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2024-01-24 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 Wednesday January 24, 2024 8:30 AM AGENDA - UPDATED Dial 1 (888) 585-9008 and enter code 212-753-619# Public comment guidelines are below. 1. CALL TO ORDER 2. ROLL CALL BOARD MEMBERS 3. AGENDA APPROVAL 4. PRIOR MINUTES – December 6, 2023 5. PUBLIC COMMENTS (2 minutes per person) see call in number above 6. EXECUTIVE SESSION –To discuss confidential matters related to the FY24 Budget. 7. NEW BUSINESS – A. Resolution No. 2024-02 Providing for Amemdments to Resolution 2022-07 B. Resolution No. 2024-01 FY25 Operating and Capital Budget Submissions Ratification C. Rural Emergencies Update 8. OLD BUSINESS – NONE 9. DIRECTOR COMMENTS A. Denali Commission Update B. Power Project Fund (PPF) Loan Update C. Power Cost Equalization (PCE) Update D. Required Legislative Submittals: Capital Reserve Fund shortfall Susitna River Power Project Annual Report Renewable Energy Grant Fund (REF) Round 16 Revised estimate of need to withdraw from Capital Reserve Fund E. IIJA Climate Pollution Reduction Grant (CPRG) Proposals GRIP 3, PHASE 2 – Concept Paper F. Legislation: Prefiled Governor’s G. Community Outreach H. Articles of Interest I. Next Regularly Scheduled AEA Board Meeting Wednesday, March 6, 2024 10. BOARD COMMENTS 11. ADJOURNMENT Public Comment Guidelines Members of the public who wish to provide written comments, please email your comments to publiccomment@akenergyauthority.org by no later than 4 p.m. on the day before the meeting, so they can be shared with board members prior to the meeting. Alaska Energy Authority Page 2 of 2 On the meeting day, callers 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. 813 W Northern Lights Blvd, Anchorage, AK 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG Alaska Energy Authority BOARD MEETING MINUTES Wednesday, December 6, 2023 Anchorage, Alaska 1. CALL TO ORDER Chair Pruhs called the meeting of the Alaska Energy Authority to order on December 6, 2023, at 8:33 am. A quorum was established. 2. ROLL CALL BOARD MEMBERS Members present: Chair Dana Pruhs (Public Member); Vice-Chair Bill Kendig (Public Member); Albert Fogle (Public Member); Julie Sande (Commissioner DCCED (joined 8:40 a.m.)); Adam Crum (Commissioner DOR (joined 8:49 a.m.)); Bill Vivlamore (Public Member); and Randy Eledge (Public Member). 3. AGENDA APPROVAL Chair Pruhs requested to add an update on the Dixon Diversion under Item 8. Director Comments. There were no objections to approving the agenda as modified. 4. PRIOR MINUTES – October 25, 2023 MOTION: A motion was made by Vice-Chair Kendig to approve the prior minutes of October 25, 2023. Motion seconded by Mr. Fogle. Mr. Eledge asked if the notation on the minutes besides Item 5. Public Comments indicating two minutes per person is based on statute. Chair Pruhs noted the limit is at the discretion of the Board. There were no other comments. The motion to approve the minutes of October 25, 2023 passed without objection. 5. PUBLIC COMMENTS (2 minutes per person) There were no public comments. 6. NEW BUSINESS -None 7. OLD BUSINESS A. Board Governance Alaska Energy Authority Page 2 of 8 Alaska Statutes – Comparison prior vs. current Alaska Statutes – December 1976 Curtis Thayer discussed the information included in the Board packet is for reference purposes to provide AEA’s current governing statutes and to provide a historical account of the changes that have been made over the years. He noted that the most significant reform occurred in 1993, and those processes have been the primary governance for the last 30 years. Mr. Thayer explained that if AEA wanted to request legislative changes, AEA would present a legislative proposal to the Governor’s Office for review and possible advancement. Mr. Thayer discussed that additional examination is necessary to determine if AEA requires legislative approval to undertake more responsibility with transmission lines. However, there are no specific requests for the Department of Law to evaluate. 8. DIRECTOR COMMENTS A. Responses to Board Questions from October Board Meeting Mr. Thayer reviewed the responses to Board questions included in the packet. The end-to-end losses of an HVDC line are approximately half of what they would be for an HVAC line. The existing losses during low transmission are approximately 2%, and approach 20% losses during high transmission. The HVDC line system is more efficient. Mr. Thayer requested that Bryan Carey, AEA, provide additional information and answer questions. Chair Pruhs asked why AC was initially utilized, rather than DC. Mr. Carey explained that DC typically was used for larger capacity lines, primarily in Europe, and the AC converters were prohibitively expensive. Mr. Carey indicated that the costs for both lines are now more similar. Chair Pruhs asked if the proposed DC line to Cook Inlet is connecting to AC on both ends. Mr. Carey agreed there will be an AC converter on both ends. This is economical because of the savings from potential line loss. Chair Pruhs inquired as to the possibility of converting the backbone to DC. Mr. Carey discussed that many of the AC lines have good capacity. He believes that if the intertie system