximately 22 years.Maintenance issues have increased in the last couple of years.The SVC technology is obsolete and replacement parts are no longer produced or supported by the equipment manufacturer.Concern has been raised that one or both of the SVCs could fail with no warning.An outage could limit the transmission line transfer capability for an extended period of time.Under these circumstances,the SVCs replacement appears to meet the definition of Required Project Work because it is necessary to keep the Bradley Lake Project in good and efficient operating condition,consistent with national industry standards and sound economics. 'Required Project Work includes repairs,maintenance,renewals,replacements,improvements or betterments that are either: 1.Required by Federal or state law,a licensing or regulatory agency with jurisdiction over the Bradley Lake Project, or the Power Sales Agreement,or 2.Otherwise necessary to keep the Bradley Lake Project in good and efficient operating condition,consistent with national standards for the industry and sound economics for the Bradley Lake Project and Purchasers. 2 Optional Project Work includes repairs,renewals and replacements,improvements,betterments,additions or expansions that do not constitute Required Project Work.Optional Project Work must be approved by the BPMC. Wakenefgyauthorityrorst 813 West Northern Lights Boulevard Anchorage,Alaska 99503 1 907.771.3000 Toll Free (Alaska Only)888.300.8534 F 907.771.3044 Conclusion The SVCs replacement can be financed with parity debt as Required Project Work under the Bond Resolution.Under the Power Sales Agreement,power purchasing utilities will be responsible for debt payments.Debt payments would presumably extend beyond July 1,2021, the final date all currently outstanding bonds are scheduled to be redeemed.The issuance of parity debt will extend the life of the Bond Resolution until all debt issued under it is retired. After current bonds are redeemed,the purchasing utilities become obligated to annually make "excess payments”to AEA for deposit in the State of Alaska Railbelt Energy Fund (AS 37.05.520).The issuance of additional debt will not postpone the obligation to make excess payments. Because the SVCs replacement is Required Project Work,the issuance of debt to finance the SVCs will reduce the amount of the annual excess payments by the amount of the annual debt service on the debt issued.See §29(b)(ii)of the Power Sales Agreement. Other Considerations For purposes of this paper,it is assumed that there will be no changes to current percentage participation in the Bradley Lake Project associated with the SVCs replacement. For more information contact Bryan Carey at the Alaska Energy Authority -907-771-3065. SVCs Replacement White Paper Page 2 of 2 Alaska Energy Authority Financing options for SVC project $7.2M »MC meeting 5/29/2015 Short-Term Long-Term Financing Options National Rural I Utilities Renewal &General Cooperati AIDEA AIDEA Alaska Cooperative 'an Renewable} Contingency Fund CoBank USDA Rural Utility Obligation Service Ne tern Utility;Energy Financing |Energy Financing Bond AIDEA Finance Energy Bonds Funding conditions (R&C Fund)Construction Loan CoBank Service (RUS)Bonds Corporation (NCSC)}Long Term Loan Programs (A)Programs (B)Bank Participation Loans corporation #0)(CREB) Does the SVC work qualify for a loan/program?Yes Yes Yes Yes Yes Yes aw Yes Yes Not at thistime {Not likely Yes Va Yes 1s AEA and/or BPMC eligible?Yes Yes Yes Yes Yes Yes ™ Yes Yes Not atthistime [Not likely No Va Yes Are the Bond &PSA acceptable security?Yes Yes Yes Yes Yes Yes NLYes Yes Parity Debt acceptable n/a Yes Yes Yes Yes Yes YO Yes Electrical Sustainable EnergyProject&Transmission &Infrastructure Loan Name of loan or program?n/a n/a [n/a and Loan n/a n/a n/a Infrastructure Supply Guarantee Program Development elopment8Prograsg(SETS) Interest rate (%)US Treasury as of 5/1/15 is 2.57%(for 20 LIBOR+150-175 bp US Treasury +12.5 US Treasury +250-.4,35-4.60%3.75%-4.25%4.90-5.45%Mark t . year term loan)(bp=basis points)na =1,75-2.0%5-4.60 bp =2.695%°°arket rate 450 bp=5%-7%_frsov at this t Finance Amount (S in million)$3,600,000 $7,200,000 $7,200,000 $3,600,000 (50%){$7,200,000 $7,200,000 $7,200,000 $5,400,000 (75%)$1,000,000 Fa Term (yrs)4 years End of construction §20 yrs 20 yrs 20 yrs |20 yrs 20 yrs 20 yrs 20 yrs Application Fee {other fees?)no TBD TBD TBD TBD ||TBD no $5,000 $5,000 Time from application to funding n/a 2 months 2 months atleast6 months {TBD {l2 months TBD 2-3 months 2-3 months Construction Funding n/a Yes No No No Yes TBD Yes {Yes ong Term Loan n/a No Yes Yes Yes Yes TBD Yes Sf Yes rrepay penalty no SObpofbalance [SObpofbalance [TBD TBD TBD TBD cap4ie negotiated can be negotiated Interest only-$539,600 to $512,200 to .$565,400 to $430,200 to ..00 TBD ,600Projecteddebtserviceannualrepaymentsn/a $29,000 $551,300 $233,000 $535,100 $591,900 $505,100 $81,600 Long term option,V4alsoavailablefor[Better option if Only $1,000,000R&C fund may be |;.available,best ..Short term,also Battle Creek.combined with ..Interest rates t Same .._: . ;replenished with . Best if combined ....combined with Not eligible at this Only loan directlyCommentsavailableforBattle[Annual 1%rebate |CoBank or Bonds,:an |considerations as |Combine with SETS . : .Not recommended . longer term ..with Battle Creek Project &time to cooperatives :.Creek available also available for other lenders financing option . Infrastructurew/membership of |Battle Creek Development loanfeeof$1,000 P tes aL neevueinancingiOpteS"it \e satetied re thy ens,ieLeeManagementn conte"Mectinggee BadMey,29720158Feleyak:eaeal Financing Goal =Find the lowest cost funding source,that aligns the repayment of the asset with its 20 year life ENERGY AUTHORITY ereag882FASSATATESTE TT APTS POA a Considerations =The BPMC and the AEA Board must approve new debt =The lender must be willing to accept that debt will be parity debt (not senior or subordinate to existing debt)under the bond resolution =The lender must be willing to accept the power sales agreement as security for repayment =The end of the debt amortization period cannot exceed the expiration of the current FERC license (12/31/2035) ENERGY AUTHORITY REL N G PA Ee s,ST 3SAOPRENSASEAEEARIESSPSAYCENBEIEOSBINRE =peter Pets :Esteon ASAE BARS ATI ERT NCE i &open RIE EES ret o Se on ios