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2020-04-15 AEA Agenda and docs
813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA Alaska Energy Authority Board Meeting Wednesday, April 15, 2020 Immediately following the 8:30 a.m. AIDEA Board Meeting AGENDA To participate via teleconference dial 1-888-585-9008 and when prompted, enter code 464-135-244# 1. CALL TO ORDER 2. ROLL CALL BOARD MEMBERS 3. ROLL CALL STAFF, PUBLIC 4. AGENDA APPROVAL 5. PUBLIC COMMENTS (3 minutes per person) see call in number above 6. PRIOR MINUTES – March 4, 2020 7. EXECUTIVE SESSION – Discuss confidential matters related to the Hiilangaay Project and Power Project Fund Outlook 8. NEW BUSINESS A. Haida Energy (Alaska Power & Telephone) Request for Loan Forbearance B. AEA Infrastructure Needs Outline 9. OLD BUSINESS – Battle Creek Construction Update 10. DIRECTOR COMMENTS A. Bradley Lake Administrative Budget Update B. Bradley Lake White Paper - Excess Payments C. 5.5 Mile Resolve Update D. Legislative Update E. Railbelt Reliability Council F. S/Q Line Purchase Update G. Snettisham Update H. Community Outreach Schedule I. Dashboard & Loan Report J. Denali Commission Update K. Articles of Interest L. Next Regularly Scheduled AEA Board Meeting Wed. May 20, 2020 11. BOARD COMMENTS 12. ADJOURNMENT ALASKA POWER & TELEPHONE COMPANY 193 OTTO STREET | PO BOX 3222 PORT TOWNSEND, WA 98368 PHONE: (800) 982-0136 | FAX: (360) 385-5177 WWW.APTALASKA.COM | EMAIL: INFO@APTALASKA.COM April 7th, 2020 To: Alaska Energy Authority Board of Directors Regarding: Request to AEA for Forbearance Due to adverse project impacts and delays associated with the COVID-19 pandemic, Haida Energy (HE – the borrower) and Alaska Power & Telephone (AP&T – parent company of Alaska Power Company - the loan guarantor) request that the Alaska Energy Authority exercise the flexibilities under AS 42.45.010(e) to authorize one-year forbearance to principal payments due under the Híilangaay Hydropower Power Project Fund (PPF) Loan, with the following stipulations: 1. If the project enters commercial operation and is generating revenue prior to the end of the forbearance period, repayment shall begin upon commencement of commercial operations.1 2. That the total length of the term of the loan not be changed, but rather, that principal (and eventual interest) payments be re-amortized within the existing term. Existing Alaska Statues Incorporate Flexibilities for Power Project Fund Borrowers AS 42.45.010 (e) discusses the manner in which the Authority may secure and require repayment of a Power Project Loan. Section (e) states: (e) Repayment of the loans shall be secured in any manner that the authority determines is feasible to assure prompt repayment under a loan agreement entered into with the borrower. The authority may make an unsecured loan from the power project fund to a borrower regulated by the Regulatory Commission of Alaska under AS 42.05 if the borrower has a substantial history of repaying long-term loans and the capacity to repay the loan. Under a loan agreement, repayment may be deferred for 10 years or until the project for which the loan is made has achieved earnings from its operations sufficient to pay the loan, whichever is earlier. [Emphasis added.] In this case, Haida Energy is the PPF borrower. Because Haida Energy is a new business lacking “a substantial history of repaying long-term loans,” Alaska Power & Telephone’s subsidiary Alaska Power Company guaranteed repayment of the principal due under the loan in the event that Haida Energy is unable to repay the principal. (See Section 7 (a) of the Loan Agreement). Because the original Loan Agreement was executed on March 17, 2016, the Alaska Energy Authority has the legal ability to defer repayment until the earlier of March 16th, 2026, or 1 Unfortunately, HE believes the most realistic scenario is that completion will be delayed by one year due to the timing of the delay relative to the construction season. 2 when the project achieves earnings from operations sufficient to repay the loan. Allowing for a one-year extension with the stipulations suggested above is consistent with statutory guidance, as well as overall guidance throughout AS 42.45.010 Power Project Fund and 3 AAC 106.110. Review by authority stating that the AEA utilize the flexibilities of the PPF to support project financial feasibility. COVID-19 - Related Project Delays and Associated Force Majeure Governor Dunleavy declared a Public Health Disaster Emergency on March 11, 2020. On March 23, 2020 the State issued Health Mandate 10.1, which requires all people arriving in Alaska - whether resident, worker, or visitor - to self-quarantine for 14 days and work from home unless the worker supports critical infrastructure. On March 27, 2020 the State issued Health Mandate 012 which restricts in-state travel between communities unless the worker supports critical infrastructure. The Híilangaay Project does not qualify under any of the “Critical Workforce Infrastructure” exceptions. The State also issued Health Mandate 9.1 which requires that “[a]ll businesses, congregations, or gatherings in the State of Alaska, where individuals are within six feet from each other, must stop all operations.” Due to its inability to safely undertake construction during these conditions, on March 25th, AP&T provided Haida Energy notification of a force majeure under the Híilangaay hydropower project Construction Agreement, consistent with Section 1.18 of the agreement (which specifically includes “epidemic”) and the Force Majeure Provision added to the agreement through the March 2019 AP&T/Haida Corporation Settlement Agreement relating to the project. Haida Energy’s President responded with a letter of acknowledgement. The parties recognize Section 1.37 of the Construction Agreement specifies that AP&T must perform construction in accordance with “applicable Laws and Government Approvals,” and that the Governor’s Health Mandates are consistent with the definition of “Law” found in Section 1.23 of the Construction Agreement The reasons for AP&T’s inability to safely undertake construction activities are many, including: - The nature of the camp, which uses shared bunk-type housing and spaces, is such that it cannot support social distancing practices, or compliance with the Governor’s Health Mandates. - AP&T is concerned about the safety and well-being of AP&T personnel. Many personnel fall within, or have close family members within, demographics with a higher likelihood of complications. This includes some key personnel who might be difficult or impossible to replace in a timely and cost-effective manner were they to become ill. - Travel restrictions and quarantine / isolation requirements create complications due to the fact that many Híilangaay personnel required and under contract for 2020 season work are from outside the state. - AP&T would have difficulty acquiring key food and household items needed to fully provision the camp for a full-sized workforce. Cleaning and sanitary products are particularly difficult to acquire, and would be necessary to maintain camp facilities. 3 - Supply chain disruptions, delays, and challenges would complicate performance of the work. Many key suppliers are closed in accordance with mandatory business closure requirements. - Numerous key construction personnel – direct employees as well as subcontractors - have expressed reluctance to live and work in a remote camp environment during a time of crisis. Some have families and children to care for, and others may fall within high-risk categories. - There is limited medical facility capacity in the area. The nearest large medical facility – Ketchikan’s hospital - has been working to increase its capacity and access to resources. However, facilities and equipment remain limited. The Cost of Accepting Risks and Proceeding is Likely Higher than the Cost of a Cautious Delay AP&T evaluated the cost of attempting to proceed with the project while accepting known risks and implementing “workarounds,” and found that it is likely equal to or greater than the cost of delaying the project by the year, while also being significantly less safe. Also, the additional time required to proceed with the project while attempting to overcome COVID- 19 risks and challenges is likely to delay on-site activities to the point where construction would still need to occur in 2021. AP&T’s modelling only takes into account “known unknowns” – the probability of “unknown unknowns” is far higher were AP&T to attempt proceed amidst the pandemic. The extent to which the pandemic will impact Alaska, and southeast Alaska, remains unknown. AP&T has delayed numerous other of its capital projects for this very same reason – the cost of attempting to proceed is more than the cost of delay. If the Project Loses 6 Months, it has Effectively Lost 1 Year AEA staff requested Haida Energy and AP&T consider and comment on the option of requesting a six-month forbearance. Unfortunately, if this project loses the next six months of the construction season, it will have effectively lost a full year. Remaining activities include mountainside cast-in-place concrete work at high elevations, which can experience significant snowfall beginning in October. This work was scheduled to begin in mid/late March. If this work is delayed, it will likely need to pause in late autumn / early winter of 2020, until it can be rebegun during 2021. This would require abandoning partially completed work, carrying the cost of the camp over an additional winter period, and undertaking an additional round of partial demobilization/remobilization of workers, materials, and equipment. AP&T and HE believe it is more administratively efficient to request a one-year extension with a stipulation that repayment begin earlier if the project can be completed sooner, rather than request a six month extension knowing it is almost certain that it will need to return to the AEA/AIDEA board once more to seek a subsequent extension. AP&T is Committed to Timely Completion of the Project On January 16th, 2020, AP&T announced to its shareholders that it anticipates cost overruns of $10.5m to $11.5m on the Híilangaay project, which – due to the Guaranteed Not to Exceed 4 provisions of the Construction Agreement – must be paid by AP&T, and which are not recoverable through HE’s customer charges. This loss will be realized in AP&T’s 2019 financial statements. AP&T estimates that a one-year delay could add $1.1m in additional costs to the project. Due to the strong potential for these losses – which is more probable than not - no one is more committed than AP&T to efficient completion of the project. Yet, the health, safety, and well-being of employees and subcontractors is of the utmost significance. If there is a way that AP&T can safely undertake work so that the project can be completed sooner, it will absolutely exercise that option. For the time being, AP&T is challenged to develop a plan to safely undertake the work. Meanwhile, AP&T is also working to safely adapt its electric, telephone, and telecommunications operations to the new COVID-19 operating environment. The Loan would be Re-amortized and Repaid in Full Within the Original Term of the Loan This request does not propose extending the loan term but rather, proposes that principal (and eventual interest) payments be re-amortized within the existing term. So AEA would get a complete return of the loan with interest within the existing term. The only thing that would change is the start date of the repayment. Loan Forbearance Supports AP&T as it Supports its Customers During a Time of Crisis AP&T is extending extraordinary levels of support to its power and telephone customers during this time of unprecedented crisis. Added support comes at additional expense to the company, and decreases the strength of its cash position. Meanwhile, AP&T’s overall revenue is forecast to decrease significantly, and it is incurring additional operating expense as it significantly adapts its operations. As previously mentioned, AP&T is also shouldering $10.5m to $11.5m in cost-overruns associated with the project, under the Guaranteed Maximum Price specified by the Construction Agreement. By delaying repayment of the PPF loan principal – which will still be repaid - the AEA is helping to support AP&T as it extends support to its workforce, its customers, and the communities it serves – all in accordance with the Governor’s Health Mandates. Support AP&T is offering includes the following: o Temporarily suspending service disconnection for any household experiencing a financial hardship related to COVID-19 o Waiving late fees and finance charges on all customer accounts o Waiving all data overage fees on broadband accounts o Converting its wifi hotspot platform to provide free service across its network o Performing telecommunications installations and upgrades for teachers for free o Installing internet for students without service for free o Incurring extra internet transport, tech, and engineering costs to provide these enhanced services and keeping the networking running as well as it possibly can in a time of increased demand. 5 o Maintaining its existing workforce, and helping them adapt to new working requirements and conditions (closed offices, working/dispatching from home, new transportation requirements, new operational policies) o Ensuring compliance with the Families First Law provisions applicable to its workforce (COVID-19-related leave) o Maintaining an Employee Assistance Program (EAP) which helps provide emotional support, health/wellbeing, and financial resources to employees o Providing an Employee Hardship program o AP&T is maintaining its newly established Charitable Contribution program – a discretionary program it uses to give back to the communities it serves. AP&T anticipates making grants to help support community organizations which may face hardship due to COVID-19 AP&T will provide this level of support to its customers and employees regardless of the AEA’s decision on the issue of the loan. It would be out of character for AP&T to do any less. We appreciate the AEA/AIDEA board taking the time to consider this request, which is necessary under the conditions we face. While COVID-19 will cause significant losses of many types, Alaskans’ acts of humanity, cooperation, and compassion will prevail, and will ultimately be what is most remembered. Thank you for your consideration, and for everything you do for the people and businesses of Alaska. Sincerely, on behalf of AP&T and Haida Energy, Michael Garrett, CPA President/CEO, Alaska Power & Telephone Company Vice-President, Haida Energy 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA MEMORANDUM To: AEA Board of Directors From: Curtis W. Thayer Executive Director Date: April 15, 2020 Subject: Amendment to the Haida Energy, Inc. (HEI) Power Project Fund (PPF) Loan Resolution No. G20-02 Amendment Request HEI has requested a one-year delay in repayment of their $20 million PPF loan due to the COVID-19 pandemic and the resulting State of Alaska health mandates. HEI’s first quarterly payment was scheduled for April 1, 2020. HEI proposes that AEA defer all payments without interest accrual until April 1, 2021 and reamortize the amount of the deferred payments over the remainder of the original loan term. The borrower also stipulated that they would resume repayment if the Project enters commercial operation and is generating revenue prior to the end of the forbearance period. Rationale HEI believes that current health conditions and Governor Dunleavy’s health mandates restricting travel prevent them from mobilizing staff to resume construction at the remote Hiilangaay Hydro Project (Project) site on Prince of Wales Island. HEI asserts that their operations are not exempt from the State health mandates as “essential services and critical infrastructure.” Further, the borrower has researched alternative delivery methods which would incorporate mandated quarantines and social distancing and concluded that they will be unable to provide safe working conditions for the foreseeable future. Current Loan Terms Loan Closed: March 17, 2016 Original Loan Amount: $20,000,000 Current Loan Balance: $20,000,000 Principal-only Repayment Term: 6 years Principal and Interest Repayment Term: 40 years Total Loan Term: 50 years Maturity Date: January 1, 2066 Current Quarterly Payment: $108,695.65 Page 2 of 3 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG Future Interest Rate: 3.78% Collateral: The property and all Project assets $500,000 of cash or equivalents in loan reserve account Borrower’s interest in all leases and commercial agreements All other revenues of the Borrower Project Background Haida Energy, Inc. was incorporated on September 21, 2009 with the purpose of developing, constructing, maintaining, owning, and operating a hydroelectric generation facility on Reynolds Creek of Prince of Wales Island, Alaska. The Project would eventually come to be known as the Hiilangaay Hydro Project. HEI is fifty percent owned by the local ANCSA tribal corporation, Haida Corporation (HC), and fifty percent owned by the local investor-owned utility, Alaska Power & Telephone (AP&T). After the Alaska Legislature sanctioned the loan with appropriations to AEA totaling the final loan amount, the AEA board extended a $20 million PPF loan to HEI on June 26, 2014 through Resolution No. 2014-04. Final loan documents were executed March 17, 2016. The project was also supported by three different AEA grants which totaled to $6 million. AP&T entered into a construction agreement with HEI in August of the same year and construction on the Project commenced thereafter. By 2018, disputes had arisen between the two parties to the agreement and construction was eventually halted. In December of 2017, the borrower requested amendments which, among other things, extended the Fixed Line of Credit Note maturity date to accommodate disruptions to the Project schedule. After receiving the Settlement Agreement and Release, which resolved the disputes between HC and AP&T, the First Amendment to the loan documents was executed in April of 2019. Construction resumed and was anticipated to be complete in the first quarter of 2020. However, in November of 2019 the borrowers informed the Authority that inclement weather had forced them to stop construction for the winter and that the project would be delayed for approximately one year. In January of 2020, HEI received the last of the available loan funds and executed the Term Promissory Note. Despite the delay in Project completion and revenues, HEI communicated to AEA that they intended to begin repayment in April as scheduled. On March 25, 2020, AEA received a copy of the Notice of Force Majeure that AP&T provided to HEI in accordance with the parties’ Construction Agreement. HEI replied with a letter on March 27 in which they acknowledged the Force Majeure event and recommended requesting a one-year delay in all payment to the PPF loan. AEA staff discussed the event, request, and statutory limits of the Authority with both parties. Subsequently, the borrowers sent the attached Request to AEA for Forbearance dated April 7, 2020. Recommendation Page 3 of 3 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG The staff recommends approval of this loan amendment with the following terms: Delay loan repayment start until October 1, 2020 without interest accrual o Plan to review conditions at September board meeting and extend the delay if warranted Reamortize April and July payment amounts to be repaid throughout the remainder of the term Reduce principal-only repayment term from 24 quarters to 22 quarters Maintain principal and interest payment period of 160 quarters with maturity date of January 1, 2066 Attachments: Request for AEA Forbearance Staff Recommended Amendment Amortization Schedule AEA Resolution No. 2020-02 AEA Resolution No. 2020-02 Loan Amendment and Change to Terms for Repayment Page 1 of 3 ALASKA ENERGY AUTHORITY RESOLUTION NO. 2020-02 RESOLUTION OF THE BOARD OF DIRECTORS OF THE ALASKA ENERGY AUTHORITY APPROVING AN AMENDMENT TO LOAN AGREEMENT TO HAIDA ENERGY INC. CHANGING THE TERMS FOR REPAYMENT IN SUPPORT OF HIILANGAAY HYDROELECTRIC PROJECT WHEREAS, The Alaska Energy Authority (“Authority”) and Haida Energy, Inc. (“Haida Energy”) entered into loan agreement no. 4090115 as of March 17, 2016 in furtherance of the Hiilangaay Hydroelectric Project (“Project”); and WHEREAS, the Authority is authorized by AS 42.45.010 to loan funds from the power project fund to eligible borrowers for constructing, equipping, modifying, improving, and expanding small-scale power production facilities; and WHEREAS, the Alaska Legislature approved the loan as required by as AS 42.45.010(j) because the Project will require more than $5,000,000 of financial support from the loan and state grants; and WHEREAS, the Board of Directors of the Authority previously approved the loan on June 26, 2014 in Board Resolution 2014-04; and WHEREAS, the public health emergency caused by the Covid-19 pandemic has led to notice of force majeure and a declaration of inability to presently continue with the construction of the Project; and WHEREAS, the staff of the Authority have diligently worked with Haida Energy on amendments to the loan agreement and on a repayment schedule for the promissory note and AEA Resolution No. 2020-02 Loan Amendment and Change to Terms for Repayment Page 2 of 3 loan documents that are intended to provide for a forbearance and a continuation of the Project thereafter; and WHEREAS, the staff of the Authority is recommending that the loan be modified and the payment schedule be revised as is explained in a staff memorandum provided to the Board; and WHEREAS, amending the Loan Agreement will promote, develop and advance the general prosperity and economic welfare on Prince of Wales Island, which are in furtherance of the Authority’s statutory mission. NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE AUTHORITY AS FOLLOWS: Section 1. The amendments to the loan documents, as described in the staff memorandum provided to the Board, are