to Fairbanks were built new at this time, it would likely be constructed as an HVDC system due to technological changes and reasonable pricing. Mr. Fogle asked if the line from Soldotna to Quartz Creek would be DC. Mr. Carey agreed that is a potential for the future. Mr. Carey discussed that the existing transmission line between the Kenai and the central area tends to reach maximum capacity during the day in the winter. He noted that review of a submersible line’s capacity can hold up to about 250 megawatts, which would provide enough capacity to have both solar and wind power on the system. Chair Pruhs inquired as to the difference in safety between the exposed AC and DC lines. Mr. Carey indicated he would have to provide additional information at a different time. Alaska Energy Authority Page 3 of 8 Mr. Eledge asked about the difference between the installed costs for both HVAC and HVDC lines. Mr. Carey explained that the general cost of installation for both HVAC and HVDC long-distance, higher voltage lines are comparable. Installation cost for shorter distances is lower for HVAC lines. Mr. Thayer commented that he would give members the name of an informative television broadcast regarding AC and DC transmission. Dixon Diversion Update Chair Pruhs requested Mr. Carey discuss the Dixon Diversion update. Mr. Carey informed that the cost estimate was revised in the fall following the hydrology work that occurred on the Martin River regarding water flows and expected energy amounts. The Martin River below Dixon Glacier is hard to gauge because the bottom is spread out and braided. It is important to have a stable depth of bedrock or other construction to identify the relationship between increased flow and increased depth. Mr. Carey explained the flow measurement activities conducted by DOWL and USGS, and the resulting average flow amounts and energy that would be diverted to Bradley. He noted that the total amount of energy over a 30-year record would be approximately 167,000 megawatt hours (MWh). However, over the standpoint of a 10-year record, the amount of energy is approximately 191,000 MWh. This is due to increased flow from the ice melting. Additional data will be gathered during the next year. Mr. Carey discussed revisions to the cost estimate. The proposed road to Dixon Glacier was removed from the plan. The cost savings are substantial at approximately $50 million. The diversion dam will be built below the Dixon Glacier at a much lower cost. The diameter tunnel is increased from 12 feet in diameter to 14 feet in diameter. This allows for greater flow for flood events and room for ventilation and power cables along the top. The tunnel length is approximately five miles. The revised total project cost estimate decreased from $415 million to $342 million. Mr. Carey discussed the planned construction process and mobilization procedures. Mr. Fogle inquired if there is spawning on the Martin River. Mr. Carey noted that spawning is not likely to occur on the mainstem because the Martin River is very fast, cold, and contains high levels of sediment loads. Sockeye and coho salmon do utilize the sloughs that are off the mainstem. Chair Pruhs asked how much power the Dixon Diversion will add to the Bradley Lake facility. Mr. Carey explained that the increase in MWh will be approximately 50%, from about 400,000 MWh to about 600,000 MWh per year. The dam at Bradley Lake will be raised 14 feet to hold the additional stored water. It is possible that another generator could be added. However, it is not within the current amendments. Additionally, the transmission lines are capacity constrained, and Bradley cannot run at full capacity. Once the transmission upgrades are completed, additional capacity can be utilized, and an additional 50 MWh to 70 MWh generator could be added. This would increase Bradley’s capacity by approximately 200 MWh. Mr. Carey discussed that currently, Bradley produces about 10% of the annual energy for the Railbelt. Chair Pruhs requested that at the next meeting, Mr. Carey show larger pictures of the proposed route of the tunnel and provide information on the cost/benefit analysis in relation to the upgrades of the transmission lines and the additional amount of energy that the Dixon Diversion will produce. Chair Pruhs noted the reference to the current production of approximately 10% of Alaska Energy Authority Page 4 of 8 energy for the Railbelt. He asked for the anticipated percentage increase from these upgrades and the effects on consumer rates. Vice-Chair Kendig added a request for staff to also provide the analysis of the effects of the upgrades on natural gas generation. Mr. Thayer indicated that some of that analysis has been completed and shared in the past. Chugach Electric Association (CEA) has conducted three different cost/benefit evaluations, and the information can be provided again. B. IIJA / IRA Grant Funding Update Waiting for response from DOE of GRIP 3 Mr. Thayer discussed that AEA is currently in negotiations with Department of Energy (DOE) regarding the GRIP 3 conditional award in the amount of $206.5 million. The next deadline is December 21 regarding cyber security. The report is in draft form. AEA has issued a series of questions