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HomeMy WebLinkAbout2020-08-05 AEA Agenda and docs 813 West Northern Lights Boulevard Anchorage, Alaska 99503 T 907.771.3000 Toll Free 888.300.8534 F 907.771.3044 REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG Alaska Energy Authority Board Meeting 8:30 a.m. Wednesday, August 5, 2020 AGENDA Dial 1 (888) 585-9008 and enter code 464-135-244#. Public comment guidelines are below. 1. CALL TO ORDER 2. ROLL CALL BOARD MEMBERS 3. AGENDA APPROVAL 4. PRIOR MINUTES – June 24, 2020 5. PUBLIC COMMENTS (2 minutes per person) see call in number above 6. EXECUTIVE SESSION A. Confidential matters related to Bradley Lake, Soldotna-Quartz Line, and energy storage 7. NEW BUSINESS A. Approve Terms of Financing and Authorize Soldotna-Quartz Creek Transmission Line Purchase 8. OLD BUSINESS A. West Fork Upper Battle Creek Construction Update 9. DIRECTOR COMMENTS A. Staff Response to Board Questions B. Renewable Energy Fund C. Power Cost Endowment Update D. Denali Commission Update E. Akhiok Powerhouse Update and Open House F. Power Project Fund Dashboard and Loan Report G. Electric Vehicle Grant Update (Verbal) H. Community Outreach Schedule I. Articles of Interest J. Next Regularly Scheduled AEA Board Wednesday, Meeting September 16, 2020 10. BOARD COMMENTS 11. ADJOURNMENT Alaska Energy Authority Page 2 of 2 Public Comment Guidelines Members of the public who wish to provide written comments, please email your comments to publiccomment@aidea.org by no later than 4 p.m. on Tue. Aug 4, so they can be shared with board members prior to the Aug 5, 2020 meeting. On Wednesday, Aug 5 when you call in, you will enter the teleconference muted. After board roll call and agenda approval, we will ask callers to press *9 on their phones if they wish to make a public comment. This will initiate the hand-raising function. We will unmute callers individually in the order the calls were received. When an individual is unmuted, you will hear, “It is now your turn to speak.” Please identify yourself and make your public comments. *CONFIDENTIAL* May 22,2420 Bradley P. Janorschke, General Manager Homer Electric Association, lnc. 3977 lake Street Homer, AK 99603 Rc:Letter of lntcnt Salo of Transmission Line - Sterllng Substation to Quertz Creek Substation Sale of Transmlssion Capaclty - Soldotna Subetation to Sterling Substation Sale of Transmlssion Line - 69 kV linc between Soldotna and Quanz Creek Reimbursement of Costs lncurnrd - Swan lrke Firc Dear Mr. Janorschke: This Letter of lntent is intended to set forth certain understandings as of the date hereof by and between Homer Electric Association, lnc., and its single-member cooperative Alaska Electric and Energy Cooperative, lnc., each an electric cooperative organized under the laws of the State of Alaska (together "HEA"), and the Alaska Energy Authority, an instrumentality of the State of Alaska ('AEA"), and to serve as a basis for further discussions and negotiations between HEA and AEA with respect to the terms and conditions of the Definitive Agreements (as defined in the non- binding term sheet attached hereto as Exhibit A (hereinafter referred to as the "Term Sheet") and the Proposed Transaction (as defined below). All capitalized terms shall have the meaning that the terms have in the documents commonly referred to as the "Bradley Agreements." HEA and AEA are sometimes referred to herein individually as a "Part/' and collectively as the "Parties." lt is recognized that this Letter of lntent references other agreements that will need to be addressed by the Bradley Lake Project Management Committee and the Purchasers. Such agreements will be referenced in the Definitive Agreements as conditions that must be met on or before closing of this Proposed Transaction. Each Purchaser has executed this Letter of Intent to evidence its respective agreement to and support of the Proposed Transaction as outlined herein. Unless othenruise defined herein, terms defined in the Term Sheet will have the same meaning when used in this Letter of lntent, Letter of lntent, May 22,2020 Page 1 of 5 Proposed Transaction. This Letter of lntent and the attached Term Sheet outline the general terms and conditions pursuant to which AEA proposes to purchase the HEA Assets (as defined below) from HEA, and HEA proposes to sell the HEA Assets to AEA, as well as other related i nteg ral matte rs (the "Proposed Transactio n "). 2. HEA Assetg. HEA is the owner of certain electrical transmission facilities and properties that are currently used by HEA to provide electrical service to the Purchasers of the Bradley Lake Hydroelectric Project ("Bradley Project") and its customers located in on the Kenai Peninsula in Alaska (the "HEA Assets"). The HEA Assets are more specifically described in the Term Sheet. 3. Timing. The Parties will employ commercially reasonable efforts to seek to complete the negotiation, execution, and delivery of mutually acceptable Definitive Agreements on or prior to September 25,202Q unless mutually extended by the Parties. The execution and delivery of the Definitive Agreements shall be subject, among other things, to the approval of such agreements: (a) on behalf of each Party by their respective governing boards; and (b) other appropriate management bodies of the Parties. 4. LOI Period: Termination. Unless otherwise agreed, this Letter of lntent shall remain in effect from the date of execution by both Parties until the earliest of (a) the date of execution and delivery of the Definitive Agreements (the "Effective Date"); or (b) the termination of this Letter of lntent by either AEA or HEA at its sole discretion at any time, effective upon written notice to the other (the "LOl Period"). Termination of this Letter of lntent without execution and delivery of the Definitive Agreements will release the Parties from the provisions hereof, except that Sections7,8,9, and 10 of this Letter of lntent shall remain binding on both Parties, notwithstanding termination hereof. 5. Access. During the LOI Period and, as provided in the Definitive Agreements, HEA will, subject to reasonable advance notice from AEA and, if necessary, subject to an appropriate confidentiality agreement, afford reasonable access and all reasonable opportunity to AEA and/or Bradley Lake Project Management Committee ("BPMC") representatives to investigate, inspect and perform due diligence regarding the HEA Assets during normal business hours. AEA and BPMC representatives and/or agents will be subject to and observe any applicable HEA rules regarding safety, security and confidentiality and shall not interfere with or hinder the operation of the HEA Assets. 6. Exoenses. Each Party shall bear its own legal, accounting, consulting, regulatory, tax and other professional fees and expenses and other transaction costs, regardless of whether the Proposed Transaction is consummated. Letter of lntent May 22,2020 Page 2 of 5 7. Confidentlallty. The Parties agree that the terms of this Letter of lntent and the attached Term Sheet shall be confidential subject to all applicable laws and regulations. The Parties acknowledge that prior to execution of this Letter of lntent a Party may present this Letter of lntent and the attached Term Sheet to its governing board at a public meeting, and that at such public rneeting, this Letter of lntent and the attached Term Sheet will be disclosed to the public. For avoidance of doubt, such designation and disclosure is not intended, nor shall it be construed, to apply to any other "Confidential lnformation" subject to the terms and conditions of the lnformation Sharing Agreement Between Homer Electric Association, lnc. and Alaska Energy Authority and Bradley Lake Project Management Committee, including but not limited to, any such "Confidential lnformation" as may in any way, directly or indirectly, be related to the subject matter of the Letter of lntent or the Term Sheet. L Governing law. This Letter of lntent shall be governed by the laws of the State of Alaska 9. Countcrparts. This Letter of lntent may be executed in several counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same instrument. 10. Effcst of This Letter of lntcnt. This Letter of lntent is not an offer or a commitment on the part of HEA, AEA, any Purchaser, or any parent company or affiliate of HEA, AEA, or any Purchaser. The Parties understand that except as expressly set forth in this paragraph, this Letter of lntent (including the attached Term Sheet) constitutes a non-binding statement of the Parties' respective intentions with respect to the Proposed Transaction, does not contain all matters upon which agreement would need to be reached in order for the Proposed Transaction to be consummated, and therefore does not constitute a binding commitment or agreement with respect to the Proposed Transaction itself. Any transaction which might result from discussions shall be contingent upon negotiation and execution of the Definitive Agreements and receipt of necessary or appropriate approvals, including, to the extent necessary or appropriate, those of the management and board of HEA and any parent entities or affiliates as necessary and AEA, and no binding commitment shall arise prior to then even if the Parties reach some understanding(s) or agreement(s) in principle. The Closing of such transaction shall be contingent upon receipt of such other conditions precedent (e.g., government and/or regulatory approvals) to Closing as shall be set forth in the Definitive Agreements. Any actions taken by a Party in reliance on the non-binding terms expressed herein (including in the Term Sheet) or on statements made during negotiations pursuant to this Letter of lntent shall be at that Party's own risk and this Letter of lntent shall not be the basis for a contract by estoppel, implied contract or any other legal theory, Notwithstanding the foregoing, the Parties acknowledge and agree that Section Nos.4 5,6,7,8,9, and 1O create, and are intended to create, binding legal and contractual obligations of the Parties. Letter of lntent, May 22,2Q20 Page 3 of 5 lf the foregoing is satisfactory to you and reflects your understanding with respect to the matters referred to in this Letter of lntent, please sign and date the enclosed copy of this Letter of lntent where indicated below and return such copy, signed and dated, to the undersigned on or before Iuly 1, 2020.lf this Letter of lntent is not executed by HEA and delivered to the undersigned on behalf of AEA on or prior to July 1, 2020, it shall be null and void. Sincerely, fu'-f* Curtis W. Thayer Executive Director Alaska Energy Authority ACCEPTED AND AGREED TO BY: HOMER ETECTRIC ASSOCIATION, INC. Bradley P. Janorschke, General Manager By: Letter of lntent, May 22,2020 Page 4 of 5 CHUGACH ETECTRIC ASSOCIATION, INC. By Lee Thibert, Chief Executive Officer GOTDEN VATLEY ELECTRIC AI'SOCIATION By: John J. Burns, President CEO MATANUSI(A ETECTRIC ASgOCIATION, INC. By: Tony M.lzzo, CEO TtlE MuNlClPAIlw OF ANCHOMGE d/b/a MUNICIPAI LIGHT & POWER By Anna C. Henderson, General Manager CITY OF SEWARD dlbla SEWARD EIECTRIG SYSTEM By: John Foutz, Electric Utility Manager Letter of lntent, May 22,2O2O Page 5 of 5 CHI.'GACH ELTCTHC AI$TOCIATION, INC. By Lee D. Thibert, Chief Executiw Officer @I-DTN VAIICY ELECTRIC ASSOCNNON cEo MATANWISI EIECTRIC ASSOCI,ATION, INC. By Tony M. lzzo, CEO THE MUNICIPAUTY OF ANCHORAGE dlblt MUNrcPAL LI6HT & POWER By Anna C. Henderson, Geneml Manager CITY OF SEWARD dftlt$nilAnD ELECTRIC SVSTEM 8y: John Fouta Electric Utiltty Managcr Lettcr of lntent, May 22,2A20 Page 5 of 5 CI{UGACH ELECTNC ASSOCIATION, INC. By Lee D. Thibert Chief Executive Officer @I.DEN VALLEY ETECTRIC ASSOCIATION By: John J. Burns, President, CEO MATANUSKA rNc. By Tony M.cEo THE MUHICIPAUTY OF ANCHORAGE dhla MUNICIPAL LIGHT & POWER By Anna C. Henderson General Manager CITVOF SEWARD dlble SEWARD ELECTRIC SVSTEM By: John Fouta Electric Utility Manager Letter of lntent, May 22,2O20 Page 5 of I CHUGACH ETECTRIC ASSOCIATPN, INC. By:- Lee D. Thibert, Chief Executive Officer GOIDEN VAttW ETECTRIC ASSOCIATION By: John J. Burns, President CEO MATAI{T'SKA EITCTRIC ASSOCIATION, INc. By: Tony M. lzzq CEO THE MUNICIPAUTY OF ANCHORAGE dlbla MUNICIPAI LI6HT Et POWER By: Anna C. Henderson, General Manager CIW OF SA'VARD dlbh SEWARD EI.GCTRIC SYIsTEM By: John Foutz, Electric Utility Manager Letter of lntent May 22,202O Page F of 5 CI{UGACI{ ELECTRIC ASSOCIATION, INC. By Lee D. Thibert, Chief Executive Officer GOIDEN VATLEY ELECTRIC ASSOCIATION By: John J. Burns, President CEO MATANUSKA ELECTRIC ASSOCIATION, INC. By: Tony M. lzzo, CEA THE MUNICIPAUTY OF ANCHORAGE dlhla MUNICIPAI IIGHT & POWER By: Anna C. Henderson, General Manager CIW OF SEWARD dlbla ETECTRIC SYSTEM By: John Foutz, Electric Letter of fntent May 22,2A20 Page 5 of 5 ^tl.m[$-,,, Exhibit A ls Letter of lntent May 22.2OZO This Exhibit is being prepared to set forth the terms and conditions of the Proposed Transaction. The purchasing entity will be the Alaska Energy Authority C'AEA'). SECTION 1 -CONDITIONS PRECEDENT Condltions Precedent - The Proposed Transaction is contingent upon: A. The Parties receiving an opinion from the Department of Law (acceptable to AEA and the Purchasing Utilities) determining that the following transactions will be deemed Required Project Work under the Power Sales Agreement 1) the purchase and sale of capacity on the SS Line; 2) the purchase and sale of the SSQ Line; 3) the purchase and sale of the 69 kV transmission line; and 4) the expected future upgrades to the SS Line and SSQ Line. 1 B. The receipt of working permits (including acceptable buffer zones) for authorization to use and occupy certain lands of the Kenai National Wildlife Refuge for the 1 15 kV line (Permit E- 48-KE) and the 69 kV line (Permit E-47-KE) and appropriate assurances regarding upgrades to the 115 kV line with terms acceptable to the BPMC. C. Execution by all the Parties of all the Definitive Agreements and execution of the various agreements by the Purchasers which require amendments as more specifically set forth in this Exhibit A. SECTION 2 - ASSETS AND RIGHTS TO BE TRANSFERRED Soldotna Substation to $terling Substation Tronsmission Linr f"SS Unc") - HEA will remain owner of this 14.25 mile 1 15 kV transmission line segment up to and including switches #1 1 5 and #425 at the Sterling Substation and AEA will purchase transmission capacity on the SS Line. The line will operate under the AMENDMENT TO AGREEMENT FOR SALE OF TMNSMISSION CAPABILITY (HEA Transmission Sharing Agreement"). 1 The planned transmission upgrades will be identified by the Railbelt Reliability Council. Exhibit A, May 22,2020 Page 1 of 5 The capacity allocations by and between the Parties shall be subject to a priority right for HEA native load similar in substance to the priority held by Chugach under Section 7(c) of the Services, i.e., the safety, efficiency, and economic needs of HEA's own system as a first priority. The remaining capacity, if constrained by HEA's priority rights, will be provided to the Purchasers on a pro rata basis. SSQ 115 kV Transmission Line fSSQ Line) - HEA will sell, and AEA will purchase and assume all rights and obligations in the approximately 39.3 mile 115 kV transmission line between the Sterling Substation and the Quartz Creek Substation ('SSQ Line") and all associated rights-of-way and permits. The SSQ Line will be maintained in accordance with the Bradley Lake Hydroelectric Transmission Maintenance Agreement ("Transmission Maintenance Agreement"). Language will be added to allow for AEA to offer this contract to other parties in accordance with its procurement provisions. The SSQ Line's transmission capacity will be allocated in the same manner as provided in the HEA Transmission Sharing Agreement, i.e., based upon the individual utilities' percentage share of Bradley Project Capacity (i.e., ML&P 25.9o/o; MEA 13.87o; HEA 12.0o/o; GVEA 16.97o; Chugach 30.4o/o; and City of Seward 1.Oo/"). HEA will maintain operational access and control to the Sterling Substation and Chugach Electric Association, lnc., ("Chugach") will maintain and control operational access to the Quartz Creek Substation. 69 kV Line between Sterling Substation and Ouartz Creek Substation (69 kV Line") - HEA will sell, and AEA will purchase and assume all of HEA's rights and obligations in the 69 kV Line. SECTION 3 - KENAI WITDTIFE REFUGE PERMITS The Parties will cooperate and provide all necessary support to accommodate the assignment of the permit granted to HEA (Permit E-48-KE) for authorization to use and occupy certain lands of the Kenai NationalWildlife Refuge, as well as support any upgrade to the line in the future. The Parties will cooperate and provide all necessary support to accommodate the assignment of the permit granted to HEA (Permit E-47-KE) for authorization to use and occupy certain lands of the Kenai National Wildlife Refuge, as well as support any upgrade to the line in the future. Representatives of HEA, AEA, and the BPMC shall form a task force to work with the relevant governmental authorities to accomplish the transfer of permits and authorizations and obtain any necessary approvals/authorizations for upgrading the transmission lines operated pursuant to the permits. Exhibit A, May 22,2020 Page 2 of 5 SECTION 4 - USE AND CONTROL OF TINES SS Linc - The HEA Transmission Sharing Agreement will be amended to include the SS Line and allocate the capacity of the SS Line in accordance with the terms of the HEA Transmission Sharing Agreement, which provides a transmission capacity allocation for use based upon the individual utilities' percentage share of Bradley Project Capacity (i.e., MLSIP 25.9%; MEA 13.8%;HEA12.Oo/o; GVEA 16.9%; Chugach 3O.4Tai and City of Seward 1.0o/o), subject to a priority right for HEA native load similar in substance to the priority held by Chugach under Section 7(c) of the AGREEMENT FOR THE WHEELING OF ELECTRIC POWER AND FOR RELATED SERVICES ("Services Agreement"), i.e., the safety, efficiency, and economic needs of HEA's own system as a first priority, The remaining capacity, if constrained by HEA's priority rights, will be provided to the other Purchasers on a pro rata basis. AEA will have the right to direct HEA to repair and upgrade the SS Line. lf HEA is unable or unwilling to repair and/or upgrade the SS Line as directed by AEA, then AEA shall be authorized to have such work completed. The cost associated with repair and upgrade of the SS Line required by AEA shall be deemed cost to be paid as a Project Cost. SSQ Llne - The Parties will amend the Bradley Lake Hydroelectric Project Transmission Facilities Maintenance Agreement to include the SSQ Line. The capacity of the SSQ Line will be allocated in accordance with the terms of the HEA Transmission Sharing Agreement (i.e., ML8.P 25.97o; MEA 13.8Vd HEA12.OYo; GVEA 16.90/o; Chugach 30.4Yo; and City of Seward 1.OYo). Services Agrecment Delivcry Point - The Services Agreement will be amended to designate that the southern delivery point for wheeling services under the Services Agreement will be the Quartz Creek Substation. HEA Load Balancing Arca GBA) - HEA's LBAwill be inclusive of at minimum all HEAowned lines with three (3) tie points as follows: Bradley Junction, Soldotna SVC, and the Sterling Substation. Losses on the SS and SSQ Line section shall be treated as losses under the Transmission Sharing Agreement, except that HEA shall participate in such losses in proportion to its usage on these line segments. Amendments to Rclcvant Agreements - Any amendments to the various Bradley Lake Agreements will be executed on or before closing. SECTION 