approved. The amendments to the Loan Agreement and the related agreements shall be on the same terms and conditions as are stated in the staff memorandum presented to the Board, or with non-material modifications to those terms and conditions that the Executive Director determines to be appropriate. Section 2. The Executive Director is authorized to prepare and execute the amended loan documents as necessary to implement the changes stated in the staff memorandum. Section 3. The Executive Director is authorized and directed to sign all other documents and instruments, and to take such other actions, as may be necessary or convenient in implementing this resolution. Dated at Anchorage, Alaska on this 15th day of April, 2020. AEA Resolution No. 2020-02 Loan Amendment and Change to Terms for Repayment Page 3 of 3 ATTEST [SEAL] Chair Secretary 04/01/2020 10:48:02 AM Page 1 PPF 40901115-A Haida Energy Payments - Prin Beg 10/1/2020 until 4/1/2026 Then P+Int Rate Period ................................. :Exact Days Nominal Annual Rate ................................. :0.000 % CASH FLOW DATA Event Date Amount Number Period End Date 1 Loan 01/31/2020 20,000,000.00 1 2 Payment 10/01/2020 109,890.11 22 Quarterly 01/01/2026 Principal First Allocation 3 Rate Change 01/01/2026 Rate: 3.780 % Rate Period: Exact Days 4 Payment 04/01/2026 109,890.11 160 Quarterly 01/01/2066 Fixed Principal (+Int.) AMORTIZATION SCHEDULE - U.S. Rule (no compounding) Date Payment Interest Principal Balance Loan 01/31/2020 20,000,000.00 1 10/01/2020 109,890.11 0.00 109,890.11 19,890,109.89 2020 Totals 109,890.11 0.00 109,890.11 2 01/01/2021 109,890.11 0.00 109,890.11 19,780,219.78 3 04/01/2021 109,890.11 0.00 109,890.11 19,670,329.67 4 07/01/2021 109,890.11 0.00 109,890.11 19,560,439.56 5 10/01/2021 109,890.11 0.00 109,890.11 19,450,549.45 2021 Totals 439,560.44 0.00 439,560.44 6 01/01/2022 109,890.11 0.00 109,890.11 19,340,659.34 7 04/01/2022 109,890.11 0.00 109,890.11 19,230,769.23 8 07/01/2022 109,890.11 0.00 109,890.11 19,120,879.12 9 10/01/2022 109,890.11 0.00 109,890.11 19,010,989.01 2022 Totals 439,560.44 0.00 439,560.44 10 01/01/2023 109,890.11 0.00 109,890.11 18,901,098.90 11 04/01/2023 109,890.11 0.00 109,890.11 18,791,208.79 12 07/01/2023 109,890.11 0.00 109,890.11 18,681,318.68 13 10/01/2023 109,890.11 0.00 109,890.11 18,571,428.57 2023 Totals 439,560.44 0.00 439,560.44 14 01/01/2024 109,890.11 0.00 109,890.11 18,461,538.46 15 04/01/2024 109,890.11 0.00 109,890.11 18,351,648.35 16 07/01/2024 109,890.11 0.00 109,890.11 18,241,758.24 17 10/01/2024 109,890.11 0.00 109,890.11 18,131,868.13 2024 Totals 439,560.44 0.00 439,560.44 18 01/01/2025 109,890.11 0.00 109,890.11 18,021,978.02 19 04/01/2025 109,890.11 0.00 109,890.11 17,912,087.91 20 07/01/2025 109,890.11 0.00 109,890.11 17,802,197.80 21 10/01/2025 109,890.11 0.00 109,890.11 17,692,307.69 04/01/2020 10:48:02 AM Page 2 PPF 40901115-A Haida Energy Payments - Prin Beg 10/1/2020 until 4/1/2026 Then P+Int Date Payment Interest Principal Balance 2025 Totals 439,560.44 0.00 439,560.44 22 01/01/2026 109,890.11 0.00 109,890.11 17,582,417.58 Rate 01/01/2026 0.00 0.00 17,582,417.58 01/01/2026 Rate: 3.780 % Rate Period: Exact Days 23 04/01/2026 273,767.88 163,877.77 109,890.11 17,472,527.47 24 07/01/2026 274,553.12 164,663.01 109,890.11 17,362,637.36 25 10/01/2026 275,315.61 165,425.50 109,890.11 17,252,747.25 2026 Totals 933,526.72 493,966.28 439,560.44 26 01/01/2027 274,268.61 164,378.50 109,890.11 17,142,857.14 27 04/01/2027 269,670.93 159,780.82 109,890.11 17,032,967.03 28 07/01/2027 270,410.66 160,520.55 109,890.11 16,923,076.92 29 10/01/2027 271,127.62 161,237.51 109,890.11 16,813,186.81 2027 Totals 1,085,477.82 645,917.38 439,560.44 30 01/01/2028 270,080.63 160,190.52 109,890.11 16,703,296.70 31 04/01/2028 267,303.81 157,413.70 109,890.11 16,593,406.59 32 07/01/2028 266,268.19 156,378.08 109,890.11 16,483,516.48 33 10/01/2028 266,939.64 157,049.53 109,890.11 16,373,626.37 2028 Totals 1,070,592.27 631,031.83 439,560.44 34 01/01/2029 265,892.64 156,002.53 109,890.11 16,263,736.26 35 04/01/2029 261,477.04 151,586.93 109,890.11 16,153,846.15 36 07/01/2029 262,125.73 152,235.62 109,890.11 16,043,956.04 37 10/01/2029 262,751.65 152,861.54 109,890.11 15,934,065.93 2029 Totals 1,052,247.06 612,686.62 439,560.44 38 01/01/2030 261,704.65 151,814.54 109,890.11 15,824,175.82 39 04/01/2030 257,380.10 147,489.99 109,890.11 15,714,285.71 40 07/01/2030 257,983.26 148,093.15 109,890.11 15,604,395.60 41 10/01/2030 258,563.66 148,673.55 109,890.11 15,494,505.49 2030 Totals 1,035,631.67 596,071.23 439,560.44 42 01/01/2031 257,516.66 147,626.55 109,890.11 15,384,615.38 43 04/01/2031 253,283.16 143,393.05 109,890.11 15,274,725.27 44 07/01/2031 253,840.79 143,950.68 109,890.11 15,164,835.16 45 10/01/2031 254,375.67 144,485.56 109,890.11 15,054,945.05 2031 Totals 1,019,016.28 579,455.84 439,560.44 46 01/01/2032 253,328.68 143,438.57 109,890.11 14,945,054.94 47 04/01/2032 250,733.95 140,843.84 109,890.11 14,835,164.83 48 07/01/2032 249,698.33 139,808.22 109,890.11 14,725,274.72 49 10/01/2032 250,187.69 140,297.58 109,890.11 14,615,384.61 2032 Totals 1,003,948.65 564,388.21 439,560.44 50 01/01/2033 249,140.69 139,250.58 109,890.11 14,505,494.50 51 04/01/2033 245,089.27 135,199.16 109,890.11 14,395,604.39 52 07/01/2033 245,555.86 135,665.75 109,890.11 14,285,714.28 04/01/2020 10:48:02 AM Page 3 PPF 40901115-A Haida Energy Payments - Prin Beg 10/1/2020 until 4/1/2026 Then P+Int Date Payment Interest Principal Balance 53 10/01/2033 245,999.70 136,109.59 109,890.11 14,175,824.17 2033 Totals 985,785.52 546,225.08 439,560.44 54 01/01/2034 244,952.70 135,062.59 109,890.11 14,065,934.06 55 04/01/2034 240,992.32 131,102.21 109,890.11 13,956,043.95 56 07/01/2034 241,413.40 131,523.29 109,890.11 13,846,153.84 57 10/01/2034 241,811.71 131,921.60 109,890.11 13,736,263.73 2034 Totals 969,170.13 529,609.69 439,560.44 58 01/01/2035 240,764.71 130,874.60 109,890.11 13,626,373.62 59 04/01/2035 236,895.38 127,005.27 109,890.11 13,516,483.51 60 07/01/2035 237,270.93 127,380.82 109,890.11 13,406,593.40 61 10/01/2035 237,623.72 127,733.61 109,890.11 13,296,703.29 2035 Totals 952,554.74 512,994.30 439,560.44 62 01/01/2036 236,576.73 126,686.62 109,890.11 13,186,813.18 63 04/01/2036 234,164.08 124,273.97 109,890.11 13,076,923.07 64 07/01/2036 233,128.47 123,238.36 109,890.11 12,967,032.96 65 10/01/2036 233,435.74 123,545.63 109,890.11 12,857,142.85 2036 Totals 937,305.02 497,744.58 439,560.44 66 01/01/2037 232,388.74 122,498.63 109,890.11 12,747,252.74 67 04/01/2037 228,701.49 118,811.38 109,890.11 12,637,362.63 68 07/01/2037 228,986.00 119,095.89 109,890.11 12,527,472.52 69 10/01/2037 229,247.75 119,357.64 109,890.11 12,417,582.41 2037 Totals 919,323.98 479,763.54 439,560.44 70 01/01/2038 228,200.75 118,310.64 109,890.11 12,307,692.30 71 04/01/2038 224,604.55 114,714.44 109,890.11 12,197,802.19 72 07/01/2038 224,843.53 114,953.42 109,890.11 12,087,912.08 73 10/01/2038 225,059.76 115,169.65 109,890.11 11,978,021.97 2038 Totals 902,708.59 463,148.15 439,560.44 74 01/01/2039 224,012.77 114,122.66 109,890.11 11,868,131.86 75 04/01/2039 220,507.60 110,617.49 109,890.11 11,758,241.75 76 07/01/2039 220,701.07 110,810.96 109,890.11 11,648,351.64 77 10/01/2039 220,871.77 110,981.66 109,890.11 11,538,461.53 2039 Totals 886,093.21 446,532.77 439,560.44 78 01/01/2040 219,824.78 109,934.67 109,890.11 11,428,571.42 79 04/01/2040 217,594.22 107,704.11 109,890.11 11,318,681.31 80 07/01/2040 216,558.60 106,668.49 109,890.11 11,208,791.20 81 10/01/2040 216,683.79 106,793.68 109,890.11 11,098,901.09 2040 Totals 870,661.39 431,100.95 439,560.44 82 01/01/2041 215,636.79 105,746.68 109,890.11 10,989,010.98 83 04/01/2041 212,313.71 102,423.60 109,890.11 10,879,120.87 84 07/01/2041 212,416.14 102,526.03 109,890.11 10,769,230.76 85 10/01/2041 212,495.80 102,605.69 109,890.11 10,659,340.65 04/01/2020 10:48:02 AM Page 4 PPF 40901115-A Haida Energy Payments - Prin Beg 10/1/2020 until 4/1/2026 Then P+Int Date Payment Interest Principal Balance 2041 Totals 852,862.44 413,302.00 439,560.44 86 01/01/2042 211,448.80 101,558.69 109,890.11 10,549,450.54 87 04/01/2042 208,216.77 98,326.66 109,890.11 10,439,560.43 88 07/01/2042 208,273.67 98,383.56 109,890.11 10,329,670.32 89 10/01/2042 208,307.81 98,417.70 109,890.11 10,219,780.21 2042 Totals 836,247.05 396,686.61 439,560.44 90 01/01/2043 207,260.82 97,370.71 109,890.11 10,109,890.10 91 04/01/2043 204,119.83 94,229.72 109,890.11 9,999,999.99 92 07/01/2043 204,131.21 94,241.10 109,890.11 9,890,109.88 93 10/01/2043 204,119.83 94,229.72 109,890.11 9,780,219.77 2043 Totals 819,631.69 380,071.25 439,560.44 94 01/01/2044 203,072.83 93,182.72 109,890.11 9,670,329.66 95 04/01/2044 201,024.36 91,134.25 109,890.11 9,560,439.55 96 07/01/2044 199,988.74 90,098.63 109,890.11 9,450,549.44 97 10/01/2044 199,931.84 90,041.73 109,890.11 9,340,659.33 2044 Totals 804,017.77 364,457.33 439,560.44 98 01/01/2045 198,884.84 88,994.73 109,890.11 9,230,769.22 99 04/01/2045 195,925.94 86,035.83 109,890.11 9,120,879.11 100 07/01/2045 195,846.27 85,956.16 109,890.11 9,010,989.00 101 10/01/2045 195,743.85 85,853.74 109,890.11 8,901,098.89 2045 Totals 786,400.90 346,840.46 439,560.44 102 01/01/2046 194,696.85 84,806.74 109,890.11 8,791,208.78 103 04/01/2046 191,828.99 81,938.88 109,890.11 8,681,318.67 104 07/01/2046 191,703.81 81,813.70 109,890.11 8,571,428.56 105 10/01/2046 191,555.86 81,665.75 109,890.11 8,461,538.45 2046 Totals 769,785.51 330,225.07 439,560.44 106 01/01/2047 190,508.87 80,618.76 109,890.11 8,351,648.34 107 04/01/2047 187,732.05 77,841.94 109,890.11 8,241,758.23 108 07/01/2047 187,561.34 77,671.23 109,890.11 8,131,868.12 109 10/01/2047 187,367.88 77,477.77 109,890.11 8,021,978.01 2047 Totals 753,170.14 313,609.70 439,560.44 110 01/01/2048 186,320.88 76,430.77 109,890.11 7,912,087.90 111 04/01/2048 184,454.49 74,564.38 109,890.11 7,802,197.79 112 07/01/2048 183,418.88 73,528.77 109,890.11 7,692,307.68 113 10/01/2048 183,179.89 73,289.78 109,890.11 7,582,417.57 2048 Totals 737,374.14 297,813.70 439,560.44 114 01/01/2049 182,132.89 72,242.78 109,890.11 7,472,527.46 115 04/01/2049 179,538.16 69,648.05 109,890.11 7,362,637.35 116 07/01/2049 179,276.41 69,386.30 109,890.11 7,252,747.24 117 10/01/2049 178,991.90 69,101.79 109,890.11 7,142,857.13 2049 Totals 719,939.36 280,378.92 439,560.44 04/01/2020 10:48:02 AM Page 5 PPF 40901115-A Haida Energy Payments - Prin Beg 10/1/2020 until 4/1/2026 Then P+Int Date Payment Interest Principal Balance 118 01/01/2050 177,944.90 68,054.79 109,890.11 7,032,967.02 119 04/01/2050 175,441.22 65,551.11 109,890.11 6,923,076.91 120 07/01/2050 175,133.95 65,243.84 109,890.11 6,813,186.80 121 10/01/2050 174,803.91 64,913.80 109,890.11 6,703,296.69 2050 Totals 703,323.98 263,763.54 439,560.44 122 01/01/2051 173,756.92 63,866.81 109,890.11 6,593,406.58 123 04/01/2051 171,344.27 61,454.16 109,890.11 6,483,516.47 124 07/01/2051 170,991.48 61,101.37 109,890.11 6,373,626.36 125 10/01/2051 170,615.93 60,725.82 109,890.11 6,263,736.25 2051 Totals 686,708.60 247,148.16 439,560.44 126 01/01/2052 169,568.93 59,678.82 109,890.11 6,153,846.14 127 04/01/2052 167,884.63 57,994.52 109,890.11 6,043,956.03 128 07/01/2052 166,849.01 56,958.90 109,890.11 5,934,065.92 129 10/01/2052 166,427.94 56,537.83 109,890.11 5,824,175.81 2052 Totals 670,730.51 231,170.07 439,560.44 130 01/01/2053 165,380.94 55,490.83 109,890.11 5,714,285.70 131 04/01/2053 163,150.38 53,260.27 109,890.11 5,604,395.59 132 07/01/2053 162,706.55 52,816.44 109,890.11 5,494,505.48 133 10/01/2053 162,239.95 52,349.84 109,890.11 5,384,615.37 2053 Totals 653,477.82 213,917.38 439,560.44 134 01/01/2054 161,192.95 51,302.84 109,890.11 5,274,725.26 135 04/01/2054 159,053.44 49,163.33 109,890.11 5,164,835.15 136 07/01/2054 158,564.08 48,673.97 109,890.11 5,054,945.04 137 10/01/2054 158,051.96 48,161.85 109,890.11 4,945,054.93 2054 Totals 636,862.43 197,301.99 439,560.44 138 01/01/2055 157,004.97 47,114.86 109,890.11 4,835,164.82 139 04/01/2055 154,956.50 45,066.39 109,890.11 4,725,274.71 140 07/01/2055 154,421.62 44,531.51 109,890.11 4,615,384.60 141 10/01/2055 153,863.98 43,973.87 109,890.11 4,505,494.49 2055 Totals 620,247.07 180,686.63 439,560.44 142 01/01/2056 152,816.98 42,926.87 109,890.11 4,395,604.38 143 04/01/2056 151,314.77 41,424.66 109,890.11 4,285,714.27 144 07/01/2056 150,279.15 40,389.04 109,890.11 4,175,824.16 145 10/01/2056 149,675.99 39,785.88 109,890.11 4,065,934.05 2056 Totals 604,086.89 164,526.45 439,560.44 146 01/01/2057 148,628.99 38,738.88 109,890.11 3,956,043.94 147 04/01/2057 146,762.61 36,872.50 109,890.11 3,846,153.83 148 07/01/2057 146,136.69 36,246.58 109,890.11 3,736,263.72 149 10/01/2057 145,488.00 35,597.89 109,890.11 3,626,373.61 2057 Totals 587,016.29 147,455.85 439,560.44 150 01/01/2058 144,441.01 34,550.90 109,890.11 3,516,483.50 04/01/2020 10:48:02 AM Page 6 PPF 40901115-A Haida Energy Payments - Prin Beg 10/1/2020 until 4/1/2026 Then P+Int Date Payment Interest Principal Balance 151 04/01/2058 142,665.66 32,775.55 109,890.11 3,406,593.39 152 07/01/2058 141,994.22 32,104.11 109,890.11 3,296,703.28 153 10/01/2058 141,300.02 31,409.91 109,890.11 3,186,813.17 2058 Totals 570,400.91 130,840.47 439,560.44 154 01/01/2059 140,253.02 30,362.91 109,890.11 3,076,923.06 155 04/01/2059 138,568.72 28,678.61 109,890.11 2,967,032.95 156 07/01/2059 137,851.75 27,961.64 109,890.11 2,857,142.84 157 10/01/2059 137,112.03 27,221.92 109,890.11 2,747,252.73 2059 Totals 553,785.52 114,225.08 439,560.44 158 01/01/2060 136,065.03 26,174.92 109,890.11 2,637,362.62 159 04/01/2060 134,744.90 24,854.79 109,890.11 2,527,472.51 160 07/01/2060 133,709.29 23,819.18 109,890.11 2,417,582.40 161 10/01/2060 132,924.04 23,033.93 109,890.11 2,307,692.29 2060 Totals 537,443.26 97,882.82 439,560.44 162 01/01/2061 131,877.04 21,986.93 109,890.11 2,197,802.18 163 04/01/2061 130,374.83 20,484.72 109,890.11 2,087,912.07 164 07/01/2061 129,566.82 19,676.71 109,890.11 1,978,021.96 165 10/01/2061 128,736.05 18,845.94 109,890.11 1,868,131.85 2061 Totals 520,554.74 80,994.30 439,560.44 166 01/01/2062 127,689.06 17,798.95 109,890.11 1,758,241.74 167 04/01/2062 126,277.89 16,387.78 109,890.11 1,648,351.63 168 07/01/2062 125,424.36 15,534.25 109,890.11 1,538,461.52 169 10/01/2062 124,548.07 14,657.96 109,890.11 1,428,571.41 2062 Totals 503,939.38 64,378.94 439,560.44 170 01/01/2063 123,501.07 13,610.96 109,890.11 1,318,681.30 171 04/01/2063 122,180.94 12,290.83 109,890.11 1,208,791.19 172 07/01/2063 121,281.89 11,391.78 109,890.11 1,098,901.08 173 10/01/2063 120,360.08 10,469.97 109,890.11 989,010.97 2063 Totals 487,323.98 47,763.54 439,560.44 174 01/01/2064 119,313.08 9,422.97 109,890.11 879,120.86 175 04/01/2064 118,175.04 8,284.93 109,890.11 769,230.75 176 07/01/2064 117,139.42 7,249.31 109,890.11 659,340.64 177 10/01/2064 116,172.09 6,281.98 109,890.11 549,450.53 2064 Totals 470,799.63 31,239.19 439,560.44 178 01/01/2065 115,125.09 5,234.98 109,890.11 439,560.42 179 04/01/2065 113,987.05 4,096.94 109,890.11 329,670.31 180 07/01/2065 112,996.96 3,106.85 109,890.11 219,780.20 181 10/01/2065 111,984.10 2,093.99 109,890.11 109,890.09 2065 Totals 454,093.20 14,532.76 439,560.44 182 01/01/2066 110,937.11 1,047.02 109,890.09 0.00 2066 Totals 110,937.11 1,047.02 109,890.09 04/01/2020 10:48:03 AM Page 7 PPF 40901115-A Haida Energy Payments - Prin Beg 10/1/2020 until 4/1/2026 Then P+Int Date Payment Interest Principal Balance Grand Totals 33,382,895.68 13,382,895.68 20,000,000.00 04/01/2020 10:48:03 AM Page 8 PPF 40901115-A Haida Energy Payments - Prin Beg 10/1/2020 until 4/1/2026 Then P+Int Last interest amount increased by 0.02 due to rounding. Shovel-Ready Energy Infrastructure Projects in Alaska Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 2 of 20 OVERVIEW Created in 1976 by the Alaska Legislature, the Alaska Energy Authority (AEA) is a public corporation of the State of Alaska governed by a board of directors with the mission to “reduce the cost of energy in Alaska.” AEA is the state's energy office and lead agency for statewide energy policy and program development. AEA accomplishes this mission through its core services: Owned Assets, Power Cost Equalization, Rural Energy Assistance, Energy Technology Programs, Grants and Loans, and Energy Planning. This document is a catalog of Shovel-Ready Energy Infrastructure Projects in Alaska within AEA’s capability to manage. Each project provides significant benefit to the communities in which they are targeted. Infrastructure projects of larger scope provide a corresponding greater benefit to more than a single community and have a long-term positive impacts on the state economy. This catalog of energy projects ready for funding and capable of near term deployment has been within the AEA portfolio for varying periods of time as funding priorities have shifted from time to time. All projects have been carefully engineered and that engineering kept up to date in the event funding were to become available. Each project can be developed once clearances are given and funding is available We wish to make clear that the organization of this catalog is purposeful. Projects are aggregated into “by category of energy” spheres and are prioritized within each sphere. Our listing of these projects within each sphere will be able to advance to construction as expediently as practical. Project completion is harder to calculate but sooner construction completions are rated more positively for priority. PROGRAM SUMMARY CATEGORY NUMBER OF PROJECTS COST ($ MILLION) Railbelt (Transmission) 3 $955 Hydroelectric 9 $6 Billion Rural Power System Upgrades 20 $35 Bulk Fuel Upgrades 50 $100 Biomass/Heat 7 $10 Wind 9 $114 Totals 98 $7.21 Billion The following pages include in depth descriptions of the six categories listed in the above table. Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 3 of 20 RAILBELT 3 PROJECT GROUPS, TOTAL $955.2 MILLION Over the past decade the Railbelt Utilities have spent nearly $1 billion on generation assets in the region. Many facilities were largely justified through the respective utilities local area planning criteria, as such little attention was given to the transmission of this generation portfolio throughout the interconnected system which could take maximum advantage of the construction of these newer, higher efficiency units which replaced or caused the retirement of less efficiency generators. In 2014, largely in recognition of this fact, AEA contracted for completion of a region-wide transmission plan. This plan, completed in 2017 identified a host of prioritized projects which, if constructed, would relieve transmission congestion that currently exists on the transmission system, most importantly unconstraining the Bradley Lake Hydroelectric Facility, while at the same time, satisfying the requirements set out in the reliability standards in place for the railbelt region of the State. Below is a summary of the transmission plan results. It describes in a prioritized fashion the unmet needs of the interconnected bulk- power system. LEVEL 1 PROJECTS (KENAI PENINSULA)* PRIORITY PROJECT DESCRIPTION COST ($ MILLION) 1** Soldotna-Quartz Creek Upgrade Soldotna-Quartz Line to 230kV $52 1 Bernice Lake-Beluga HVDC 100 MW HVDC Intertie $185.3 2 25 MW/14MWh BESS Anchorage Area Battery $30.2 3 Bradley-Soldotna 115kV Line New Line and Bradley/Soldotna Substations $65.5 4 University-Dave's Creek 230kV Reconstruct existing line $57.5 5 University-Dave's Creek Substations Convert stations for 230 kV operation $34.6 6 Dave's Creek-Quartz Creek Upgrade line to Rail Conductor, Quartz Sub $15.0 Sub-Total $440.1 *Level 1 Projects constitute the host of projects most directly required to fully unconstraine the Bradley Lake Hydroelectric Facility. **In 2019 the Swan Lake Fire prompted discussions on potential realignment and upgrades to the Soldotna to Quartz Creek Transmission Line on the Kenai Peninsula. That project is listed here as priority 1 in Level 1 Projects. SUMMARY Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 4 of 20 LEVEL 2 PROJECTS (SOUTHCENTRAL) PRIORITY PROJECT DESCRIPTION COST ($ MILLION) 1 Fossil Creek Substation New 115 kV substation $10.7 2 Eklutna Hydro Substation New 115 kV substation $9.7 Sub-Total $20.4 LEVEL 3 PROJECTS (NORTH) PRIORITY PROJECT DESCRIPTION COST ($ MILLION) 1 Lorraine-Douglas Lorraine-Douglas 230 kV line and Stations $129.3 2 Douglas-Healy New 230 kV line operated at 138 kV $243.6 3 Healy-Fairbanks Convert 138 kV to 230 kV $106.8 4 Communications Upgrade Upgrade communication infrastructure $15.0 Sub-Total $494.7 Total Transmission Upgrade Estimate $955.2 The host of projects within each of the above three tables were identified by applying the current Transmission Planning Standards contained within the reliability standards which are in place for the Railbelt. At the time of the transmission plan completion, the benefits ascribed to the above host of projects resulted in a cost to benefit ratio in total of 3.4:1. It is important to note that these analysis would need to be updated however it is highly unlikely that any significant movement, one direction or the other with respect to the costs/benefits would be seen. Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 5 of 20 HYDROELECTRIC 9 PROJECTS, TOTAL $6 BILLION As Alaska’s largest source of renewable energy, hydropower supplies more than 20 percent of the state’s electrical energy in an average water year. There are nearly 50 operating utility-scale hydroelectric projects in Alaska. The majority of Alaska’s existing hydro projects are located in the southeast and southcentral regions of Alaska. LEVEL 1 PROJECTS ELFIN COVE CROOKED CREEK HYDROELECTRIC – $3 MILLION Sponsor Community of Elfin Cove Description 160 kW run of river project serving Community of Elfin Cove. The project would replace powerplant diesel usage. Estimated fuel savings $240,000 annually. Status Design and licensing phase. THAYER CREEK HYDROELECTRIC (ANGOON) – $18 MILLION Sponsor Kootznoowoo Incorporated Description 850 kW run of river hydroelectric project on Thayer Creek serving the community of Angoon. The project would replace powerplant diesel usage and substantial amount of community heating oil. Estimated fuel savings ~$1,200,000 per year. Status Design and licensing phase. SUMMARY Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 6 of 20 LEVEL 2 PROJECTS GRANT LAKE HYDROELECTRIC (RAILBELT REGION) – $53 MILLION Sponsor Homer Electric Association Description Grant Lake would be a 5 MW storage project serving Ketchikan region. Estimated equivalent fuel savings $4,000,000 annually. License from FERC and in final design. Status Design and licensing phase. MAHONEY LAKE HYDROELECTRIC (KETCHIKAN REGION) – $75 MILLION Sponsor City of Saxman Description Mahoney Lake would be a 9.6 MW storage project serving Ketchikan region. Estimated fuel savings $7,500,000 annually. This project has license from FERC. Status Design and licensing phase. SUSITNA-WATANA HYDROELECTRIC PROJECT (RAILBELT REGION) – $5.6 BILLION (2014$) Sponsor Alaska Energy Authority Description Susitna-Watana would be a 609 MW (maximum) storage project serving the railbelt region of Alaska. The project can replace ~60 percent of the natural gas usage of the railbelt region and create 23,000 direct and indirect jobs during construction. Status Design and licensing phase. The State of Alaska has spent $193 million advancing this project and is through two-thirds of the licensing process. Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 7 of 20 SWEETHEART LAKE HYDROELECTRIC PROJECT (JUNEAU REGION) – $188 MILLION (2014$) Sponsor Juneau Hydropower Inc. Description Sweetheart Lake would be a 19.8 MW storage project serving Juneau region. Estimated fuel savings $20,750,000 annually. This project has license from FERC and is in final design. Status Design and licensing phase. LEVEL 3 PROJECTS INDIAN RIVER HYDROELECTRIC PROJECT (TENAKEE SPRINGS) – $4.8 MILLION Sponsor City of Tenakee Springs Description Indian River is a 180 kW run-of-river hydroelectric project serving the community of Tenakee Springs. Project would replace community diesel generation with hydroelectric. Estimated fuel savings $104,000 annually. This project could be completed within one year once construction. Status Ready for construction. KNUTSON CREEK HYDROELECTRIC PROJECT (PEDRO BAY) – $5 MILLION Sponsor Pedro Bay Village Council Description This project is a 200 kW run of river hydroelectric project serving Pedro Bay. The project will replace community diesel generation by hydroelectric. Estimated fuel savings $120,000 annually. This project is in final design. Status Design and licensing phase. Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 8 of 20 OLD HARBOR HYDROELECTRIC PROJECT (OLD HARBOR) – $10 MILLION Sponsor Alaska Village Electric Cooperative Description This project is a 525 kW diversion hydro serving the Alaska native community of Old Harbor. Estimated fuel savings $220,000 annually. Project would replace a portion of community diesel generation with hydroelectric. Status Design and licensing phase. Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 9 of 20 RURAL POWER SYSTEM UPGRADE 20 PROJECTS @ $1.75 MILLION = $35 MILLION Electricity powers lighting, communications, heat, and is necessary to operate infrastructure that supports safe and healthy living conditions. In Alaska’s rural communities electricity is often generated by a small local “system” (generation and distribution) using diesel fuel, and that power is three to five times more than power in urban parts of the state. Upgrades may include efficiency improvements, powerhouse upgrades or replacements, line assessments, lines to new customers, demand-side improvements, heat recovery and repairs to generation and distribution systems. It is not uncommon to see a significant increase in fuel savings. Rural Power System Upgrade (RPSU) projects range from maintenance and improvement to full system replacements. Using an average upgrade project cost of $1.75 million and a 20 year expected life span the yearly funding level required to meet the need for rural power systems is approximately $16 million dollars. This assumes all power systems being at the expected point in their life span, which is not the case. To bring the required 20 projects up to the necessary life cycle expectancy would require about $35 million. AEA is has currently contracted to inventory and assess all eligible rural power systems. This effort will compile over 200 data points on each community power system including generation, distribution, and heat recovery. For the first time complete 3D imaging of each powerhouse will be captured enabling an enhanced ability for remote assistance and training. TYPICAL POWERHOUSE BEFORE SUMMARY Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 10 of 20 RPSU-Eligible Communities PRIORITY PROJECT COST ($ MILLION) 1 Aniak $1.75 2 Atka $1.75 3 Beaver $1.75 4 Buckland $1.75 5 Chefornak $1.75 6 Chenega Bay $1.75 7 Chuathbaluk $1.75 8 Crooked Creek $1.75 9 Elfin Cove $1.75 10 Golovin $1.75 11 Karluk $1.75 12 Kokhanok $1.75 13 Koliganek $1.75 14 Levelock $1.75 15 Manokotak $1.75 16 McGrath $1.75 17 Napakiak $1.75 18 Ouzinkie $1.75 19 Pedro bay $1.75 20 Pelican $1.75 Sub-Total $35 2 1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 11 of 20 BULK FUEL UPGRADE 50 PROJECTS @ $2 MILLION = $100 MILLION Rural Alaska is energized primarily by diesel for power generation and heating. Gasoline is used for transportation. Many villages are located either along rivers or on the coast, so fuel is primarily delivered by barge. Where barge delivery is unavailable or uneconomic, air tankers and in a few cases tanker trucks deliver fuel. Delivery is seasonal and limited by sea or river ice, water levels, or ice road availability. Villages of a few hundred people must store hundreds of thousands of gallons of fuel to meet their annual energy needs. Many of rural Alaska’s bulk fuel facilities were built in the 1950s and 1960s. They were not built to national standards and aren’t compliant with today’s health and safety regulations. Some of them are at the end of their useful lives. This infrastructure, however, continues in service until upgraded or replaced, in some cases posing serious risks. In recent years, AEA’s Bulk Fuel Upgrade (BFU) program has shifted emphasis from new construction to repairs. In many cases, existing bulk fuel tanks can be re-used if they are appropriately refurbished. Repair projects focus on minimizing risk, using local workers, and replacing piping, pumps, valves, and tanks when necessary. Using an average upgrade project cost of $2 million and a 40 year expected lifespan (20 year design life span), the yearly funding level required to meet the need for rural bulk fuel facilities is approximately $40 million dollars. This assumes all bulk fuel facilities being at the expected point in their life span, which is not the case. To bring the required 50 projects up to the necessary life cycle expectancy would require about $100 million dollars. TYPICAL BULK FUEL FACILITY BEFORE SUMMARY Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 12 of 20 BFU-Eligible Communities LEVEL 1 PROJECTS PRIORITY PROJECT DESCRIPTION COST ($ MILLION) 1 Holy Cross (3) Native Corp / City / Utility Bulk Fuel Facilities $6 2 Nondalton City Bulk Fuel Facility $2 3 Shaktoolik (2) Utility / Native Corp Bulk Fuel Facilities $4 4 Togiak Native Corp Bulk Fuel Facility $2 5 Nunapitchuk (2) Native Corp / City Bulk Fuel Facilities $4 6 Noatak Tribal Bulk Fuel Facility $2 7 Shungnak Tribal Bulk Fuel Facility $2 8 Scammon Bay Native Corp Fuel Facility $2 9 Newtok (2) Native Corp / Utility Bulk Fuel Facilities $4 10 Ekwok City Bulk Fuel Facility $2 11 Shageluk (2) Native Corp / City Fuel Facilities $4 12 Marshall (2) Utility / City Bulk Fuel Facility $4 13 Minto (2) Utility / Native Corp Fuel Facilities $4 14 Goodnews Bay City Bulk Fuel Facility $2 15 Birch Creek Tribal Bulk Fuel Facility $2 16 Nulato City Bulk Fuel Facility $2 17 Chalkyitsik Native Corp Fuel Facility $2 18 Venetie Tribal Bulk Fuel Facility $2 19 Allakaket City Bulk Fuel Facility $2 20 Rampart Tribal Bulk Fuel Facility $2 21 Russian Mission (2) Native Corp / City Bulk Fuel Facilities $4 Sub-Total $60 11 2 3 14 5 6 7 8 9 10 1 12 13 4 15 16 17 18 19 20 21 Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 13 of 20 BFU-Eligible Communities LEVEL 2 PROJECTS PRIORITY PROJECT DESCRIPTION COST ($ MILLION) 1 Fort Yukon (2) Native Corp / Tribal Fuel Facility $4 2 Klawock Utility Bulk Fuel Facility $2 3 Hydaburg Utility Bulk Fuel Facility $2 4 Ambler Tribal Bulk Fuel Facility $2 5 Kivalina (2) Utility / City Bulk Fuel Facility $4 6 Beaver Tribal Bulk Fuel Facility $2 7 Mountain Village Native Corp Fuel Facility $2 8 Craig Utility Bulk Fuel Facility $2 9 St. Paul Native Corp Fuel Facility $2 10 Togiak City Bulk Fuel Facility $2 11 Coffman Cove Utility Bulk Fuel Facility $2 12 Noatak Tribal Bulk Fuel Facility $2 13 Eek Native Corp Fuel Facility $2 14 Oscarville Native Corp Fuel Facility $2 15 Thorne Bay Utility Bulk Fuel Facility $2 16 Platinum Tribal Bulk Fuel Facility $2 17 Hughes City Bulk Fuel Facility $2 18 Kobuk City Bulk Fuel Facility $2 Sub-Total $40 1 2 4 5 6 7 8 3 9 10 11 12 13 14 15 16 17 18 Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 14 of 20 BIOMASS/HEAT 7 PROJECTS, TOTAL $9.7 MILLION Alaska's primary biomass fuels are wood, sawmill waste, fish by products and municipal waste. Wood remains an important renewable energy sources for Alaskans. More than 100,000 cords of wood are burned in the form of chips, cordwood, and pellets annually. Wood-heating systems in Alaska are creating local jobs and reducing the cost of building heat in rural communities throughout the state. LEVEL 1 PROJECTS HAINES SCHOOL AND POOL (CHIP) – $1.8 MILLION Sponsor Haines Borough Description The proposed biomass district energy system is designed to provide heat to the Haines School and Pool, Administration Building, Library, Vocational Education building (Voc-Ed), Garage, and future Greenhouse, with the school and pool is the baseline scenario. Status Ready for construction. KAKE (CHIP) – $3.5 MILLION Sponsor Organized Village of Kake Description The proposed biomass district energy system is designed to provide heat to the Haines School and Pool, Administration Building, Library, Vocational Education building (Voc-Ed), Garage, and future Greenhouse, with the school and pool is the baseline scenario. Status Design and licensing phase. SUMMARY Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 15 of 20 MENTASTA CLINIC (CHIP) – $200,000 Sponsor Mentasta Tribal Council Description This project would be a small containerized Chip System that would heat the Health Clinic and possibly some adjacent buildings. The community currently has an operating chip system so there is great confidence this project would also be successful. Status Ready for construction. LEVEL 2 PROJECTS CRAIG HIGH SCHOOL (CHIP) – $770,000 Sponsor Craig City School District Description This project is to construct a wood chip heating plant at Craig High School. The wood heating system is expected to include a wood fuel delivery system, biomass boilers, and heat exchangers to be integrated into the existing heating system of Craig High School. Status Ready for construction. KLAWOCK MALL (CORDWOOD) – $845,000 Sponsor Klawock Heenya Corporation Description Construct a cordwood heating system, including a large wood shed to heat two thirds of the Klawock Bell Tower Mall. The other one third is the AC Grocery Store and they are using the heat from the refrigeration units. The Biomass system could be backup heat for the grocery store. Status Conceptual design. Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 16 of 20 NORTHWAY SCHOOL BIOMASS – $1.32 MILLION Sponsor Alaska Gateway School District (Tok) Description This project will construct a woodchip heating system for the Northway School, the garage, and the teacher housing duplex. The project is estimated to offset approximately 90 percent of the fuel use. Status Ready for construction. LEVEL 3 PROJECT KETCHIKAN HIGH SCHOOL (PELLET) – $1.25 MILLION Sponsor Ketchikan Gateway Borough Description This project will construct a pellet heating system for the new clinic, tribal office, community building, and water treatment plant. Project design was completed through a grant from the United States Forest Service. Status Ready for construction. Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 17 of 20 WIND 9 PROJECTS, TOTAL $114.2 MILLION In Alaska, there are abundant wind resources available for energy development. High costs associated with fossil fuel-based generation and improvements in wind power technology makes this clean, renewable energy source attractive to many communities. Today wind energy accounts for 2.4 percent of the state’s total energy production and that percentage is growing. Since 2012, Alaska’s wind energy capacity has increased 400 percent. LEVEL 1 PROJECT FIRE ISLAND WIND FARM EXPANSION – $75 MILLION Sponsor Cook Inlet Regional Inc. Description Expansion of the Fire Island Wind farm from 17.6 MW to 52.8 MW with the installation of 22 more GE 1.6 MW wind turbines. Cook Inlet Regional could sell the power to any of the south-central Alaska utilities. This project would help to stabilize electrical costs in Southcentral Alaska. Status Ready for construction. LEVEL 2 PROJECTS CHEFORNAK, KIPNUK, AND PILOT POINT BATTERY ENERGY STORAGE – $2.4 MILLION Sponsor Village of Chefornak, Native Village of Kipnuk, and Native Village of Pilot Point Description Currently Chefornak, Kipnuk, and Pilot Point have fully operational wind turbines installed in their communities. Battery energy storage will increase wind energy utilization and reduce the need to curtail wind energy production. Status Ready for construction. SUMMARY Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 18 of 20 IGIUGIG WIND – $1.0 MILLION Sponsor Igiugig Village Council Description Installation of two 25 kW turbines. The turbines will be used in conjunction with the community in-river hydrokinetic turbine. Fuel offset will be 7,044 gallons of diesel per year. Status Design and licensing phase. KONGIGANAK, KWIGILLINGOK, AND TUNTUTULIAK TURBINE UPGRADES – $4.8 MILLION Sponsor Native Village of Kongiganak, Native Village of Kwigillingok, and Native Village of Tuntutuliak Description Incorporate more efficient rotor and nacelle upgrades for 15 wind turbines to increase efficiency and power output of existing turbines. This project would also add a 500 kW solar array to each system. Status Design and licensing phase. KWETHLUK WIND AND SOLAR WITH ELECTRIC THERMAL STORAGE UNITS – $4.2 MILLION Sponsor Village of Kwethluk Description Install three 100kW wind turbines, a 500 kW solar array and 50-70 electric thermal storage units. The projected diesel displacement for this project is 70,000 gallons of diesel fuel at the power plant and 20,000 gallons of heating fuel. Status Design and licensing phase. Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 19 of 20 LEVEL 3 PROJECTS DUTCH HARBOR AND UNALASKA WIND-DIESEL PROJECT – $11.6 MILLION Sponsor Dutch Harbor and City of Unalaska Description Install 2MW capacity wind turbines and battery energy storage near the water treatment plant. Dutch Harbor is the largest fishing port in North America with a very high industrial load. This project would offset 270,000 gallons of diesel per year. Status Ready for construction. KOTZEBUE ELECTRIC ASSOCIATION WIND FARM EXPANSION – $7.0 MILLION Sponsor Kotzebue Electric Association Description The utility will install two more EWT 900 kW wind turbines and expand battery energy storage. This project is expected to displace 300,000 to 400,000 gallons of diesel fuel annually, thus lowering the cost of energy in the community. Status Design and licensing phase. NOME WIND TO HEAT – $400,000 Sponsor Nome Joint Utility System Description Nome will be purchasing an electric boiler to utilize excess wind produced from their Banner Peak Wind Farm. The boiler will be used to heat the school and potentially the hospital and rec center in the future. The expected cost savings from diesel displacement for the school district would be $71,000 per year. Status Ready for construction. Shovel-Ready Energy Infrastructure Projects in Alaska April 2020 Alaska Energy Authority Page 20 of 20 STEBBINS AND ST. MICHAEL WIND FARM EXPANSION – $7.8 MILLION ($2021) Sponsor Alaska Village Electric Cooperative Description Installation of a single 900 kW turbine. Fuel offset will be 160,000 gallons of diesel per year. The project will also include the installation of an electric boiler in the St. Michael pump house, and will account for another 5,000 gallons of diesel displacement. The wind farm expansion project will serve both Stebbins and St. Michael. Status Design and licensing phase. 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA AEA Board Update – West Fork Upper Battle Creek April 15, 2020 Battle Creek Construction Update Events: Contractor has substantially provided UAR true-up survey for rock excavation and embankment volumes. UAR cost substantially complete. Diversion structure is substantially completed. Contractor demobilized from Bradley in early March. Schedule: Contractor remobilized to the site on April 7 to assemble the fusing machine, perform test welds, and clear snow. Fusing pipe into 80’ lengths, at sea level, to start mid-April. Transporting of 80’ pipe sections to the access road to start in April. Fusing to be completed in June followed by completion, testing, and commissioning of electrical controls and equipment. Contract substantial completion date of July 22 and final completion date of August 31 remains the same. Budget: Total project cost will exceed non-contingency budget by a couple of percent because of longer field time and increased rock excavation. Page 2 of 3 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG Photo 1: Placing concrete for spillway wall. Photo 2: Ready to start the day. Page 3 of 3 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG Photo 3: Placing rock fill on downstream side. Photo 4: Installing sediment wall. 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA MEMORANDUM To: AEA Board of Directors From: Curtis W. Thayer Executive Director Date: April 3, 2020 Subject: Proposed Change to Bradley Lake Administrative Fee – FY2021 Historically, AEA has charged the Bradley Lake Management Committee (BPMC) an annual fixed fee of $200,000 for administrative services. Those services include AEA personnel services (direct and indirect payroll costs), travel, BPMC meeting transcription, and Department of Law legal fees. If the expenses exceeded the $200,000, AIDEA paid the difference. For FY2021, and future fiscal years, AEA proposed to charge utilities at actual costs rather than a flat fee. This is similar to how the Alaska Intertie project is reimbursed for administrative costs. The estimated cost for FY2021 is $317,000. The attached spreadsheet provides proposed cost details, including comparisons between FY2020 to FY2021 and the breakdown of the FY2021 estimated AEA payroll. AEA used the same methodology as the Battle Creek payroll calculation to determine the payroll calculation for Bradley Lake. For the other non-payroll costs, we calculated based on prior year expenses. Attached are only estimated expenses and actuals costs may differ. AEA will provide detailed backup during the year to support actual costs incurred. The Bradley Lake Management Committee approved the request on March 27, 2020. Bradley Lake Operations & Maintenance Budget Entry Page - AP & Other FY 2021 Budget Summary budget comparison to prior year - AEA AP & Other % change FY2019 FY2020 FY2021 FY20 to FY21 Budget 1,583,186.00 1,418,731.00 1,657,865.00 16.9% Actual 1,415,075.00 Dept FERC Activity Cost Type AP Detail Description Total Cost AEA 540 - Rents Bradley Lake FERC land use Fees 804030000 - Other Costs Bradley Lake FERC land use fees -$ AEA 556 - System Control & Load DispatchingSCS Snow Measurement 803010000 - Contractual SCS Snow Measurement 10,000.00$ AEA 556 - System Control & Load DispatchingUA Seismic monitoring/reporting 803010000 - Contractual UAF Seismic monitoring and reporting 62,000.00$ AEA 556 - System Control & Load DispatchingUSGS Stream gauging 803010000 - Contractual USGS Streamgauging 259,615.00$ AEA 556 - System Control & Load DispatchingState of Alaska Permits 804030000 - Other Costs State of Alaska Permits 350.00$ AEA 920 - Administrative Expense AEA Admin Fee 809010000 - Administrative expense AEA Bradley Labor Admin Fees 241,000.00$ AEA 920 - Administrative Expense Bradley Lake Audit fees 809010000 - Administrative expense Audit fee 19,900.00$ AEA 920 - Administrative Expense Bradley Lake PMC Legal 809010000 - Administrative expense Legal fees (BPMC Council and Dept. of Law)70,000.00$ AEA 920 - Administrative Expense Bradley Lake Arbitrage Report 809010000 - Administrative expense Arbitrage fee 5,000.00$ AEA 920 - Administrative Expense AEA Admin Fee 809010000 - Administrative expense Travel 3,500.00$ AEA 920 - Administrative Expense AEA Admin Fee 809010000 - Administrative expense Accutype Transcription 2,500.00$ AEA 920 - Administrative Expense Bradley Lake Trustee fees 809010000 - Administrative expense Trust & Account fees 12,000.00$ AEA 920 - Administrative Expense Miscellaneous Admin 809010000 - Administrative expense NHA membership 12,000.00$ AEA 924 - Property Insurance Project Insurance Premiums 809010000 - Administrative expense Insurance Premiums 600,000.00$ AEA 928 - Regulatory Commission ExpenseFERC administrative fees 809010000 - Administrative expense FERC administrative fees 175,000.00$ AEA 928 - Regulatory Commission ExpenseFERC administrative fees 809010000 - Administrative expense Contractual Engineer - FERC license issues 110,000.00$ AEA 928 - Regulatory Commission ExpenseFERC administrative fees 809010000 - Administrative expense FERC Part 12 Inspection 75,000.00$ AEA 1,657,865.00$ Battle Creek O&M (13,278.60)$ Labor and O&M 1,657,865.00$ Capital Projects - 1,657,865.00$ *FERC Part 12 Inspection AEA AP FY21 Page 1 of 1 Page 1 of 6 {00984660} BPMC Alaska Energy Authority White Paper Bradley Lake Hydroelectric Project March 27, 2020 Title: Retirement of Bonds and Excess Payments Purpose: The purpose of this White Paper is to: 1) provide background on the construction financing of the Bradley Lake Hydroelectric Project (Project); 2) address questions relating to final payment of power revenue bonds, proceeds of which were used to finance or refinance construction cost of the Project, at maturity, redemption or defeasance, and related cash flow matters; and 3) discuss “Excess Payment” obligations of the utilities under the Power Sales Agreement (as defined herein). For purposes of this White Paper, certain definitions follow: 1) “AEA” means Alaska Energy Authority, formerly known as the Alaska Power Authority. 