to DOE clarifying the process of the $413 million project, including the allocation of match funds. A grant agreement is expected to be in place within 120 days of the November 17 notification date. Mr. Thayer indicated that the required match is not limited to specifically a State match. AEA will own the HVDC line asset and the battery energy storage systems (BESS) in Anchorage and Fairbanks. Chair Pruhs asked how the balance of the funding will be provided. Mr. Thayer noted that work is ongoing with the Administration and with the utilities to determine the best way to obtain the match. DOE indicated that the match can be obtained over multiple years. AEA requested that detail in writing. Chair Pruhs asked if the consumer rates are expected to increase to pay for the necessary match. Mr. Thayer stated that the goal is not to raise consumer rates. However, an increase in consumer costs depends on the source of the match. He explained that the Governor’s Energy Security Task Force has the goal to lower rates to 10-cent power overall. Mr. Thayer discussed the correlation and blended average of cost for the Power Cost Equalization (PCE) program. For every penny that utility rates increase, there is approximately $1.5 million less money available for the PCE program. For every penny that utility rates decrease, there is approximately an increase of $1.5 million available for the PCE program. Mr. Thayer informed that there is a possibility of using a portion of last year’s $166 million of bonding for a share of the match. These types of cash flow questions are outstanding and are being discussed with DOE and Department of Law. If the bonding funds were able to be utilized, there would not be an increase in consumer rates. Chair Pruhs asked Mr. Thayer when he expects the funding proposition to be presented to the Board for review and feedback regarding any affects to the consumer. Mr. Thayer noted that the schedule is based on the Administration. He invited Commissioner Crum and Commissioner Sande to comment. Commissioner Crum highlighted that part of the Governor’s goal with these funds Alaska Energy Authority Page 5 of 8 and any new transmission projects debated during this year’s legislative session is not to affect the rate payer, but to move forward in such a way that contributes to a statewide benefit. The Administration anticipates being in conversation with the Board and with the public during the process of creating a prudent plan during this fantastic and exciting time for the state. Commissioner Sande emphasized that the Governor has been vocal about stabilizing and reducing consumer rates. Commissioner Sande asked Mr. Thayer if the Board needs to act for the State to receive this impressive grant funds award. Mr. Thayer indicated that the Board does not need to take any action. He noted the success that out of 700 applications that were received, 58 applicants were selected, and Alaska was the fifth highest awardee in the country. Mr. Thayer advised that through weekly reports and meetings, the Board has discussed the application 17 different times, and 8 times since the funding letter was received. Vice-Chair Kendig inquired if the Board will have any approval or denial authority regarding the match funding negotiations. Commissioner Crum indicated that the Board does not have to be part of the negotiations, but will be made aware of the negotiations because the Board has the authority and responsibility to be aware of the status of the new funding. Commissioner Crum reiterated that the match arrangements will be a deliberative and planned multi-year process and that no State match is required in the first year. Vice-Chair Kendig expressed his understanding that the intent is not to have an increase to rate payers. He cited the purpose of AEA as indicated in Article Two, Section 44.56.070, and noted that AEA will own the assets. Vice-Chair Kendig asked if the Board will be involved in making the decision after the departments negotiate a plan. Commissioner Crum agreed. Chair Pruhs reiterated the excitement of receiving the grant for $206 million, while at the same time being concerned about the ongoing process of how to fund the match of $206 million. He believes that it would be best to have alignment on the multi-year solution, and the sooner the better. Waiting for response from DOE on 40101(d) Mr. Thayer advised that the IIJA 40101(d) is a $60 million grant to be passed on to the urban utilities for transmission upgrades. It requires a 15% State match of $1.8 million per year. The Legislature has provided for three years of the match. The current awarded amount is $22 million, and AEA has been working with DOE to release those funds in the first quarter of next year for the transmission upgrades across the state. Mr. Thayer discussed that there is a similar DOE grant program for rural Alaska that AEA is not administering and contains a greater amount of awarded funding. C. Governor’s State Energy Security Task Force Update Final report to be presented to Governor Dec. 1 Alaska Energy Authority Page 6 of 8 Mr. Thayer noted that about a year ago, the Board asked for an energy plan for the State, and ironically, the Governor asked for the same plan in February. The