5 . PRICING COMPONENTS Purchasc Price of Assets - AEA will pay HEA a total of $13,300,000.00 for: Exhibit A, May 22,2OZA Page 3 of 5 . Capacity rights in the SS Line (subject to reservation for native load requirements); o Ability for AEA to direct HEA to repair and upgrade the SS Line; o All of HEA's property rights in the SSQ Line; r All of HEA's property rights to 69 kV Line; and, o Reimbursement of the costs to restore the SSQ Line (Swan Lake Fire). The assets included in the Proposed Transaction will be split into two parts and the price will be allocated for each component of the Proposed Transaction accordingly and paid to HEA in tr,rro equal payments. The first payment will be no later than December 15,2020. The second payment no earlier than January 2,2021 and no later than January 15, 2021, sEcTroN 6 - o&M HEA currently provides the O&M on the SSQ Line. HEA has stated that it will continue the OSIM responsibility through the end of the Calendar Year 2020. Thereafter, AEA is required to offer this contract to other parties in accordance with its procurement provisions. The Purchasers desire for HEA to continue to provide O&M services on the SS Line and SSQ Line. The provision of O&M will fall under the existing standards outlined within the Transmission Maintenance Agreement. The OBIM costs will be approved by the BPMC as is the current practice. HEA reserves the right to continue providing the O&M on the SS Line. SECTION 7 - RESTORATION OF SSQ IINE As noted above, the costs incurred for restoration of the SSQ Line following the Swan Lake Fire are included in the Proposed Transaction. SECTION 8 - SERVICES AGREEMENT The Services Agreement shall be amended to keep the Services Agreement in effect from Quartz Creek North through Chugach's system, if necessary. Any amendments to the Services Agreement will be developed and executed prior to closing of the Proposed Transaction. SECTION 9 - DISPATCHING/SCHEDULING Dispatching and scheduling of Bradley energy across the SS Line and the SSQ Line will continue as provided for in the Bradley Agreements, i.e., HEA Transmission Sharing Agreement and the Bradley Lake Hydroelectric Project Allocation and Scheduling Procedures as amended by the terms of this Proposed Transaction. Exhibit A, May 22,2O2O Page 4 of 5 SECTION 10 - FEMA/STATE RECOVERIES Any work and amounts received from FEMA and/or any state recovery associated with the Swan Lake Fire and restoration of the SSQ Line shall be accounted for and transferred to AEA as a direct reduction in the purchase price. lf any of the BPMC utilities receive compensation for economic losses, each utility keeps their respective amount. SECTION 11 - REGUI.ATORY OVERSIGHT The Parties will cooperate and provide support as needed for any approvals at the RCA regarding the price paid by AEA and subsequently passed through by individual utilities through a cost of power adjustment mechanism. sEcfloN 12 - FUTURE UPGRADE(S) TO LTNES SERVTNG BRADLBT PROJECT AEA and the Purchasers expect this purchase and sale to be the initial step in upgrading transmission capacity and reliability of the delivery of energy from the Bradley Lake Project. AEA and the Purchasers pledge to work towards this mutual goal on an expedited basis. AEA and the Purchasers support the future upgrades to the transmission capacity and reliability of the delivery of energy from the Bradley Lake Project and support a determination that the upgrades to the SS Line and the SSQ Line are Required Work under the Bradley Lake Power Sales Agreement. SECTION 13 - CURRENT LITIGATION All claims and litigation by and between the various Purchasers shall be dismissed with prejudice as an integral component and condition of the Proposed Transaction. This specifically includes the dismissal of all regulatory proceedings, litigation, and appeals associated with Case No. 3AN- 14-06125 Cl and 3AN-14-08890 Cl and the Complaint pending before the BPMC. As a condition to closing of the Proposed Transaction, the utilities involved shall execute a settlement and release on terms and conditions mutually acceptable to the utilities involved. Such settlement and release shall be negotiated in good faith with the intent that it resolves all issues involving Bradley Lake transmission including, but not limited to, any future issues that are related or derivative to the underlying claims in all current matters. This will allow AEA to complete the Proposed Transaction free and clear of further legal claims, disputes or demands upon the assets and rights included in the Proposed Transaction. The process will be as follows: 1) An extension within which to file pleadings until July 1st will be granted by HEA; and 2) A Stay of Proceedings will be jointly filed by the parties to the litigation until the Definitive Agreements are successfully executed or the LOI is terminated. SECTION 14 - TRANSMISSION RATES None. The O&M will be paid at actual and reasonable costs approved by the BPMC. Exhibit A, May 22,2020 Page 5 of 5   {01034317}  ALASKA ENERGY AUTHORITY  RESOLUTION NO. 2020‐07    RESOLUTION OF THE ALASKA ENERGY AUTHORITY AUTHORIZING THE PURCHASE OF STERLING QUARTZ  CREEK TRANSMISSION LINE; APPROVING FINANCING TERMS; AND RELATED MATTERS    WHEREAS, the Alaska Energy Authority (the “Authority”) and Homer Electric Association (“HEA”)  entered into a Letter of Intent dated May 22, 2020, and approved by the Bradley Lake participating  utilities, whereby HEA will sell, and AEA will purchase and assume all rights and obligations in the  approximately 39.3 mile 115 kV transmission line between the Sterling Substation and the Quartz Creek  Substation and all associated rights‐of‐way and permits (“SSQ Line”), and  acquire all of HEA’s rights and  obligations in the 69 kV line located east of the Sterling Substation and transmission capacity on HEA’s  line between Soldotna Substation and Sterling Substation (collectively, the “Proposed Transaction”);   and  WHEREAS, the Authority intends to finance costs of Proposed Transaction, including financing costs and  necessary  reserve deposits, through the issuance of power revenue bonds (“Bonds”) issued under the  terms of the Bradley Lake Power Revenue Bond Resolution  (“Bond Resolution”) and secured, in part, by  payments received under and pursuant to the Power Sales Agreement (“PSA”); and  WHEREAS, the Bonds will be purchased by the Alaska Industrial Development and Export Authority  pursuant to conditions set forth in  a financing term sheet (“Term Sheet”), which shall be in substantially  the form present to and made part of the records of this meeting; and  WHEREAS, the Proposed Transaction is intended to resolve: 1) the issues concerning the transmission of  energy from the Bradley Lake Hydroelectric Project (Project) off the Kenai Peninsula; and 2) the current  litigation between HEA and the other participating utilities (Golden Valley Electric Association,  Matanuska Electric Association, Chugach Electric Association, Municipal Light and Power and the City of  Seward)1; and  WHEREAS, benefits derived from the Proposed Transaction include:    Cost Sharing of Purchase‐The participating utilities, through the Bradley Lake Power Management  Committee (“BPMC”), will divide and share the cost of the Proposed Transaction (debt service on  the financing), operation and maintenance of the line in accordance with their respective shared  interest pursuant to the terms of the PSA.   Greater Access to Resources ‐ Allow for timely response, with shared utility resources, in the event  of immediate needs to the Project; and.   Better Ongoing Cost Alignment ‐ Align the allocation of resources with traditional utility  methodology, i.e. cost causer/cost payer. From a financial perspective, there would be greater                                                               1 The Proposed Transaction includes the dismissal of all regulatory proceedings, litigation, and appeals associated with Case No. 3AN-14-06125 CI and the Complaint pending before the BPMC. There was an additional legal action, 3AN-14-08890 CI, on the same subject matter that AEA was a party to. AEA had intervened in this action to protect certain financial issues related to the Project. It concluded in 2019.   {01034317}  resources available for use on this transmission segment, and the ongoing costs will be spread more  equitably to a wider group of ratepayers benefiting from Project power.   Increased Reliability ‐ Reduction in risk of extended outages and related costs for power for  ratepayers throughout the Railbelt.   The Proposed Transaction results in the SSQ Line becoming part of the Project under the oversight  of the BPMC. Upgrades to the SSQ Line are needed to address significant issues with line losses and  when corrected will provide additional energy flows for the participating utilities in the North. The  transmission capacity allocations for the lines delivering energy from the Project have now been  established which should assist the utilities in scheduling delivery of their Project energy deliveries;  and    WHEREAS, the Department of Law Memorandum Opinion dated May 20, 2020 finding that the  definition of “Required Work” set forth in the PSA could include the Proposed Transaction, subject to  the approval of all parties to the PSA and determination that the work is necessary to keep the Project in  good and efficient operating condition, consistent with national industry standards and sound  economics (Attached DOL Memorandum on Required Project Work, May 20, 2020); and  WHEREAS, at the request of the Authority and the BPMC, the Bradley O & D subcommittee commenced  review and analysis of the Proposed Transaction to determine whether the Proposed Transaction is  necessary to keep the Project in good and efficient operating condition consistent with sound economics  and national standards.  On July 17, 2020, the Bradley O & D committee finalized and issued its report  on the Proposed Transaction which is attached hereto and made part of the BPMC’s Resolution No 20‐ 02 (Bradley O & D Report) attached.  The BPMC is aware and understands the Authority will have the  findings and conclusions of the Bradley O & D committee reviewed and certified by an independent  consulting engineer; and  WHEREAS, the members of the BPMC support the Proposed Transaction, subject to any required final  approval of the governing bodies of the individual members (attached BPMC Resolution 20‐03); and  WHEREAS, the Proposed Transaction is contingent upon:    A determination that  all costs associated with the Proposed Transaction are  deemed Required  Project Work under the PSA and Bond Resolution;    The receipt of working permits (including acceptable buffer zones) for authorization to use and  occupy certain lands in the Kenai National Wildlife Refuge for the SSQ Line and the right of way  of the 69 kV Line with terms acceptable to the BPMC;    Execution by all the utilities of definitive agreements delineating  terms and conditions of the  Proposed Transaction;    Amendment to the various Project Agreements by the participating utilities reflecting the terms  of the Proposed Transaction;   Approval of a Financing and Term Sheet by the Authority’s Board, BPMC and the participating  utilities’ Boards of Directors; and   Issuance of the Bonds to finance qualified acquisition costs of the Proposed Transaction, funding  necessary reserves and payment of costs of issuance; and    WHEREAS, the cost of the Proposed Transaction is not to exceed $16 million plus costs of the Bond  issuance and funding of necessary reserves; and      {01034317}  WHEREAS, carrying out the Proposed Transaction is in furtherance of the Authority’s statutory powers  and consistent with the Authorities mission to ‘reduce the cost of energy in Alaska’ and advances the  public interest.    NOW, THEREFORE BE IT RESOLVED BY THE ALASKA ENERGY AUTHORITY AS FOLLOWS:    Section 1.  The Executive Director of the Authority is hereby authorized, directed and empowered  to continue efforts in conjunction with the Proposed Transaction, including preliminary efforts necessary  and desirable to enable the Authority to issue bonds under the Bond Resolution, supported by the moral  obligation of the State of Alaska.     Section 2:    That the form and content of the Term Sheet, in substantially the form and content  presented and made part of this Resolution, is hereby approved.      Section 3.  The Executive Director of the Authority is hereby authorized and empowered to  perform such acts for and on behalf of the Authority necessary or appropriate in order to implement  and carry out the intent and purpose of this Resolution.    Section 4.  The Resolution shall become effective immediately upon its passage and approval.    DATED at Anchorage, Alaska this 5th day of August 2020. _____________________________________ Chair A T T E S T: __________________________________ Secretary             SSQ Line Terms & Conditions  Page 1  July 24, 2020  Alaska Energy Authority  SSQ Line Acquisition Proposed Transaction  as part of the Bradley Lake Hydroelectric Project  Private Placement Funding by the Alaska Industrial Development and Export Authority under the  Sustainable Energy Transmission and Supply (SETS) (AS 44.88.650 – 44.88.690)    PRELIMINARY TERMS AND CONDITIONS  Lender  The Alaska Industrial Development and Export Authority  (“AIDEA” or the “Authority”)  Administrative Provisions of  the Authority  As provided for under the Authority’s Sustainable Energy  Transmission and Supply (SETS) development program and its  corresponding statutes and regulations  Borrower/Owner Alaska Energy Authority (“AEA”) as Owner of the transmission  asset to be acquired from Homer Electric Association  Purpose As provided under the May 22, 2020 Letter of Intent accepted  and agreed to by HEA and the other Bradley Lake participating  Utilities, HEA will sell, and AEA will purchase and assume all  rights and obligations in the approximately 39.3 mile 115 kV  transmission line between the Sterling Substation and the  Quartz Creek Substation and all associated rights‐of‐way and  permits (the SSQ Line). Additionally, HEA will sell, and AEA will  purchase and assume all of HEA’s rights and obligations in the  69 kV line located east of the Sterling Substation.  Bond Resolution AEA’s Bradley Lake Power Revenue Bond Resolution, adopted  by the Board of Directors of the AEA on September 7, 1989 as  further supplemented (the “Resolution”)   Power Sales Agreement  Agreement for the Sale and Purchase of Electric Power (the  “Power Sales Agreement”) dated December 8, 1987.  Loan Amount In an amount not to exceed $16 million plus the costs of  issuance and necessary reserves subject to a confirmed Use of  Funds  As a new Series of Additional Bonds to be issued under the  Resolution and purchased by the Authority  Closing/Funding Anticipated to occur in 4Q 2020  Single advance of all loan proceeds on the closing date  Fees & Transaction Costs  As provided for under 3 AAC 101.140   A $11,000 Application Fee      SSQ Line Terms & Conditions  Page 2  July 24, 2020   A commitment fee equal to 1.00% of the Loan Amount,  due upon acceptance of the Authority’s commitment,  less a credit for the payment of the $11,000 Application  Fee   Borrower is obligated to reimburse the Authority for its  reasonable costs of underwriting and closing the  financing   All fees and expenses may be paid from the proceeds of  the financing at the election of the Borrower  Maturity Date 20 years, subject to confirmation of the remaining economic  life of the SSQ Line.  Payment and Amortization  As provided for under the Power Revenue Bond Resolution:   Principal payable annually; and   Interest payable semi‐annually  Amortization based on a level debt service payments through  the maturity date.  Interest Rate A fixed rate of interest per annum through the maturity date, as  provided for and subject to the Authority’s regulations (3 AAC  101.120), equal to:  1. The 20 year FHLB Des Moines Fixed Rate Advances  Index; plus  2. A credit spread of 100 basis points.  Per the Authority’s regulations 3 AAC 101.120(c)(1)(b)(i), this  rate is subject to a minimum rate of interest as of July 16, 2020  equal to 3.50% per annum.   Capital Upgrades Borrower agrees that all capital upgrades to the SSQ Line are to  follow procurement guidelines, including competitively bid.  Security As provided under 3 AAC 101.080(c), secured under the  Resolution, on a parity with all other outstanding bonds,  inclusive of the pledge of revenues derived from the Agreement  for the Sale and Purchase of Electric Power (the “Power Sales  Agreement”) dated December 8, 1987 and all of Borrower’s  rights under the Power Sales Agreement.  Security includes a Debt Service Fund, a Capital Reserve Fund,  and all other funds secured under the Resolution.  Financial Covenants  Debt Service Coverage Ratio (DSCR) – AEA will maintain a  minimum annual DSCR with respect to the Resolution and SSQ  Line of 1.0x  Prepayment Borrower may prepay any portion of the Loan Amount provided  30 days prior written notice has been given and it occurs on a  scheduled payment date. Prepayments will be applied pro‐rata      SSQ Line Terms & Conditions  Page 3  July 24, 2020  across the remaining amortization schedule. All prepayments  made within 5 years of closing will be subject to a 38 basis  points Administrative Fee.  Representations &  Warranties  As customary in long‐term privately placed debt fundings of this  type, including but not limited to the following: Good Standing,  Authority, No Conflicting Agreements, Taxes, Licenses and  Permits, Litigation, Financial Statements, Material Adverse  Change, Required Approvals, Compliance with Laws, Disclosure,  No Other Liens, Environmental Matters, Power Contract.  Covenants Covenants of the Borrower, as customary in long‐term privately  placed debt fundings of this type, subject to appropriate  materiality thresholds, reasonableness and time periods to be  agreed, including, but not limited to the following:   delivery of financial statements, compliance  certificates, government reports and notices of default,  material litigation and material governmental and  environmental proceedings;   compliance with laws (including environmental laws)  and material contractual obligations;   payment of applicable taxes;   maintenance of insurance as required under the  Resolution1;   use of proceeds;   limitation on liens;   providing notice of material changes to the Power Sales  Agreement;   no termination of the Power Sales Agreement;   prompt notice to the Authority of any material event to  the Bradley Lake Hydroelectric Project or the SSQ Line;  and   no amendment to the Power Sales Agreement which  results in a reduction of the required payments  thereunder to satisfactorily cover debt service on the  Loan Amount and the outstanding bonds or otherwise  materially affects the Security.  Events of Default and  Remedies  As customary in long‐term privately placed debt fundings of this  type, to include a cross‐default to all Series issued under the  Resolution.  The Default Rate will be the Interest Rate plus 300 basis points.  If there is a payment default that continues for 30 days after  the due date, then beginning on the 31st day after the payment  is due, the Loan Amount will bear interest at the Default Rate.                                                               1 Section 714: consistent with requirements that are customary in connection with the operation of facilities of a  type and size comparable to the project.      