2) “Bonds” means all bonds issued under, and pursuant to, the Bond Resolution. 3) “Bond Resolution” means AEA’s Bradley Lake Power Revenue Bond Resolution, dated September 7, 1989, as amended and supplemented from time to time. 4) “Original Bonds” means, together, those power revenue bonds issued by AEA to finance a portion of the cost of the Project, consisting of: a. $105,001,142 principal amount of Power Revenue Bonds, First Series (“First Series”); and b. $60,259,015.10 principal amount of Power Revenue Bonds, Second Series (“Second Series”). 5) “PSA” means that Power Sales Agreement, dated December 8, 1987. 6) “Refunding Bonds” means, collectively, those power revenue bonds issued by AEA to refund portions of the outstanding Original Bonds, consisting of: a. $59,485,000 principal amount of Power Revenue Refunding Bonds, Third Series (“Third Series”); b. $47,710,000 principal amount of Power Revenue Refunding Bonds, Fourth Series (“Fourth Series”); Page 2 of 6 {00984660} c. $30,640,000 principal amount of Power Revenue Refunding Bonds, Fifth Series (“Fifth Series”); and d. $28,800,000 principal amount of Power Revenue Refunding Bonds, Sixth Series (“Sixth Series”). Background: Original Project Financing Construction of the Project was financed with appropriations from the State of Alaska and proceeds of the Original Bonds. (Construction of the Project is “Required Project Work”1 under the PSA.) The Original Bonds and Refunding Bonds were issued as general obligation bonds of AEA, and the full faith and credit of AEA is pledged to the payment of these Bonds. Payment of the Original Bonds and Refunding Bonds are secured on a parity basis by a pledge of revenues of the Project, including all payments made by the utilities under the terms of the PSA. As of December 31, 2019, the following series of Original Bonds and Refunding Bonds were outstanding (collectively referred to herein as the “Outstanding Bradley Bonds”), each with a final scheduled maturity date of July 1, 2021: $50,000 principal amount of the First Series $8,540,,000 principal amount of the Fourth Series $13,855,000 principal amount of the Sixth Series Payment of the Outstanding Bradley Bonds is also secured by capital reserve subaccounts. As of December 31, 2019, the aggregate amount on deposit in such subaccounts is $12,778,775. Battle Creek Diversion Project Financing Pursuant to the terms of the Bond Resolution, AEA issued parity Bonds in December 2017 to finance the Battle Creek Diversion Project (“Battle Creek Project”), in the aggregate principal amount of $47,000,000, consisting of three series of Bonds: $40,000,000 principal amount of Power Revenue Bonds, Seventh Series (New Clean Renewable Energy Bond) (“Seventh Series”) $1,239,000 principal amount of Power Revenue Bonds, Eighth Series (Qualified Energy Conservation Bond) (“Eighth Series”) 1 “Required Project Work” is defined in the PSA as repairs, maintenance, renewals, replacements, improvements or betterments required by state or federal law, licensing or regulatory agencies, or that are necessary to keep the project in good and efficient operating condition. Page 3 of 6 {00984660} $5,761,000 principal amount of Power Revenue Bonds, Ninth Series (Taxable Draw-Down Bond) (“Ninth Series”) As of December 31, 2019, the outstanding principal amount of Battle Creek Project debt totaled $41,239,000 (Seventh Series and Eighth Series). The Ninth Series bonds are available to draw down if needed. As of the date of this White Paper, no draws have been made on the Ninth Series bonds. Final scheduled maturity for the Battle Creek Project debt is July 1, 2050. (Battle Creek Project work is considered “Optional Project Work” under the PSA, and does not affect the calculation of Excess Payments discussed below.) Payment of the outstanding Battle Creek Project debt is secured by capital reserve subaccounts. As of December 31, 2019, the aggregate amount on deposit in such subaccounts is $2,796,378. Excess Payment Obligation The State funded approximately half of the construction cost of the Project in the form of equity. In order to allow the State to recover some of its equity contribution to the Project, the PSA obligates the Project utilities to make annual Excess Payments after the Original Bonds and Refunding Bonds are retired.2 The annual Excess Payment Amount equals the average debt service over the life of the Original Project bonds that financed the Project (i.e., approximately $12.5 million), minus debt service paid for any Required Project Work. Currently, no Bonds have been issued to finance Required Project Work and so no deductions would be made. Excess Payments are also capped at $0.04 per kilowatt hour. The payment is not a take‐or- pay obligation so each utility only pays for their pro-rata share as defined in the PSA for power actually delivered. Questions and Answers: Question: When can the Outstanding Bradley Bonds be retired? Answer: Final scheduled maturity for the Outstanding Bradley Bonds is July 1, 2021. The First Series and Sixth Series Bonds are subject to optional redemption on or after July 1, 2020. The Fourth Series are not callable prior to maturity; although such Bonds could be legally defeased prior to maturity. (Defeasing such Bonds would require that an amount be deposited into an irrevocable escrow sufficient to pay principal and interest on such bonds until maturity.) 2 Testimony of Robert LeResche, then Executive Director of the Authority, at House Judiciary Committee (1/27/1988), transcript at pg. 10. Note, however, that the PSA describes the Excess Payments as payments by the utilities in recognition of efforts to obtain an intertie. Section 29, PSA. Page 4 of 6 {00984660} The BPMC may request AEA to redeem and/or defease the Outstanding Bradley Bonds issued under, and pursuant to, the Bond Resolution. Question: When may amounts held in the Capital Reserve Subaccounts (securing payment of the Outstanding Bradley Bonds) be released if such Bonds are not retired prior to maturity (7/1/2021)? Answer: Approximately $1.6 million is scheduled to be released from the Capital Reserve Subaccounts following the principal and interest payment due 7/1/2020. The remaining balance held in the Capital Reserve Subaccounts and related to the Outstanding Bradley Bonds (approximately $11.2 million ) will be released after 7/1/2021 when such Bonds are retired (paid in full). Question: When are the Capital Reserve Subaccounts for the Outstanding Bradley Bonds released if the First Series and Sixth Series are optionally redeemed on 7/1/2020 and the Fourth Series is paid off at scheduled maturity on 7/1/2021? Answer: Amounts held in the applicable Capital Reserve Subaccounts would be released following the optional call date for the First Series and Sixth Series, and following retirement of the Fourth Series. Question: What is the timing and cost to the utilities in connection with an optional redemption of the First Series and Sixth Series Bonds? Answer: AEA Board resolution authorizing the redemption would be required, followed by notice to the Bond trustee of the optional call. The Bond trustee is then required to provide notice to bondholders no less than 30 days or more than 60 days prior to the redemption date (no earlier than July 1, 2020). Following are approximate amounts necessary to redeem such Bonds (not including the regular debt service payment due July 1, 2020): First Series : $51,562.50 ($50,000 principal and $1,562.50 interest) Sixth Series : $14,199,125 ($13,855,000 principal and $344,125 interest) There would also be transaction costs incurred in connection with the optional call, such as legal fees. Page 5 of 6 {00984660} Question: What happens with funds released from the Capital Reserve Fund and what can the funds be used for? Answer: In accordance with Section 508 of the Bond Resolution, funds released from the Capital Reserve Fund will be deemed “other available funds” within the meaning of Section 712 of the Bond Resolution and deposited into the Revenue Fund to be used for the payment of amounts required to be paid from the Revenue Fund or refunded (subject to applicable tax rules) to the participating utilities pursuant to Section 13 of the PSA. Question: When does the Excess Payment obligation begin? Answer: After the retirement of all Original Bonds and Refunding Bonds issued to finance (or refinance) “recoverable construction costs” for constructing the Bradley Lake Project. The PSA requires the Excess Payment Amount to be included in Annual Project Costs (defined in the PSA). The Outstanding Bradley Bonds are the bonds issued to pay “recoverable construction costs” that are outstanding at this time. Unless retired earlier as discussed above, on July 1, 2021 all Outstanding Bradley Bonds will be paid off and the Excess Payment Amount will be required to be included in Annual Project Costs (FY22 budget year), and charged to utilities for their purchases of Project power. Page 6 of 6 {00984660} Question: How will the Excess Payment Amount be paid? Answer: The Excess Payment Amount is required to be included in Annual Project Costs and will be included in the annual Project operating budget. The payment will be made to the Authority by the participating utilities. The Authority will then transfer the funds to the State of Alaska Railbelt Energy Fund for appropriation by the Legislature. The Excess Payment Amount ($12.5 million) would be included in the Annual Bradley budget as an expense, and would be funded by the monthly payments made by the utilities. As noted earlier, approximately $11.2 million is estimated to be released from the Capital Reserve Account on 7/1/2021 and may be available to be applied to FY22 Annual Project Costs. At the end of each fiscal year a true-up will be done in the event the Excess Payment Amount cap (4 cents per kilowatt hour of delivered power) is below the amounts paid by the utilities. In general, we do not anticipate the cap to be a limitation as most years the delivered power has been above the amount required to reach $12.5 million as the Excess Payment Amount. The Authority compares total actual Annual Project Costs (which would include the Excess Payment Amount) to revenues collected at the end of the fiscal year and refunds any excess to the participating utilities or bills for any deficiency. It is important to note that the total annual Excess Payment Amount (and the amount available to appropriate by the Legislature) will not be known until the end of the fiscal year when total delivered power is known and the Excess Payment cap can be calculated. Question: When will the Excess Payment Amount be available for appropriation? Answer: The appropriation of the Excess Payment Amount remitted to the Railbelt Energy Fund could be structured in several different ways. The cleanest approach would be to collect the amount allowed under the PSA from the utilities as an Annual Project Cost and remit the amount due to the Railbelt Energy Fund for the fiscal year (on June 30, 2022 or soon thereafter for FY22). Legislation would then be included in the FY24 budget (being drafted in FY23) to appropriate the FY22 Excess Payment Amount. Under this methodology there would be a two- year lag between when the Excess Payment Amount is paid to AEA by the Utilities and the State budget year the funds could be available to be appropriated and spent. Earlier timing might be possible but there would be limitations on cash flow availability as AEA could only remit payments to the State based on delivered power until the cap is exceeded (312.5 megawatts) and the maximum payment is earned by the State. 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA AEA Board Update – Teeland to Hollywood Transmission Lease Agreement April 15, 2020 5.5 Mile Resolve Update In October 2018, permits and licenses related to the 5.5 mile segment of transmission line located between the Teeland Substation on the Palmer Wasilla Highway and Hollywood Road in Wasilla, Alaska, were terminated. Matanuska Electric Association (MEA) and AEA have been working diligently over the course of the past year to establish terms resolving ownership issues and provisions for continued operation of this AEA asset in MEA’s service territory as an integral part of the Alaska Intertie. On March 20, 2020, all items of negotiation were wholly addressed and resolved. This resulted in the execution of an Amended Joint Use Agreement as well as a ROW Lease for easement associated with the routing of this transmission line. The terms of the extended agreement are in place through October 1, 2038, at the cost of $603,225. The Joint Use Agreement and Lease Agreement are available for Board review. 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA AEA Board Update – Legislative Update April 15, 2020 Alaska Energy Authority had a very successful legislative session in regards to our FY21 operating and capital budget requests. FY21 Operating Funds: $2.2 Million for Statewide Project Development, Alternative Energy & Efficiency $5.5 Million for AEA Rural Energy Assistance $780K Owned Faculties $8.5 Million Total This represents a status quo budget for AEA. FY21 Capital Funds: $5 Million in State Capital Match for Rural Power Systems Upgrades o This allows for $12.5 million in federal receipt authority. $29.8 Million for the FY21 PCE Program o The bill included the annual reverse sweep, which means funds will remain in the Power Cost Equalization Endowment Fund and be available to fund the PCE program in the next fiscal year. REF: The Governor vetoed a re-appropriation in the FY21 budget that would have moved $7.3 million from the Railbelt Energy Fund (REF), which was previously appropriated to upgrade and extend the Anchorage to Fairbanks power transmission line intertie to a southern terminus in the Point MacKenzie area. The proposed re-appropriation would have used those funds as federal-aid highway state match. Per statutes, the REF, created in 1986 (HB699), is a fund of the general fund (GF) and consists of money appropriated to it by the legislature and interest received on money in the fund. The department of revenue manages the fund. Page 2 of 2 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG The legislature may appropriate money from the fund for programs, projects, and other expenditures to assist in meeting Railbelt energy needs, including projects for retrofitting state-owned buildings and facilities for energy conservation. The original definition was “to assist in meeting Railbelt energy needs” and expanded in 1993. It was AEA’s position that the proposed re-appropriation of the existing intertie extension appropriation to DOT had a high probability of unintended consequences. These include undermining the credibility of the Authority in its relationship with the utilities and raising concerns long expressed by the utilities over the “necessity” of their excess payments being deposited into the Railbelt Energy Fund. AEA supports the veto. 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA AEA Board Update – Railbelt Reliability Council April 15, 2020 Railbelt Reliability Council Just prior to the end of the legislative session Senate Bill 123, an Act relating to the creation and regulation of electric reliability organizations, relating to participation of electric utilities in electric reliability organizations and the duties thereof; providing for integrated resource planning; requiring project preapproval for certain interconnected large energy facilities, passed the legislature and has been transmitted to the Governor for approval. This bill creates an Electric Reliability Organization (ERO) to carry out the functions described above. Since 2015 the railbelt utilities, at the urging of the RCA, have been working towards development of an organization similar to the ERO. They have called this organization the Railbelt Reliability Council (RRC). AEA holds a seat on the Implementation Committee (IC) and will be integral in standing up an entity to carry out the duties envisioned by Senate Bill 123. Organizational Makeup: 12 Members o 1-6, Utilities (self-appointed) COMPLETE o 7, AEA (self-appointment) COMPLETE o 8-9, Independent Power Producers (IPP) (selected by the Alaska Independent Power Producers Association (APPIP)) COMPLETE o 10, Consumer Advocacy (selected by consultant based on criteria established in MOU) RFP DRAFTED, SELECTION NLT 6/1/20 o 11-12, non-affiliated (selected by consultant based on criteria establish in MOU) WITHIN 30 DAYS OF CONSUMER ADVOCACY SEATING AEA will participate as part of its core mission to reduce the cost of energy in Alaska and as owners of the Bradley Lake Hydroelectric Project and the Alaska Intertie. It is imperative that the unconstrained flow of Bradley Lake Energy be of the Authority’s foremost consideration. This can be accomplished best through AEA’s continued participation in the management committees of both assets and participation in regional organizations responsible for planning, reliability, and standards within the interconnected network where these assets reside. Enrolled SB 123 LAWS OF ALASKA 2020 Source Chapter No. CSSB 123(RBE) am H _______ AN ACT Relating to electric and telephone cooperatives; relating to telephone service and related telecommunications services; relating to the creation and regulation of electric reliability organizations; relating to participation of electric utilities in electric reliability organizations; relating to duties of electric reliability organizations; providing for integrated resource planning; requiring project preapproval for certain interconnected large energy facilities; and providing for an effective date. _______________ BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: THE ACT FOLLOWS ON PAGE 1 -1- Enrolled SB 123 AN ACT Relating to electric and telephone cooperatives; relating to telephone service and related 1 telecommunications services; relating to the creation and regulation of electric reliability 2 organizations; relating to participation of electric utilities in electric reliability organizations; 3 relating to duties of electric reliability organizations; providing for integrated resource 4 planning; requiring project preapproval for certain interconnected large energy facilities; and 5 providing for an effective date. 6 _______________ 7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 8 "* Section 1. AS 10.15.005 is amended to read: 9 Sec. 10.15.005. Purposes for which cooperatives may be organized. A 10 cooperative may be organized under this chapter for any lawful purpose, except for the 11 purpose of banking or insurance or the furnishing of electric or telephone or related 12 telecommunications service. 13 * Sec. 2. AS 10.15.575(a) is amended to read: 14 Enrolled SB 123 -2- (a) A person other than a cooperative association incorporated under this 1 chapter or a previous law of the state may not use the term "cooperative," or any 2 variation of the term, as part of its corporate or other business name or title. However, 3 this section does not apply to cooperatives organized to generate and transmit electric 4 energy and power or to furnish electric or telephone or related telecommunications 5 service. 6 * Sec. 3. AS 10.15.585 is amended to read: 7 Sec. 10.15.585. Application of chapter. This chapter applies to the fullest 8 extent permitted by the laws and constitution of the United States and of the state to all 9 existing cooperative associations incorporated under a previously existing law of the 10 state relating to incorporation of cooperative associations. However, this section does 11 not apply to cooperatives organized to generate and transmit electric energy and power 12 or to furnish electric or telephone or related telecommunications service. 13 * Sec. 4. AS 10.25.010(a) is amended to read: 14 (a) Except as provided in (b) of this section, an electric or telephone 15 cooperative may 16 (1) sue and be sued in its corporate name; 17 (2) have perpetual existence; 18 (3) adopt a corporate seal and alter it; 19 (4) construct, buy, lease, or otherwise acquire, and equip, maintain, 20 and operate, and sell, assign, convey, lease, mortgage, pledge, or otherwise dispose of 21 or encumber lands, buildings, structures, electric or telephone lines or systems, dams, 22 plants and equipment, and any other real or personal property, tangible or intangible, 23 that is necessary, convenient, or appropriate to accomplish the purpose for which the 24 cooperative is organized; 25 (5) buy, lease, or otherwise acquire, and use, and exercise and sell, 26 assign, convey, mortgage, pledge or otherwise dispose of or encumber franchises, 27 rights, privileges, licenses, and easements; 28 (6) borrow money and otherwise contract indebtedness, and issue 29 evidences of indebtedness, and secure the payment of the indebtedness by mortgage, 30 pledge, or deed of trust of, or any other encumbrance upon its real or personal 31 -3- Enrolled SB 123 property, assets, franchises, or revenues; 1 (7) construct, maintain, and operate electric transmission and 2 distribution lines [,] or telephone or related telecommunications service lines along, 3 on [UPON], under and across publicly owned lands and public thoroughfares, 4 including, without limitation, all roads, highways, streets, alleys, bridges, and 5 causeways; 6 (8) exercise the power of eminent domain; 7 (9) become a member of other cooperatives or corporations or own 8 stock in them; 9 (10) conduct its business and exercise its powers inside or outside the 10 state; 11 (11) adopt, amend, and repeal bylaws; 12 (12) make all contracts necessary, convenient, or appropriate for the 13 full exercise of its powers; 14 (13) make donations for the public welfare or for charitable, scientific, 15 or educational purposes; 16 (14) do and perform any other act and thing, and have and exercise any 17 other power that may be necessary, convenient, or appropriate to accomplish the 18 purpose for which the cooperative is organized. 