mE Pb aa an cia *,ete aeae.See eee Els =Th ry tre AP Gael Cash Flow Needs «7/2015-7/2016 -$3.6 million to purchase SVC equipment =7/2016-10/2016 -$3.6 million for construction costs IEE SE,SPE Ye RE a Qe ea Funding Options Considered Short-Term Financing (equipment purchase and construction costs): 1.Renewal &Contingency Fund (R&C Fund) 2.CoBank Construction Draw Loan Long-Term Financing (take out): 1.CoBank Loan USDA Rural Utility Service (RUS) General Obligation Bonds tional Cooperative Service Corporation (NCSC)(higher interest rates) A Particip ility Long Term Loan AIDEA Energy Financing ms (higher interes Alaska Bond Bank Authority (statue AIDEA Participation L ismatch with banks Nationa tilities Cooperative Finance Corporation (CFC) ean Renewable Energy Bonds (CREB)(application deadline problem)pooNDMPLYNdoesn't fit)| /=ED ENERGY AUTHORITY SSRI OTF LENE Se ce PTT 5 Short-term financing R&C Fund $5,000,000 R&C Net Cash Balance Problem $4,000,000 FY15 FY16 FY17 $115,700 $282,000$3,000,000 FY17 $2,000,000 : | 12 equal $1,000,000 ||i monthly payments 7 $236,000 ce <i a ””s ”2 oe s($1,00000g Re "Res >s xy Ss *x»ss ($2,000,000) $5,000,000 .R&C Net Cash Balance Solution $4,000,000 FY45 FY16 FY17 $115,700 $282,000 $3,000,000 FY17 $2,000,000 4,accelerated monthly payments $1,000,000 |l (July-Oct)$708,000 -(Nov-jJune)$o ce es se”veos ve a a($1,000,000 x”»**-Cain Sa ”.”° a /-AaDENERGY AUTHORITY enn 272 SATAY FGETSANAT:SEE IDSTA 15 enema 6 lim CoBank Construction Draw Loans $5,000,000 .R&C Net Cash Balance with CoBank $4,000,000 FY15 FY6 FYa7 $115,700 $217,600 $78,4 $3,000,000 i $2,000,000 $1,000,000 $0 %S Oo A AoncoesaofPeye”s”a oe”e”eo(s1,000,008 gg*ee ”»”"ss *sfef ”"s s CoBank Construction Draw Loan: «=Monthly interest only payments with approx.interest rate of 1.75%-2.0% FY15 FY16 FY17 R&C repayment S 115,700 217,600 78,400 CoBank Interest Payment 0 29,250 28,500 Total Payment S 115,700 246,850 106,900 ALASKA Quam ENERGY AUTHORITY BAS PV ee ee ae ee oe General .USDA Rural Utility Service Obligation Funding conditions CoBank (RUS)Bonds Does the SVC work qualify for a loan/program?Yes Yes Yes Is AEA and/or BPMC eligible?Yes Yes es Are the Bond &PSA acceptable security?Yes Yes es Parity Debt acceptable Yes Yes Yes Electrical Infrastructure Name of loan or program?n/a Loan and Loan Guarantee |n/a Program Interest rate (%)US Treasury as of 5/1/15 is 2.57%(for 20 year term loan)(bp=basis points)|4.35-4.60%all +12.5 bp=3.75%-4.25% Finance Amount ($in million)$7,200,000 $3,600,000 (50%)$7,200,000 (Term (yrs)20 yrs 20 yrs 20 yrs Application Fee (other fees?)TBD (TBD TBD Time from application to funding 2 months at least 6 months TBD Construction Funding No No No Long Term Loan Yes Yes Yes Prepay penalty 50 bp of balance TBD TBD Projected debt service annual repayments $539,600 to $551,300 $233,000 eee sD to Long term option,also available for Battle Creek.Better option if combined with CoBank or Bonds,Best if combined FIERaDENERGYAUTHORITY Com t 9 :omments Annual 1%rebate available also available for Battle _lwith Battle Creekw/membership of fee of Creek$1,000 ieneat Sos AS es,4 RE SME RR Bee Ss 8 Capa SF,ee eel :alnatyneeri.Spee,Pas ASaes ARESHORE Long-Term Financing:CoBank Loan =Finance amount:$7,200,000 «=Term:20 years =Interest rate:4.35-4.60% =Projected debt service annual payment:$539,600-$551,300 «Short term and long term option =Could be combined with RUS =Benefit:offer annual dividend payment of 1%of outstanding loan balance '=ENERGY AUTHORITY Fe ge eae Ra Le eae ke Lek a bstarsntceii cdehsnn thchdaihasianlczsiinieatishadbaiccail SOP SACee eS eS Long-Term Financing:USDA Rural Utility Service (RUS) =Finance amount:$3,600,000 (assume 50%of total project costs) «=Term:20 years Interest rate:US Treasury +12.5 bp =2.695% Projected debt service annual payment:$233,000 Remaining 50%of project could be funded by: »R&C Fund (assume 0%interest cost) *CoBank Loan (assume 4.35-4.60%interest rate) RUS +R&C: "FY16 =R&C rate 0%annual payment $900,000 .FY17-FY19 =R&C+RUS annual payment $1,133,000 .FY20-FY35 =RUS rate 2.695%annual payment $233,000 RUS +CoBank approximate blended rate =3.52-3.65%blended payment =$502,000-S507,800 /MED ENERGY AUTHORITY eats F<SEEPS BET eh NRPS SASL TE SYS Ee SoA OE EERO PET LEDS =a er Sa ae TE COP ST Ra Ee et 10 ae Mite Co Anh esSy StackLongTermFinancing:General Obligation Bonds with Battle Creek =Finance amount:$7,200,000 =Term:20 years »Interest rate:3.75%-4.25% Projected debt service annual payment:$512,200 -$535,100 SSSR Sab STE WA Fes A PEPE Te Ee Eee BON TA OT LES DEMERS Ee aaa Rhy BE 27S ST nares¥ Recommendations If the SVCs is the only project-S7,200,000: =Short Term -CoBank and/or R&C Fund ™Long Term: =»50%RUS =50%CoBank If the SVCs and Battle Creek are financed together-S57,200,000: "Short Term -CoBank and/or R&C Fund (SVC portion) =Long Term: »50%RUS #50%CoBank or Bonds 2B REGS BES ae OLA E EIS SOTERAPEETSCRSEe 12 Gkeke wax AEeAaeWeSgalileTeeSCARESSOR, REE CGE ess ee 3s angeAK0.tele fron,ae-fae Sup PtSt RA set ae "Are there any other options that have not been included in this presentation that the BPMC would like us to pursue? "Would the BPMC like AEA to pursue one of these funding options? f=[ED ENERGY AUTHORITY pantryanagpacly Lae,'Baer As bta8, eeB ' ¥ a "ee Required vs Optional Project Work «Required Project Work =Includes repairs,maintenance,renewals and replacements,improvements or betterments that are either; «1.Required by Federal or state law,a licensing or regulatory agency with Jurisdiction over the Bradley Lake Project,or the PSA or «2.Otherwise necessary to keep the Bradley Lake Project in good and efficient =Reduces the excess payment amount to the State beginning no later than July 1, 2021 (final maturity of current outstanding bonds) =Optional Project Work =Includes repairs,maintenance,renewals and replacements,improvements, betterments,additions or expansions that are not Required Project Work =No effect on excess payment ACN ED ENERGY AUTHORITY fe Tel Aa a Be Le ee ee SW eRey Sa)EERE, Excess Payment Amount =After the retirement of all bonds (including refunding bonds)issued to pay "recoverable construction costs”for constructing the Bradley Lake Project, the Power Sales Agreement requires the Excess Payment Amount to be included in annual project costs. =Calculated as: «Average annual debt service on the retired bonds,less =Any debt service in annual project costs associated with bonds or other debt issued to fund Required Project Work =Limitation:No Excess Payment Amount will exceed $.04\kwh of delivered power to a purchaser =Approximate amount:$12.5 million per year l=NERGY AUTHORITYL3iv} an.eS vie5 ¢SEOsWateFaFeS eee ae ye ee A Bg bi 3 ae oeeliaeemeees |6 pinnate Ee oe de ee ee>ee eee ee Long-Term Financing:AIDEA Energy Financing Programs "Project and Infrastructure Development Program-Direct Loans =Finance amount:$5,400,000 (75%of total project costs) =Term:20 years "Interest rate:US Treasury +250-450 bp =5.07%-7.01% "Projected debt service annual payment:$430,200 -$505,100 "Sustainable Energy Transmission and Supply Development Program (SETS) =Finance amount:$1,000,000 =»Term:20 years =Interest rate:5.36%at this time =Projected debt service annual payment:$81,600 ="Remaining $800,000 funded by R&C Fund PUN CN LIER ES AT a Se ITE RE SE,FRG ME ERI EPL STEAL EP eS |7 Questions and Answers Q.What is the source of the repayment of new debt? «A.Per Bond Counsel,debt service for the new debt would be added to the annual project costs payable by utilities under the power sales agreeement. Q.Does the timing of disbursements impact the financing options? -A.Yes,some financing options do not allow a take out until after construction is complete.The R&C fund must have enough funds to repay contractors. Q.Does the approval of Battle Creek have an impact on financing of the SVC project? -A.Yes,bonding is not a cost effective option for the SVCs as a stand alone project. Bonds could be issued for Battle Creek and SVCs as a whole. Q.Are the financing conditions the same for the SVCs and Battle Creek? °A.Yes. I=NASA eee Ya ETE Take ade oN ICYPETE SE CII cn NET LE Le BE SS Se La hieee 18 eS57S lineationa Questions and Answers Continued.. -Q.Can we reimburse the Bradley participants with tax exempt bond proceeds? -A.Possibly,BPMC must meet tax exempt criteria and tax exempt requirements. -Q.If tax exempt bonds are issued,is there a need for a resolution for IRS purposes explaining the intent of the loan reimbursement to the participants? -A.Yes,resolution must be submitted to the IRS before any funds are spent on the project. ENERGY AUTHORITY PN EAS YT ENE Cat ET PET ORE TERY E TAT EN oy We PF ee OL i SO | Questions and Answers Continued.. «Q.Does BPMC need to approve the issuance of debt? *A.Yes. ¢Q.Does AEA board need to approve the issuance of debt? -A.Yes. -Q.Do lenders need to approve the issuance of debt? -A.Yes. ¢Q.Who signs the debt document? ©A. ENERGY AUTHORITY aa,22 22h SATS TET kD AY OPS PN ia ea neem 20)iene Background Information =The committee requested AEA to find alternative funding sources for the SVC project which would be repaid over the life of the asset and eliminate the need for the utilities and their customers to finance the project over a short period of time «Estimated costs of project $7.2 million =Life of the asset is at least 20 years ENERGY AUTHORITY PTS TTL ATES FEEASSMRP EL a ss a 2 BPMIC Goals «Replace the SVCs at Daves Creek &Soldotna ($7.2M estimate) =Procurement of SVC equipment to occur July-August 2015 =Project construction to occur July-September 2016 «Have enough cash in the R&C fund to pay the contractors as payments become due ENERGY AUTHORITY 23.3 ss Sob PECL BY TPE PRE GE APU MAPSllNS 22 Ve meaziit isPeelates aoteee Short-Term Financing:Renewal &Contingency Fund «7/2015-7/2016 -$3.6 million to purchase SVC equipment »7/2016-10/2016 -$3.6 million for construction costs =Payback period from disbursement must be within 4 years «Itis anticipated that the R&C fund will be replenished with long term debt,such as RUS,CoBank or Bonds =However,under the current repayment policy there could be a cashflowissuebeginninginSeptember2016 Oe ee Seki EES RAD SUES ALE ae BE Lh ed ERO Ty a 2S as Short-Term Financing:CoBank Construction Draw Loan =Construction draws are allowed as cash is needed =Interest rates on construction take out loans are lower than the long term loan interest rates =Cash could be available approximately 60 days from date application is submitted ENERGY AUTHORITY ae RN ia!RAY OF QAM TAPE ERR SLY NTN ASPRDE DER LOPE WTP ETOAC ah,24 GARETT Varo easJex"Fea SR . 3 ata b ty"cs '7 Py ht SiPereySee!FF CO peek Oe te pee ee! Long-Term Financing:National Cooperative Service Corporation «=Finance amount:$7,200,000 =Term:20 years =Interest rate:4.90-5.45% =Projected debt service annual payment:$565,400-$591,900 ENERGY AUTHORITY EU EO TERE EF EAE MDE BRT IRA Ee PTS BN oe ES ER Re PN PLS 25BEESEVESA PET EtFey i essage aaa Hh sda heatice &ey Long-Term Financing:Participant Utility Long- Term Loan «Finance amount:$7,200,000 =Term:20 years »Interest rate:market rate ENERGY AUTHORITY rag Dscae a Si Se AN A ALANA aa MATRICES TSLat iThatim?226 vielSeTos ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT 2015 3RD QUARTER REPORT REVENUES,EXPENSES &CHANGES IN SURPLUS REVENUES UTILITY CONTRIBUTIONS INTEREST INCOME EXPENSES OPERATIONS RENEWAUREPLACE (R&C REPAYMENTS) R&C INTEREST APPLIED AS REPMT NON R&C CAPITAL PURCHASES-See A1 TRANSFER TO OPERATING RESERVE DEBT SERVICE (net of Capital Reserve Reduction) TRANSFER TO ARBITRAGE CURRENT YEAR SURPLUS(DEFICIT) PRIOR YEAR SURPLUS (DEFICIT) BEGINNING SURPLUS (DEFICIT) COMMITTED CY EXP &DEBT SVC ENDING SURPLUS (DEFICIT) BALANCE SHEET ASSETS REVENUE FUND OPERATING FUND DUE FROM R&C RECEIVABLE PREPAID LIABILITIES &SURPLUS CURRENT LIABILITIES COMMITTED CY EXP &DEBT SVC PAYABLE TO UTILITIES O&M PAYABLE TO UTILITIES R&C OTHER INFORMATION OPERATING RESERVE MONTHLY CONTRIBUTIONS FY2014 FY2015 FY2015 ACTUALS APPROVED ACTUALS BUDGET 3/31/2015 16,260,994 17,574,314 13,180,734 1,879,404 1,859,550 1,856,550 18,140,398 19,433,864 15,037,284 4,142,938 5,630,502 2,837,929 1,048,829 1,250,318 937,737 313,408 -244,582193,549 140,000 206,315 44,030 160,366 160,366 12,104,950 11,872,900 6,237,925 292,694 292,000 298,316 18,140,398 19,346,086 10,923,170 -87,778 4,114,114 --(4,114,114) -87,778 : 678,142 -3,405,052 1,599,575 -1,225,669 279,247 -- 25,865 -- 6,205 -278,580 2,589,034 4,909,302 1,175,401 -795,188 --4,114,114 1,134,386 -- 279,247 -- 2,589,034 :4,909,302 965,734 1,126,100 1,126,100 1,404,594 1,464,526 1,464,526 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Schedule A-1 FY14 FY14 FY15 FY15CAPITALPURCHASESNOTFUNDEDBYR&C FUND BUDGET |ACTUALS BUDGET |ACTUALS Replace Office Furniture 10,000 7,327 -- Telephone/Network Upgrade 20,000 13,457 -- Accusonic Flow Meter Monitoring Unit Replacement -16,422 -- Replace Fish Water Valve Actuators 20,000 -20,000 - Utility Vehicles 7,500 5,500 -- Replace JEM meters with ION meters -23,154 -- Nuka Diversion Hut 75,000 5,636 -- Weather Stations 15,000 --- Roof Ice Guards for Main Transfomer 28,000 --- DCS Security Interface for Data Access 125,000 --141,703 Generator Partial Discharge Monitor 145,000 107,012 -- Surveillance Cameras 30,000 15,040 -- Lube Oil Purification System --46,000 - Replace 1998 Chevrolet Crew Cab Vehicle --37,000 32,306 Replace 1990 Ford Single Cab Vehicle --37,000 32,306 Total Non R&C Capital Purchases 475,500 193,549 140,000 206,315 Budget Items Being Reviewed by O&D FY14 FY14 FY15 FY15 (not approved at this time)PROPOSED]ACTUALS |PROPOSED]ACTUALS Engineering Work to Design Bradley Junction Substation 300,000 System Studies for Bradley Operation 250,000 Diamond Ridge Breaker Mitigation 160,000 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE 8 BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2014 THROUGH 03/31/2015 FY 15 FY 14 BUDGET % FY 15 Approved 07/01/2014 -{Over)Under FY14 APPROVED Budget 03/31/2015 HEA Actual |CEA Actual |AEA Actual |Total Actual |Budget to Date BUDGET FY14 ACTUAL [Summary by expense type 161,274 344,042 Labor &Benefits 1,986,848 1,490,136 1,110,325 179,084 :1,289,409 200,727 1,545,880 1,353,077 Travel 35,410 26,558 11,405 1,751 :13,156 13,402 11,000 13,837 Training 38,731 29,048 14,083 ::14,083 14,965 =- Contractual 809,380 607,035 183,380 2,145 272,070 457,895 149,440 797,473 597,329 'Supplies &Materials 435,919 326,939 76,141 116,817 :192,959 133,981 248,919 415,619 Other Costs.803,797 602,848 21,555 24,560 91,837 137,952 464,896 858,897 489,643 Equipment &Machinery 8,500 6,375 17,857 ::17,557 (11,182)3,500 3,192 Maintenance Projects 143,530 107,648 :2,400 -2,400.105,248 95,790 22,013 Administrative Costs 1,368,387 1,026,290 38,903 30,000 643,916 712,819 313,471 1,100,937 1,204,190 5,630,502 4,222,877 1,473,348 356,7S7 1,007,823 2,837,929 1,384,948 4,828,670 4,142,940 FERC 535 -O,i ision & Operations Sup/Eng Bradiey Lake Operating tabor &Benefits 291,632 218,724 236,411 --236,411 (27,687)268,052 266,237 Travel 8,610 6,488 11,246 ::11,246 (4,789)8,200 il 861)Training 7,904 5,928 4,116 =:4,116 1,812 -: Contractual 1,445 1,084 =:=:1,084 9,349 10,339 Supplies &Materials 6,203 4,652 207 -:207 4,445 6,203 390 Bradley Lake Operating Total 315,794 236,846 251,980 -251,980 (15,134)291,804 288,827 FERC 535 -0)ion &Eng \g Total 315,794 236,846 251,980 --251,980 (15,134)291,804 288,827 FERC 537 -Hydraulic Expenses Hydraulic Expenses Bradley Lake Operating Labor &Benefits 95,056 71,292 60,539 =x 60,539 10,753 91,400 74,298 Contractual 19,504 14,628 8,000 :=8,000 6,628 19,504 11,475 Supplies &Materials 2,608 1,956 --:-1,956 2,608 918 Bradley Loke Operating Total 117,168 87,876 68,539 +-68,539 19,337 113,512 86,691 FERC 537 -Hydraulic Expenses Total 117,168 87,876 68,539 -.68,539 19,337 113,512 86,692 FERC 538 -Electric Expenses Electric Expenses Bradley Lake Operating Labor&Benefits 224,000 168,000 169,624 :=169,624 (1,624)197,000 215,557 Training 30,827 23,120 8,600 =:8,600 14,520 =: Contractual 21,342 16,007 1,400 :=1,400 14,607 121,169 $7,136 Supplies &Materials 6,232 4674 1,836 :=1,836 2,838 6,232 498 Bradley Lake Operating Total 282,401 211,801 281,461 -bd 181,461 30,340 324,401 273,191 FERC 538 -Electric Expenses Total 282,401 211,801 181,461 --181,461 30,340 324,401 273,191 FERC 539 -Misc,ic Power i Mise Hydro Power Exp Bradley Lake Operating Labor &Benefits 192,000 144,000 85,698 -:85,698 58,302 192,168 75,569 Training fa :1,368 :=1,368 (1,368):x Contractual 239,571 179,678 99,839 --99,839 79,840 224,078 173,600 Supplies &Materials 94,878 71,159 15,795 ==15,795 $5,364 94,878 53,658 Bradiey Lake Operating Total 526,449 394,837 202,699 5 -202,699 192,138 $11,124 302,827 BRADLEY CIRCUITS/RADIO TO BERNICE LK Other Costs 30,000 22,500 21,555 ==21,555 945 90,000 90,000 @RADLEY CIRCUITS/RADIO TO BERNICE LK Total 30,000 22,500 21,555 -:23,555 945 90,000 '90,000 BRADLEY CIRCUITS BERNICE LK TO ANCH Other Costs 30,000 22,500 :24,042 -24,042 (1,542)30,000 28,746 BRADLEY CIRCUITS BERNICE LK TO ANCH Total 30,000 22,500 -24,042 -24,042 (1,542)30,000 28,746 FERC 539 -Mise.Hydraulic Power Total 586,449 439,837 224,254 24,042 .248,296 191,541 631,124 421,573 FERC 540 -Rents FERC Land Use Fee Bradley Lake Operating Other Costs 180,000 135,000 x -91,487 91,487 43,513 175,000 179,565BradleyLakeOperatingTotal180,000 135,000 --91,487 91,487 43,513 175,000 179,565 FERC 540 -Rents Total 180,000 135,000 -:91,487 91,487 43,513 175,000 179,565 FERC 541 -Mai pervision &i ii Maint Supervision/Eng Bradiey Lake Operating labor &Benefits 214,230 160,673 163,066 bd -163,066 (2,393)171,510 206,626 Bradley Lake Operating Total 214,230 160,673 163,066 =163,066 (2,393)171,510 206,626 FERC S42 -pel &Engi rg Total 214,230 160,673 163,066 --163,066 {2,393}171,510 206,626 FERC 542 -Maintenance of Structures Maintenance of Structures Bradley Lake Operating Labor &Benefits 96,200 72,150 $9,491 -:$9,491 12,659 110,000 74,461 Supplies &Materiais 64,273 48,205 6,012 -=6,012 42,193 64,273 23,138 Equipment&Machinery 8,500 6,375 9,272 -=9,272 (2,897)8,500 3,192 Maintenance Projects 6,000 4 500 ----4,500 =bd Bradley Lake Operating Tota!174,973 131,230 74,775 --78,775 56,455 182,773 100,791 FERC $42 -Maintenance of Structures Total 174,973 131,230 74,775 id 74,775 56,455 182,773 100,791 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2014 THROUGH 03/31/2015 FY 15 FY 14 BUDGET % FY 15 Approved 07/01/2014 -{Over)Under FY14 APPROVED Budget 03/31/2015 HEA Actual |CEA Actual |AEA Actuai |Total Actual |Budget to Date BUDGET FY14 ACTUAL FERC 543-Mai of irs,Dams&¥ Maint Res,Dams,WWays Bradley Lake Operating Labor &Benefits 49,950 37,463 15,798 :-15,798 21,665 10,750 276 Contractual 28,769 21,577 630 =z 630 20,947 2,769 : Bradley Lake Operating Total 78,719 59,039 16,428 -16,428 42,611 13,519 276 BRADLEY NUKA REPAIR Supplies &Materials a -787 -:787 (787)-. Equipment &Machinery :-8,284 .:8,284 (8,284)-- Maintenance Projects 21,630 16,223 ===:16,223 21,630 463 BRADLEY NUKA REPAIR Total 21,630 16,223 9,071 --9,071 7,151 21,630 463 BRADLEY POWER TUNNEL MAINT (Dam) Contractual ::39,331 >>39,331 (39,331):- Maintenance Projects 56,000 42,000 ::--42,000 43,260 21,550 BRADLEY POWER TUNNEL MAINT (Darn Total 56,000 42,000 39,331 --39,331 2,669 43,260 21,550 BRADLEY POWER TUNNEL DRAIN CLN/INSP {P/House) Maintenance Projects.9,000 6,750 ----6,750 -- BRADLEY POWER TUNNEL DRAIN CLN/INSP {P/House)Total 9,000 6,750 ----6,750 -- FERC 543 -Maintenance of Reservoirs,Dams &Waterways Total 165,349 124,012 64,830 id -64,830 59,181 78,409 22,289 FERC 544 -Maintenance of Electric Plant Maintenance of Elec Plant Bradley Lake Operating Labor &Benefits 379,600 284,700 247,212 -:247,212 37,488 365,000 317,817 Travel 2,800 2,100 158 ==158 1,942 2,800 1,976 Contractual 61,849 46,387 5,810 ==5,810 40,577 31,849 7,905 Supplies &Materials 27,245 20,434 15,664 --15,664 4,769 27,245 14,961 Bradley Lake Operating Total 473,494 353,621 268,844 E -268,844 84,777 426,894 342,659 BRADLEY GOVERNOR PSSE MODEL Contractual 25,000 18,750 25,000 :z 25,000 {6,250}=: BRADLEY GOVERNOR PSSE MODEL Total 25,000 18,750 25,000 --25,000 (6,250)-- FERC 544 -Maintenance of Electric Plant Total 496,498 372,371 293,844 :-293,844 78,527 426,854 342,659 FERC S45 -Maintenance of Misc.Hydraulic Plant Maint of Mise Hydr Plant Bradley Lake Operating Labor &Benefits 95,680 71,760 60,521 -z 60521 11,239 32,000 113,365 Contractual 3,900 2,928 170 >:170 2,755 3,900 : Supplies &Materiats 71,281 $3,461 33,653 =:33,653 19,808 41,281 21,231 Bradley Lake Operating Total 170,861 128,146 94,344 --94,344 33,802 137,181 134,596 BRADLEY FISH WATER OSGN/MIDDLE FORK SHACK IMPR Maintenance Projects 30,900 23,175 :-==23,175 30,900 - BRADLEY FISH WATER DSGN/MIDDLE FORK SHACK IMPR Total 30,900 23,178 :-:23,178 30,900 - FERC 545 -Maintenance of Misc.Hydraulic Plant Total 201,761 151,321 94,344 -id 94,344 $6,977 168,081 134,596 FERC 556 -System Control &Load Dispatching System Cnt!&Load Disp Bradley Lake Operating Labor&Benefits 48,000 36,000 11,966 :-11,966 24,034 48,000 8,871 Contractual $5,000 3,750 ->--3,750 35,500 16,131 Supplies &Materials 6,199 4,649 2,187 ==2,187 2,463 6,199 825 Bradley Lake Operating Total 59,199 44,399 14,153 --14,153 30,247 89,699 25,827 BRADLEY POWERHOUSE PC'S Contractual 30,500 22,875 3,201 -z 3,201 19,674 -: BRADLEY POWERHOUSE PC'S Total 30,500 22,875 3,201 --3,201 19,674 -: BRADLEY DISPATCH REGULATIONS. Maintenance Projects 20,000 15,000 x =-:15,000.-: BRADLEY DISPATCH REGULATIONS Tota!20,000 15,000.--=15,000 -- Snow Measurement Bradley Lake Operating Contractual 11,000 8,250 :=10,000 10,000 (1,750)10,130 10,000. Bradley Lake Operating Total 11,000 8,250 -=10,000 10,000 (1,750)10,130 10,000 Seismic Service Bradiey Lake Operating Contractual 60,000 45,000 -:39,764 39,764 5,236 56,500 51,678 Bradley Lake Operating Total 60,000 45,000 -:39,764 39,764 5,236 56,500 51,678 Streamguaging Serv Bradley Leke Opereting Contractual 295,000 221,250 :=222,307 222,307 (1,057)282,725 259,065 Bradley Lake Operating Totat 295,000 221,250 :-222,307 222,307 (1,057)282,725 259,065 Permits Bradley Loke Operating Other Costs 100 7s =:350 350 (275)200 250 Bradley Leake Operating Total 100 75 --350 350 {275}200 250 FERC 556 -System Contro!&Load Dispatching Total 475,799 356,849 27,354 :272,420 289,774 67,075 439,254 346,820 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2014 THROUGH 03/31/2015 FY 35 FY 14 BUDGET% FY 15 Approved 07/01/2014 -(Over)Under FY14 APPROVED Budget 03/31/2015 HEA Actual |CEA Actual |AEA Actual |Tota!Actual |Budget to Date BUDGET FY14 ACTUAL FERC 562 -Station Expenses Station Expenses Bradley Lake Operating 161,274 344,042 Labor &Benefits 300,500 225,375 :179,084 :179,084 46,291 Travel 24,000 18,000 -2,751 =1,751 16,249 Contractual 6,500 4,875 :2,145 =2,145 2,730 Supplies &Materials 157,000 117,750 :116,817 :116,817 933 Other Costs -::518 :518 (518) Maintenance Projects =-:2,400 :2,400 (2,400) Bradley Lake Operating Total 488,000 366,000 -302,715 302,715 63,285 161,274 344,042 FERC 562 -Station Expenses Total 488,000 366,000 .302,715 -302,715 63,285 161,274 344,042 FERC 571 -Maintenance of Overhead Lines Maint of OH Lines Bradley Leke Operating 'Other Costs 353,697 265,273 -=:-265,273 353,697 191,080 Bradley Lake Operating Total 353,697 265,273 ---265,273 353,697 191,080 BRADLEY JUNCTION SWITCH REMOVAL Other Costs 210,000 157,500 -=z :157,500 210,000 = BRADLEY JUNCTION SWITCH REMOVAL Total 210,000 157,500 ----157,500 210,000 - FERC 571 -Maintenance of Overhead Lines Total 563,697 422,773 --::422,773 563,697 191,080 FERC 920 -Administrative Expense AEA Bradley Fixed Admin Fees Bradley Lake Operating Administrative Costs 200,000 150,000 -:150,000 150,000 Go 200,000 200,000 Bradley Lake Operating Total 200,000 150,000 a -150,000 150,000 i 200,000.200,000 Operating Committee Exp-Audit Bradley Lake Operating Administrative Costs 116,250 87,188 -fd 15,500 15,500 71,688 15,200 14,750 Bradley Lake Opersting Total 116,250 87,188 -15,500 15,500 71,688 15,200 14,750 Operating Committee Exp-Legal Bradley Lake Operating Administrative Costs 25,000 18,750 ::15,244 15,244 3,506 25,000 68.151 Bradley Lake Operating Total 25,000 18,750 --15,244 15,244 3,506 25,000 68,151 Operat Committee Exp-Arbitrage Bradiey Lake Operating Administrative Costs 5,200 3,900 z =2,723 2,723 1,178 §,200 3,630 |Bradley Lake Operating Total 5,200 3,900 --2,723 2,723 1,178 $,200 3,630 Trust &Account Fees Bradley Lake Opersting Administrative Costs 12,300 9,225 =-8,939 8,939 286 12,300 11,918 Bradley Lake Operating Total 12,300 3,225 -.8,939 8,939 286 12,300 11,918 FERC 920 -Administrative Expense Total 358,750 269,063 :.192,405 192,405 76,658 257,700 298,449 FERC 924 &925 -Insurance Premiums Insurance Premiums Bradley Lake Operating Administrative Costs $74,637 430,978 38,903 -384,108 423,010 7,968 $72,237 $19,471 Bradley Lake Operating Total $74,637 430,978 38,903 :384,108 423,010 7,968 $72,237 $19,471 Risk Management Bradley Lake Operating Administrative Costs 35,000 26,250 :30,000 =30,000 {3.750)}:: Bradley Lake Operating Total 35,000 26,250 -30,000 -30,000 (3,750)-- FERC 924 &925 -Insurance Premiums Total 609,637 457,228 38,903 30,000 384,108 453,010 4,218 572,237 519,471 FERC 928 -Regulatory Commission Expenses FERC Admin Fees Bradley Leke Operating Administrative Costs 250,000 187,500 =::-187,500 200,000 204,998 Bradley Lake Operating Total 250,000 187,500 ----187,500 200,000 204,998 FERC Related Prof