SSQ Line Terms & Conditions  Page 4  July 24, 2020  Upon the occurrence of an event of default (other than a  payment default), the interest rate on the Loan Amount will be  the Default Rate until the default is cured.  Conditions Precedent to  Closing  Conditions customary in long‐term privately placed debt  fundings of this type including, but not limited to the following:   Definitive agreement by the Committee for the  acquisition of the SSQ Line as approved Required  Project Work2 under the Power Revenue Bond  Resolution.   The negotiation, execution and delivery of definitive  documentation including, without limitation, a loan  agreement, promissory note, satisfactory legal  opinions, corporate authorizations and other  customary closing documents in form and substance  satisfactory to the Authority.   The  receipt  of  working  permits  (including  acceptable  buffer zones) for authorization to use and occupy certain  rights‐of‐way with terms acceptable to the BPMC.   A certificate from the Committee stating that the  Supplemental Resolution authorizing such Additional  Bonds has been adopted in accordance with Section 11  of the Power Sales Agreement.   There shall not have occurred a material adverse  change in the business, assets, liabilities (actual or  contingent), operations, and condition (financial or  otherwise) of AEA or the SSQ Line.   The absence of material litigation surrounding the SSQ  Line pursuant to agreement(s) by the Transmission  Capacity Purchasers and AEA satisfactory to the  Authority.   AEA shall be in compliance with all existing material  financial obligations.   AEA shall have or shall have obtained all governmental  and regulatory authorizations necessary for the SSQ  Line.   The receipt of a legal opinion from counsel to the  Power Purchasers as to the continued validity and  enforceability of the Power Sales Agreement.   External consultant report satisfactory to the Authority  confirming the technical and operational capacity of  the SSQ Line and its ability to meet its performance  obligations under the Transmission Capacity  Agreement.                                                               2 See DOL Memorandum from Stefan A. Saldanha, Assistant Attorney General, dated May 20, 2020, which also  references future upgrades to the SSQ Line as constituting Required Project Work so long as such upgrades are  consistent with sound economics and national industry standards.      SSQ Line Terms & Conditions  Page 5  July 24, 2020   Proof of insurance coverages as required under the  Resolution3.   The payment of all reasonable out of pocket expenses  incurred by the Authority in establishing and closing the  Loan.  Governing Law The laws of the State of Alaska. Any action or judicial  proceeding arising out of the finance documents shall be filed  and prosecuted in the Superior Court for the State of Alaska,  Third Judicial District at Anchorage, or in the judicial district  where the property that is the subject of any enforcement  action is located.  Disclosures This preliminary term sheet is not an offer or commitment to  lend or borrow and remains subject to the Authority’s and  Borrower’s internal approvals and acceptable final  documentation.                                                                  3 Section 714: consistent with requirements that are customary in connection with the operation of facilities of a  type and size comparable to the project.    MEMORANDUM State of Alaska Department of Law TO: FROM: BPMC participants AEA Board of Directors Curtis Thayer AEA Executive Director Stefan A. Saldanha Assistant Attorney General Labor and State Affairs Section DATE: FILE NO.: TEL. NO.: SUBJECT: May 20, 2020 2019104163 (AEA - Kenai Transmission Line Discussions) (907) 269-5156 Whether the SQL Project meets the definition of “Required Project Work” in the PSA The participants in the Bradley Lake hydroelectric facility (Bradley Lake Project) are discussing a sale and transfer of the transmission line from Sterling substation to Quartz Creek substation (SQ Line), along with further terms and rights such as relating to transmission capacity on a linked transmission line, a parallel right of way, an upgrade option on the SQ Line and related terms. The proposed transaction is outlined in the draft documents, dated May 19, 2020, attached as Exhibit A, (the transaction, SQL Project) and for the purpose of this memorandum will be considered to be agreed upon by all participants, including HEA, the current owner of the SQ Line and the other rights, and AEA, the potential future owner. This memorandum considers whether the SQL Project is “Required Project Work” (Required Project Work) as defined in the Bradley Lake Power Sales Agreement (PSA). This analysis is important, because if found to be Required Project Work, financing costs of the transaction and relevant upgrades could be deducted from future excess payments paid by the utilities to the State of Alaska under the PSA. In short, the definition of Required Project Work is sufficiently broad enough, allowing the SQL Project to be considered Required Project Work under the PSA. However, additional analysis should be done with respect to how the SQL Project is consistent with sound economics and national standards in the industry. CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 2 of 14 1. Can the transaction as outlined in Exhibit A be considered as Required Project Work? a. Description of SQL Project The main part of the SQL Project is the sale of the transmission line linking the substations located in Sterling and Quartz Creek (SQ Line). Also included in the transaction are (a) the sale of transmission capacity between Soldotna substation and Sterling substation, (b) certain rights regarding the transmission line between Soldotna substation and Sterling substation (SS Line), (c) the purchase of a right of way, containing an unused 69kV transmission line between Sterling substation and Quartz Creek substation, and (d) the planning for the future upgrades of the SQ and SS Lines. All permits allowing access to the Kenai National Wildlife Refuge would also be transferred. All of these assets are currently the property of HEA, and lie mostly within its service territory. The buyer would be AEA in its capacity as owner of the Bradley Lake Project. The SQL Project would then be overseen by the BPMC, and upgrades, capacity allocation and other rights and obligations would be done in accordance with amended agreements as approved by the BPMC. AEA is no longer allowed to construct or acquire new power projects, such as hydroelectric facilities or interties, without legislative approval.1 However, AEA still has the power to “improve, equip, operate and maintain power projects”, such as the Bradley Lake Project, which has been approved by the legislature.2 Additionally, AEA has the power to “enter into contracts with any person … for the purchase, sale, exchange, transmission or use of any power from a project, or any right to the capacity of it.”3 The Department of Law has done detailed research on the statutory powers of AEA and has concluded that the SQL Project, including upgrades to the SS and SQ lines, is within AEA’s statutory powers. The purchase price is estimated at $13.3 million, primarily for the SQ Line. Upgrade costs have not been determined but could reach $750 thousand per mile, e.g. for a new 230kV line. The financing structure has not been determined yet, but could include both short- and long-term financing, including AEA issuing bonds on behalf of 1 SLA 1993, ch. 18, Sec. 10. 2 AS 44.83.080(5). 3 AS 44.84.080(11). CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 3 of 14 the Bradley Lake Project or the utilities themselves financing the costs and expenses and paying the amounts directly into the annual budget in proportion to their ownership. There are several other terms and conditions as outlined in Exhibit A, including operating and maintenance responsibilities, allocation of restoration costs caused by the Swan Lake Fire, accounting for any disaster compensation received by FEMA, regulatory cooperation, and a litigation settlement between HEA and the other five Railbelt utilities. b. Contractual language analysis The Required Project Work definition in the PSA combines several types of projects.4 The SQL Project is not repair, renewal, maintenance or replacement work because the work planned is not of this type and the assets and rights in question were historically not part of the Bradley Lake Project. Also, the SQL Project is not required by federal or state law, a licensing or regulatory agency with jurisdiction over the Bradley Lake Project, or the PSA. These categories of Required Project Work are essentially routine, and dealt with accordingly in the PSA – AEA essentially has the right to “make or cause to be made all Required Project Work, provided that funds are legally available to the Authority for this purpose” and so long as prior reasonable notification is given to the utilities.5 However, the definition of Required Project Work is broader than just routine, required work. The SQL Project could be considered an improvement or betterment necessary to keep the Bradley Lake Project in good and efficient operating condition, consistent with (1) sound economics for the Project and the Purchasers, and (2) national standards for the industry. The SQL Project is focused on improving transmission of Bradley Lake power, which is critical to providing Bradley Lake power to ratepayers. With the Swan Lake Fire, it was shown that without this transmission in place, the Bradley Lake Project could only operate in a very limited way, supplying only HEA’s territory, and the economics of its operation were likely not sound, and there were significant damages to utilities. It is probable that this catch-all portion of the Required Project Work definition was included in the PSA for unforeseen circumstances such as this. This would make sense considering the term of the PSA, which at the minimum was expected to last 50 years but could easily be extended for several more decades. 4 Section 1(hh), p. 7, PSA 5 Section 4(c), p. 9, PSA. CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 4 of 14 The utilities have strongly argued that the SQL project would be an improvement or betterment for the Bradley Lake Project because of the ability and competence of the BPMC to manage this infrastructure. The utilities believe the SQL Project is consistent with the sound economics. It is not clear what “national standards for the industry” refers to in the definition, and here the utilities have not suggested any particular standard. It would be preferable if the utilities would perform a formal economic analysis and have a consultant opine on the consistency of the SQL Project with national standards for the industry. For example, an inspection by the manufacturer was performed before the start of the SVC project. Finally, there does not seem to be any limitation on where Required Project Work must be located. However, it makes sense that there should be a strong link to the original Bradley Lake Project and protection of the Bradley Lake participants’ interests, otherwise nearly any wholesale transmission infrastructure in the Railbelt could be considered to be Required Project Work. In this case, the strong link is clear because the relevant transmission lines carry predominantly (over 90%) Bradley Lake-generated power, and the proposed plan would protect each purchaser’s allocation rights on the line. Even HEA, who takes power from a separate transmission network, would keep its allocation rights on this line for potential economy energy sales. In addition, the BPMC must approve any alternative methods of carrying out and funding Required Project Work, inherently protecting all participants’ rights. As mentioned in Exhibit A, there are alternative methods of carrying out and funding this project, so the BPMC will have to approve these specific alternatives prior to the agreement on the SQL Project. 2. Conclusion The SQL Project cannot be easily characterized under the PSA. Nothing like this project has ever been done before. However, due to the language in the definition of Required Project Work, which can be broadly interpreted, the SQL Project could be considered as such. With the approval of all Parties to the PSA, and studies or reports supporting the economics and industry standards, the SQL Project can be seen as necessary to keep the Bradley Lake Project in good and efficient operating condition, consistent with national industry standards and sound economics. CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 5 of 14 EXHIBIT A – PROPOSED TRANSACTION DOCUMENTS [AEA Letterhead] May ___, 2020 Bradley P. Janorschke, General Manager Homer Electric Association, Inc. 3977 Lake Street Homer, AK 99603 Re: Letter of Intent Sale of Transmission Line – Sterling Substation to Quartz Creek Substation Sale of Transmission Capacity – Soldotna Substation to Sterling Substation Sale of Transmission Line – 69 kV line between Soldotna and Quartz Creek Reimbursement of Costs Incurred – Swan Lake Fire Dear Mr. Janorschke: This Letter of Intent is intended to set forth certain understandings as of the date hereof by and between Homer Electric Association, Inc., and its single-member cooperative Alaska Electric and Energy Cooperative, Inc., each an electric cooperative organized under the laws of the State of Alaska (together “HEA”), and the Alaska Energy Authority, an instrumentality of the State of Alaska (“AEA”), and to serve as a basis for further discussions and negotiations between HEA and AEA with respect to the terms and conditions of the Definitive Agreements (as defined in the non-binding term sheet attached hereto as Exhibit A (hereinafter referred to as the “Term Sheet”) and the Proposed Transaction (as defined below). All capitalized terms shall have the meaning that the terms have in the documents commonly referred to as the “Bradley Agreements.” HEA and AEA are sometimes referred to herein individually as a “Party” and collectively as the “Parties.” It is recognized that this Letter of Intent references other agreements that will need to be addressed by the Bradley Lake Project Management Committee and the Purchasers. Such agreements will be referenced in the Definitive Agreements as conditions that must be met on or before closing of this Proposed Transaction. Each Purchaser has executed this Letter of Intent to evidence its respective agreement and support of the Proposed Transaction as outlined herein. Unless otherwise defined herein, terms defined in the Term Sheet will have the same meaning when used in this Letter of Intent. 1. Proposed Transaction. This Letter of Intent and the attached Term Sheet outline the general terms and conditions pursuant to which AEA proposes to purchase the HEA Assets (as defined below) from HEA, and HEA proposes to sell the HEA Assets to AEA (the “Proposed Transaction”). 2. HEA Assets. HEA is the owner of certain electrical transmission facilities and properties that are currently used by HEA to provide electrical service to the Purchasers of the CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 6 of 14 Bradley Lake Hydroelectric Project (“Bradley Project”) and its customers located in on the Kenai Peninsula in Alaska (the “HEA Assets”). The HEA Assets are more specifically described in the Term Sheet. 3. Timing. The Parties will employ commercially reasonable efforts to seek to complete the negotiation, execution and delivery of mutually acceptable Definitive Agreements on or prior to September 25, 2020, unless mutually extended by the Parties. The execution and delivery of the Definitive Agreements shall be subject, among other things, to the approval of such agreements: (a) on behalf of each Party by their respective governing boards; and (b) other appropriate management bodies of the Parties. 4. LOI Period; Termination. Unless otherwise agreed, this Letter of Intent shall remain in effect from the date of execution by both Parties until the earliest of (a) the date of execution and delivery of the Definitive Agreements (the “Effective Date”); or (b) the termination of this Letter of Intent by either AEA or HEA at its sole discretion at any time, effective upon written notice to the other (the “LOI Period”). Termination of this Letter of Intent without execution and delivery of the Definitive Agreements will release the Parties from the provisions hereof, except that Sections 7, 8, 9, and 10 of this Letter of Intent shall remain binding on both Parties, notwithstanding termination hereof. 5. Access. During the LOI Period and, as provided in the Definitive Agreements, HEA will, subject to reasonable advance notice from AEA and, if necessary, subject to an appropriate confidentiality agreement, afford reasonable access and all reasonable opportunity to AEA and/or Bradley Lake Project Management Committee (“BPMC”) representatives to investigate, inspect and perform due diligence regarding the HEA Assets during normal business hours. AEA and BPMC representatives and/or agents will be subject to and observe any applicable HEA rules regarding safety, security and confidentiality and shall not interfere with or hinder the operation of the HEA Assets. 6. Expenses. Each Party shall bear its own legal, accounting, consulting, regulatory, tax and other professional fees and expenses and other transaction costs, regardless of whether the Proposed Transaction is consummated. 7. Confidentiality. The Parties agree that the terms of this Letter of Intent and the attached Term Sheet shall be confidential subject to all applicable laws and regulations. The Parties acknowledge that, prior to execution of this Letter of Intent, a Party may present this Letter of Intent and the attached Term Sheet to its governing board at a public meeting, and that at such public meeting, this Letter of Intent and the attached Term Sheet will be disclosed to the public. For avoidance of doubt, such designation and disclosure is not intended, nor shall it be construed, to apply to any other “Confidential Information” subject to the terms and conditions of the Information Sharing Agreement Between Homer Electric Association, Inc. and Alaska Energy Authority and Bradley Lake Project Management Committee, including but not limited to, any such “Confidential Information” as may in any way, directly or indirectly, be related to the subject matter of the Letter of Intent or the Term Sheet. 8. Governing Law. This Letter of Intent shall be governed by the laws of the State of Alaska. CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 7 of 14 9. Counterparts. This Letter of Intent may be executed in several counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same instrument. 