19 * Sec. 5. AS 10.25.030(a) is amended to read: 20 (a) A telephone cooperative may 21 (1) furnish, improve, and expand telephone or [SERVICE AND] 22 related telecommunications service to its members [,] and to other users not in excess 23 of 10 percent of the number of its members; however, telephone or related 24 telecommunications service may be made available by a cooperative through 25 interconnection of facilities to any number of subscribers of other telephone or 26 related telecommunications systems, and through pay stations to any number of 27 users, and a cooperative that [WHICH] acquires existing telephone facilities or 28 related telecommunications facilities may continue service to persons, not exceeding 29 40 percent of the number of its members, who are already receiving service from the 30 facilities without requiring them to become members, and these persons may become 31 Enrolled SB 123 -4- members on [UPON] terms as may be prescribed in the bylaws; 1 (2) connect and interconnect its telephone or related 2 telecommunications service lines, facilities, or systems with other telephone or 3 related telecommunications service lines, facilities, or systems; 4 (3) make its facilities available to persons furnishing telephone or 5 related telecommunications service inside or outside the state. 6 * Sec. 6. AS 10.25.040(a) is amended to read: 7 (a) The name of a cooperative must include the words "electric," [OR] 8 "telephone," "telecommunications," or "telecom," as appropriate to its purpose, and 9 "cooperative" or "association," and the abbreviation "Inc." ["INC."] 10 * Sec. 7. AS 10.25.080(a) is amended to read: 11 (a) Each incorporator of a cooperative shall be a member of the cooperative or 12 of another cooperative that is a member of it. A person may not become a member 13 unless that person agrees to use electric energy, [OR] telephone or related 14 telecommunications service, or other services furnished by the cooperative when they 15 are made available through its facilities. 16 * Sec. 8. AS 10.25.090(a) is amended to read: 17 (a) An annual meeting of the members of a cooperative shall be conducted as 18 [HELD AT THE TIME AND PLACE] provided in the bylaws of the cooperative. An 19 annual meeting of the members of a cooperative that has been divided into districts as 20 provided for in AS 10.25.190 may consist of separate annual meetings of the members 21 of each district. Unless prohibited by the articles or bylaws of the cooperative, the 22 members of a cooperative may conduct an annual meeting by teleconference or 23 another means of communication that ensures all members participating can 24 hear each other during the meeting. 25 * Sec. 9. AS 10.25.090(c) is amended to read: 26 (c) An annual meeting of district delegates of a cooperative shall be 27 conducted as [HELD AT THE TIME AND PLACE] provided in the bylaws of the 28 cooperative. 29 * Sec. 10. AS 10.25.100 is amended to read: 30 Sec. 10.25.100. Notice of meetings. Except as otherwise provided in this 31 -5- Enrolled SB 123 chapter or the articles or bylaws of a cooperative, written notice stating the time and 1 place of each meeting of the members or district delegates shall be given to each 2 member or district delegate, in person [EITHER PERSONALLY] or by mail, 3 electronic mail, or text message, not less than 15 days nor [OR] more than 60 days 4 before the date of the meeting. Notice of a special meeting of the members, together 5 with notice of the purpose for which the meeting is called, shall be given to each 6 member or district delegate [, EITHER] personally or by mail, electronic mail, or 7 text message, not less than 90 days nor [OR] more than 120 days before the date of 8 the meeting. If mailed, notice is considered given when the notice [IT] is deposited in 9 the United States mail with postage prepaid addressed to the member or district 10 delegate at the address of the member or delegate as the address [IT] appears on the 11 records of the cooperative. If sent by text or electronic mail, notice is considered 12 given when the notice is sent to the member's telephone number, if the telephone 13 is capable of receiving text messages, or the electronic mailing address on record 14 with the cooperative. 15 * Sec. 11. AS 10.25.110(a) is amended to read: 16 (a) Unless the bylaws prescribe the presence of a greater percentage or number 17 of the members for a quorum, a quorum for the transaction of business at all meetings 18 of the members of a cooperative or the members of a district of a cooperative having 19 not more than 1,000 members is five percent of all members [, PRESENT IN 20 PERSON], and a quorum for the transaction of business of the members of a 21 cooperative or the members of a district of a cooperative having more than 1,000 22 members is 50 members [, PRESENT IN PERSON]. If less than a quorum is present, 23 or considered present under (c) of this section, at a meeting, a majority of those 24 present, or considered present under (c) of this section, [IN PERSON] may adjourn 25 the meeting from time to time without further notice. 26 * Sec. 12. AS 10.25.110 is amended by adding a new subsection to read: 27 (c) Unless prohibited by the articles or bylaws, a member or delegate who 28 votes on a matter by electronic communication received or mail postmarked before a 29 meeting begins is considered to have attended the meeting for the matter on which the 30 member or delegate voted. 31 Enrolled SB 123 -6- * Sec. 13. AS 10.25.175(a) is amended to read: 1 (a) A meeting of the board of directors may be attended by members of the 2 cooperative. Except when voice votes are authorized, a vote shall be conducted in such 3 a manner that the members may know the vote of each person entitled to vote. The 4 board of directors may conduct a meeting by teleconference, or another means of 5 communication that ensures all participating directors can hear each other 6 during the meeting, [OR SIMILAR COMMUNICATIONS EQUIPMENT] if the 7 board gives reasonable notice of the meeting and if members of the cooperative are 8 able to attend the meeting sites and hear the meeting. This section applies only to a 9 meeting at which a quorum of the board participates. 10 * Sec. 14. AS 10.25.175(c) is amended to read: 11 (c) The following excepted subjects may be discussed in an executive session: 12 (1) matters the immediate knowledge of which would clearly have an 13 adverse effect on the finances of the cooperative; 14 (2) subjects that tend to prejudice the reputation and character of a 15 person; however, the person may request a public discussion; 16 (3) matters discussed with an attorney for the cooperative, the 17 immediate knowledge of which could have an adverse effect on the legal position of 18 the cooperative; 19 (4) personnel matters. 20 * Sec. 15. AS 10.25.290(a) is amended to read: 21 (a) A corporation organized under the laws of the state and supplying or 22 having the corporate power to supply electric energy [,] or to furnish telephone or 23 related telecommunications service [,] may be converted into a cooperative by 24 complying with the requirements of this section and thereupon becomes subject to this 25 chapter as if originally organized under this chapter. 26 * Sec. 16. AS 10.25.430 is amended to read: 27 Sec. 10.25.430. Validity of mortgage under Rural Electrification Act [OF 28 1936]. A mortgage made by a cooperative organized under this chapter to the United 29 States of America, or an agency or instrumentality of it, to secure indebtedness 30 incurred under 7 U.S.C. 901 - 950bb-2 [7 U.S.C. 901 - 950b] (Rural Electrification 31 -7- Enrolled SB 123 Act [OF 1936]), as amended, is not void as against creditors of the mortgagor and 1 subsequent purchasers and encumbrancers of the property in good faith for value 2 because the mortgage is not accompanied by an affidavit of the parties to it, or an 3 affidavit of the agent or attorney-in-fact of a party to it, that the mortgage is made in 4 good faith to secure the amount named, and without a design to hinder, delay or 5 defraud creditors. A mortgage made by a cooperative organized under this chapter to 6 the United States of America, or an agency or instrumentality of it to secure 7 indebtedness incurred under 7 U.S.C. 901 - 950bb-2 [7 U.S.C. 901 - 950b] (Rural 8 Electrification Act [OF 1936]), as amended, need not set out [FORTH] the date upon 9 which the indebtedness secured by it becomes due. 10 * Sec. 17. AS 10.25.460 is amended to read: 11 Sec. 10.25.460. Registered office and registered agent. Each cooperative 12 shall have and continuously maintain in the state a registered 13 (1) office, which may be, but need not be, the same as the location of 14 the principal office; 15 (2) agent who is either an individual resident in the state [AND] 16 whose business office is identical with the registered office or a domestic or foreign 17 corporation authorized to transact business in the state whose business office is 18 identical with the registered office. 19 * Sec. 18. AS 10.25.810 is amended to read: 20 Sec. 10.25.810. Purpose. Cooperative, nonprofit, membership corporations 21 may be organized under this chapter for the purpose of supplying electric energy or 22 telephone or related telecommunications service and promoting and extending the 23 use of these services. 24 * Sec. 19. AS 10.25.820 is amended to read: 25 Sec. 10.25.820. Chapter extended to existing cooperatives. This chapter 26 applies to all nonprofit cooperatives organized under any other law of the state for the 27 purpose of supplying electric energy and power, or telephone or related 28 telecommunications service, to its members, or for the purpose of promoting and 29 extending the use of electric energy and power [,] or telephone or related 30 telecommunications service. These cooperatives are subject to this chapter as if 31 Enrolled SB 123 -8- originally organized under it. 1 * Sec. 20. AS 10.25.840 is amended by adding a new paragraph to read: 2 (6) "related telecommunications service" means 3 (A) the transmission and reception of messages, impressions, 4 pictures, and signals by means of electricity, electromagnetic waves, or any 5 other source of energy, force variations, or impulses, whether conveyed by 6 cable, wire, radiated through space, or transmitted through other media; or 7 (B) a service capable of electronically generating, acquiring, 8 storing, transforming, processing, retrieving, utilizing, or making available 9 information, through the use of broadband Internet access, data center services, 10 information technology, or other technology services. 11 * Sec. 21. AS 42.05 is amended by adding new sections to read: 12 Article 9A. Electric Reliability Organizations, Plans, and Standards. 13 Sec. 42.05.760. Electric reliability organizations. (a) An electric utility must 14 participate in an electric reliability organization if the utility operates in an 15 interconnected electric energy transmission network served by an electric reliability 16 organization certificated by the commission. The commission may not require an 17 electric reliability organization for an interconnected bulk-electric system if all of the 18 load-serving entities operating in the interconnected bulk-electric system are exempt 19 under AS 42.05.711(b). 20 (b) A person may submit to the commission an application for certification as 21 an electric reliability organization for an interconnected bulk-electric system. The 22 commission may certificate one electric reliability organization for each 23 interconnected electric energy transmission network. The commission may certificate 24 an electric reliability organization if the commission determines that the electric 25 reliability organization has the ability to comply with AS 42.05.762. 26 (c) The commission shall immediately notify the interconnected load-serving 27 entities within a new or existing interconnected bulk-electric system of the 28 requirements of this section. 29 (d) Notwithstanding the requirements in (e) of this section, if all load-serving 30 entities within an interconnected bulk-electric system petition the commission for an 31 -9- Enrolled SB 123 exemption from the requirement to establish an electric reliability organization for the 1 interconnected electric energy transmission network, the commission may waive the 2 requirement to form an electric reliability organization for that interconnected electric 3 energy transmission network. 4 (e) The commission shall form and certificate an electric reliability 5 organization for an interconnected bulk-electric system under this section if, within 6 (1) 90 days after the commission notifies the interconnected load-7 serving entities under (c) of this section, no person has applied for certification as an 8 electric reliability organization for that interconnected bulk-electric system; or 9 (2) 270 days after the commission notifies the interconnected load-10 serving entities under (c) of this section, the commission has not certificated an 11 electric reliability organization for that interconnected bulk-electric system. 12 (f) The commission may certificate an electric reliability organization for an 13 interconnected electric energy transmission network that is not an interconnected bulk-14 electric system if 15 (1) one or more load-serving entities within that network successfully 16 petition the commission to find that an electric reliability organization should be 17 established for the network; and 18 (2) a person applies for certification as an electric reliability 19 organization for the network. 20 Sec. 42.05.762. Duties of an electric reliability organization. An electric 21 reliability organization shall 22 (1) develop reliability standards that provide for an adequate level of 23 reliability of an interconnected electric energy transmission network; 24 (2) develop integrated resource plans under AS 42.05.780(a); 25 (3) establish rules to 26 (A) ensure that the directors of the electric reliability 27 organization and the electric reliability organization act independently from 28 users, owners, and operators of the interconnected electric energy transmission 29 network; 30 (B) equitably allocate reasonable dues, fees, and other charges 31 Enrolled SB 123 -10- among all load-serving entities connected to the interconnected electric energy 1 transmission network for all activities under AS 42.05.760 - 42.05.790; 2 (C) provide fair and impartial procedures for the enforcement 3 of reliability standards; 4 (D) provide for reasonable notice and opportunity for public 5 comment, due process, openness, and balancing of interests in exercising its 6 duties; and 7 (4) be governed by a board that 8 (A) includes as nonvoting members the chair of the 9 commission or the chair's designee and the attorney general or the attorney 10 general's designee; and 11 (B) is formed as 12 (i) an independent board; 13 (ii) a balanced stakeholder board; or 14 (iii) a combination independent and balanced 15 stakeholder board. 16 Sec. 42.05.765. Reliability standards. (a) An electric reliability organization 17 shall file each reliability standard or modification to a reliability standard with the 18 commission as a new or revised tariff provision. All users, owners, and operators of an 19 interconnected electric energy transmission network served by an electric reliability 20 organization, including a user, owner, or operator that is exempt from other regulation 21 under AS 42.05.711 or another provision of this chapter, shall comply with reliability 22 standards contained in a tariff that is approved by the commission. The commission 23 may enforce a reliability standard approved under this section. A reliability standard 24 approved under this section 25 (1) shall provide for the reliable operation of the interconnected 26 electric energy transmission network or of an interconnected electric energy 27 transmission network facility; 28 (2) may provide for 29 (A) protection from a cybersecurity incident; 30 (B) facility security; 31 -11- Enrolled SB 123 (C) additions or modifications to an interconnected bulk-1 electric system facility to the extent necessary to provide for reliable operation 2 of the interconnected electric energy transmission network; 3 (3) may result in, but may not be designed for the purpose of, requiring 4 enlargement of interconnected bulk-electric system facilities or construction of new 5 transmission capacity or generation capacity. 6 (b) The commission may, after public notice, approve a proposed reliability 7 standard or modification to a reliability standard submitted by an electric reliability 8 organization. The commission shall determine whether the proposed standard or 9 modification is just, reasonable, not unduly discriminatory or preferential, and in the 10 public interest before approving the standard or modification. If, after public notice 11 and a hearing, the commission determines that a proposed reliability standard or 12 modification to a reliability standard submitted by an electric reliability organization 13 should be changed, the commission shall return the standard to the electric reliability 14 organization for timely modification and resubmission, consistent with the 15 commission's order. The commission may modify a resubmitted standard if the 16 commission determines that the standard is inconsistent with the commission's order 17 or the public interest. A standard approved under this subsection satisfies the 18 requirements of AS 42.05.291(c). 19 (c) The commission may, on its own motion or upon complaint, order an 20 electric reliability organization to submit to the commission a proposed reliability 21 standard or modification to a reliability standard that addresses a specific matter. 22 (d) If a reliability standard adopted under this section conflicts with a function, 23 rule, tariff, rate schedule, or agreement that has also been accepted, approved, adopted, 24 or ordered by the commission, a user, owner, or operator shall comply with the 25 function, rule, tariff, rate schedule, or agreement until the conflict is resolved by the 26 commission. 27 (e) If, as a condition of a contract with the United States Department of 28 Defense, a user, owner, or operator is subject to a federal standard, rule, or function 29 that conflicts with a reliability standard adopted under this section, the user, owner, or 30 operator shall comply with the federal standard, rule, or function until the conflict is 31 Enrolled SB 123 -12- resolved by the commission. The commission may not resolve the conflict in a manner 1 that prevents the user, owner, or operator from fulfilling the contract with the United 2 States Department of Defense. 3 (f) The commission may direct an electric reliability organization to conduct 4 assessments of the reliability and adequacy of the interconnected electric energy 5 transmission network. 6 Sec. 42.05.767. Electric reliability organization rules; approval. An electric 7 reliability organization shall file with the commission each proposed rule or proposed 8 rule change, along with an explanation of the basis and purpose of the proposed rule or 9 proposed rule change. The commission may, on its own motion or upon complaint, 10 propose a change to the rules of an electric reliability organization. A rule change 11 proposed by the commission takes effect upon a finding by the commission, after 12 notice and opportunity for public comment, that the rule change is just, reasonable, not 13 unduly discriminatory or preferential, and in the public interest. 14 Sec. 42.05.770. Regulations. The commission shall adopt regulations 15 governing electric reliability organizations, reliability standards, and modifications to 16 reliability standards consistent with this section. Regulations under AS 42.05.760 - 17 42.05.790 must 18 (1) require that an electric reliability organization's tariff include 19 (A) standards for nondiscriminatory open access transmission 20 and interconnection; 21 (B) standards for transmission system cost recovery; 22 (2) provide a process to identify and resolve conflicts between a 23 reliability standard and a function, rule, tariff, rate schedule, or agreement that has 24 been accepted, approved, adopted, or ordered by the commission; 25 (3) allow an electric reliability organization to recover its costs through 26 surcharges added to the rate for each participating load-serving entity. 27 Sec. 42.05.772. Duties of load-serving entities. All load-serving entities, 28 including load-serving entities otherwise exempt from regulation under this chapter, in 29 an interconnected bulk-electric system served by an electric reliability organization are 30 subject to the electric reliability organization's tariff on file with the commission. 31 -13- Enrolled SB 123 Sec. 42.05.775. Penalties. (a) An electric reliability organization may impose a 1 penalty on a user, owner, or operator of an interconnected electric energy transmission 2 network for a violation of a reliability standard if, after notice and a hearing, the 3 electric reliability organization 4 (1) finds that the user, owner, or operator has violated a reliability 5 standard; and 6 (2) files notice of the proposed penalty and the record of the 7 proceeding with the commission at least 30 days before imposition of the penalty. 8 (b) The commission may, on its own motion or upon complaint, order a user, 9 owner, or operator of an interconnected electric energy transmission network to 10 comply with a reliability standard and impose a penalty against the user, owner, or 11 operator if the commission finds, after notice and a hearing, that the user, owner, or 12 operator has engaged or is about to engage in an act or practice that violates a 13 reliability standard. 