Services Bradley Lake Operating Administrative Costs 150,000 112,500 --67,404 67,404 45,096 71,000 181,272 Bradley Lake Operating Total 150,000 112,500 --&7,404 67,404 45,096 71,000 181,272 FERC 928 -Regulatory Commission Expenses Tota!400,000 300,000 --67,404 67,404 232,596 271,000 386,270 Total Sradiey Lake Budget $,630,502 8,222,877 1,473,348 356,757 1,007,823 2,837,929 1,384,948 4,828,670 4,142,940 BRADLEY LAKE R&C FUND DISBURSEMENTS AND REPAYMENTS SCHEDULE D Aewal Actual 'Actual 'Actual 'Actual 'Actual Actual ActualFY12TOREPAYFY13TOREPAYFY14TOREPAY@osis146TOREPAYDescriptionDisburseev302012Disburse6730/2013 Disburse 6730/2014 Disburse 30/2016 R&C FUND PROJECTS: IGovernor °2,770,054 68,252 2,838,200 586,120 9,424,331 624,276 4,048,600 Replace RFLS °264,003 °251,003 tC)261,003 0 251,003 Replace Runners o 1,046,733 °1,040,733 °1,046,733 0 1,040,733 Replace cable from dam to power house °2,321,023 0 2,321,023 °2,321,023 °2,321,023 Replace power system stabilizer 447,531 501,444 27.761 619,205 °610,208 °610,205 Replace two RTUs °86,005 C)86,005 °86,006 °86,005 Culvert Repairs °075,067 o 075,067 °676,067 0 675,007 Tower Repair for Jack Frost Heaves 0 887,507 °887,607 °887,507 0 887,507ReplacePlantandSCADAControls1,008,200 1,008,200 336,384 1,344,083 °1,344,083 0 1,344,683 Vibration Monitoring System °490 °400 C)490 °490 Fire Alarm System Replacement °0 0 0 °©0 ° Battle Creek Diversion 0 0 470,058 470,658 471,074 950,728 24,170 974,808 Bradtey Replace Electro-Mechanical Relays °0 490,803 400,803 777,304 1,277,107 °4,277,197 Fishwater Screen Debris Removal °°°°°0 21.020 21,920 Turbine Nozzel Repair Q Q °0 ©0 96,423 96,423 4,455,830 |10,550,404 1,401,049 |11,052,352 1,834,500 |13,786,852 708,707 |14,553,649 Current Year R&C Repayment (1,536,310)(4,328,076)|(937,737) |Adjust to balance to $5milion °©° interest in Fund Applied to Repayment 372,015 (313.407)(244,582) Net Transfer from Revenue Fund (1,000,234)(1,641.483)](1,182.319)]ce tive Prior Years R&C Repayments (8,742,194)(0,884,350)(44,346,045) Due Back to Utlites 767,078 179,788 0 Adjust Due to R&C Actual 190.450 0 0 (8.074,576)]0.704.562 (14,346,045)] NET DUE TO R&C FUND 1,708,751 1,968,543 2,440,807 2,028,285 R&C FUND CASH FLOW PROJECTION °Balance 9,872,243 4,671,504 4,627,751 3,015,717for\t year "Accrual (849,473)(672,732)(1,057,224)(766,707)oO prior year accrued (82,071)(600,357)(820.216)(276,736) Utiities'RAC Repayment 537,901 (773,808)(707.078)(170,788) Current year interest earnings 00.830 372,015 313,407 244,582 joipants C ons to REC Fund 883,075 1,596,310 1,328,076 037,737 Ending Investment Balance 4,871,504 4,627,751 3,015,717 2,074,715 Accrued Due to Utiities (773,808)(787,078)(170,788)0 Accrued R&C Payable at Year End {c06.357)(920,210)(276,735)0 less R&C excess cash at 7/1/05 PROJECTED NET DUE +ENDING INVESTMENT BALANCE 5,000,000 5,000,000 §,000,000 5,000,000 REPAYMENT AMOUNT $238,606.15 X 25%ath 60,652 $054,181.70 x 25%Ord yr 238,545 ]4th yw 238,546 $750,605.11 x 25%2nd yr 189,166 {3rd yr 180,168 |4th yr 180,166 $1 ,458,830.05 x 25%tstyr 363,058 |2nd yr 303,058 [ard wr 363,088 [ath yr 903,058 1$1.401.048.63 x .25%ist 350,487 [2nd yr 30,487 {3rd yr 350,487 1$1,834,400.02 x .25%tat yr 458,625 [2nd w 488,625 asty 101,600 851,321 1,142,156 4,362,236 1,364,760 eT Unit Statistics: Bradley Lake BPMC May 29th,2015 Operators Report Generation Unit 1 (MWhrs)Unit 2 (MWhrs)Total (MWhrs) March 2015 12,259 19,687 31,946 April 2015 13,941 22,131 36,072 Hydraulics Avg.Lake Level (ft)Usage (ac ft)Fishwater (ac ft) March 2015 1,133 32,692 3,140 April 2015 1,123 37,123 1,883 Lake Level -May 26 -1,114.7'(lake level has remained constant since May 7+) Projects page 1 Operation and Maintenance ........sssscscssccrecsesesees page | General Project INFOrMAtION...........:ssseesssesseceeseceseeees page 2 Item #5 Budget Clarification Document...............page 3-7 Projects: _T})Nozzle Refurbish -Bid Award -NAES Power Contractors was awarded the contract to refurbish the turbine nozzles.NAES offered the most cost effective manpower rate and they provided a detailed staffing arrangement that was in line with HEA projections. Budgeted amount FY2016---_Unit #1 -$450,000 labor and support contracts Unit #2 -$450,000 labor and support contracts Needle tips and parts -$130,000 Unit #1 -$350,000 labor Unit #2 -$350,000 labor NAES labor projection - Unit #2 needle tips FY2016-$75,954 to Voith Hydro Unit #1 parts were purchased with remaining nozzle project money in FY2015. 2)Bradley Junction Switch Removal -This project is still on track to be completed in June.Engineering review and final project details are in the final stages of acceptance between HEA and EPS/EPC. Operations and Maintenance: 1)Long Term Repair and Replacement Analysis -D.Hittle and Associates provided a timeline and cost proposal to update the report.The projected cost is $27,588.A site visit to review project equipment is scheduled for June 8". Bradley Lake Operator Report Page 1 2)FERC inspection is scheduled on July 16".Annual brush removal and minor maintenance at the dam began on May 25". 3)Fishwater valve #3 -Bids were received from vendors to replace fishwater valve #3.This is a 12”valve.The best option was provided by Alaska Roteq in Wasilla. The new valve will accommodate the existing limitorque actuator that was installed in 2012.Valve cost is $26,087 which is within the 2015 budget amount. 4)Transmission ROW Clearing -The BPMC requested to see O&M expenditures for the Bradley Project Transmission Lines and Soldotna Segment for the past five years.Expenditures for the Project transmission lines will be distributed at the May 29,2015 meeting of the BPMC.Expenditures for the Soldotna Segment have been sent to Purchasers of Capability on that line segment. 5)BLPP Budget Clarifiation Request -The BPMC requested information regarding BLPP project payroll clarification of exempt HEA employees.Two documents pertaining to Fair Labor Standards and Exempt Employee Compensation are attached to this report.