10. Effect of This Letter of Intent. This Letter of Intent is not an offer or a commitment on the part of HEA or AEA or any parent company or affiliate of either. The Parties understand that except as expressly set forth in this paragraph, this Letter of Intent (including the attached Term Sheet) constitutes a non-binding statement of the Parties’ respective intentions with respect to the Proposed Transaction, does not contain all matters upon which agreement would need to be reached in order for the Proposed Transaction to be consummated, and therefore does not constitute a binding commitment or agreement with respect to the Proposed Transaction itself. Any transaction which might result from discussions shall be contingent upon negotiation and execution of the Definitive Agreements and receipt of necessary or appropriate approvals, including, to the extent necessary or appropriate, those of the management and board of HEA and any parent entities or affiliates as necessary and AEA, and no binding commitment shall arise prior to then even if the Parties reach some understanding(s) or agreement(s) in principle. The Closing of such transaction shall be contingent upon receipt of such other conditions precedent (e.g., government and/or regulatory approvals) to Closing as shall be set forth in the Definitive Agreements. Any actions taken by a Party in reliance on the non-binding terms expressed herein (including in the Term Sheet) or on statements made during negotiations pursuant to this Letter of Intent shall be at that Party’s own risk, and this Letter of Intent shall not be the basis for a contract by estoppel, implied contract or any other legal theory. Notwithstanding the foregoing, the Parties acknowledge and agree that Section Nos. 4, 5, 6, 7, 8, 9, and 10 create, and are intended to create, binding legal and contractual obligations of the Parties. If the foregoing is satisfactory to you and reflects your understanding with respect to the matters referred to in this Letter of Intent, please sign and date the enclosed copy of this Letter of Intent where indicated below and return such copy, signed and dated, to the undersigned on or before July 1, 2020. If this Letter of Intent is not executed by HEA and delivered to the undersigned on behalf of AEA on or prior to July 1, 2020, it shall be null and void. Sincerely, Curtis W. Thayer Executive Director Alaska Energy Authority CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 8 of 14 ACCEPTED AND AGREED TO BY: HOMER ELECTRIC ASSOCIATION, INC. By: ______________________________ Bradley P. Janorschke, General Manager CHUGACH ELECTRIC ASSOCIATION, INC. By :_________________________________ Lee D. Thibert, Chief Executive Officer GOLDEN VALLEY ELECTRIC ASSOCIATION By: __________________________________ John J. Burns, President, CEO MATANUSKA ELECTRIC ASSOCIATION, INC. CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 9 of 14 By: ___________________________________ Tony M. Izzo, General Manager THE MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT & POWER By: __________________________________ Anna C. Henderson, General Manager CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM By: ___________________________________________ John Foutz, Electric Utility Manager CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 10 of 14 Exhibit A to Letter of Intent This Exhibit is being prepared to set forth the terms for sale, transfer, and operation of the transaction involving Soldotna Substation to Sterling Substation transmission line (“SS Line”) and the Sterling Substation to Quartz Creek Substation transmission line (“SSQ Line”), as well as other related matters. The purchasing entity will be the Alaska Energy Authority (“AEA”). This Exhibit A will be made part of a Letter of Intent between the Parties. SECTION 1 – CONDITIONS PRECEDENT Conditions Precedent - The terms contained in this Exhibit A and the proposed transaction is contingent upon satisfaction of the following are contingent upon: A. The Parties receiving an opinion from the Department of Law (acceptable to AEA and the Purchasing Utilities) determining that the following transactions will be deemed Required Project Work under the Power Sales Agreement: 1) the purchase and sale of capacity on the SS Line; 2) the purchase and sale of the SSQ Line; 3) the purchase and sale of the 69 kV transmission line; and 4) the expected future upgrades to the SS Line and SSQ Line.6 B. The receipt of working permits (including acceptable buffer zones) for authorization to use and occupy certain lands of the Kenai National Wildlife Refuge for the 115 kV line (Permit E-48-KE) and the 69 kV line (Permit E-47-KE) and appropriate assurances regarding upgrades to the 115 kV line with terms acceptable to the BPMC. C. Execution by all the Parties of all the Definitive Agreements and execution of the various agreements by the Purchasers which require amendments as more specifically set forth in this Exhibit A. SECTION 2 - ASSETS AND RIGHTS TO BE TRANSFERRED Soldotna Substation to Sterling Substation Transmission Line (“SS Line”) – HEA will remain owner of this 14.25 mile 115 kV transmission line segment up to and including switches #115 and #425 at the Sterling Substation and AEA will purchase transmission capacity on the SS Line. The line will operate under the AMENDMENT TO AGREEMENT FOR SALE OF TRANSMISSION CAPABILITY (“HEA Transmission Sharing Agreement”). The capacity allocations by and between the Parties shall be subject to a priority right for HEA native load similar in substance to the priority held by Chugach under Section 7(c) of the Services, i.e., the safety, efficiency, and economic 6 The planned transmission upgrades will be identified by the Railbelt Reliability Council. CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 11 of 14 needs of HEA’s own system as a first priority. The remaining capacity, if constrained by HEA’s priority rights, will be provided to the Purchasers on a pro rata basis. SSQ 115 kV Transmission Line (SSQ Line) - HEA will sell, and AEA will purchase and assume all rights and obligations in the approximately 39.3 mile 115 kV transmission line between the Sterling Substation and the Quartz Creek Substation (“SSQ Line”) and all associated rights-of- way and permits. The SSQ Line will be maintained in accordance with the Bradley Lake Hydroelectric Transmission Maintenance Agreement (“Transmission Maintenance Agreement”). Language will be added to allow for AEA to offer this contract to other parties in accordance with its procurement provisions. The SSQ Line’s transmission capacity will be allocated in the same manner as provided in the HEA Transmission Sharing Agreement, i.e., based upon the individual utilities’ percentage share of Bradley Project Capacity (i.e., ML&P 25.9%; MEA 13.8%; HEA 12.0%; GVEA 16.9%; Chugach 30.4%; and City of Seward 1.0%). HEA will maintain operational access and control to the Sterling Substation and Chugach Electric Association, Inc., (“Chugach”) will maintain and control operational access to Quartz Creek Substations. 69 kV Line between Sterling Substation and Quartz Creek Substation (69 kV Line”) – HEA will sell, and AEA will purchase and assume all of HEA’s rights and obligations in the 69kV Line. SECTION 3 - KENAI WILDLIFE REFUGE PERMITS The Parties will cooperate and provide all necessary support to accommodate the assignment of the permit granted to HEA (Permit E-48-KE) for authorization to use and occupy certain lands of the Kenai National Wildlife Refuge, as well as support any upgrade to the line in the future. The Parties will cooperate and provide all necessary support to accommodate the assignment of the permit granted to HEA (Permit E-47-KE) for authorization to use and occupy certain lands of the Kenai National Wildlife Refuge, as well as support any upgrade to the line in the future. Representatives of HEA, AEA, and BPMC shall form a task force to work with the relevant governmental authorities to accomplish the transfer of permits and authorizations and obtain any necessary approvals/authorizations for upgrading the transmission lines operated pursuant to the permits. SECTION 4 - USE AND CONTROL OF LINES SS Line – The HEA Transmission Sharing Agreement will be amended to include the SS Line and allocate the capacity of the SS Line in accordance with the terms of the HEA Transmission Sharing Agreement which provides a transmission capacity allocation for use based upon the individual utilities’ percentage share of Bradley Project Capacity (i.e., ML&P 25.9%; MEA 13.8%; HEA 12.0%; GVEA 16.9%; Chugach 30.4%; and City of Seward 1.0%), subject to a priority right for HEA native load similar in substance to the priority held by Chugach under Section 7(c) of the AGREEMENT FOR THE WHEELING OF ELECTRIC POWER AND FOR RELATED SERVICES (“Services Agreement”), i.e., the safety, efficiency, and economic needs of HEA’s own system as a first priority. The remaining capacity, if constrained by HEA’s priority rights will be provided to the other Purchasers on a pro rata basis. AEA will have the right to direct HEA to repair and upgrade the SS Line. If HEA is unable or unwilling to repair and/or upgrade the SS Line as CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 12 of 14 directed by AEA, then AEA shall be authorized to have such work completed. The cost associated with repair and upgrade of the SS Line required by AEA shall be deemed cost to be paid as a Project Cost. SSQ Line – The Parties will amend the Bradley Lake Hydroelectric Project Transmission Facilities Maintenance Agreement to include the SSQ Line. The capacity of the SSQ Line will be allocated in accordance with the terms of the HEA Transmission Sharing Agreement (i.e., ML&P 25.9%; MEA 13.8%; HEA 12.0%; GVEA 16.9%; Chugach 30.4%; and City of Seward 1.0%). Services Agreement Delivery Point - The Services Agreement will be amended to designate that the southern delivery point for wheeling services under the Services Agreement will be the Quartz Creek Substation. HEA Load Balancing Area (LBA) – HEA’s LBA will be inclusive of at minimum all HEA owned lines with three (3) tie points as follows: Bradley Junction, Soldotna SVC, and the Sterling Substation. Losses on the SS and SSQ Line section shall be treated as losses under the Transmission Sharing Agreement, except that HEA shall participate in such losses in proportion to its usage on these line segments. Amendments to Relevant Agreements - Any amendments to the various Bradley Lake Agreements will be executed on or before closing. SECTION 5 – PRICING COMPONENTS Purchase Price of Assets – AEA will pay HEA a total of $13,300,000.00 for:  Capacity rights in the SS Line (subject to reservation for native load requirements);  Ability for AEA to direct HEA to repair and upgrade the SS Line;  All of HEA’s property rights in the SSQ Line;  All of HEA’s property rights to 69kV Line; and,  Reimbursement of the costs to restore the SSQ Line (Swan Lake Fire). The price will be allocated for each component of the transaction accordingly and paid to HEA in two equal payments. The first payment will be no later than December 15, 2020. The second payment no earlier than January 2, 2021 and no later than January 15, 2021. SECTION 6 - O&M HEA currently provides the O&M on the SSQ Line. HEA has stated that it will continue the O&M responsibility through the end of the Calendar Year 2020. Thereafter, AEA is required to offer this contract to other parties in accordance with its procurement provisions. The Purchasers desire for HEA to continue to provide O&M services on the SS Line and SSQ Line. The provision of O&M will fall under the existing standards outlined within the Transmission Maintenance Agreement. The O&M costs will be approved by the BPMC as is the current practice. HEA reserves the right to continue providing the O&M on the SS Line. CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 13 of 14 SECTION 7 - RESTORATION OF SSQ LINE As noted above, the costs incurred for restoration of the SSQ Line following the Swan Lake Fire are included in the transaction. SECTION 8 - SERVICES AGREEMENT The Services Agreement shall be amended to keep the Services Agreement in effect from Quartz Creek North through Chugach’s system, if necessary. Any amendments to the Services Agreement will be developed and executed prior to closing of the transaction. SECTION 9 – DISPATCHING/SCHEDULING Dispatching and scheduling of Bradley energy across the SS Line and the SSQ Line will continue as provided for in the Bradley Agreements, i.e., HEA Transmission Sharing Agreement and the Bradley Lake Hydroelectric Project Allocation and Scheduling Procedures as amended by the terms of this transaction. SECTION 10 - FEMA/STATE RECOVERIES Any work and amounts received from FEMA and/or any state recovery associated with the Swan Lake Fire and restoration of the SSQ Line shall be accounted for and transferred to AEA as a direct reduction in the purchase price. If any of the BPMC utilities receive compensation for economic losses, each utility keeps their respective amount. SECTION 11 - REGULATORY OVERSIGHT The Parties will cooperate and provide support as needed for any approvals at the RCA regarding the price paid by AEA and subsequently passed through by individual utilities through a cost of power adjustment mechanism. SECTION 12 - FUTURE UPGRADE(S) TO LINES SERVING BRADLEY PROJECT AEA and the Purchasers expect this purchase and sale to be the initial step in upgrading transmission capacity and reliability of the delivery of energy from the Bradley Lake Project. AEA and the Purchasers Utilities pledge to work towards this mutual goal on an expedited basis. AEA and the Purchasers support the future upgrades to the transmission capacity and reliability of the delivery of energy from the Bradley Lake Project and support a determination that the upgrades to the SS Line and the SSQ Line are Required Work under the Bradley Lake Power Sales Agreement. SECTION 13 – CURRENT LITIGATION All claims and litigation by and between the various Purchasers shall be dismissed with prejudice as an integral component and condition of this Proposed Transaction. This specifically includes the dismissal of all regulatory proceedings, litigation, and appeals associated with Case No. 3AN- CONFIDENTIAL May 20, 2020 Re: Whether the SQL Project meets the definition of “Required Project Work” in the PSA Page 14 of 14 14-06125 CI and 3AN-14-08890 CI and the Complaint pending before the BPMC. As a condition to closing of the Proposed Transaction, the utilities involved shall execute a settlement and release on terms and conditions mutually acceptable to the utilities involved. Such settlement and release shall be negotiated in good faith with the intent that it resolves all issues involving Bradley Lake transmission including, but not limited to, any future issues that are related or derivative to the underlying claims in all current matters. This will allow AEA to complete the transaction free and clear of further legal claims, disputes or demands upon the assets and rights included in the transaction. SECTION 14 – TRANSMISSION RATES None. The O&M will be paid at actual and reasonable costs approved by the BPMC. ______________ {00056322.2} Page 1 of 10 – Report of the Bradley O&D Committee: Proposed Transaction Bradley Lake Project Management Committee Report of the Bradley O&D Committee Review of the Proposed Transaction On May 22, 2020 Alaska Energy Authority (AEA) and Homer Electric Association, Inc. (HEA) entered into a Letter of Intent containing the terms and conditions under which AEA would purchase and HEA would sell certain electric transmission facilities and properties that are currently used by HEA to provide electric service to Project Purchasers (Proposed Transaction). The components of the Proposed Transaction are set forth in more detail in the Letter of Intent between AEA and HEA.1 Each component provides value for the Proposed Transaction. This Report focuses on the transmission facilities serving the Project; specifically, the Sterling to Quartz Creek Line (SSQ line). At the request of the Bradley Lake Project Management Committee (BPMC), the Bradley O&D Committee (Bradley O&D) has performed the review and analyses described below on the Proposed Transaction which confirms the Proposed Transaction is consistent with Prudent Utility Practice for the industry and is necessary to keep the Bradley Lake Hydroelectric Project (Project) in good and efficient operating condition and therefore qualifies as “Required Project Work” under the Agreement for the Sale and Purchase of Electric Power (Power Sales Agreement). The Proposed Transaction will allow more resources to be available for managing the scheduled and unscheduled maintenance on the SSQ line. The Proposed Transaction will be more in line with the utility practice of cost causer is cost payer with respect to the obligations and responsibilities associated with the SSQ line. The Proposed Transaction will also clear the way for future upgrades to the transmission facilities serving the Project. Based on the O&D analysis, upgrading the new line will save power and reduce utility system stress making the project more efficient and reliable. As explained in more detail later in this Report, the Proposed Transaction is 1 The Proposed Transaction is comprised of AEA paying HEA a total of $13,300,000.00 for: 1) all of HEA’s property rights in the SSQ line; 2) capacity rights in the Soldotna to Sterling Line (SS Line), subject to reservation for HEA’s native load requirements; 3) the ability for AEA to direct HEA to repair and upgrade the SS Line; 4) all of HEA’s property rights in the HEA’s 69kV Line; and, reimbursement of the costs incurred by HEA to restore the SSQ line (Swan Lake Fire). The price will be allocated for each component of the transaction accordingly. There is also some additional amounts being obtained to provide for some immediate maintenance issues and the cost of financing and transferring the assets. This Report concentrates its economic analyses on the SSQ line which is the source of much of the benefits. {00056322.2} Page 2 of 10 – Report of the Bradley O&D Committee: Proposed Transaction consistent with the definition of “Prudent Utility Practice” as that term is defined in the Power Revenue Bond Resolution. The SSQ line is operated at 115 kV and crosses land owned by private individuals as well as several government entities, including the Kenai National Wildlife Refuge. It should be noted that acquiring a new right of way in a national wildlife refuge requires an act of the US Congress. The transmission line utilizes wood pole construction over a combination of mountainous and swampy terrain. The line was originally constructed to interconnect HEA and Chugach Electric Association Inc. (Chugach) service territories and later was utilized to provide the pathway to access Project power by the northern utilities (located North of the Kenai Peninsula, i.e., Golden Valley Electric Association (GVEA), Matanuska Electric Association (MEA), and Anchorage Municipal Light and Power (ML&P), Chugach, City of Seward d/b/a Seward Electric System (SES)). The line is rated for 75 MW during normal operation and 85 MW during emergency operation such as Pending Spill at the Project. Because the Project is rated at 120 MW , the transmission line is not capable of transporting all participants full capacity share at the same time. Methodology To prepare this report, the Bradley O&D members sought to identify the economic benefits and applicable industry standards that apply to the Proposed Transaction generally, and more specifically, to the SSQ line. Bradley O&D members gathered SCADA, modeling and financial information for each utility receiving power from the Project. In addition to reviewing real time data, the following documents were reviewed.  