14 (c) A user, owner, or operator may appeal to the commission a penalty 15 imposed under (a) of this section. The commission may, on its own motion, review a 16 penalty imposed under (a) of this section. The commission shall, after notice and a 17 hearing, issue an order affirming, modifying, reinstating, or revoking the penalty or 18 remand the penalty to the electric reliability organization for further proceedings. 19 Unless otherwise ordered by the commission, a penalty shall remain in effect during 20 proceedings under this subsection. The commission shall expedite proceedings under 21 this subsection. 22 (d) A penalty imposed under this section must bear a reasonable relation to the 23 seriousness of the violation and take into consideration the effort of a user, owner, or 24 operator to remedy the violation in a timely manner. 25 Sec. 42.05.780. Integrated resource planning. (a) An electric reliability 26 organization shall file with the commission in a petition for approval an integrated 27 resource plan for meeting the reliability requirements of all customers within its 28 interconnected electric energy transmission network in a manner that provides the 29 greatest value, consistent with the load-serving entities' obligations. An integrated 30 resource plan must contain an evaluation of the full range of cost-effective means for 31 Enrolled SB 123 -14- load-serving entities to meet the service requirements of all customers, including 1 additional generation, transmission, battery storage, and conservation or similar 2 improvements in efficiency. An integrated resource plan must include options to meet 3 customers' collective needs in a manner that provides the greatest value, consistent 4 with the public interest, regardless of the location or ownership of new facilities or 5 conservation activities. 6 (b) The commission shall, after public notice and review of the process used to 7 develop an integrated resource plan, approve or modify an integrated resource plan 8 filed under (a) of this section, consistent with the public interest. The commission shall 9 determine whether the petition is complete, has been publicly noticed, and is 10 consistent with the commission's regulations and orders. The commission may reject 11 all or part of a petition that does not comply with the commission's form or filing 12 regulations. Within 45 days after receipt, the commission shall approve the petition or 13 suspend the petition to an investigation docket. If a petition is not suspended to an 14 investigation docket within 45 days, the petition is considered approved. If, after 15 public notice and a hearing, the commission concludes that the plan requires 16 modification, the commission shall return the plan to the electric reliability 17 organization for timely modification and refiling, consistent with the commission's 18 order. The commission may modify a refiled integrated resource plan if the 19 commission determines that the plan is inconsistent with the commission's order or the 20 public interest. 21 (c) The commission may include in a public utility's rates 22 (1) the cost of resources acquired in accordance with an integrated 23 resource plan adopted under this section; 24 (2) cost-effective expenditures for improving the efficiency with which 25 a public utility provides and its customers use utility services; and 26 (3) the cost of a utility to comply with the planning requirements of 27 this section, including planning costs and portfolio development costs. 28 (d) The commission shall adopt regulations governing the filing of a plan 29 under this section, including the content of a plan, time for filing a plan, criteria for 30 determining cost-effectiveness and greatest value, and other criteria as determined by 31 -15- Enrolled SB 123 the commission. 1 (e) In this section, 2 (1) "planning costs" means the costs of evaluating the future demand 3 for services and alternative methods of satisfying future demand; 4 (2) "portfolio development costs" means the costs of preparing a 5 resource in a portfolio for timely acquisition of the resource. 6 Sec. 42.05.785. Project preapproval for large energy facilities. (a) A public 7 utility, including a public utility that is exempt from other regulation under 8 AS 42.05.711 or another provision of this chapter, that is interconnected with an 9 interconnected electric energy transmission network served by an electric reliability 10 organization certificated by the commission may not construct a large energy facility 11 unless the commission determines that the facility 12 (1) is necessary to the interconnected electric energy transmission 13 network with which it would be interconnected; 14 (2) complies with reliability standards; and 15 (3) would, in a cost-effective manner, meet the needs of a load-serving 16 entity that is substantially served by the facility. 17 (b) Unless the commission finds otherwise by clear and convincing evidence, 18 a large energy facility that was included in the most recent integrated resource plan 19 approved under AS 42.05.780 is considered to satisfy the requirements of (a) of this 20 section. 21 (c) The commission may not require preapproval for a 22 (1) project for refurbishment or capitalized maintenance; 23 (2) hydropower project licensed by the Federal Energy Regulatory 24 Commission before September 30, 2016. 25 (d) The commission shall adopt regulations 26 (1) governing project preapproval; 27 (2) defining refurbishment and capitalized maintenance; 28 (3) maintaining municipal jurisdiction over local planning decisions; 29 and 30 (4) addressing projects undertaken before integrated resource plan 31 Enrolled SB 123 -16- approval for an interconnected electric energy transmission network. 1 (e) In this section, "large energy facility" means 2 (1) an electric power generating plant or combination of plants at a 3 single site with a combined capacity of 15,000 kilowatts or more with transmission 4 lines that directly interconnect the plant with the transmission system; 5 (2) a high-voltage, above-ground transmission line that 6 (A) has a capacity of 69 kilovolts or more; and 7 (B) is longer than 10 miles; 8 (3) a high-voltage submarine or underground cable that 9 (A) has a capacity of 69 kilovolts or more; and 10 (B) is longer than three miles; 11 (4) an energy storage device or combination of devices at a single site 12 with a combined capacity of 15,000 kilowatts and one hour or more of energy storage 13 that directly connects with the interconnected bulk-electric system; and 14 (5) a reactive compensation device or combination of devices at a 15 single site with a combined reactive capability of 15,000 kilovars or more with a step-16 up device to regulate interconnected bulk-electric system voltage. 17 Sec. 42.05.790. Definitions. In AS 42.05.760 - 42.05.790, 18 (1) "cybersecurity incident" means a malicious act or suspicious event 19 that disrupts or attempts to disrupt the security of data or the operation of 20 programmable electronic devices and communication networks, including hardware 21 and software that are essential to the reliable operation of the interconnected electric 22 energy transmission network; 23 (2) "electric reliability organization" means an organization that is 24 certificated by the commission under AS 42.05.760; 25 (3) "electric utility" means a public utility that provides electricity 26 service; 27 (4) "interconnected bulk-electric system" means an interconnected 28 electric energy transmission network that includes two or more load-serving entities, 29 at least one of which is subject to the provisions of AS 42.05.291; 30 (5) "interconnected electric energy transmission network" means a 31 -17- Enrolled SB 123 network of interconnected electrical generation resources, transmission lines, 1 interconnections, and associated equipment operated at voltages of 69 kilovolts or 2 more, operating in a geographic area that are synchronized so that the failure of one or 3 more of the components may adversely affect the ability of the operators of other 4 components within the system to maintain reliable operation of the facilities within the 5 control of the operators; 6 (6) "load-serving entity" means an electric utility that has a service 7 obligation to distribute power to more than 10 customers that receive invoices directly 8 from the entity; 9 (7) "reliable operation" means operating the elements of the 10 interconnected electric energy transmission network within equipment and electric 11 system thermal, voltage, and stability limits so that instability, uncontrolled separation, 12 or cascading failures of the system will not occur as a result of a sudden disturbance, 13 including a cybersecurity incident, or unanticipated failure of system elements. 14 * Sec. 22. AS 10.25.030(b) and 10.25.400(e) are repealed. 15 * Sec. 23. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 TRANSITION: REGULATIONS. On or before July 1, 2021, the Regulatory 18 Commission of Alaska shall adopt regulations necessary to implement the changes made by 19 sec. 21 of this Act. The regulations take effect under AS 44.62 (Administrative Procedure 20 Act), but not before the effective date of the law implemented by the regulation. 21 * Sec. 24. Sections 1 - 20, 22, and 23 of this Act take effect immediately under 22 AS 01.10.070(c). 23 * Sec. 25. Except as provided in sec. 24 of this Act, this Act takes effect July 1, 2021. 24 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA AEA Board Update – Soldotna to Quartz Creek Transmission Line April 15, 2020 S/Q Line Purchase Update Background: In the fall of 2019, the Swan Lake fire resulted in damage and remediation to a portion of the interconnected railbelt electric grid known as the “Soldotna to Quartz Creek (S/Q) Transmission Line.” During the outage and resultant remediation, power from the AEA owned Bradley Lake Hydroelectric facility was stranded on the Kenai Peninsula and unable to be delivered to the entirety of participants in the Bradley Lake Project. Actions: Since the fire occurred, the collective group of railbelt utilities and the Alaska Energy Authority have been investigating the strengths, weaknesses, opportunities, and threats associated with aligning ownership and operation of assets with the organization impacted. Tenets of the Discussion: AEA’s mission is to reduce the cost of energy in Alaska. AEA has worked to ensure that power from the Bradley Lake Hydroelectric facility is decongested and can be delivered proportionally to the percentage share of the participating utilities. The passage of Senate Bill 123, the creation of a Railbelt Reliability Council (RRC), and the near term defeasance of bonding associated with the Bradley facility creates a confluence of circumstances for ownership and possible upgrading of this line segment. AEA and Bradley participating utilities are committed to working cooperatively to maximize the strengths and opportunities currently presented. 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA AEA Board Update – Soldotna to Quartz Creek Transmission Line April 15, 2020 S/Q Line Purchase Update Background: In the fall of 2019, the Swan Lake fire resulted in damage and remediation to a portion of the interconnected railbelt electric grid known as the “Soldotna to Quartz Creek (S/Q) Transmission Line.” During the outage and resultant remediation, power from the AEA owned Bradley Lake Hydroelectric facility was stranded on the Kenai Peninsula and unable to be delivered to the entirety of participants in the Bradley Lake Project. Actions: Since the fire occurred, the collective group of railbelt utilities and the Alaska Energy Authority have been investigating the strengths, weaknesses, opportunities, and threats associated with aligning ownership and operation of assets with the organization impacted. Tenets of the Discussion: AEA’s mission is to reduce the cost of energy in Alaska. AEA has worked to ensure that power from the Bradley Lake Hydroelectric facility is decongested and can be delivered proportionally to the percentage share of the participating utilities. The passage of Senate Bill 123, the creation of a Railbelt Reliability Council (RRC), and the near term defeasance of bonding associated with the Bradley facility creates a confluence of circumstances for ownership and possible upgrading of this line segment. AEA and Bradley participating utilities are committed to working cooperatively to maximize the strengths and opportunities currently presented. 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA April 7, 2020 Dear Ms. Hulbert and Mr. Mitchell: The Board of Directors for the Alaska Industrial Development and Export Authority (AIDEA) and the Alaska Energy Authority (AEA) has recently discussed with staff their understanding of ongoing efforts you are making to reduce to writings a transmission agreement and an interconnection agreement. We are aware that to date neither agreement has been concluded but it is our hope that you are making positive progress on both. We urge you to prioritize to the greatest extent possible your efforts and we ask you to keep us informed. If you would like to address us in a regularly scheduled Board meeting we welcome your contact and will certainly accommodate a status or progress report from you. We are also aware that the FERC permission held by Juneau Hydro Power, Inc. may need to be extended. To that matter it is appropriate to inform you that if an extension is sought, having discussed it we have determined that it is in the best interest of the State of Alaska and the general Southeast Alaska region that both authorities support such an extension. While we respect that in negotiating the transmission agreement and an interconnection agreement both of your companies have their own preferences as to terms and conditions it is difficult to understand how after many months those differences cannot be bridged by mutual concessions whether it be on engineering issues, ownership of assets, location of facilities, right of way size and location, or payments for costs incurred or which will necessarily be incurred to design or rebuild systems that and must be paid by one party to prevent harm to another’s customers. Surely you acknowledge that there have been many contentious negotiations of transmission and interconnection agreements elsewhere in the United States that have been satisfactorily resolved and which have been modified when facts justifying a change are made evident and are proven to harm one party wrongly. We believe that remedy should be available to you as well. Connie Hulbert President and General Manager Alaska Electric Light &Power 5601 Tonsgard Court Juneau Alaska 99801-7201 Duff Mitchell Managing Director Juneau Hydro Power Inc. PO Box 22775 Juneau AK 99802 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG If you believe that there is a helpful role that the Alaska Energy Authority can fill in helping your companies reach necessary agreements please directly inform me or Mr. Thayer, AEA’s Executive Director. The Board will take the matter up immediately and promptly advise of our decision if you inform that you wish AEA involved. It is not our role to list or argue with you for the many benefits that might flow from the Sweetheart Lake Hydro Project once that projects power is available for Juneau’s docks, for mining ventures, for adjacent communities, or other customers. It is our role to do all we can to encourage development in Alaska and to do everything possible to reduce the cost of energy to Alaskan’s wherever they work and reside. Sincerely, J. Dana Pruhs Chairman of the Board Cc Dennis Vermillion, Avista President and CEO Kriss Hart, President and CEO Juneau Hydropower Inc. Lieutenant Governor Kevin Meyer AIDEA and AEA Board of Directors Curtis W. Thayer, AEA Executive Director TW Patch, AEA Director of Planning Bryan Carey, AEA Hydro Group Manager Stefan Saldanha, Alaska Department of Law Dean D. Thompson, Kemppel, Huffman and Ellis, P.C. Michael Jungreis, Reeves Amodio LLC Page 1 of 2 2019/2020 AEA Community Outreach Schedule Last modified on April 3, 2020 # Status Date Organization AEA Staff 1. Past November 18, 2019 Alaska Municipal League Annual Conference Tom Benkert 2. Past November 21, 2019 Alaska Municipal League Annual Conference Jeff Williams 3. Past December 5, 2019 BIA Tribal Providers Conference Curtis W. Thayer 4. Past December 9, 2019 Anchorage Chamber of Commerce Curtis W. Thayer 5. Past December 18, 2019 Chugiak-Eagle River Chamber of Commerce Curtis W. Thayer 6. Past January 10, 2020 Commonwealth North’s Energy Action Coalition Curtis W. Thayer 7. Past January 29, 2020 Alaska Power Association’s Legislative Conference Curtis W. Thayer 8. Past January 29, 2020 Senate Special Committee on the Railbelt Electric System Curtis W. Thayer 9. Past January 30, 2020 House Subcommittee Curtis W. Thayer 10. Past January 30, 2020 Senate Community & Regional Affairs Committee Curtis W. Thayer 11. Past February 4, 2020 Southeast Conference Mid-Session Summit Curtis W. Thayer 12. Past February 5-7, 2020 National Association of State Energy Officials Curtis W. Thayer 13. Past February 10-14, 2020 Alaska Forum on the Environment AEA Team Members: a. Welcome Remarks during Keynote Event: Alaska Beyond Oil Panel T.W. Patch b. Renewable Energy & Rural Alaska Powerhouse Panel Bill Price c. Bulk Fuel Tank Farm Updates: Construction, Training, & Regulations Panel Bill Price d. The Shines in Alaska: Solar Power Projects on the Railbelt Panel Tom Benkert e. Harvesting Energy from Wood & Waste: Biomass & Landfill Gas Fuels in Alaska Panel Taylor Asher f. Electric Vehicles Panel Betsy McGregor g. Solar Power in Rural Alaska Panel David Lockard h. The Low-Hanging Fruit of Energy Savings Panel Rob Jordan i. New Hydropower Energy for Alaska Panel Bryan Carey j. Rooftop Solar in your Alaskan Community Tom Benkert k. Capturing the Wind Across Alaska: Large Scale Wind Projects Panel Kirk Warren Page 2 of 2 l. Clean Energy Financing Panel Tom Benkert 14. Past February, 11, 2020 Community & Regional Affairs Committee Curtis W. Thayer 15. Past February 20, 2020 Greater Wasilla Chamber of Commerce Curtis W. Thayer 16. Past March 10, 2020 Greater Fairbanks Chamber of Commerce Curtis W. Thayer 17. Upcoming April, 21, 2020 (Cancelled*) Homer Chamber of Commerce Curtis W. Thayer 18. Upcoming May 6, 2020 (Scheduled**) Kenai and Soldotna Chambers of Commerce Curtis W. Thayer 19. Upcoming June 11, 2020 (Scheduled**) Seward Chamber of Commerce Curtis W. Thayer 20. Upcoming To Be Determined, 2020 Greater Palmer Chamber of Commerce Curtis W. Thayer 21. Upcoming To Be Determined, 2020 Bethel Chamber of Commerce Curtis W. Thayer 22. Upcoming To Be Determined, 2020 Kenai/Soldotna Chamber of Commerce Curtis W. Thayer *Cancelled – AEA’s presentation date/time was cancelled due to the COVID-19 situation. **Scheduled – AEA’s presentation date/time is still schedule, but contingent on the COVID-19 situation. AEA LOAN DASHBOARD REPORT AEA POWER PROJECT LOAN FUND YEAR TO DATE 07/01/2019 LOAN ACTIVITY EARNINGS START DATE LOAN CATEGORY STARTING BALANCE FUNDS DISBURSED PAYMENTS RECEIVED ENDING BALANCE INTEREST RECEIVED LATE FEES RECEIVED INTEREST + LATE FEES 20 AEA POWER PROJECT FUND LOANS 23,690,152 4,514,324 (311,406) 27,893,070 271,541 694 272,235 TOTAL # OF PPF LOANS 0 LOAN PROGRAM SUMMARY # OF DELINQUENT PPF LOANS Outstanding Loans per Trial Balance 27,893,070.20$ -$ Uncommitted Cash Balance 10,422,145.37$ LOANS DELINQUENT AMOUNT ($)Loan Commitments 58,569.36$ 0.000%Total Loan Program 38,373,784.93$ % OF DELINQUENT LOANS TO PORTFOLIO BALANCE 03/31/2020 END DATE FISCAL YEAR-TO-DATE LOAN PORTFOLIO ACTIVITY (07/01/2019 - 03/31/2020 ) Waterfall Creek Hydro - King Cove, Alaska Print Date: 4/6/2020 Page 1 of 2 Award No Project Name DC Funding Perf. Period Beg Perf. Period Thru 01349-09 RPSU - Togiak-Twin Hills Intertie 4,187,221 2/15/2011 9/30/2021 01432-08 BFU - Tatitlek 1,472,000 6/1/2013 12/31/2020 01473-06 RPSU - Clark's Point 2,819,700 6/16/2015 6/30/2020 01474-06 BFU - Chalkytsik 517,500 6/16/2015 12/31/2020 01485-04 START Communities Tech Asst 375,000 11/1/2015 6/30/2022 01492-07 BFU - Beaver 608,000 7/6/2016 12/31/2020 01500-05 Bulk Fuel Operator Training 750,000 9/1/2016 12/31/2020 01515-06 Circuit Rider Program 600,000 1/1/2017 12/31/2020 01516-06 RPSU - Maintenance & Improvement 748,776 10/1/2016 12/31/2020 01523-05 Miscellaneious Small M&I Projects 520,000 6/1/2017 12/31/2020 01524-03 RPSU - Port Heiden 1,250,000 7/1/2017 6/30/2020 01525-04 Power Plant Operator Training 467,514 8/15/2017 9/30/2020 01544-03 Itinerant Utility Training 500,000 3/1/2018 6/30/2021 01548-04 RPSU M&I - Statewide 2,550,000 5/1/2018 12/31/2020 * Amendment in progress 01549-03 RPSU Inventory & Assessment - Statewide 300,000 4/18/2018 9/30/2020 01550-02 RPSU - Akhiok 1,500,000 5/1/2018 12/31/2020 01551-04 RPSU - Venetie 250,000 5/1/2018 12/31/2019 * Amendment in progress 01557-02 Barge Headers and Fill Lines 3,976,820 10/1/2018 12/31/2022 01571-00 BFU - Nunapitchuk 1,852,546 8/15/2019 12/31/2021 01573-00 BFO In Community Training 40,000 8/15/2019 3/31/2020 01574-00 RPSU - Nikolai 351,050 8/1/2019 12/31/2020 01575-00 RPSU - Nelson Lagoon 135,455 8/1/2019 3/31/2020 01576-00 RPSU - Rampart 351,050 8/1/2019 12/31/2020 01577-00 RPSU - Napaskiak 135,455 8/1/2019 3/31/2020 01589-00 2020 Rural Energy Track 10,000 1/1/2020 3/31/2020 01592-00 BFU - Scammon Bay 300,000 2/17/2020 3/31/2021 Total Funding for Active DC Awards:26,568,087 Less Total Spending on Active DC Awards:(11,588,264) Total Funding Remaining on Active DC Awards:14,979,824 Active Denali Commission Awards As of 04/03/2020 NOW READ OUR ARTICLES IN 40 DIFFERENT LANGUAGES. Select Language Powered by Translate SEARCH our ARCHIVE of over 14,000 articles Vol. 25, No.11 Week of March 15, 2020 Providing coverage of Alaska and northern Canada's oil and gas industry New initiative for EV charging stations Chugach Electric partnering with other entities for the installation of new facilities that will support electric vehicle use Alan Bailey for Petroleum News Anchorage-based electric utility Chugach Electric Association is partnering with five other entities to participate in an electric vehicle charging station research project in Southcentral Alaska, Chugach Electric has announced. The entities, selected competitively based on criteria such as geographic diversity and the availability of activities to carry out while charging is in progress, consist of Alyeska Resort; Creekbend Co., Hope; Dimond Center; JL Properties, South Restaurant retail center; and the Municipality of Anchorage parking lot, east of Rustic Goat Restaurant, Chugach Electric says. Each selected member will choose, install, own and maintain a charging station for the duration of the three-year research project. Chugach Electric will contribute up to $7,500 towards the installed cost of each facility. The objective of the project is to better understand the driving habits and charging needs of electric vehicle owners, and to gain insights into the extent to which the use of chargers may be made in commercial areas. While the charger at Alyeska Resort has already been in operation since September 2019, the other facilities will be installed by the end of June, after the ground thaws, Chugach Electric says. Growing use The use of electric vehicles in the Anchorage region has been growing, albeit from a very low start. Although expensive to buy, the vehicles are relatively cheap to operate, with much simpler maintenance requirements, higher energy efficiency and lower fuel costs than traditional gasoline or diesel vehicles. However, the vehicle mileage range between charges impacts their popularity - hence presumably the interest in evaluating and promoting the use of commercial charging stations. The Alaska Energy Authority is planning to help fund an electric vehicle charging network in Alaska, using funds allocated from a U.S. settlement relating to cheating by Volkswagen over the testing of emissions from diesel vehicles. Chugach Electric says that the most recent count indicates that just over 150 all-electric (as distinct from hybrid) vehicles are registered in the Municipality of Anchorage. That represents an increase of 50 vehicles since last August. The vehicles come from 12 different manufacturers, but with 110 of the vehicles being made by Tesla, Chugach Electric says. Did you find this article interesting? Tweet it Digg it | Click here to subscribe to Petroleum News for as low as $89 per year. 