(pages 3-7} General Information: e GVEA board of directors has requested to hold a Retreat at Bradley Lake.The details and possibile dates are pending. e Alaska Department of Fish and Game and AEA traveled to Bradley Lake onMay12"to review the Battle Creek fish habitat and project. e Emerson Control Review and ELC Module Update -Emerson personnel wereonsiteMay12"for a project review.A technician to install the ELC module upgrades in conjunction with CEA dispatch link testing is scheduled for theweekofJune15°”. e Public Access Request-Members of the public submitted a request to AEA to be able to travel through the BLPP project boundary and airport road to access private lands in Martin River and Bear Cove.HEA submitted a list of concerns and comments to AEA regarding items that should be considered item is still pending other related agency review. ¢Cook Inlet Aquaculture Association -On May 12"a preliminary review of the BLPP barrow ponds and stream flows on the Martin River was conducted by representatives from AEA,the Alaska Department of Fish and Game,and the Cook Inlet Aquaculture Association (CIAA).The purpose of the review was to determine the feasibility of using the ponds as part of a salmon stocking program.This was only a preliminary review of project feasibility. Bradley Lake Operator Report Page 2 Uvertme fugipiity:Exempt Salary Basis:!want to pay my exempt staffers more than theirs...Page 1 of 3 «SECTIONS SHRM (/Pages/default.aspx)»Templates &Samples (/TemplatesTools/Pages/default.aspx)»HR Q&As Overtime Eligibility:Exempt Salary Basis:I want to pay my exempt staffers more than their salaries for the extra work they do.How do I pay them if tracking their time jeopardizes the exempt status? 5/8/2014 Permissions As you know,exempt employees are not subject to the Fair Labor Standards Act »(/legalissues/federalresources/federalstatutesregulationsandguidanc/pages/fairlaborstandardsactofi938.aspx)(FLSA) requirement to pay overtime at time and a half of the regular rate of pay.You are not obligated to pay overtime to an exempt employee,but if you want to,you may-without jeopardizing the exempt status.vw!Aa_As long as the exempt employee is paid on a salary basis,you have met your FLSA compensation obligation.ra Compensating beyond the salary does not dilute or nullify the salary basis,as described in 29 C.Y.R.541.604 -(http://www.ecir.gov/cgi-bin/text-idx? SID=4807797110428675152cfbf3ecoedf8 7&node=29:3.1.1.1.238rgn=div5#29:3.1.1.1.23.7.95.5).Per that regulation, "Such additional compensation may be paid on any basis (e.g.,flat sum,bonus payment,straight-time hourly amount,time and one-half or any other basis},and may include paid time off.”Therefore,you may pay an exempt employee "extra pay”for extra work without violating the requirements for the salary basis test. Although this extra pay can be paid in any amount,some employers may wish to pay it hourly.To calculate an _hourly rate,divide the annual salary by the number of hours to be worked in a year.Hours worked in a year can be figured,for example,by multiplying a 40-hour workweek by the number of weeks in operation each year (for example,52)for 2,080 hours per year.Divide the annual salary-for example,$52,000-by 2,080 hours.If paying straight time,you would give the employee $25 per hour you wish to pay extra;time and a half would be $37.50 per hour. http://www.shrm.org/templatestools/hrqa/pages/iwanttopaymyexemptstaffersmorethantheirsalar...3/24/2015 eCFR -Code of Federal Regulations Page |of 1 §541.604 Minimum guarantee plus extras. (a)An employer may provide an exempt employee with additional compensation without losing the _exemption or violating the salary basis requirement,if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis.Thus,for example, an exempt employee guaranteed at least $455 each week paid on a salary basis may also receive additional compensation of a one percent commission on sales.An exempt employee also may receive a percentage of the sales or profits of the employer if the employment arrangement also includes a guarantee of at least $455 each week paid ona salary basis.Similarly,the exemption is not lost if an exempt employee who is guaranteed at least $455 each week paid on a salary basis also receives additional compensation based on hours worked for work beyond the normal workweek.Such additional compensation may be paid on any basis (e.g.,flat sum,bonus payment,straight-time hourly amount,time and one-half or any other basis),and may include paid time off. (b)An exempt employee's earnings may be computed on an hourly,a daily or a shift basis,without losing the exemption or-violating the salary basis requirement,if the employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of hours,days or shifts worked,and a reasonable relationship exists between the guaranteed amount and the amount actually earned.The reasonable relationship test will be met if the weekly guarantee is roughly equivalent to the employee's usual earnings at the assigned hourly,daily or shift rate for the employee's normal scheduled workweek.Thus,for example,an exempt employee guaranteed compensation of at least $500 for any week in which the employee performs any work,and who normally works four or five shifts each week,may be paid $150 per shift without violating the salary basis requirement.The reasonable relationship requirement applies only if the employee's pay is computed on an hourly,daily or shift basis.It does not apply,for example,to an exempt store manager paid a guaranteed salary of $650 per week who also receives a commission of one-half percent of ail sales in the store or five percent of the store's profits,which in some weeks may total as much as,or even more than,the guaranteed salary. http://www.ecfr.gov/cgi-bin/text-idx ?SID=4807797 1 104a8675 1 52cfbf3ecOed{87&node=2...3/24/2015 Can We Pay an Exempt Employee Extra for Working More Than 40 Hours ina Week?