National and Railbelt Reliability Standards  Power Sales Agreement (PSA)  Letter of Intent between the AEA and HEA, with Attachments (AEA/HEA Letter of Intent)  2017 AEA Railbelt Transmission Plan and Economic Analysis  Definition of “Prudent Utility Practice” used in the Power Revenue Bond Resolution In order to establish the cost of the SSQ line operation, HEA, GVEA, ML&P, MEA and Chugach gathered and analyzed the information to determine the economic impact to the respective utilities during periods when the SSQ line is out of service. This information provided an estimate of the economic impact when the SSQ line is out of service. SCADA data and economic information gathered included:  Hourly power data at Sterling and Quartz Creek Substations  Generation Data {00056322.2} Page 3 of 10 – Report of the Bradley O&D Committee: Proposed Transaction  Fuel-related Data  Avoided Cost Data  Swan Lake Fire Impact Data Power Sales Agreement Under the PSA, work determined to be “Required Project Work” will be performed under AEA’s overview, and paid for by Bradley Participants, Section 4(c). “The Authority shall make or cause to be made all Required Project Work, provided that funds are legally available to the Authority for this purpose. The costs of Required Project Work shall be included in Annual Project Costs in the manner set forth in Section 8(a) (iv). The Authority shall give reasonable notification to all Purchasers prior to making or causing to be made any Required Project Work. Alternative methods (if any) of carrying out and funding Required Project Work shall be subject to approval by the Committee under rules of procedure to be adopted pursuant to Section 13.” See PSA at Required Project Work, Section 4(c) “Required Project Work means repairs, maintenance, renewals, replacements, improvements or betterments required by federal or state law, a licensing or regulatory agency with jurisdiction over the Project, or this Agreement, or otherwise necessary to keep the Project in good and efficient operating condition, consistent with ( 1) sound economics for the Project and the Purchasers, and (2) national standards for the industry.” See PSA at Required Project Work, Section 1(hh) Therefore, for the Proposed Transaction to be considered “Required Work” under the PSA the work must be intended to keep the project in good and efficient operating condition. The measures of this must: (1) be based on sound economics for the Project and the Purchasers, and (2) be consistent with national standards for the industry. AEA/HEA Letter of Intent AEA/HEA Letter of Intent proposes an AEA purchase price of $13.3 million dollars2 in exchange for:  Capacity rights in the Soldotna to Sterling line (SS line)  Ability for AEA to direct HEA to repair and upgrade SS Line  All of HEA’s property rights in the SSQ line 2 There are also some additional monies allocated for financing and required repairs and maintenance. {00056322.2} Page 4 of 10 – Report of the Bradley O&D Committee: Proposed Transaction  All of HEA’s property rights in the 69 kV Line  Reimbursement of the cost to restore the SSQ line (Swan Lake Fire damage) Prudent Utility Practice The definition of “Prudent Utility Practice” used in the Power Revenue Bond Resolution provides that for purposes of the Power Revenue Bond Resolution "national standards for the industry" shall be deemed to be defined by Prudent Utility Practice. The Bradley O&D reviewed the definition of “Prudent Utility Practice” used in the Power Revenue Bond Resolution to ascertain whether the Proposed Transaction meets the requirements of the definition of “Required Work” as set forth in the PSA. Swan Lake Fire The impact of the Swan Lake Fire on the SSQ line started August 28, 2019 when the line was taken out of service for safety reasons at the request of the U.S. Forest Service. The SSQ line remained out of service until December 19, 2019, for a total of 123 days. The fire initially impacted the SSQ line in the south end but eventually impacted a larger section of the line extending into the mountains at the north end of the line. Because HEA owns the SSQ line and associated easements, ROWs, and access permits, it was their responsibility to work with the fire officials as well as ensure the line was ready to be placed back in service once the fire no longer impacted the SSQ line. This included making repairs to the line as needed. When the SSQ line was taken out of service, all the utilities north of the SSQ line (i.e., Chugach, ML&P, MEA, GVEA and SES) were unable to access their Project Power, substantially reducing the amount of water that could be used. The line outage also required the Bradley plant operate only a single unit. Due to above average water inflows in the months before the fire, as well as plant outages earlier in the year, the Bradley Lake water level was abnormally high. As a result, just hours after the SSQ line was taken out of service, the lake level reached 1175’ requiring the project dispatcher to declare “Pending Spill”. Pending Spill is a condition where the rules of water usage change. Under these rules any participant is allowed to exceed their percentage share of participation in the Project output if it is available to prevent water spill. HEA started utilizing as much water as practical in an attempt to prevent spill but it proved to be inevitable and water spill did occur. See Table 1 for the amount of water allocated during Pending Spill. {00056322.2} Page 5 of 10 – Report of the Bradley O&D Committee: Proposed Transaction Table 1(Acre-feet) The Project spilled a significant amount of water with the greatest amount in the month of September. See Table 2 below. In previous Pending Spill events, the Project Participants were able to increase their power usage. This is partly due to the transfer limit of the tie being increased to 85 MW when the Project enters Pending Spill. This was not possible with the SSQ line out of service. Table 2 16.9% 25.9% 12.0% 30.4% 13.8% 1.0% GVEA ML&P HEA Chugach MEA SES August (2,193.43) (3,361.53) 11421.4 (3,945.58) (1,791.09) (129.79) September (5,009.58) (7,677.40) 26085.4 (9,011.31) (4,090.66) (296.42) October (5,761.31) (8,829.47) 29999.7 (10,363.54) (4,704.50) (340.91) November (5,159.53) (7,907.21) 26866.2 (9,281.05) (4,213.11) (305.30) December (3,377.28) (5,175.84) 17585.9 (6,075.11) (2,757.78) (199.84) Total (21,501.14) (32,951.45) 111958.6 (38,676.60) (17,557.14) (1,272.26) Water used by HEA under pending spill acft September GVEA ML&P HEA CEA MEA SES Totals Water at Risk 7,581.67 15,233.65 0.00 8,396.64 17,201.81 0.00 48,413.77 % of Risk 15.66% 31.47% 0.00% 17.34% 35.53% 0.00% 100.00% Allocation Volume 2,982.45 5,992.57 0.00 3,303.05 6,766.80 0.00 19,044.87 End of Month 4,599.22 9,241.08 0.00 5,093.59 10,435.01 0.00 29,368.90 acft October GVEA ML&P HEA CEA MEA SES Totals Water at Risk 4,573.37 9,201.48 0.00 4,714.66 10,413.92 0.00 28,903.43 % of Risk 15.82% 31.84% 0.00% 16.31% 36.03% 0.00% 100.00% Allocation Volume 52.49 105.60 0.00 54.11 119.52 0.00 331.72 End of Month 4,520.88 9,095.88 0.00 4,660.55 10,294.40 0.00 28,571.71 acft November GVEA ML&P HEA CEA MEA SES Totals Water at Risk 4,488.70 9,046.55 0.00 4,602.66 10,268.12 0.00 28,406.03 % of Risk 15.80% 31.85% 0.00% 16.20% 36.15% 0.00% 100.00% Allocation Volume 63.76 128.49 0.00 65.37 145.84 0.00 403.47 End of Month 4,424.94 8,918.06 0.00 4,537.29 10,122.28 0.00 28,002.56 acft December GVEA ML&P HEA CEA MEA SES Totals Water at Risk 4,391.99 8,867.56 0.00 4,478.01 10,095.37 0.00 27,832.93 % of Risk 15.78% 31.86% 0.00% 16.09% 36.27% 0.00% 100.00% Allocation Volume 682.81 1,378.61 0.00 696.18 1,569.50 0.00 4,327.11 End of Month 3,709.18 7,488.95 0.00 3,781.83 8,525.87 0.00 23,505.82 4,118.71 acftTotal Spill Volume 24,107.16 September Spill Volume 19,044.87 October Spill Volume 331.72 November Spill Volume 403.47 December Spill Volume 4,327.11 {00056322.2} Page 6 of 10 – Report of the Bradley O&D Committee: Proposed Transaction Table 2.1 Not having access to the Project Power costs $13.6 million for the 123 days of the outage related to the Swan Lake Fire and an additional cost of $2.2 Million in lost water. After the fire was contained, HEA hired EDM International, Inc. (EDM) to inspect the SSQ line and provide a report on the status of the transmission line. EDM identified 43 of 127 structures that had fire damage which included 5 structures that needed to be replaced immediately. HEA made all the needed repairs to put the line in service. However, this left 38 damaged structures in service and needing to be replaced. Southern Tie outages - Bradley Participants Economics Each Bradley Participant provided an estimate of their cost when the Southern Tie (i.e., the transmission line connecting the Kenai region to the South Central region of the Railbelt) is out of service. HEA established the Southern Tie is out an average of 28 days per year for scheduled and unscheduled maintenance. Each utility provided information on their average daily cost of alternate power and an estimate of the water spilled in the Swan Lake fire. The estimated cost impact of lost access to the Southern Tie averages $3.1 million annually. See Table 3. Utility Ac/ft Spilled Ac/ft Value Total Value GVEA 3,781.51 200.00$ 756,302.00$ MLP 7,605.28 65.00$ 494,343.20$ HEA - 77.70$ -$ CEA 4,118.71 71.68$ 295,229.13$ MEA 8,601.66 76.93$ 661,734.31$ SES - -$ Total 24,107.16 2,207,608.64$ Bradley Spilled Water 2019 {00056322.2} Page 7 of 10 – Report of the Bradley O&D Committee: Proposed Transaction Table 3 Loss Analysis If the SSQ line were to be upgraded, there would be additional benefits which would be a reduction in the losses on the line. HEA included data from 2015 through 2018 to perform the Loss analysis. 2019 was not used in the analysis due to the impact of the Swan Lake Fire. The analysis reviewed the losses and load at 115 kV and estimated the reduction in losses at 230 kV. It was assumed the construction would be consistent with the construction completed on the Northern part of the tie completed by Chugach. Improvement in losses were estimated based on basic electrical properties including the reduction of current, resistance, and reactance. The analysis estimates as much as 11,144 MWh per year could be saved if the line is upgraded. Based on the accepted average value of Project Power at the rate of $50/MWh this would be an additional $557,000/year of benefit to the utilities if the SSQ line was upgraded. See Table 4. Avg. Islanding Days Per Year 28 Utility Avg. Daily Cost Total Cost GVEA 35,000$ 980,000$ MLP 6,857$ 191,996$ HEA 34,242$ 958,776$ CEA 22,221$ 622,188$ MEA 12,000$ 336,000$ SES -$ Total 3,088,960$ Southern Tie Islanding Cost {00056322.2} Page 8 of 10 – Report of the Bradley O&D Committee: Proposed Transaction Table 4 Projected Loss Reduction 82.8% Actual Projected Loss S/Q Loss GVEA MLP CEA MEA SES S/Q Loss Reduction Jan 2015 1,332.06 8,387.00 10,196.00 12,334.00 5,599.00 406.00 229.11 1,102.95 Feb 2015 843.05 4,814.00 6,952.00 6,618.00 3,004.00 218.00 145.01 698.05 Mar 2015 644.20 4,138.00 2,349.00 13,293.00 6,034.00 437.00 110.80 533.39 Apr 2015 1,332.46 8,797.00 9,989.00 8,026.00 7,176.00 264.00 229.18 1,103.28 May 2015 1,267.15 8,239.00 8,160.00 8,773.00 7,770.00 289.00 217.95 1,049.20 Jun 2015 615.90 4,517.00 6,284.00 8,204.00 3,884.00 269.00 105.93 509.96 Jul 2015 742.83 4,131.00 5,540.00 7,209.00 3,071.00 237.00 127.77 615.07 Aug 2015 1,263.88 6,170.00 8,178.00 9,512.00 4,660.00 312.00 217.39 1,046.49 Sep 2015 2,047.49 10,007.00 11,947.00 15,433.00 8,519.00 507.00 352.17 1,695.32 Oct 2015 1,574.80 8,212.00 12,346.00 13,064.00 7,270.00 429.00 270.87 1,303.93 Nov 2015 2,448.95 10,619.00 14,959.00 14,244.00 8,652.00 468.00 421.22 2,027.73 Dec 2015 2,396.63 10,269.00 15,563.00 14,095.00 8,485.00 463.00 412.22 1,984.41 Jan 2016 1,525.15 8,420.00 11,169.00 8,141.00 6,389.00 267.00 262.33 1,262.83 Feb 2016 982.46 4,581.00 2,657.00 11,650.00 4,564.00 383.00 168.98 813.48 Mar 2016 2,160.11 9,090.00 7,417.00 23,034.72 5,272.00 756.56 371.54 1,788.57 Apr 2016 1,176.49 4,042.00 5,677.62 9,018.39 3,265.00 296.20 202.36 974.14 May 2016 186.56 - 1,945.00 3,896.00 35.00 149.00 32.09 154.47 Jun 2016 440.97 2,552.00 3,935.00 7,796.00 1,996.00 256.00 75.85 365.12 Jul 2016 732.82 4,988.00 6,335.00 9,276.00 3,167.00 305.00 126.05 606.78 Aug 2016 1,387.98 6,865.00 10,380.00 11,677.00 5,722.00 384.00 238.73 1,149.24 Sep 2016 1,707.87 9,627.00 11,855.00 9,140.00 9,033.00 300.00 293.75 1,414.11 Oct 2016 1,564.10 11,505.00 9,466.00 11,180.00 7,565.00 367.00 269.03 1,295.08 Nov 2016 1,174.98 7,426.00 8,410.00 9,766.00 6,357.00 318.00 202.10 972.89 Dec 2016 1,405.62 5,992.00 11,123.00 12,463.00 7,021.00 409.00 241.77 1,163.85 Jan 2017 1,359.29 5,067.00 10,459.00 13,232.00 7,149.00 435.00 233.80 1,125.49 Feb 2017 1,247.30 7,301.00 8,884.00 12,288.00 4,575.00 404.00 214.54 1,032.76 Mar 2017 70.56 83.00 - 6,970.00 55.00 229.00 12.14 58.42 Apr 2017 807.42 4,715.00 8,028.00 9,571.00 2,524.00 315.00 138.88 668.54 May 2017 819.46 5,898.00 7,542.00 9,941.00 3,779.00 362.00 140.95 678.51 Jun 2017 418.55 3,295.00 3,894.00 8,009.00 2,981.00 263.00 71.99 346.56 Jul 2017 728.66 4,179.00 7,258.00 9,812.00 4,434.00 322.00 125.33 603.33 Aug 2017 936.08 4,040.00 10,438.00 11,577.00 3,074.00 380.00 161.01 775.08 Sep 2017 1,212.54 4,698.00 12,758.00 12,831.00 3,459.00 421.00 208.56 1,003.98 Oct 2017 1,363.99 6,932.00 10,670.00 14,295.00 4,395.00 470.00 234.61 1,129.38 Nov 2017 1,408.74 8,590.00 10,333.00 12,888.00 4,708.00 423.00 242.30 1,166.44 Dec 2017 1,083.60 7,735.00 5,004.00 14,710.00 4,638.00 483.00 186.38 897.22 Jan 2018 1,010.41 6,661.00 8,738.00 11,287.00 3,900.00 371.00 173.79 836.62 Feb 2018 1,144.25 4,664.00 12,077.00 10,231.00 3,392.00 336.00 196.81 947.44 Mar 2018 1,075.87 4,372.00 11,477.00 12,855.00 4,048.00 422.00 185.05 890.82 Apr 2018 1,036.96 1,643.00 13,642.00 11,917.00 4,326.00 391.00 178.36 858.60 May 2018 828.66 1,242.00 11,093.00 11,625.00 3,889.00 382.00 142.53 686.13 Jun 2018 660.62 1,839.68 7,574.00 10,846.33 3,153.33 356.24 113.63 546.99 Jul 2018 573.56 2,149.79 6,068.13 10,015.06 3,050.91 328.94 98.65 474.90 Aug 2018 710.69 3,545.94 6,008.64 11,703.25 3,753.88 384.39 122.24 588.45 Sep 2018 725.22 6,844.54 3,771.60 10,301.00 3,626.13 316.00 124.74 600.48 Oct 2018 1,584.21 9,430.18 11,032.01 13,427.72 6,437.49 441.03 272.48 1,311.73 Nov 2018 908.90 6,647.00 5,793.00 11,059.75 4,377.00 363.25 156.33 752.57 Dec 2018 1,165.75 6,636.00 6,055.00 16,193.15 5,113.00 531.86 200.51 965.24 Totals 53,835.78 281,596.13 401,430.00 535,428.37 229,347.74 17,620.47 9,259.75 44,576.03 Ann. Avg. 13,458.94 70,399.03 100,357.50 133,857.09 57,336.94 4,405.12 2,314.94 11,144.01 Bradley Use - Wheeling Utilities SSQ Line Losses & Projections {00056322.2} Page 9 of 10 – Report of the Bradley O&D Committee: Proposed Transaction Other Project Considerations The list of benefits of purchasing the SSQ line include:  The end users of the line will have more direct control of its maintenance  More resources can be focused on scheduled and unscheduled maintenance  The allocation of O&M costs will be more in line with utility practice of cost causer is cost payer.  Provides a pathway for the line to be upgraded to 230 kV  If the line is upgraded, the new line will save power making the Project more efficient. The disposition of the SSQ line has been part of a dispute for several years. Clearly owned by HEA, the involvement of the SSQ line as part of the Bradley Agreements has affected how the SSQ line is to be maintained and/or upgraded. The Proposed Transaction (including the SSQ line) will resolve these legal issues and resolves the dispute from further impacting the users of Project power. The SSQ line essentially does not serve HEA members; carrying power for the Northern Project Participants. As a result, when the line was out of service, those most vested in restoration lacked the authority to directly address the issue. The concept of the cost causer is the cost payer is consistent with Prudent Utility Practice. This is not the case currently with the SSQ line. The Proposed Transaction makes the Project responsible for the operation, maintenance and upgrade of the line. That change with the relationship of parties responsible for the SSQ line resulting from the Proposed Transaction will better reflect standard industry practices regarding such responsibilities. The SSQ line was built prior to the construction of the Project. The condition of the line has been a concern for years because of its age. The damage caused by the Swan Lake Fire clarified and accentuated the need for the upgrade of this line. The EDM report, prepared to analyze the damage of the Swan Lake Fire, identified 43 poles damaged with 5 recommended to be replaced prior to the line being re-energized. 30% of poles in service on the SSQ line remain damaged. Coupled with its age, the known damage makes repair of the line critical to the reliable operation of the SSQ line that provides access to Project power. Without this needed maintenance, it is reasonable to assume the line’s reliability will continue to degrade resulting in additional unplanned islanding events. Unplanned islanding events on the {00056322.2} Page 10 of 10 – Report of the Bradley O&D Committee: Proposed Transaction Kenai result in large frequency fluctuations causing the Project to utilize dividers that reduce the power output from the Project quickly. These unplanned islanding events cause stress on all the generation units online in the islanded Kenai region, including those in the Project. This is due to the substantial mass of these machines. Increasing or decreasing power quickly in these units results in significant stress and wear. Reducing the number of unplanned islanding events will reduce the stress and the damage it causes which is necessary to keep the Project in good and efficient operating condition. The existing Kenai National Wildlife Refuge right of way is a key part of this acquisition. Establishing a new right of way through a wildlife refuge is much more difficult and costly. A list of values received from the proposed transactions would not be complete without including existing right of way through the Kenai Wildlife Refuge as a part of the transaction. Transmission line right of ways are an essential part of every transmission line. Summary & Conclusion The Proposed Transaction brings the operation of the transmission facilities serving the Project more in line with utility practice of cost causer is cost payer and will also clear the way for the transmission facilities serving the Project to be upgraded and ultimately improve system reliability. These benefits, along with the opportunity for Project Purchasers to make considerable savings as a result of increased reliability with the Project being more efficient, support the determination that the Proposed Transaction is fully consistent with both the letter and intent of the meaning of “Prudent Utility Practice” and thus the Proposed Transaction meets the national standards for the electric utility industry as defined in the Power Revenue Bond Resolution. The economics for the Proposed Transaction are sound. Moreover, the Project will receive access to greater maintenance and repair resources and the alignment of cost responsibility for all of the Project Participants. The Proposed Transaction is consistent with Prudent Utility Practice and the national standards under which interconnected electric utilities operate; consequently, the Bradley O&D concludes that the Proposed Transaction of the SSQ line and associated facilities and properties is “Required Project Work” as that term is defined in the PSA. BRADLE Y LAKE PROJECT MANAGE MENT COMM ITTEE RESO L UTI ON NO. 20 -03 FINANCING OF THE PROPOSED TRANSACTION INTRODUCTION On May 22 , 2020 Alaska Energy Authority (AEA) and HEA.entered into a Letter of Intent containing the terms and conditions under which AEA would purchase and HEA would sell certain electric transmission facilities and properties that are currently used by HEA to provide electric service to Purchasers of the power generated by the Project (Proposed Transaction). The Department of Law for the State of Alaska (DOL) issued a Memorandum Opinion dated May 20, 2020 finding that the definition of "Required Work" set forth in the Power Sales Agreement could include the Proposed Transaction. The DOL Memorandum Opinion stated that additional analysis should be done with respect to whether the Proposed Transaction is consistent with sound economics and national standards. AEA deemed it appropriate for the O&D Committee to the BPMC (Bradley 0&0) to perform the analysis to satisfy the requirement set forth in the DOL Memorandum Opinion. The BPMC 0&0 Committee has reviewed the Proposed Transaction and concluded that the Proposed Transaction is based on sound economics and is "Requ ired Work" as that term is defined in the Power Purchase Agreement. The BPMC has adopted the Bradley O&D Report in Resolution No. 20-02 . In its Resolution No . 