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Home Contact Search Login NEWSROOM PUBLICATIONS NASEO Newsroom Home > Newsroom > Article March 18, 2020 By Dylan Tucker, NASEO Environmental Transportation Source: Wikimedia Commons Alaska Energy Authority Funds School Bus Replacement Program Last month, the Alaska Energy Authority (AEA) announced $4.4 million in funding to replace 33 school buses in eight school districts around the state. The funds will remove older diesel buses from the road and cover the costs of newer, more efficient, and cleaner burning buses. “By replacing older engines with new technologies, the school buses will help improve air quality in these areas of the state,” said AEA Executive Director, Curtis W. Thayer, in AEA’s press release. "The new buses will result in a reduction of 24.6 short tons of NOx and 1.8 short tons of fine particulate matter over the remaining lifetimes of the replaced school buses.” The focus on school buses will also protect the health of schoolchildren around the state. These funds were made available under the Volkswagen Settlement, where the automaker was fined nearly $15 billion due to cheating on vehicle emission standards tests. Of those funds, $3 billion was allocated to state governments, based on the number of affected vehicles in each state. In 2017, Alaska was allocated $8.13 million to administer programs which reduce NOx emissions. AEA announced the VW Settlement School Bus Replacement Program, asking school districts to apply for new buses. Applications were then ranked on expected reductions in air pollution, and ambient air quality where the buses are operated, as well as the presence of at-risk communities which would be exposed to this pollution. TweetShare Contact Information National Association of State Energy Officials 1300 North 17th Street, Suite 1275 Arlington, Virginia 22209 (703) 299-8800 fax: (703) 299-6208 Subscribe Subscribe to our email newsletter to receive our news and updates. your@email.com Subscribe Join NASEO NASEO's Affiliate membership provides businesses, trade associations, nonprofits, and other organizations a unique alliance opportunity with each and every State Energy Office. Join Now EVENTSPOLICYISSUESMEMBERSABOUT http://www.newsminer.com/news/local_news/gvea-executive-gives-status-report-of-utility/article_54386a72-68e7- 11ea-b024-438cef0c63b8.html GVEA executive gives status report of utility Amanda Bohman abohman@newsminer.com Mar 18, 2020 An attendee walks through the rows of solar panels during a tour of the new GVEA Solar Farm off of South Cushman Street Friday afternoon, October 12, 2018. The 563KW solar array consists of 1760 300-watt panels and covers about 2 1/2 acres. The micro-inverter system has an estimated peak production of 6 megawatt hours of electricity per day. (THIS FROM PRESS RELEASE) Golden Valley Electric Association and local officials held a ribbon cutting ceremony today to acknowledge the commissioning of its 563-kilowatt solar farm. GVEA’s solar installation is the largest photovoltaic (PV) system in the State of Alaska. The project should produce enough energy to power 71 homes (using an average of 660 kWh per month). “GVEA is expanding its renewable energy portfolio with the addition of this solar PV system,” said Cory Borgeson, GVEA’s President & CEO. GVEA’s Board of Directors approved this project last fall. A local Fairbanks business, ABS Alaskan Inc. supplied the 1,760 panels, each of which has a peak generating potential of 320 watts. “This solar farm will give Golden Valley a better understanding of the performance of a solar farm on our system and the resulting cost per kilowatt-hour,” Borgeson said. The solar array is constructed on a 3-acre parcel between Van Horn Road and Bidwell Ave. The site is located next to GVEA’s Wilson Substation and the Battery Energy Storage System (BESS). There’s room for future expansion, and the panels will be visible looking north from Van Horn Road. The project will cost just over a million dollars to complete. A grant from the U.S. Department of Agriculture’s Rural Energy for America Program offset $225,000 of the cost. Golden Valley has a dedicated web page for the project at http://www.gvea.com/energy/solar-farm. The page includes a 2-minute project overview video from project manager Nathan Minnema. Eric Engman Electricity rates starting March 1 went down a smidge yet far from enough to offset a 20% rate increase that took effect late last year. The cost of electricity will remain this way at least through May 31, John Burns, interim CEO of the Golden Valley Electric Association, said during a presentation Tuesday. Burns also spoke about the utility’s power generation facilities. They are aging, and it’s time for the board of directors to talk about building something new, he said. He additionally touched on the Railbelt Reliability Council, a new governing agency being launched to look after the grid. The GVEA executive’s virtual slide show was livestreamed from the Carlson Center. The Greater Fairbanks Chamber of Commerce hosted the online event in lieu of its weekly membership luncheon due to the coronavirus pandemic. Later, GVEA announced that its face-to-face customer service is closed until further notice “as a result of the coronavirus (COVID-19) outbreak and as a precautionary measure for the safety of our employees, members and the communities we serve …” Offices offering counter service close at 5 p.m. today indefinitely. Members are encouraged to pay their bills online or use payment kiosks. “GVEA is closely monitoring the rapidly evolving issues and recommendations related to COVID-19. GVEA is following the guidelines of the Centers for Disease Control, along with local and state directives, to help prevent the spread of the virus in Alaska,” a news release stated. Member service representatives will still be available during normal business hours by calling 452- 1151. Members experiencing financial hardships due to the pandemic are encouraged to contact member services, the news release stated. The announcement came more than three hours after Burns spoke at the Carlson Center. Electricity rates aren’t dropping in the near future due to several factors, he said, including lower- than-expected output at a coal-fired plant in Healy and planned maintenance at power plants in Fairbanks and North Pole. Another factor is “limited purchase power available from Southcentral utilities due to gas supply constraint issues.” Burns noted the state of GVEA infrastructure. Power generation facilities built in the 1960s and 1970s are going to need to be replaced, he said. “GVEA likely will be looking at, ‘How do we address that?’” he said. “What generation do we want to put online?’” The Railbelt Reliability Council was another topic. It will be operated by a 12-member board of directors, plus a CEO, representing six utilities, the Alaska Energy Authority, independent power producers and a consumer advocacy group. Two members will be unaffiliated. Burns described the new organization as an achievement and said it was long overdue. “We are going to work through issues to ensure that decisions are made on behalf of not only our individual utilities but the Railbelt as a whole,” he said. In connection with the new Railbelt council, a bill in the Legislature would require GVEA to get approval from the Regulatory Commission of Alaska before building a new power generation facility. Burns said the bill has been approved by the Senate and was merged with a House bill that is expected to go to the floor for a vote. The cost of the new Railbelt council is not known, according to Burns. Contact staff writer Amanda Bohman at 459-7545. Follow her on Twitter: @FDNMborough. https://www.frontiersman.com/news/coronavirus/legislature-works-on-a-state-economic-relief-package-but-politics- enters-the-picture/article_7ce5501c-70b6-11ea-b1d3-37754a437f4b.html Legislature works on a state economic relief package, but politics enters the picture By Tim Bradner For the Frontiersman Mar 27, 2020 The end of the legislative session must be afoot, or at least this phase of it. Most committee meetings were cancelled Friday and the few that were scheduled were delayed and o en cancelled anyway. Legislative leaders closeted themselves behind closed doors, attempting to negotiate agreements on the budget and key bills. It’s hoped that enough work can be accomplished, particularly on the budget, so Gov. Mike Dunleavy has the tools he needs to ght the COVID-19 pandemic and the sharp economic decline that has come with it. The Legislature plans to recess until summer or fall, hopefully when the virus spread is under control. But political games are a part of the end of any session, even one ending temporarily during an emergency. On Thursday House Republicans withheld their votes for a needed three-quarters “super majority,” or 30 votes in of the 40 -member House, needed to tap the Constitutional Budget Reserve, or CBR, for supplemental appropriations to pay for COVID-19 response among other things. The result is that only $246 million of the $359 million supplemental is approved to augment the state health and social services budget, which was underfunded last year. The supplemental appropriations would also cover state expenses in ghting last summer’s wild res, and other unexpected expenses. If the CBR action isn’t reversed, which it may be, the governor will have to decide how to spend the money he has available, choosing between the virus outbreak or restoring state Medicaid funding shorted last year. If the Medicaid money isn’t fully approved the money currently available to pay health care providers will run out before the start of the next scal year on July 1. That would mean payments to some providers will be curtailed at a time the state’s health care system will be under growing stress from the virus. However, this is an old game. Withholding votes from the needed three-quarters majority is a common tactic used by a legislative minority to leverage the majority, usually on budget matters. This year Republicans are in the House minority and the majority is led by a coalition led by Democrats and Republicans, although House Speaker Bryce Edgmon, of Dillingham, is an independent. In the past Democrats have been in the minority, and Republicans in the controlling majority and Democrats have used their clout on a CBR draw to gain leverage. However, it isn’t yet clear what the House Republicans want in this year’s bargaining, or at least they haven’t said in public statements. The timing on this is also awkward, with the governor and legislature racing to deal with the virus outbreak and its economic fallout. Senate President Cathy Giessel, R-Anchorage, and Senate Finance cochair Bert Stedman, R-Sitka, said the three-quarter vote leveraging is irresponsible this year given the public health and economic crisis. The senators said that in comments to reporters last week. Meanwhile, in what may – or may not – be the last days before a recess, the Legislature is moving quickly on giving the governor tools to augment a huge package of federal economic funds headed for Alaska as well as other states. One initiative underway is a state program for business loans guaranteed by the state that is now being taking shape in the Legislarture. Gov. Mike Dunleavy wants the Alaska Industrial Development and Export Authority to take the lead in this, the governor said in a press conference this week. Additional state economic stabilization e orts are to be announced Monday, March 30. However, one bill being worked on now is Senate Bill 242, in the Senate Finance Committee, which would among other things allow the state to order private lending institutions to waive payments on loans, for autos and home mortgages, for examples, and to delay foreclosures and evictions. While it’s clear the state can do this with state agency nancing through agencies like Alaska Housing Finance Corp., extending this into the private sector is a legal gray area, the state Department of Law told the Senate committee Friday. State attorneys told the senators that this might be made to y under the existing Alaska Disaster Act, which provides for con scation of private property in an emergency, but which must be compensated. It was suggested that the Senate committee dra language allowing claims of nancial damage to be led against the state by private lenders for actions that interrupt payments or other commercial transactions. Legally, it seems more clear that a freeze on payments, repossessions or penalties could apply to loans from state entities, such as bulk fuel loans to communities by the Alaska Energy Authority and possibly industrial or commercial nancing by AIDEA. As this is written the bill is still in the Senate committee. However, authorization for a small business grant program was tacked onto another bill, Senate Bill 241, when it passed the House Thursday. The bill basically extends the governor’s declaration of an emergency into the fall, ensuring continued services during the COVID-19 outbreak. Among other things SB 241 provides $10 million from the state disaster relief fund to help with response e orts and gives the state medical director, Dr. Anne Zink, authority to issue standing orders for health care providers engaged in e orts to combat the virus. It also gives the state authority to recognize licenses issued in other states ro trained nurses or other licensed medical professionals who are in Alaska, such as military spouses, to augment the state’s health care workforce. Grant program A last-minute provision added through a oor amendment by Rep. Zack Fields, D-Anch., would allow the Dept. of Commerce and Economic Development to establish a grant program for small businesses to prevent bankruptcy or layo s. The grants, intended mainly for very small businesses, would be administered by the nonpro t regional development organizations, or ARDORs, set up in di erent parts of the state. The Senate must still agree to this change in SB 241, however. Meanwhile, there is a wave of federal money headed for Alaska in the $2 trillion-plus economic relief package just approved by Congress and signed by the President. Senior Trump administration o cials said they hoped SBA-backed business loans could be available by the end of next week, but it may take longer. There is also hope that the $1,200 checks to federal taxpayers ($2,400 for joint lers) depending on income, would be deposited or in the mail in two to three weeks. The state Legislature is also considering two $1,000 Permanent Fund Dividends, one paid in June and the second later in the year, but lawmakers have yet to agree on that as this is being written. The Senate Finance Committee was also briefed Thursday by its sta on major provisions of the pending federal legislation. Among other things there is authorization for block grants to states with a minimum of $1.25 billion, which would be what Alaska receives as a state with a small population. From what can be determined now this appears to be a payment to the state General Fund intended mainly to help state programs aimed at ghting the COVID 19 virus, but it may have broader uses. Senators asked on Thursday to get that clari ed as soon as possible. There is also a nationwide grant of $8 billion to tribal entities, to programs administered by tribes, and Alaska should get a good portion of this. There are also the “wage replacement” sections of the federal bill including the $600 -per-week supplement to Unemployment Insurance Compensation recipients and a separate $600 per week for self-employed workers who are not otherwise eligible for UIC. The federal bill has provisions for small business loans on generous terms made more generous if employers agree to retain workers. How this would relate to a pending state business loan program done through AIDEA is uncertain. Support local journalism. By subscribing you help local journalism continue to thrive. For our latest digital subscription information, see frontiersman.com/site/forms/subscription_services/ About Us Must Read Alaska is news of people, politics, policy, culture, and happenings in Alaska. It is edited by Suzanne Downing, who first landed in Alaska in 1969, and has called it home ever since. Contact 2525 Gambell Street Suite 405, Anchorage, AK 99503 suzanne@mustreadalaska.com Popular News $ Sign Up Your e Sign up Donate to Must Read Alaska SUPPORT MUST READ ALASKA Keep the mainstream media on its toes. Donate $100 today. Share this: Ab t U P l Si U Department of Revenue extends payment deadline for corporate income tax Democrats’ national convention postponed Putting the ‘social’ in social distance sign- waving 10 new cases; total of 143, no new deaths, hospitalizations Recent Tweets R t https://t.co/c5OYuoiS8w She is taking sign- waving to Jedi level. #Anchorage #EagleRiver #elections https://t.co/xctjaObtJs #COVID19 https://t.co/fd8optG886 This is Art Chance gold. More Like this: Like Be the first to like this Help Alaskans. Pay the full dividend now By JIM CRAWFORD Alaska’s fishermen are going to be financially hurt as a result of the COVID-19 coronavirus. Restaurant workers are being furloughed. Tourism companies are suspending operations. Cruise liners are parked. Some suggest the solution for Alaskans is to cut the Permanent Fund dividend to zero. The Alaska Permanent Fund is not the Legislature’s money nor the governor’s money. It’s the people’s fund, a financial stabilizer, managed for you, the beneficiaries. APRIL 1, 2020 /AUTHOR: GUEST CONTRIBUTOR /31 COMMENTS Home / Columns /Help Alaskans. Pay The Full Dividend Now ALMANAC SEARCH SEARCH FRIDAY, APRIL 3, 2020CONNECT WITH: 100.00 $100.00 Donate Now About Us Must Read Alaska is news of people, politics, policy, culture, and happenings in Alaska. It is edited by Suzanne Downing, who first landed in Alaska in 1969, and has called it home ever since. Contact 2525 Gambell Street Suite 405, Anchorage, AK 99503 suzanne@mustreadalaska.com Popular News $ Sign Up Your e Sign up Donate to Must Read Alaska SUPPORT MUST READ ALASKA Keep the mainstream media on its toes. Donate $100 today. Share this: Ab t U P l Si U Department of Revenue extends payment deadline for corporate income tax Democrats’ national convention postponed Putting the ‘social’ in social distance sign- waving 10 new cases; total of 143, no new deaths, hospitalizations Recent Tweets R t https://t.co/c5OYuoiS8w She is taking sign- waving to Jedi level. #Anchorage #EagleRiver #elections https://t.co/xctjaObtJs #COVID19 https://t.co/fd8optG886 This is Art Chance gold. More Like this: Like Be the first to like this Five Nine Solutions The fund was mandated to invest 25 percent of the royalties when established by Constitutional Amendment as a dedicated fund. The other 75 percent of royalties plus all the taxes and tari s and other numerous ways to grab money from the oil patch were retained for legislative purposes. Now legislators and others want your 25 percent of royalties plus the entire earnings of the fund. Legislators tell us that we’re lucky to get whatever is le , a er their spending. The Permanent Fund long-term yields have been good and can lead to prosperous Alaskans. With dividends, we have a direct individual benefit for developing our natural resources, just as Gov. Jay Hammond intended. The PFD diversifies Alaskans’ income stream adding investment income from the fund for education, retirement and making a ordable the higher cost of living in Alaska. A waitress with a husband and two kids earns $12,000 in dividends this year under existing law. That $12,000 can pay rents or mortgages due during the layo s. Just change the payout date from October to April. Fishermen and tour operators — indeed all Alaskans who will be hurt by the coronavirus pandemic — can get by if their full Permanent Fund dividends are paid. That’s because of good planning