|...Page 1 of 2 National Federation of Independent Business thuyp:/iwew.nflo.com) Can We Pay an Exempt Employee Extra for Working More Than 40 Hours in a Week? Author:SHRM Date:August 03.2011 -_-Trig +Locate.fy.SHEA uth rc. e bur com ad,pe Mepis on te dateManageYourEmpioyees Fiud more NFJ3 resources to help you better manage your employees: «+NFUB Emplover Hotline «Human Resources FAQs +Interview Questions +Sample Forns for Hiring The nature of the duties of positions classified as exempt under the Fair Labor Standards Act (FLSA)often requires employees in those positions to workmorethantheregular40hoursinaweek.It's not unusual for an exempt employee to work extra hours during a weekas part of a special project,to meet animportantdeadlineorduetoanunexpectedchangeinoperationalneeds.The FLSA doesn't require employers to provide extra compensation orcompensatorytimetotheexemptemployeeforextrahours,and up until the changes to the FLSA regulations in 2004,it was in the employer's best interestnottoprovideanytypeofextracompensationforfearthatitwouldjeopardizetheexemptstatus. The 2004 change gave employers more room to provide exempt employees extra compensation for extra time worked.The relevant regulation states that"additional compensation may be paid on any basis (e.g.,flat sum,bonus payment,straight-time bourly amount,time and one-half or any other basis),andmayincludepaidtimeoff.”However,employers should remain cautious because a worker's exempt status might be harder to prove if the employee is paidtime-and-a-half like a ponexempt employee.It may be safer to pay exempt employees extra compensation for extra hours worked in the form of a flat sum or straight time. Employers also may provide extra compensation in the form of time off,or compensatory time.Employers are free to structure compensatory time policiesastheywish.For example,an employer may choose to provide compensatory time to an exempt employee for time worked more than 4o hours if that betterfitsthecompany's operating needs. It's important to remember that exempt employees are not required to receive extra compensation or time off for extra hours worked,but the FLSA allows employers to provide extra pay or time off and still be compliant with the exempt status. Learn more through the webinar,Busting the Myths of the FLSA Please Note:This material is provided as general information and is not a substitute for legal or other professional advice. Article provided by SHRM ¢hepi/junew.skrm.org) Extra Compensation for Exempt Employees Q&A Page 1 of 2 THIS WEEK'S E-TIP:Extra Compensation for Exempt Employees Q8A Q:Cari we pay our exempt employees additional torcompensation,example,when they.work mone time than usualorcompleteaspecial Projet? A:As @ general ruje,you are not required to pay exemptemployeesextraforadditionalworksincetheseemployeesare"exemptframtheovertimerequirementsoftheFairLaborStandardsAct(FLSA).The Actexemptsfromits overtime provisions ceriain executive,administrative,professional,outsie sales,computer-related,and highty-com:'ed employees who are "paid on a salary basis,”often referred toasthe"white-collar”exemplions. The FLSA reguiationsdefinesalary basis,in 29 C.F.R§541.602,as thepaymentonaweekly or less frequent basis of &predetermined amountconstitutingailorpartof compensation,without reductions forrantationsvi in the quality or quantity of the work performed.Thus,youarenotfequiredtopayexemptemployeesanymorethantheiregreeduponsalary,even when they perform extra work. However,many employers feel there is a legitimate need toprovkieextraPaytomaintaingoodemployeerelations.For example,anexemptemployeemaytakeonacdRionaljobdutiestofillintemporarilyforacowarkeronleaveormayworklongerhoursthenusualtocompiateaspecialproject.In these cases,additional pay shows that youvaluetheextraworkandthatyourecognizethettheemployeeis,ineffect,going"above and beyond”the usual job requirements. If you would #ke to provide exempt employees with additionalcompensationabovetheirstatedsalaries,the new exemptionragulationsspeciicatiyalowyoutodo$0.The reguiations,which tookeffectonAugust23,2004,clarify when you may pay an exemptemployeeadditionalcompensationwithoutjeopardizingtheexemptionofviolatingthesalarybasisrequirementin29C.F.R.§544.604. Specifically,¥the exempt employee is guaranteed@minimumweeklypaymentof$455,he also may be paid a commission ontalesor@percentagsofprofitsorsales,or even additionalcompensationbasedonhoursworkedbeyondthenomialworkweek.This edditianalcompensationcanbepaidonanybasis,includingflateum,bonus payment,straighttimehourlyamount,time and one-half,oranyatherbesis,including paid time-off, Note that this ref to extra payments calculatedonanhourtybasisisanewadditiontotheregulations.The oid regulations alsoetowedforextracompensationintheformofcommissionsandbonusas,but did notdhwhether employers could pay exempt employeesextraemourtsbasedonhoursworked,The Department of Labor (DOL),innonbinding opinion ietters,traditionally has allowed employers to pay additional compensation calculatedonhours worked without affectingtheexemptstatus.Ht now appeers the agency has formatized its positioninthenewregulations, One final point -if you find that you ere paying an exemptemployesextracompensationon@regudarbesis,you may need toreevaluatethatemployee's pay.This pattern may mean that the emptoyee'sjobdutieshavebeenincreasedforthetongterm,not just to completeone-time http://www.ppspublishers.com/ez/html/120705txtb.html ,3/24/2015 Overtime Eligibility:Exempt Salary Basis:I want to pay my exempt staffers more than theirs...Page 2 of 3 It is acceptable to track the time of exempt employees for the purposes of performance,discipline and other organizational matters such as billing and extra pay.However,some employers feel the more they track an exempt employee's hours,the greater the risk of improper pay deductions and the scrutiny of a Department of Labor (http://www.dol.gov/)(DOL)auditor on the classification in general.For that reason,employers that want to reward the extra efforts of their exempt employees often allow time off or special consideration at bonus time instead of extra wages.Nevertheless,it is permissible to count the hours that san exempt.employee-works tocompensatethatemployeeoverandabovethesalarybasis.; SHRM HR Knowledge Center As a professional member of SHRM,you have free,exclusive access to the HR Knowledge Center.Our advisors have many years of HR experience and a wide variety of resources to assist you with your HR questions.You may reach the Knowledge Center at (800)283-7476,option #5,or by using the HR Knowledge Center Request Form (/TemplatesTools/AskAnHRExpert/Pages/default.aspx). Express Requests The HR Knowledge Center has gathered resources on current topics in HR management.Click here»(http://sapphire.shrm.org/HRResources/ExpressRequests.aspx?type=6)to view and request information. This matertal is for informational purposes only and notfor the purpose ofproviding legal advice.You should always contact your attorney to determine if this information,and your interpretation of it,is appropriate to your particular situation. 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