20-02 , the BPMC indicated its full support for the Proposed Transaction, subject to any requi red final approval of the governing bodies of the indiv idual Members . The BPMC considers the Proposed Transaction as the foundation for future upgrades to the Railbe lt Transmission System . PURPOSE OF RESOLUTION The Purchasers of the power generated by the Project are responsible for the cost of Required Work (i.e ., the Proposed Transaction) under the terms of the Power Sales Agreement. AEA has been worki ng w ith the Alaska Industrial and Developm ent Export Authority (AID EA) on financing the Proposed Transaction with Private Placement Funding u nder the Sustainable Energy Transmission and Supply (SETS) (AS 44.88 .650 - 44 .88.690). The BPMC is responsible for selection among alternative methods that involve AEA for funding Required Project Work . BPMC Resolution No. 20 -03 provides the preliminary approval of the preliminary terms and conditions for financing the Proposed Transaction . The final approval will be subject to approval of the govern ing bodies of the individual BPMC Members . Pag e 1 of 3 -BPM C R ESO LUTION NO . 2 0-03 ; Financi ng the Proposed Trans action RESOLUTION NO. 20-03 WHEREAS, On May 22, 2020 AEA and HEA entered into the Proposed Transaction; WHEREAS , The DOL issued a Memorandum Opinion dated May 20 , 2020 finding that the definition of "Required Work" set forth in the Power Sales Agreement could include the Proposed Transaction and upgrades; WHEREAS, The DOL Memorandum Opinion stated that additi onal analysis should be done with respect to how the Proposed Transaction is consistent with sound economics and national standards; WHEREAS , AEA deemed it appropriate for the Bradley O&D to perform the analysis to satisfy the requirement set forth in the DOL Memorandum Opinion; WHEREAS, On July 17, 2020 the Bradley O&D issued its Report on the Proposed Transaction concluding that the Proposed Transaction: (i) is based on sound economics, (ii) is fully consistent with the meaning of "Prudent Utility Practice" as defined by the Power Revenue Bond Resolution, (iii) meets the national standards for the electric utility industry and (iv) is "Required Work" as that term is defined in the Power Purchase Agreement; WHEREAS, BPMC Resolution No. 20-02 dated July 24, 2020, adopted the Bradley O&D Report which contained the conclusion of the Bradley O&D that the Proposed Transaction is Required Work under the Power Sales Agreement. WHEREAS, the BPMC is aware and understands that AEA will have the findings and conclusions of the Bradley O&D reviewed and certified by an independent consulting engineer; WHEREAS, The BPMC supports the Proposed Transaction subject to any required final approval of the governing bodies of the individual Members; WHEREAS , AEA has worked with AIDEA on financing the Proposed Transaction with Private Placement Funding under the Sustainable Energy Transmission and Supply (SETS) (AS 44.88 .650-44.88.690). WHEREAS, Attachment 1 to this Resolution No . 20 -03 contains the preliminary terms and conditions for financing the Proposed Transaction; WHEREAS, The BPMC is responsible for selection among alternative methods that involve AEA for funding Required Project Work; WHEREAS, AEA would like an indication from the BPMC whether the terms and conditions for Financing the Proposed Transaction that AEA has worked out with AIDEA are acceptable to the BPMC ; Page 2 of 3-BPMC RESOLUTIO N NO . 20-03; Financin g the Proposed Transaction WHEREAS, The BPMC has reviewed the preliminary terms and conditions for financ ing the Proposed T ransaction as presented by AEA on Attachment 1 to this Resolution No. 20 -03 . T HEREFORE , BE IT RESOLVED THAT , the BPMC supports the Proposed Transaction subject to any required fi nal approval of the governing bodies of the individual Members; BE IT ALSO RESOLVED THAT, the BPMC desires an accommodation that all insurance requirements be consistent with requirements that are customary in connection with the operation of faci lit ies of a type and size comparable to the Project and that the Memorandum Opinion issued by the Department of Law for the State of Alaska dated May 20 , 2020 regarding the Proposed Transaction and upgrades being Required Project Work be referenced in Terms and Conditions as set forth i n Attachment 2 this Resolution No . 20-03; and , BE IT ALSO RESOLVED THAT, the BPMC has reviewed and approves the preliminary terms and conditions for financing the Proposed Transaction subject to the above- referenced changes are incorporated in the preliminary terms and conditions and any required final approval of the governing bodies of the individual Members. DATED at Anchorage Alaska , this 24th day of July 2020 . Attest: Secretary, Curtis Thayer Page 3 of 3 -BPMC R ESOLUTION NO. 20 -03; Financing the Proposed Transaction 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 T 907.771.3000 Toll Free 888.300.8534 F 907.771.3044 REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG West Fork Upper Battle Creek Update Events:  Contract and actual Substantial Completion July 22, 2020.  Contract and actual Final Completion expected August 31, 2020. Budget:  Construction contract bid was $36.476 million.  Current contract $37.458 million. Schedule Summary:  2017 November – Bid opening  2018 April – Mobilization to site  2018 November – Shut down year one  2019 April – Remobilization year 2  2020 March – Shut down year 2  2020 April – Remobilization year 3  2020 August – Completion and demobilization Alaska Energy Authority Page 2 of 3 Photo 2 - Fusing High Density Polyethylene Pipe Photo 1 - Diversion Dam From Downstream Alaska Energy Authority Page 3 of 3 Photo 4 - Completed Pipe Photo 3 - Installed Pipeline in Place 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 T 907.771.3000 Toll Free 888.300.8534 F 907.771.3044 REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG Ribbon Cutting Ceremony West Fork Upper Battle Creek Diversion Tuesday, August 25, 2020, Noon-4:30 p.m. Anticipated Schedule Noon – Depart Anchorage for Bradley Lake on Non-Stop Charter 12:45 p.m. – Arrive at Bradley Lake 1:30 p.m. – Arrive at Outlet, Disembark 1:45 p.m. – Depart Outlet, Drive to West Fork Upper Battle Creek Diversion 2:15 p.m. – Arrive at West Fork Upper Battle Creek Diversion 2:30 p.m. – Ribbon Cutting Ceremony Occurs 3 p.m. – Ribbon Cutting Ceremony Concludes 3:45 p.m. – Depart Bradley Lake for Anchorage on Non-Stop Charter 4:30 p.m. – Arrive at Anchorage About the West Fork Upper Battle Creek Diversion Project The West Fork Upper Battle Creek Diversion Project was completed this summer at an approximate cost of $44 million. By diverting glacial water from the West Fork Upper Battle Creek into Bradley Lake the power capacity will increase by about 10 percent. The diversion project began in May 2018. It includes three miles of road, a concrete diversion dam, and piping which delivers water into Bradley Lake. The project is expected to produce 37,000 megawatt hours of energy annually. This amount of energy would light and heat 5,000 homes at an anticipated cost less than natural gas generation. Managed by the Alaska Energy Authority and paid for by Railbelt utility customers, this project is the largest improvement to the Bradley Lake Hydroelectric Facility since beginning commercial operation in September 1991. 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 T 907.771.3000 Toll Free 888.300.8534 F 907.771.3044 REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG MEMORANDUM TO: AEA Board of Directors FROM: Curtis W. Thayer, Executive Director RE: Questions Posed by Directors During June 24, 2020 Board Meeting 1. Director McKinnon inquired about standards or criteria against which a Power Project Loan (PPF) application is examined and a determination is made on economic feasibility. AS 42.45.010 is the enactment of PPF. The act requires that the Alaska Energy Authority (AEA) specify by regulation the criteria that will establish financial feasibility. Pursuant to that directive AEA has promulgated regulations that explain its review process of a completed loan application from a qualified borrower. Specifically regulations set out what a review of a loan requires in the matter of written comments (3 AAC 106.110) and establishes the criteria that will establish financial feasibility (3 AAC 106.125) and regulations define the term “financially feasible” in the context of the Power Project Fund (3 AAC 106.159). Please see attached highlighted statute and regulations. 2. Director Sande inquired whether with respect to the Grant Application for funding to permit and construct the proposed Anchorage Cold Storage and Transfer Facility AEA had explored wetlands permits and mitigation requirements. Neither within the agreement AEA has executed with the project developer nor in the grant application is AEA responsible for procuring a wetlands permit nor is AEA to be liable for damages to wetlands or required to mitigate damages caused by contractors engaged by the Airport or the developer. Generally section 404 of the Clean Water Act (CWA) establishes a program to regulate the discharge of dredged or fil material into waters of the United States. The program is under the authority of both the Environmental Protection Agency and the United States Army Corps of Engineers. The basic premise of the section is that no discharge of fill is permitted if there is a practicable alternative that is less damaging to an aquatic environment. When a permit is applied for the applicant must show that (1) steps have been taken to avoid impacts to wetlands, (2) potential adverse impacts have been minimized, and (3) a permittee must agree to provide compensation for all remaining unavoidable impacts. AEA is not responsible for obtaining a section 404 CWA permit. That responsibility rests with the developer and the Airport. STATE OF ALASKA-STATUTES Title 44 State Government Chapter 42.45 Alaska Energy Authority As of 1/30/2018 Alaska Statutes 2018 Article 01. POWER ASSISTANCE PROGRAMS Chapter 42.45 RURAL AND STATEWIDE ENERGY PROGRAMS Sec. 42.45.010. Power project fund. {a) The power project fund is established as a separate fund. The fund shall be distinct from any other money or funds of the authority and includes only money appropriated by the legislature, proceeds from the sale of loans appropriated by the legislature, and money deposited under (g) of this section. {b) The authority may make loans from the power project fund (1) to electric utilities, regional electric authorities, municipalities, regional and village corporations, village councils, and independent power producers to pay the costs of (A) reconnaissance studies, feasibility studies, license and permit applications, preconstruction engineering, and design of power projects; and (B) constructing, equipping, modifying, improving, and expanding small-scale power production facilities that are designed to produce less than 10 megawatts of power, bulk fuel storage facilities, and transmission and distribution facilities, including energy production, transmission and distribution, waste energy, energy conservation, energy efficiency, and alternative energy facilities and equipment; (2) to a borrower for a power project or for bulk fuel, waste energy, energy conservation, energy efficiency, or alternative energy facilities or equipment if (A) the loan is entered into under a leveraged lease financing arrangement; (B) the party that will be responsible for the power project or the bulk fuel, waste energy, energy conservation, energy efficiency, or alternative energy facilities or equipment is an electric utility, regional electric authority, municipality, regional or village corporation, village council, or independent power producer; and (C) the borrower seeking the loan demonstrates to the authority that the financing arrangement for the power project or the bulk fuel, waste energy, energy conservation, energy efficiency, or alternative energy facilities or equipment will reduce financing costs for the project, facilities, or equipment below costs of comparable public power projects, facilities, or equipment. (c) Before making a loan from the power project fund, the authority shall, by regulation, specify {1) standards for the eligibility of borrowers and the types of projects to be financed with loans; (2) standards regarding the technical and economic viability and revenue self-sufficiency of eligible projects; (3) collateral or other security required for loans; (4) the terms and conditions of loans; (5) criteria to establish financial feasibility and to measure the amount of state assistance necessary for particular projects to meet the financial feasibility criteria; and (6) other relevant criteria, standards, or procedures. (d) The authority may adopt regulations to establish the standards, criteria, and procedures for making loans under this section, including regulations to establish reasonable fees for applications and loan ~. (11) for an investor-owned electric utility, a business history of any person or entity owning or controlling 10 percent or more of the applicant's stock or business; (12) for a leveraged lease financing arrangement, information sufficient for the authority to determine that the provisions of AS 42.45.010(b)(2) have been met; and (13) if the applicant is a Native village council, a resolution waiving sovereign immunity on a form provided by the authority. (b) An applicant shall, in addition to the application, timely provide other information requested by the authority. (c) Repealed 4/8/2015. (d) An applicant requesting an interest rate less than the rate set out in AS 42 .45.010(f)(2)(A) must provide information sufficient for the authority to dete rmine that the reduced rate is necessary to allow the project to meet the criteria for financial feasibility under 3 AAC 106.125(b). Authority: AS 42.45.010 , AS 44.83.080 3 AAC 106.110. Review bv authoritv (a) Upon receipt of a completed application and other information requested or required, the authority will review the application. (b) The authority after reviewing an application, other than an application for a loan for reconnaissance studies, feasibility studies, license and permit applications, or engineering and design, will make a determination that includes the.. following: (1) written comments analyzing whether (A) the money will be used to pay the costs of activities that are eligible under AS 42.45.010 and the applicant is an eligible borrower under AS 42.45.010; will benefit the area; (B) the project will meet the needs of the area to be served by the project and (C) for a loan to construct, equip, modify, or expand a project, the project is (i) technically and economically viable; and (ii) financially feasible under the criteria in 3 AAC 106.125(a), or will become financially feasible with the assistance of a power project loan; (D) for a construction project, any alternatives to the project exist that (i) would result in development of power at a different site, by a different method, or by an entity other than the applicant (ii) could reasonably be expected to provide, within a time schedule comparable to the project, comparable volumes of power at a lower cost to the consumer; and (iii) meet the criteria set out in (B) and (C) of this paragraph; (E) the applicant has applied for, or has been awarded, necessary permits or certificates; (F) for a loan to construct, equip, modify, or expand a project, if enough money is not available in the power project fund to make a loan for the project, or if a loan cannot be made at a rate of interest low enough to allow the project to be financially feasible under the criteria in 3 AAC 106.125(b), the loan should be approved if assistance is made to the applicant from some other source identified by the authority; (G) if there is power project fund money that the authority can loan for more than one project, the needs of, and benefits to, the area to be served by the project are greater than the -needs of, and benefits offered to, other areas of the state by a project for which sponsors may also seek loan money from the authority, if this determination can be made based on information existing at the time of the authority's review; (H) the applicant has, or will have, sufficient revenue from all sources to repay the loan; and 3 AAC 105.010-109.990 AEA Regulations, State of Alaska website 1/30/2018 Page 7of87 ~·· (iii) wood gasification; (iv) wood-fired steam-generation facilities; (v) bulk fuel storage facilities; (vi) energy efficiency and conservation projects; (vii) solar thermal, solar photovoltaic hydrokinetic, energy storage, and transmission facilities; and (viii) alternative energy facilities; (B) the term of loans will be up to 50 years for feasibility studies, preconstruction engineering and project design, or constructing, equipping, modifying, improving, and expanding of (i) coal-fired steam-generation facilities; and (ii) hydroelectric generation facilities; and (3) the loan must be supported by appropriate documentation that may include a loan agreement, bonds, notes, or other documentation, evidencing to the authority's satisfaction that the loan is secured by one or more of the following: (A) a pledge of the revenues of the borrower or the project that may be subordinate to operating and maintenance expenses and certain other expenses of the borrower or the project as specified by the authority; (B) a lien, mortgage, security interest, collateral agreements, or other encumbrance on the project or other assets, rights, or interests of the borrower; or (C) a pledge of the taxing power of the borrower. (b) The requirements of (a)(3) of this section do not apply to a loan to an applicant regulated by the Regulatory Commission of Alaska under AS 42.05 if the applicant has a history of repaying long-term loans and demonstrates to the authority that it has the capacity to repay the loan obtained from the authority. Authority: AS 42.45.010, AS 44.83.080 3 AAC 106.125. Criteria to establish financial feasibili ty (a) When making a written determination under 3 AAC 106.110 regarding the financial feasibility of a project, the authority will consider (1) the revenue-generating capability of the project, including the local need for power from the project within any interconnected transmission grid; (2) whether the applicant has, or will have, sufficient revenue from all sources to (A) repay the loan; (B) complete the project; and (C) operate and maintain the project; (3) whether the collateral provided is sufficient to secure repayment of the Joan, including whether the loan is secured by a means other than by a pledge or revenues ofthe project; (4) whether the applicant has obtained regulatory approval for any proposed power sales agreement; (5) the relationship between the estimated user fees or charges upon completion of the project and the estimated user fees or charges if consumers of services