by our forefathers. Gov. Hammond would be well pleased that when the fund is le alone, it provides substantial direct benefits to Alaskans. Greater security, more a ordable education, and cash reserves for emergencies like the virus are all benefits of abiding by the original calculation of the dividend. Make no mistake, we already have the earnings – in cash. Anyone who tells you we don’t, can’t read the Comprehensive Annual Financial Report of the State of Alaska. Our problem is our legislators passed two conflicting statutes, both on the books for calculation of the dividend. The first one is our historic 50/50 split. Earnings are evenly divided between the people’s dividend and General Fund appropriated by the Legislature. But, the Legislature enacted a “per cent of market value” approach that reduces the amount that can be drawn and shockingly, removed the calculation for earnings. The Legislature, for three years, has divided the earnings with bloated government as the winner and the people getting the short end of the stick. The solution to our fishermen’s cash flow is not to further cut a family’s cash. The same is true of tourism employees, retailers, restauranteurs, and other Alaskans who are experiencing financial turmoil as a result of SEARCH 100.00 $100.00 Donate Now About Us Must Read Alaska is news of people, politics, policy, culture, and happenings in Alaska. It is edited by Suzanne Downing, who first landed in Alaska in 1969, and has called it home ever since. Contact 2525 Gambell Street Suite 405, Anchorage, AK 99503 suzanne@mustreadalaska.com Popular News $ Sign Up Your e Sign up Donate to Must Read Alaska SUPPORT MUST READ ALASKA Keep the mainstream media on its toes. Donate $100 today. Share this: Ab t U P l Si U Department of Revenue extends payment deadline for corporate income tax Democrats’ national convention postponed Putting the ‘social’ in social distance sign- waving 10 new cases; total of 143, no new deaths, hospitalizations Recent Tweets R t https://t.co/c5OYuoiS8w She is taking sign- waving to Jedi level. #Anchorage #EagleRiver #elections https://t.co/xctjaObtJs #COVID19 https://t.co/fd8optG886 This is Art Chance gold. More Like this: Like Be the first to like this Five Nine Solutions the virus. Our cash cow has had great earnings. The Legislature simply wants to butcher it – and use all the money to grow more government. Alaskans have had enough and don’t want their PFD reduced or ended. An alternative way back to fiscal sanity is to stop the Legislature from dedicating funds. The Alaska Constitution bans dedicated funds except for federally provided revenue and those funds in existence when we became a state. Or, we can do as we did when the Permanent Fund was established, with passage of a constitutional amendment by the people. One unconstitutional dedicated fund is the Power Cost Equalization Fund at $1.2 billion, housed in the Alaska Energy Authority. AEA financial statements describe the PCE assets as restricted and not available for government spending. That’s a dedicated fund. There are many in state government. The Supreme Court ruled that dividends must compete with all other appropriations. But, the Legislature unconstitutionally protects the PCE. PCE doesn’t compete for appropriations, but your PFD does. Special interests are pleased. The Permanent Fund must return to averaging our five-year earnings to calculate the dividend. The market turmoil of today then becomes a blip on the screen of our long term investment program. Yes, stocks and oil go up and down. That’s why we insisted on the five-year earnings average. A down year is not the end of life. Most Alaskans are o work awaiting clearance to return. We have time to communicate directions to our Legislators. My message to my Senator, Natasha Von Imhof and my Representative Chuck Kopp is simple: Rescue our economy from the damage of coronavirus by voting to pay a full dividend. Please change the date to April 30, 2020. If you fail in this e ort, I will vote against you. I will not vote for Legislators who damage the people who elected them. Alaskans, if you agree, please share the instruction with your Legislators. A er all, they work for you. Doctors will solve this coronavirus and in time, we will be stronger as a result. Doctors take a Hippocratic Oath, paraphrased as “First, do no harm”. Legislators should take that oath for our Permanent Fund dividend. Jim Crawford is a third generation Alaskan entrepreneur who resides in Anchorage with his bride of 36 years, Terri. He is president of The Alaska Institute for Growth, a local think tank which studies and reports on and may sponsor projects of sustained economic growth for the Alaskan economy. Crawford was a member of the Investment Advisory Committee, appointed by Governor Hammond to plan and implement the Alaska Permanent Fund Corporation. SEARCH February ANS output down 1.3% from January; Cook Inlet up page 3 l EXPLORATION & PRODUCTION l UTILITIES l GOVERNMENT Vol. 25, No. 13 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of March 29, 2020 • $2.50 see ERD RIG page 12 The ‘Beast’ headed to Alpine to spud first ERD well in late April Doyon Drilling’s new extended reach drilling rig is on its way to the North Slope Colville River unit to spud its first well in late April for ConocoPhillips Alaska. From CD2 pad, the giant ERD rig will target the Fiord West Kuparuk reservoir, which was discovered in 1996, but because it’s in an environmentally sensitive area along the coast it couldn’t be accessed. Rig 26, which is being transported in seven modules, can drill targets some 7 miles from its surface location, whereas other rigs are designed to drill about 22,000 feet from a pad. This means the 9.5 million pound high-tech ERD rig will be able to develop 154 square miles of reservoir versus the stan- dard 55 square miles. see KENAI REFINERY page 8 Kenai refinery turnaround delayed to fall due to coronavirus concerns Marathon Petroleum Corp. said it has postponed a mid- April turnaround operation at its Kenai refinery due to coron- avirus concerns. “It’s a pretty extraordinary measure,” Casey Sullivan, Marathon government and public affairs manager, told Petroleum News March 24. “This is a program that is tens and tens of millions of dollars; it’s hundreds and hundreds of con- tractors; it’s kind of a big ship and it is a hard thing to turn — or turn off. “Lots of things in the air. We’ve been able to do it, with teams working really hard to do that ... to pause it as best you can.” The company plans to get the turnaround back on the see CONTINGENCY PLANS page 7 DEC hears concerns regs would be weakened, others urge updating Last year the Alaska Department of Environmental Conservation sought input on requirements for its oil dis- charge prevention and contingency plan requirements. The department said that based on feedback it “may consider amending contingency plan regulations” in 18 Alaska Administrative Code 75, Article 4, and said it was “also accepting comments on the related statutes that authorize the Article 4 regulations.” “I’ve heard from many Alaskans that contingency plans are unnecessarily burdensome while lacking corresponding envi- ronmental benefits,” ADEC Commissioner Jason Brune said. “To achieve Governor Dunleavy’s goal of being open for busi- see FURIE SALE page 9 Furie/Kachemak asset sale craters; HEX, with AIDEA loan, in running An acquisition by foreclosure agreement between Chapter 11 debtor Furie Operating Alaska LLC and acquirer Kachemak Exploration LLC for the sale of Furie’s Cook Inlet assets appears to have broken down. Kachemak — a Delaware corporation recently formed by GFR Holdings of Fort Worth, Texas, and Melody Capital Partners L.P. — is seeking to acquire the Cook Inlet Kitchen Lights offshore unit, related infrastructure such as the Julius R offshore natural gas platform, together with an onshore process- ing facility and related pipelines. According to a Law360 report, Furie told Judge Laurie Selber Silverstein that the deal collapsed last week, during a March 25 Juggling windows Jade’s plan schedules Sourdough work to maintain economic viability By KAY CASHMAN Petroleum News A couple of days after it was filed on March 17 Alaska’s Division of Oil and Gas approved Jade Energy’s second Plan of Development for the Sourdough prospect on the southeastern edge of the Point Thomson unit. Jade is both the majority owner of and operator of PTU Tract 32 in Area F of the eastern North Slope lease ADL 343112. Tract 32 holds two mid-1990’s oil discovery wells, Sourdough 2 and 3, that were drilled by BP, which at the time estimated the prospect held 100 million barrels of recoverable oil. The essential difference in Jade’s new POD, which cov- ers the period April 1 through Dec. 31, is to drill the first new Sourdough appraisal well, Jade 1, in the winter of 2021-22, versus next winter. Jade worked closely with the division to come up with a plan that maintained the economic viability of the project, which is the fur- thest east of all North Slope developments. SB 123 goes to governor Legislature passes bill enabling formation of electric reliability organization By ALAN BAILEY For Petroleum News T he Alaska Legislature has passed Senate Bill 123, a bill designed to enable the formation of an electric reliability organization, in particular for the Alaska Railbelt electricity system. The bill also enacts a statute that gives the Regulatory Commission of Alaska authority to regulate the construction of new major generation and trans- mission facilities in the electricity grid, and to reg- ulate integrated resource planning for the system. The bill now goes to the governor for his signature. The purpose of the legislation is to ensure a more coordinated and efficient approach to the overall management and operation of the electrical system in the Railbelt, to minimize the cost of electricity for consumers while also assuring a high level of supply reliability. In passing SB 123 the legislators added the text of another bill, Senate Bill 81, presumably to allow the simultaneous passage of both bills. SB 81 Waiting game for Alberta No sign of promised O&G sector bailout beyond individual, company support By GARY PARK For Petroleum News Facing growing unease as the spread of COVID-19 accelerates and its eco- nomic underpinning crumbles, energy- driven Alberta is waiting for the Canadian government to deliver a promised bailout package to keep the province’s oil and gas industry functioning. A spokeswoman for Natural Resources Minister Seamus O’Regan said all options are being weighed, including financial backing for skilled workers to remediate the envi- ronmental liabilities associated with abandoned, or orphan wells. So far, the government of Prime Minister Justin Trudeau has limited itself to gaining approval of Parliament in an emergency session to release C$27 bil- lion in direct support for individuals and companies and grant C$55 billion in deferred taxes. But Trudeau was forced by the oppo- sition parties to back off a measure that would have given the government sweep- ing new powers for the next 21 months to unilaterally spend, borrow and tax Canadians with- out obtaining the approval of Parliament. In the midst of this swirl the Trudeau adminis- tration released C$5 billion for the agriculture sec- see SOURDOUGH page 11 see SB 123 page 10 see WAITING GAME’ page 10 ERIK OPSTAD TOM STOKES In December all six of the Railbelt utilities signed a memorandum of understanding for the formation of the Railbelt Reliability Council, in effect an electric reliability organization for the Railbelt. JASON KENNEY 10 PETROLEUM NEWS • WEEK OF MARCH 29, 2020 makes changes to the statutes governing the operation of electrical and telecom- munications cooperatives — the existing statutes date from 1959 and need updat- ing to reflect the use of modern technolo- gies and communication capabilities. Fragmented grid management The Railbelt electrical system, which runs from the southern Kenai Peninsula through Southcentral Alaskan north to the Fairbanks region, is owned and operated by six independent electric utilities and the State of Alaska. And, while the utili- ties have achieved a high level of reliabil- ity in supplying electricity to their cus- tomers, there are significant concerns regarding the need for a more coordinat- ed approach to the provision and mainte- nance of generation and transmission facilities across the system, and for open access to the system for independent power producers. There are also concerns relating to the need for a consistent set of mandated reliability standards, including standards for cybersecurity and physical security. RRC agreement In December all six of the Railbelt utilities signed a memorandum of under- standing for the formation of the Railbelt Reliability Council, in effect an electric reliability organization for the Railbelt. The RRC will maintain and mandate reli- ability standards; administer rules for open access to the grid; conduct Railbelt- wide system planning; and investigate the economic value of security constrained economic dispatch for all or part of the system. Economic dispatch involves the continuous use of the most cost effective power generation that is securely avail- able. But the RRC also requires RCA regu- lation and oversight, something that is not possible under current statutes defining how the RCA can operate. Hence part of the urgency to pass SB 123, to enable the implementation of the RRC to proceed this year. Started in 2014 The passage of SB 123 and the initia- tive to form the RRC are outcomes of a process that started in 2014, when the Legislature directed the RCA to investi- gate the manner in which the Railbelt electrical system was operated. Although covering a large geographical area, the Railbelt grid is small in terms of its elec- trical load and generation capacity. But the evolution of the system through its fragmented ownership has resulted in inefficiencies. There has been a lack of coordination in the development of new generation capacity, for example. The pancaking of electricity transmission fees across sectors of the grid owned by dif- ferent entities elevates transmission costs. The business economics of making major upgrades to the transmission sys- tem are very challenging. And it is diffi- cult for independent power producers, including purveyors of renewable energy, to connect to the system. 2015 report In 2015 the RCA responded to the Legislature by submitting a report, rec- ommending various changes to the man- agement of the system. The commission recommended the implementation of merit-ordered economic dispatch; the for- mation of a single transmission company, to operate the transmission grid; and the implementation of a single set of enforced reliability standards. The com- mission also opened a docket to investi- gate the formation of some form of uni- fied operator, to oversee the management of the entire electrical system. Since then the commission has been encouraging voluntary efforts by the util- ities to follow the commission’s recom- mendations. The utilities had been making signifi- cant progress towards the implementation of economic dispatch, especially in Southcentral Alaska. However, the initia- tives for achieving this were placed on hold, pending the proposed purchase of Anchorage based Municipal Light & Power by Chugach Electric Association. In April 2018 the utilities filed an agreed set of reliability standards and have since added cybersecurity stan- dards. Maintenance and enforcement of these standards would become a function of the RRC, with regulatory oversight by the RCA, enabled by the passage of SB 123. In March 2019 four of the utilities and the American Transmission Co. filed an application for RCA certification of a transmission company. However, this application was withdrawn later in the year following objections from some util- ities about the manner in which the pro- posed transco was structured and would operate. Key concerns included the gov- ernance of the proposed company, which would have operated as a for-profit cor- poration. Some utilities expressed a view that the RRC should be formed first, to pro- vide governance of the entire system. GDS Associates, the consultancy involved in the development of the RRC concept, has since suggested that func- tional control of the transmission grid could at some stage be made an addition- al responsibility of the RRC. However, this issue has yet to be resolved. Governance Effective and balanced governance will be a critical factor in the success of future oversight of the electrical system. On the one hand, the utilities have con- siderable expertise in the technicalities and business of operating the system. On the other hand, there are other stakehold- ers, including independent power produc- ers, consumers and the state, all of whom have significant interests in the system. The RRC will be governed by a board with six members representing the six Railbelt utilities and six independent members representing other stakeholders. The RRC CEO would have a tie-breaking vote on board decisions. Independent members would consist of two represen- tatives from independent power produc- ers, one member representing consumer interests, a representative from the Alaska Energy Authority and two non-affiliated members. The RCA and the state’s Regulatory Affairs and Public Advocacy Section would have non-voting board seats. l continued from page 1 SB 123 tor, but nothing for the petroleum industry and, as of Petroleum News press time, no sign of when or if a larger financial pack- age will be made available for what is the largest economic sector in Canada. For now the bleeding continues as Canadian companies slash another C$4 billion in spending, a clawback that could cut oil production by 1.3 million barrels per day, or almost one-third of Canadian output. All that has emerged from the national government has been a hint from Finance Minister Bill Morneau of a possible change to industry payroll taxes. Alberta measures Alberta Premier Jason Kenney has opted to announce his own measures in hopes of helping the energy sector bridge its way to a more significant federal pro- gram. The Kenney administration has tem- porarily waived about C$113 million in annual fees collected by the Alberta Energy Regulator from the industry and extended oil and gas tenures from 2020 to 2021, giving upstream operators more time to raise capital. Kenney also appointed an economic advisory panel, led by economist Jack Mintz and including former Canadian prime minister Stephen Harper to look at the province’s medium- and long-term economic recovery after COVID-19. While those small steps were being taken, word was trickling out from federal sources, including mention of a three- hour meeting between O’Regan and the Canadian Association of Petroleum Producers. Those sources suggested federal aid could facilitate easier access to credit, especially for small- and medium-sized producers who are rapidly sinking below the surface as they get bled dry by the col- lapse in stock values and commodity prices. Credit facility pushed Meanwhile, Kenney has put pressure on the Trudeau administration introduce a credit facility similar to the U.S. Troubled Asset Relief Program, TARP, that saved banks and automobile manufacturers dur- ing the 2008-09 financial crisis. The TARP program would see the fed- eral government buy shares in distressed companies, along the lines of what Canada did for the auto industry in 2008. To drive home their woes, 65 petrole- um industry chief executive officers also asked the federal government to suspend plans to raise the federal carbon tax in C$10 annual increments from C$20 per metric ton to C$50 in 2022 and lower all income tax at every level, while urging banks to provide no-interest loans and loan guarantees. What the critics don’t want to see is a replay of TARP, whose money flowed to banks and wealthy shareholders. Since the oil price crash in 2014, more than 50,000 direct jobs have been lost in Canada’s oil patch and analysts doubt they will ever return, while companies have distributed massive dividends among their shareholders, reaching C$10.3 billion to shareholders in 2019 alone. Bronwen Tucker, an Edmonton-based research analyst with Oil Change International, said trillions of dollars will be needed to build a resilient economy after the COVID-19 crisis, but “handing money over to oil and gas corporations will leave us more vulnerable.” She said the chance should be taken to “fund a just transition from oil and gas that protects workers, communities and the climate instead of tying their future to a sun-setting and volatile commodity.” Sector still reeling Kenney has insisted that Trudeau “do no further harm” to the oil and gas sector which is reeling from a massive drop in revenues and is in no position to handle the planned increase in carbon taxes, or impose new limits on methane emissions that are rated as many times more potent than carbon dioxide. The Alberta Energy Regulator says oil and gas operations are responsible for 70% of the province’s methane emis- sions, but Kenney insists his govern- ment’s own regulations to curb those emissions by 45% over the next five years are more effective than proposed new federal rules. In addition, the Canadian government is sticking with a 2021 target for a ban on certain single-use plastics — a plan strongly opposed by major petrochemical companies that argue product demand should be market-driven and not mandat- ed by government regulations. The natural gas-derived plastics would be another blow to a sector that provides 7,500 direct jobs and has annual exports of C$8.2 billion. In February Kenney told a business conference that a company he did not identify is planning a C$10 billion project that would create 10,000 permanent jobs. Alberta’s Natural Gas Minister Dale Nally said an aggressive federal attack on plastics would constitute an “unimagin- able” overreach and flagrant attack on Alberta’s economy. l continued from page 1 WAITING GAME Don’t miss another issue! Subscribe to Petroleum News: Call 907.522.9469