provided by the project would have continued to receive services from existing sources; and; (6) the relationship between the estimated user fees or charges upon completion of the project and the present or estimated user fees or charges for similar services in the state; (b) When making a determination under 3 AAC 106.120(a)(1) regarding whether to reduce the interest rate for a loan below the interest rate set out in AS 42.45.010(f)(2)(A), the authority will consider (1) the criteria identified in (a) of this section; 3 AAC 105.010-109.990 AEA Regulations, State of Alaska website 1/30/2018 Page9 of87 r---. (2) for electric power projects, whether and the amount by which the local cost of energy exceeds the weighted average retail residential rate in Anchorage, Fairbanks, and Juneau under I AS 42.45.110(c)(2); (3) the financial impact on nonindustrial ratepayers expected to use energy or heat produced by the project; (4) whether the project will provide immediate benefits to support the stability and sustainability of local energy or heat systems, including replacement of failing generation systems; and (5) whether the project will help meet new load demands or diversify the local energy system's energy resource portfolio. Authority: AS 42.45.010, AS 44.83.080 3 AAC 106.130. Insp ection of records and facilities (a) An applicant for a loan and a borrower who has an outstanding loan with the authority shall make its books and records, facilities, and its real and personal property of any kind, available for inspection at any reasonable time by the authority, or its agents, after receipt by the applicant or borrower of the authority's written request to inspect. (b) The authority or its agents will, in the discretion of the authority, inspect, after giving reasonable notice, the construction of any project that is financed, in whole or in part, with a loan under this chapter. The inspection does not relieve the borrower from its obligation to comply with applicable codes and ordinances. (c) A borrower that has obtained a loan from the authority shall permit the authority or its agents to inspect its books, records, facilities, and real and personal property for as long as any portion of the loan, including interest, remains outstanding. (d) The authority will, in its discretion, by written request require a borrower who has obtained a loan from the authority to submit (1) at reasonable times to audits or examinations of its books and records by an independent firm of certified public accountants selected by the authority to determine whether the provisions of the loan agreement have been complied with and to pay the cost of those audits or examinations; (2) a sworn statement by a responsible officer of the borrower describing the purposes to which the proceeds of the loan have been applied. Authority: AS 42.45.010, AS 44.83.080 3 AAC 106.140. Loans from other approp riations The provisions of 3 AAC 106.100-3 AAC 106.130 relating to loans from the power project fund apply also to all other loans made by the authority affected by ch. 58, SLA 1999 and made from money appropriated for that purpose by the legislature, except loans from the rural electrification revolving loan fund, which are subject to the provisions of 3 AAC 106.200-3 AAC 106.260 and loans from the bulk fuel revolving loan fund, which are subject to the provisions of 3 AAC 106.300 - 3 AAC 106.365. 3 AAC 106.150. Loan fees and reimbursement of costs (a) An applicant for a loan from the power project fund must pay an application fee of (1) $200 for applications requesting loan amounts up to and including $100,000; (2) $1,000 for applications requesting loan amounts of more than $100,000 and not more than $500,000; (3) $2,000 for applications requesting loan amounts of more than $500,000 and not more than $1,000,000; or (4) $5,000 for applications requesting loan amounts of more than $1,000,000. 3 AAC 105.010-109.990 AEA Regulations, State of Alaska website 1/30/2018 PageJOo/87 (b) T~e applic_ation fees in (a) of this section are nonrefundable and due at the time ao application is filed with the authority. (c) The authority may require the applicant to enter into an agreement obligating the applicant to reimburse the authority for the authority's costs to conduct a feasibility analysis of the loan application or proposed project. (d) If the authority approves an application, the borrower shall pay a closing fee of one percent of the total loan amount at the time of closing. The application fee will be credited toward the closing fee. The authority may add the closing fee to the balance of the loan at loan closing. If the authority entered into an agreement with the applicant for reimbursement of the authority's costs for conducting a feasibility analysis under (c) of this section, the authority may add the cost of the authority's feasibility analysis to the balance of the loan at closing. Authority: AS 42.45.010, AS 44.83 .080 3 AAC 106.1S9. Definition In 3 AAC 106.100-3 AAC 106.159, "financially feasible" means that the authority has determined that enough money is available from all sources to complete the project, and that enough money is estimated to be available in the future to repay any debt incurred in connection with the project, taking into consideration the criteria in 3 AAC 106.125. Authority: AS 42.45.010, AS 44.83.080 Article 2 Loans From Rural Electrification Revolving Loan Fund 3 AAC 106.200. Use of loan proceeds (a) A borrower who receives a loan from the rural electrification revolving loan fund may use the loan only to pay for capital improvements that extend the borrower's transmission and distribution system to customers not previously receiving service from a public utility. A borrower may not use the loan to provide electric power generation or fuel storage facilities, or for reconstruction or upgrade of existing transmission and distribution lines. (b) A borrower who receives a loan from the rural electrification revolving loan fund shall use money available to the borrower, other than the proceeds of the loan, to acquire and install one transformer, one span of line, one pole, and one service drop for each customer to who immediate service is provided. The borrower may use proceeds of the loan to pay for additional costs of providing service to a customer receiving immediate service that are not paid by the customer. Authority: AS 42.45.020, AS 44.83.080 3 AAC 106.210. Rural electrification revolving loan fund application (a) An applicant for a loan from the rural electrification revolving loan fund shall submit an application, which contains at the time of filing, the following information: (1) the legal name of the applicant and the legal authority under which it was created and other information that will demonstrate that the applicant is an eligible borrower under AS 42.45.020, including evidence that it holds a certificate of public convenience and necessity issued by the Regulatory Commission of Alaska allowing it to provide electric service to the area where the proceeds of the loan will be used; (2) a certified copy of the resolution or other official action taken by the applicant's governing body authorizing the application for a loan; 3 AAC 105.010-109.990 AEA Regulations, State of Alaska website 1/30/2018 Page11 of87 813 West Northern Lights Boulevard Anchorage, Alaska 99503 T 907.771.3000 Toll Free 888.300.8534 F 907.771.3044 REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG July 20, 2020 To All Interested Alaskans: The Alaska Energy Authority (AEA) is seeking applications for funding through the Renewable Energy Fund (REF). Details and instructions on how to apply can be found on AEA’s website at www.akenergyauthority.org/what-we-do/grants-loans/renewable-energy-fund-ref-grants/2020- ref-application. Applications must be filed with AEA no later than 4 p.m. on Monday, September 28, 2020. A report summarizing all applications and recommending a priority for funding will be delivered to the Alaska State Legislature shortly after it next convenes (Alaska Statute 42.45.045, et seq.). The principal goal of REF grants and recommendation program is to bring to market technically and economically viable renewable energy projects, which have the added benefit of decreasing reliance on fossil fuels. The program is statutorily mandated to focus on projects in high-cost regions of Alaska. To maximize efficient use of funds the program will focus on earlier stages of viable projects. Projects in early stages have higher risks of non-completion and can be difficult to conventionally finance. The REF was established by the Alaska State Legislature to provide grant funding for the development of qualifying and competitively selected renewable energy projects. Since inception 287 REF grants have been awarded to projects totaling $268 million. Over 90 operating projects have been built with REF contributions, collectively saving more than 30 million gallons of diesel each year. We at AEA appreciate those who dream big and will apply for this funding. Vision and hard work, as well as good ideas will benefit each and every Alaskan, especially in challenging economic times. We also appreciate the hard work and helpful guidance provided to us by the Renewable Energy Fund Advisory Committee and from Alaskan applicants across our Great State who continue to deliver remarkable renewable benefits to their neighbors. We look forward to receiving strong applications for funding of exciting new renewable energy projects. Sincerely, Curtis W. Thayer Executive Director 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 Phone (907) 771-3000 Fax (907) 771-3044 Toll Free (888) 300-8534 Email info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG EVENT DATE DAY DEPENDENCIES Announcement of Opening: REF Round #13 July 20, 2020 0 RFA, Supplementary materials completed, REF Website updated, Economic Models Application Due Date September, 28, 2020 77 REVAL updated, Interested applicants AEA's Evaluation of Applications Complete December 18, 2020 151 Qualified review personnel AEA confer with Renewable Energy Fund Advisory Committee (REFAC) to solicit recommendations for all grants January 7, 2021 171 REFAC appointments AEA provides recommendations and summary of all applications to Legislature January 29, 2021 193 Timely submittal by AEA Capital Funds Appropriated by Legislature July 1, 2021 346 Contingent on legislative action Finalized Grant Award Documents September 1, 2021 408 Contingent upon grantees providing documentation RENEWABLE ENERGY FUND Request for Applications Timetable and Dependencies 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 T 907.771.3000 Toll Free 888.300.8534 F 907.771.3044 REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG Power Cost Equalization Endowment Fund Update Award No Project Name DC Funding Perf. Period Beg Perf. Period ThruActions Since Last ReportEstimated Jobs Created 01349-09 RPSU - Togiak-Twin Hills Intertie 4,187,221 2/15/2011 9/30/2021 None2601432-08 BFU - Tatitlek 1,472,000 6/1/2013 12/31/2020 None3001473-06 RPSU - Clark's Point 2,819,700 6/16/2015 6/30/2020 In Close-out2601474-06 BFU - Chalkytsik 517,500 6/16/2015 12/31/2020 None3001485-04 START Communities Tech Asst 375,000 11/1/2015 6/30/2022 None201492-07 BFU - Beaver 608,000 7/6/2016 12/31/2020 None501500-06 Bulk Fuel Operator Training 1,010,000 9/1/2016 12/31/2021 None301515-07 Circuit Rider Program 900,000 1/1/2017 12/31/2021 None301516-06 RPSU - Maintenance & Improvement 748,776 10/1/2016 12/31/2020 None2001523-06 Miscellaneious Small M&I Projects 870,000 6/1/2017 12/31/2021 None2001524-03 RPSU - Port Heiden 1,250,000 7/1/2017 6/30/2020 In Close-out3001525-05 Power Plant Operator Training 647,514 8/15/2017 9/30/2021 None301544-03 Itinerant Utility Training 500,000 3/1/2018 6/30/2021 None301548-05 RPSU M&I - Statewide 2,550,000 5/1/2018 12/31/2020 None2001549-03 RPSU Inventory & Assessment - Statewide 300,000 4/18/2018 9/30/2020 None2001550-02 RPSU - Akhiok 1,500,000 5/1/2018 12/31/2020 None2601551-04 RPSU - Venetie 250,000 5/1/2018 12/31/2020 None501557-02 Barge Headers and Fill Lines 3,976,820 10/1/2018 12/31/2022 None6001571-01 BFU - Nunapitchuk 1,852,546 8/15/2019 12/31/2022 Date Extended3001573-01 BFO In Community Training 40,000 8/15/2019 12/31/2020 None201574-00 RPSU - Nikolai 351,050 8/1/2019 12/31/2020 None501575-01 RPSU - Nelson Lagoon 135,455 8/1/2019 12/31/2020 None501576-00 RPSU - Rampart 351,050 8/1/2019 12/31/2020 None501577-01 RPSU - Napaskiak 135,455 8/1/2019 12/31/2020 None501592-00 BFU - Scammon Bay 300,000 2/17/2020 3/31/2021 None501600-00 VEEP - Statewide 500,000 6/15/2020 12/31/2021 New Award3Total Funding for Active DC Awards:28,148,087 Less Total Spending on Active DC Awards:(10,854,103) Total Funding Remaining on Active DC Awards:17,293,985 Active Denali Commission AwardsAs of 7/10/2020 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 T 907.771.3000 Toll Free 888.300.8534 F 907.771.3044 REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG Akhiok Powerhouse Update Photo 1 – Exterior of Existing Powerhouse Photo 2 – Interior of Existing Powerhouse Alaska Energy Authority Page 2 of 2 Photo 3 – Exterior of New Powerhouse Photo 4 – Interior of New Powerhouse 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 21 AEA POWER PROJECT FUND LOANS 23,690,152 4,575,980 (705,870) 27,560,262 356,330 841 357,171 TOTAL # OF PPF LOANS 1 LOAN PROGRAM SUMMARY # OF DELINQUENT PPF LOANS Outstanding Loans per Trial Balance 27,560,261.60$ 1,179.22$ Uncommitted Cash Balance 10,856,135.88$ LOANS DELINQUENT AMOUNT ($)Loan Commitments 58,276.46$ 0.004%Total Loan Program 38,474,673.94$ % OF DELINQUENT LOANS TO PORTFOLIO BALANCE 06/30/2020 END DATE FISCAL YEAR-TO-DATE LOAN PORTFOLIO ACTIVITY (07/01/2019 - 06/30/2020 ) Waterfall Creek Hydro - King Cove, Alaska Print Date: 7/7/2020 Page 1 of 2 AEA POWER PROJECT FUND LOANS BY ENERGY REGION & PROJECT TYPE OUTSTANDING BALANCES & NEW ACTIVITY ENERGY REGION AEA PPF LOAN BALANCE REMAINING LOAN COMMITMENTS NEW APPLICATIONS IN PROCESS # OF AEA PPF LOANS TOTAL ALEUTIANS 2,567,357 - 65,000 4 2,632,357 BERING STRAITS - - - 0 - BRISTOL BAY 460,722 - 514,500 2 975,222 COPPER RIVER/ CHUGACH - - - 0 - KODIAK 47,092 - - 2 47,092 LOWER YUKON- KUSKOKWIM 370,316 - - 2 370,316 NORTH SLOPE - - - 0 - NORTHWEST ARCTIC - - - 0 - RAILBELT 4,086,401 - - 3 4,086,401 SOUTHEAST 19,839,306 - 924,153 3 20,763,459 27893070.2 YUKON-KOYUKUK/ UPPER TANANA 189,068 58,277 4,083,114 5 4,330,459 10422145.37 58569.36 27,560,262 58,277 5,586,767 21 33,205,306 TOTAL BIOMASS $104,074 CONSERVATION $9,092DIESEL $974,309 HYDRO $24,616,830 SOLAR $793,226 TRANSMISSION $1,824,285 TANK FARM $2,258,829 WIND $2,624,661 AEA PPF LOANS BY PROJECT TYPE -NEW & OUTSTANDING BALANCE BIOMASS 1 CONSERVATION 1 DIESEL 5 HYDRO 7 SOLAR 1 TRANSMISSION 1 TANK FARM 1 WIND 4 AEA PPF LOANS BY PROJECT TYPE Print Date: 7/7/2020 Page 2 of 2 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 Phone (907) 771-3000 Fax (907) 771-3044 Toll Free (888) 300-8534 Email info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG 2019/2020 AEA Community Outreach Schedule Last modified on July 22, 2020 # Status Date Organization AEA Staff 1. Upcoming To Be Determined, 2020 Bethel Chamber of Commerce Curtis W. Thayer 2. Upcoming To Be Determined, 2020 Greater Palmer Chamber of Commerce Curtis W. Thayer 3. Past July 28, 2020 Fairbanks Economic Development Corporation: Energy for All Alaska Task Force Curtis W. Thayer 4. Past July 22, 2020 Fairbanks Chamber’s Energy, Environment and Natural Resources Committee Kirk H. Warren 5. Past June 12, 2020 Commonwealth North’s Energy Action Coalition Curtis W. Thayer 6. Past June 11, 2020 (Postponed*) Seward Chamber of Commerce Curtis W. Thayer 7. Past May 6, 2020 (Postponed*) Kenai/Soldotna Chamber of Commerce Curtis W. Thayer 8. Past April, 21, 2020 (Postponed*) Homer Chamber of Commerce Curtis W. Thayer 9. Past March 10, 2020 Greater Fairbanks Chamber of Commerce Curtis W. Thayer 10. Past February 20, 2020 Greater Wasilla Chamber of Commerce Curtis W. Thayer 11. Past February, 11, 2020 Community and Regional Affairs Committee Curtis W. Thayer 12. Past February 10-14, 2020 Alaska Forum on the Environment AEA Team Members: 11a. Past - Welcome Remarks during Keynote Event: Alaska Beyond Oil Panel T.W. Patch 11b. Past - Renewable Energy & Rural Alaska Powerhouse Panel Bill Price 11c. Past - Bulk Fuel Tank Farm Updates: Construction, Training, and Regulations Panel Bill Price 11d. Past - The Shines in Alaska: Solar Power Projects on the Railbelt Panel Tom Benkert 11e. Past - Harvesting Energy from Wood & Waste: Biomass and Landfill Gas Fuels in Alaska Panel Taylor Asher 11f. Past - Electric Vehicles Panel Betsy McGregor 11g. Past - Solar Power in Rural Alaska Panel David Lockard 11h. Past - The Low-Hanging Fruit of Energy Savings Panel Rob Jordan *These presentations’ date/time has been postponed due to COVID-19 to a later date/time to be determined. Page 2 of 2 11i. Past - New Hydropower Energy for Alaska Panel Bryan Carey 11j. Past - Rooftop Solar in your Alaskan Community Tom Benkert 11k. Past - Capturing the Wind Across Alaska: Large Scale Wind Projects Panel Kirk H. Warren 11l. Past - Clean Energy Financing Panel Tom Benkert 13. Past February 5-7, 2020 National Association of State Energy Officials Curtis W. Thayer 14. Past February 4, 2020 Southeast Conference Mid-Session Summit Curtis W. Thayer 15. Past January 30, 2020 Senate Community and Regional Affairs Committee Curtis W. Thayer 16. Past January 30, 2020 House Subcommittee Curtis W. Thayer 17. Past January 29, 2020 Senate Special Committee on the Railbelt Electric System Curtis W. Thayer 18. Past January 29, 2020 Alaska Power Association’s Legislative Conference Curtis W. Thayer 19. Past January 10, 2020 Commonwealth North’s Energy Action Coalition Curtis W. Thayer 20. Past December 18, 2019 Chugiak-Eagle River Chamber of Commerce Curtis W. Thayer 21. Past December 9, 2019 Anchorage Chamber of Commerce Curtis W. Thayer 22. Past December 5, 2019 BIA Tribal Providers Conference Curtis W. Thayer 23. Past November 21, 2019 Alaska Municipal League Annual Conference Jeff Williams 24. Past November 18, 2019 Alaska Municipal League Annual Conference Tom Benkert https://www.anchoragepress.com/bulletin/solid-waste-services-awarded-nearly-700-thousand-grant-to-fund- anchorage-s-first-electric-garbage/article_5613dea0-cb7d-11ea-b4a2-237545d3dda4.html Solid Waste Services awarded nearly $700 thousand grant to fund Anchorage’s first electric garbage truck MOA Press Release Jul 21, 2020 Electric garbage truck prototype. The white boxes situated below the body house lithium-ion batteries. Facebook Twitter Pinterest LinkedIn Messenger Reddit WhatsApp Email Outlook Gmail SMS Yahoo Mail The U.S. Department of Energy has awarded the Municipality of Anchorage Department of Solid Waste Services (SWS) a $689,659 grant to help fund the city’s first electric garbage truck and medium-duty box truck. The grant will also help fund an innovative battery charging system. The grant was announced Thursday, July 16, as part of $139 million in federal funding for 55 projects across the country that will support new and innovative advanced vehicle technologies. Since 2017, SWS has been evaluating how electric vehicles can be incorporated into its fleet. SWS operates a fleet of 70 vehicles, including 22 garbage trucks. Diesel garbage trucks have a low average efficiency of 2 miles per gallon which makes them good candidates for electrification. Replacing a diesel garbage truck with an electric version reduces fuel and maintenance costs, improves air quality and benefits neighborhoods with quieter operations. Electric garbage trucks and heavy-duty vehicles are beginning to be deployed in communities across the country; however, no electric garbage trucks currently operate in Alaska. “This is really cool – Anchorage gets to demonstrate innovation and prove sustainability,” said Mayor Ethan Berkowitz. “And hopefully the results of this test will validate technology that has benefits across the state and Circumpolar North.” SWS is partnering with eCamion, Inc. to test an electric vehicle charging station which incorporates a large battery. The addition of a battery allows for a steady charge at a lower voltage which will reduce demand rates from electric utilities. This system will save the Municipality money while still providing fast charging to electric trucks. This innovative battery technology will be the first of its kind in the state. The Alaska Center for Energy and Power will conduct a performance analysis of both trucks and the charging station so other fleets in Alaska and the world can learn from this pilot deployment. “We are excited to be taking our first steps towards electrifying our garbage and recycling trucks, reducing our carbon footprint and improving the overall sustainability of the community,” said SWS General Manager Mark Spafford. The total cost for deploying the electric vehicles in Anchorage is $1.3 million. SWS is matching the grant with $660,000 in funding that would have gone toward diesel fuel-powered trucks and maintenance. The Alaska Energy Authority is providing $25,000 in matching funds to cover partial costs of an electric vehicle charging station. The trucks will be deployed in Anchorage in 2021. Executive Director Report: Crystal Enkvist, APA/AIE, 703 West Tudor Rd., Suite 200, Anchorage, AK; Direct: (907) 771-5703, E-mail: cenkvist@alaskapower.org, Toll-free: 1-877-992-7322, Fax: (907) 561-5547 Page 1 Page 1 Alaska Power Association & ARECA Insurance Exchange Semi-monthly Update By Crystal Enkvist, Executive Director & Executive Vice President June 26, 2020 June report: With the increase of COVID-19 cases in Alaska, our offices remain closed to the public and we continue practicing workplace hygiene protocols to keep our employees and members safe. The APA Managers’ Forum received an informative presentation Tuesday from Dr. Anne Zink, Chief Medical Officer for the State of Alaska. Zink offered some compelling data points. One-third of Alaskans are considered high risk. She also said she is concerned about the fall timeframe because Alaska’s healthcare system could become overwhelmed when COVID-19 is added to the cold and flu season. She noted that Alaska is the eighth most tested state and we have a .07 percent positive rate. After delivering comments, Zink fielded questions from electric utility CEOs. Trey Acteson, Chair of the forum and CEO of Southeast Alaska Power Agency, conveyed the need for the electric utility industry to have easy access to testing and to have the results available as soon as possible. Zink said some employers are turning to private lab companies to receive results quicker than tests processed by the State of Alaska’s lab. She said, in some cases, what used to take 12 to 24 hours is now taking six to eight days to return results. Safety Moment: The Electricity Subsector Coordinating Council (ESCC) today released Version 9 of its COVID-19 Resource Guide. Version 9 adds additional planning considerations for contact tracing during mutual assistance and additional guidance on planning a transition from remote work back to the workplace. Changes from Version 8 are highlighted for reference. (Source: American Public Power Association) APA awards deadline next Friday: Alaska Power Association’s award nominations come from you, our members. The deadline is Friday, July 3 at 5 p.m. The awards committee depends on nominations with robust back-up material to determine each year who should be recognized by our industry. This is a special opportunity to honor those who have made a difference within and for the state’s electric utility industry and consumers. • David P. Hutchens Public Service Award – This award recognizes individuals outside the electric industry – legislators, Executive Branch officials, and other public servants - who provide outstanding public service for the benefit of electric consumers in Alaska. Letters of recommendations, awards and/or certificates are encouraged. • Hatcher-Williams-Turkington Employee Award – This award recognizes employees of the electric industry who provide exemplary service to their employer and community. It is named in honor of Robert Hatcher, Fred Williams and Robert Turkington, past recipients of the Mason LaZelle A chievement Award. Letters of recommendations, awards and/or certificates are encouraged. Executive Director Report: Crystal Enkvist, APA/AIE, 703 West Tudor Rd., Suite 200, Anchorage, AK; Direct: (907) 771-5703, E-mail: cenkvist@alaskapower.org, Toll-free: 1-877-992-7322, Fax: (907) 561-5547 Page 2 Page 2 • Mason LaZelle Achievement Award - The highest honor conferred by the Alaska Power Association membership. It is bestowed to those within the electric industry who have made outstanding contributions to electrification efforts in Alaska. Letters of recommendations, awards and/or certificates are encouraged. If you have any questions our awards program, contact Michael Rovito, Deputy Director, or me. We want your photos: Things have not gone as planned this year, but that doesn’t mean we can’t share the beauty of Alaska and the work APA’s members perform each day. The APA Directory Cover Photo Contest is underway. The photos submitted to the APA Photo Contest will be used to highlight the talents within the electric utilities that supply power to Alaskans in communities from Utqiagvik to Unalaska, through the Interior and Southcentral regions, and down the Inside Passage. We want to see your best shots of powerlines and other infrastructure, workers on the job, major projects, or any other visually stunning image of your utility at work. One of the photos will end up on the cover of APA’s 2021 Membership Directory. The deadline to submit is August 1, 2020. If you have any questions about the photo contest, contact Michael Rovito at mrovito@alaskapower.org or 907-771-5711. AIE policies explained at online insurance workshop: The ARECA Insurance Exchange (AIE) All-Risk Blanket Policy (ARB) has got you covered . . . and then some. We want our insureds – and even those we don’t insure - to know what is contained in this specialized policy created for electric utilities. Margaret Varlamos, AIE’s insurance consultant, will walk you through our policy and answer questions on September 23 from 8:30 a.m. to noon. Registration is open. This workshop is available to all APA members and is free of charge to AIE subscribers. The non- subscriber fee is $75. For more information, contact Michael Rovito or me. CFC hosting free webinar Monday on the U.S. energy landscape after COVID-19: U.S. power generation has been shifting away from coal generation and toward gas and renewables over the last several years, with solar power and battery storage a rising star. Yet much remains uncertain in light of the recession and economic volatility. On June 29, energy expert Robert Bryce will provide his perspectives on how the pandemic will impact electric generation trends. For more information, email membertraining@nrucfc.coop or call Casey Bell at 703-467-1637. Webinar Tuesday on COVID-19 screening, testing, and contact tracing: The American Public Power Association, Edison Electric Institute, National Rural Electric Cooperative Association and the National Institute for Occupational Safety & Health have come together to bring you a series of webinars focused on worker health and safety during COVID-19. The second webinar is “Screening, Testing, Contact Tracing and the Evolution of Medical Surveillance Protocols in the age of COVID-19” scheduled for Tuesday, June 30 from 11 a.m. to noon Alaska time via WebEx. The panel discussion will focus on current conditions in the U.S. and electric industry practices implemented to meet the safety and health challenges presented by COVID-19. Featured panelists are: Jenny Bailey, Xcel Energy; Jodie Broderick, Salt River Project; Tom Dyson, Ameren Services; and Dr. Sara Luckhaupt, National Institute for Occupational Safety and Health. Registration is available online. (Source: American Public Power Association) Free webinar next month on using GIS to plan indoor spaces: 1898 & Co., the technology and security consultancy of APA member Burns & McDonnell, is offering a webinar Thursday, July 9 at Executive Director Report: Crystal Enkvist, APA/AIE, 703 West Tudor Rd., Suite 200, Anchorage, AK; Direct: (907) 771-5703, E-mail: cenkvist@alaskapower.org, Toll-free: 1-877-992-7322, Fax: (907) 561-5547 Page 3 Page 3 8:30 a.m. Alaska time on how to use geographic information systems (GIS) to map out indoor spaces, and how this technology can be used for return to the office. The webinar will include a demo of how ArcGIS Indoors was utilized for its world headquarters office building in Kansas City. For more information on the topic, you can check out a recent blog titled Visualizing Return-to- Work Facility Management Plans. Attendees can register online. For more information, contact Ben Frerichs at 816-812-4341 or bfrerichs@burnsmcd.com. Alaska EV workshop recordings and presentations available: Information from last week's electric vehicle workshop, hosted by the Alaska Center for Energy and Power and the U.S. Arctic Research Commission, is now available on the ACEP website. The event, held completely online, attracted more than 170 participants and speakers from at least eight countries, including Canada, Norway, Finland, Bulgaria, India, the United Kingdom and Kenya. The workshop was the first virtual event organized by ACEP. It explored the technical and economic potential of EVs in Alaska and the Arctic and included presentations from EV researchers, users, utilities, equipment manufacturers and others from across the U.S. and Norway. (Source: Alaska Center for Energy and Power) Alaska Energy Authority reports on initiatives in process: Recently, we spoke with the Alaska Energy Authority’s (AEA) leadership and learned that, despite the difficulties brought on by COVID-19, a number of initiatives are in process. First, the authority is updating its accounting software and planning for additional changes that face outward from its website. While no promises of delivery dates for changes were announced, the data kept by AEA, including many current and past studies, will soon be publicly available online through its website. The authority is in the final stages of selecting software and deliberating on filing and naming conventions. Once decisions are made, it will transfer public records, data, and studies to its website where the information be readily available, free of charge. Another development at AEA is the method of submitting Power Cost Equalization (PCE) utility monthly reports. Once in place, the changes will enable the authority to receive PCE reports in a faster, more efficient manner, resulting in a reduced turnaround time for PCE reimbursements to the utilities. At present, there are a number of payments made to communities that are lost or damaged and they cannot be processed. To correct this problem and other delays, and to harness the benefits of technology and stay ahead of regulatory changes, all PCE communities will be required to make arrangements to obtain payments by electronic fund transfer or direct deposit. The authority said if your PCE community has not already converted to this payment method, it urges you to contact its PCE team at (907) 771-3929 or pce@akenergyauthority.org to arrange for sooner and safer payments for deposit directly into your bank account. In other news, AEA’s PCE team anticipates a major update in how PCE Utility Monthly Reports are processed to occur later this year. The change, which has long been carefully planned, is intended to make the filing and processing of essential PCE data easier resulting in time savings to utilities, and sooner delivery of PCE monies to the companies. The update will be preceded with training for utility clerks and involves changes at utilities, many of which may need to upgrade computers and office equipment. It will be necessary that any not yet enrolled utility participate in a banking practice of allowing receipt of funds by electronic fund Executive Director Report: Crystal Enkvist, APA/AIE, 703 West Tudor Rd., Suite 200, Anchorage, AK; Direct: (907) 771-5703, E-mail: cenkvist@alaskapower.org, Toll-free: 1-877-992-7322, Fax: (907) 561-5547 Page 4 Page 4 transfer. AEA has arranged discounted prices for the new computer and office equipment some utilities will need to take advantage of the web portal. Further news on this topic will be shared by the authority at a later date. Although the COVID-19 pandemic has put many things on hold, AEA said it has had a benefit of allowing some fine-tuning of the entry screens and the processing software behind the web portal. Trainings for utility clerks on how to submit reports and information through the web portal will begin as soon as possible. AEA said use of the web portal will eventually be the only way PCE reports will be accepted and processed for payment. Stay tuned for web portal training announcements from the authority. AEA is also making efforts to help statewide employment by participating in projects that will put Alaskans to work and build infrastructure. In addition to AEA’s involvement in the administration of the statutorily created Power Project Fund, the authority has guided many prospective borrowers towards the Department of Interior’s Indian Energy fund borrowing opportunity. AEA recently applied for more than $30 million in grants funds from the Department of Transportation in two applications, one of which has the promise of a statewide electric vehicle charging infrastructure in at least two regions of the state. Another grant holds the promise for further development and diversification of services at the Ted Stevens Anchorage International Airport. This project entails a hub service for cargo transfer and holding, and a cold storage facility of major proportion. For more information on these AEA initiatives, contact Brandy Dixon, AEA Public Engagement Officer, at 907-771-3078 or bdixon@akenergyauthority.org. (Source: Alaska Energy Authority) APA & AIE meetings a nd events: APA Board of Directors Special Meeting July 1, 2020 Teleconference APA & AIE Annual Meeting Postponed TBD AIE Insurance Workshop for Electric Utilities Sep. 23, 2020 Online APA Accounting and Finance Workshop Sep. 24-25, 2020 Online APA & AIE Safety Summit Oct. 1-2, 2020 Online Electric industry events and training opportunities: Engineering Webinar Series: Load Balancing on Wye Systems July 7, 2020 Webinar CFO & Senior Accountant Webinar Series: Cash Flow July 16, 2020 Webinar NRECA Regional Meetings Week Oct. 12-16, 2020 Online Staff schedule: Chief Financial Officer June 22-July 2, 2020 Leave Deputy Director July 27-31, 2020 Leave APA/AIE offices closed July 3, Sep. 7, Oct. 19, Nov. 26-27 and Dec. 25. http://www.newsminer.com/opinion/editorials/restart-the-susitna-dam-project-governor-legislature-must-look-out- for-alaskans-energy-future/article_4446558c-ce33-11ea-a9ec-ab9236fa5037.html News-Miner Opinion Restart the Susitna Dam project: Governor, Legislature must look out for Alaskans’ energy future Jul 26, 2020 News-Miner opinion: The recent Golden Valley Electric Association board of directors election prompted much discussion on this page about electricity rates, with many readers noting that rates here are high compared to other Alaska urban communities. The campaigns also included talk about the desire for clean energy. GVEA itself has a goal of reducing its carbon emissions by 26% by 2030, as measured against the utility’s 2012 carbon emission goal. A long-lasting way to achieve that — and more — is for work to resume on the Susitna-Watana Hydroelectric Project. It’s vital. The dam and hydroelectric system would benefit not only GVEA customers but also customers of utilities elsewhere along the Railbelt. As proposed, the 600-megawatt project would produce 2.8 million megawatt hours of electricity, enough to provide for 50% of the needs of the Railbelt region, which reaches from Fairbanks to the Kenai Peninsula. The region includes roughly 75% of the state’s population. Hydropower is clean power. And the estimated life of the Susitna-Watana Hydroelectric Project, which is generally just referred to as the Susitna Dam, is about 100 years. This is no small project. The dam would be built on the Susitna River, 87 river miles upstream from Talkeetna and, according to the Alaska Energy Authority’s information site, far above the natural impediment to salmon migration that is Devil’s Canyon. The dam would be 705 feet high and create a reservoir 42 miles long and about 1 mile wide. The project and its potential impact have been studied intensively, on and off, for decades. Many more studies have been proposed by the state energy agency, which is the lead entity on the project. But in late 2014, former Gov. Bill Walker, just weeks after winning election, suspended spending on the dam and other projects to allow for a review as tumbling oil prices continued to create major budget deficits for the state. In July of 2015, he allowed the project to proceed through 2017, at which time all work was halted. Then in came new Gov. Mike Dunleavy, who in February 2019 rescinded his predecessor’s stop- work order. That act was only symbolic, however. No additional money was provided for the project. And that is where things stand today: A project that has been found to be technically doable and possessing enormous potential for the long-term energy security of a large part of Alaska’s population sits idle. But there are stirrings. Governor Dunleavy’s office has been provided with much information about the project. Several legislators have asked for information. And, importantly, potential investors, who would buy the bonds that would finance the project, have reportedly shown interest. There won’t be a project for those investors to invest in, however, unless the governor and Legislature agree to provide the money to resume work toward federal licensing of the project. The Alaska Energy Authority’s required annual update to the Legislature for 2020 notes that the agency is about two-thirds of the way through the federal licensing process. If work had not ceased in 2017, the agency’s update reads, “the next steps for the project would have been implementation of the second study season, followed by preparation of final reports and a license application.” We have lost years on this project. We can’t afford to lose any more. As the Alaska Energy Authority points out, “Alaska ranks the fifth highest in U.S. energy costs and remains reliant on volatile-priced fossil fuels.” That’s not good for Alaska, for its businesses or for its residents. The project will take about eight years to build. Alaskans and their leaders need to be forward- thinking: What will our energy situation be like in the years ahead? Our energy situation for years has been one filled with uncertainty. We once prided ourselves on being known as the great land of big ideas. Let’s return to that and get on with this project. Governor Dunleavy and the Legislature need to make the Susitna-Watana Hydroelectric Project a priority and provide funding so work can resume toward obtaining federal approval.