Governor’s Alaska Energy Security Task Force (AESTF) was created and consists of 20 selected members, who have been meeting since February. Mr. Thayer gave an overview of the AESTF subcommittees. He discussed the partnership that occurred with the University of Alaska to create a series of eight energy symposiums that are available online. Mr. Thayer discussed that the final work product was delivered to the Governor on Friday. The goal was to create a plan to lower the cost of energy to 10 cents per kilowatt-hour (kWh). Key recommendations were region-specific. Some of the recommendations from the Railbelt include moving ahead with the Dixon Diversion project, updating the economic modeling on Susitna- Watana to decide on action, and reviewing the two proposals for gas lines to decide on action. Mr. Thayer noted discussions regarding PCE and issues in King Cove. The suggestion was made that AEA house the energy data and reinstate the Energy Technology Fund. Another AESTF recommendation was the unification of the transmission lines through AEA or through a nonprofit utility-like entity. Mr. Thayer acknowledged Jennifer Bertolini, AEA, for her efforts and for providing notice for all the meetings. He commented that a budget was provided by the federal government that was allocated to AEA staff to conduct the work and to Michael Baker consultants to keep the process on track over 160 hours of 50 to 60 meetings. Mr. Thayer noted that the behind-the-scenes work was probably two to three times the number of hours spent in meetings. He emphasized that the AESTF was 100% committed to the Governor’s goal. Mr. Eledge expressed appreciation for the herculean effort and the great job of presenting the extensive information. He asked if any feedback has been provided by the Governor’s Office or commissioners. Mr. Thayer discussed that since it was presented to the Governor on Friday, there has not been time for a roll-out with the public or with the Legislature as a whole. Mr. Thayer indicated that individual legislators who have requested the report have received it. Commissioner Sande requested Mr. Thayer to clarify for the public if the GRIP 3 project aligns with the AESTF recommendations. Mr. Thayer agreed, and indicated that the AESTF recommendations are 100% aligned with the grants that AEA has applied. Chair Pruhs asked that the format of the funding opportunities include a column that lists the match dollars related to the specific grant. Mr. Thayer agreed. Mr. Fogle expressed appreciation to Mr. Thayer for compiling the AESTF report. He asked what the next steps will be to move the priorities in the plan forward. Mr. Thayer discussed that the Governor will identify the Administration’s priorities, the Legislature will identify their priorities, and AEA should review and identify their priorities and recommendations. He explained that the report is a living document, and it is likely that an implementation committee will be formed after this legislative session to implement the selected priority recommendations. Mr. Fogle suggested that AEA, in conjunction with the Governor’s Office, maintain connection with a committee to Alaska Energy Authority Page 7 of 8 continue to update the report and to ensure that the recommendations were fulfilled. Mr. Thayer agreed. D. Community Outreach Mr. Thayer discussed that the community outreach has increased substantially post the Covid pandemic. The extensive community outreach listing is provided in the packet. E. Articles of Interest Mr. Thayer noted that the Articles of Interest are also included within the Board packet. F. Next Regularly Scheduled AEA Board Meeting Wednesday, January 24, 2024 Mr. Thayer informed that the Governor’s budget will be announced December 15, and the corresponding resolution is listed as an agenda item on the January meeting under New Business. MOTION: A motion was made by Vice-Chair Kendig to enter into executive session to discuss confidential financial matters related to owned assets, the immediate disclosure of which would have an adverse impact on the Authority. This is supported by the Open Meetings Act, AS 44.62.310, which allows a board to consider confidential matters in executive session. In this case, the board believes that these are subjects, which would have an adverse effect upon the finances of AEA and are protected by law, due to the rules protecting personal privacy and certain business information. Motion seconded by Mr. Fogle. A roll call was taken, and the motion to go into executive session passed unanimously. 9. EXECUTIVE SESSION: 9:46 a.m. – Discuss confidential matters regarding Owned Assets the immediate knowledge of which would have an adverse effect on Alaska Energy Authority. The Board reconvened its regular meeting at 11:20 am. Chair Pruhs advised that the Board did not take any formal action on matters discussed while in Executive Session. 10. BOARD COMMENTS Mr. Vivlamore commented that he recently had the pleasure of meeting with Mr. Thayer and John Burns, CEO of Golden Valley Electric Association (GVEA). He noted that Mr. Burns was very complimentary of AEA staff and their efforts, and was disappointed that the first GRIP map did not include GVEA. Mr. Vivlamore will provide Mr. Burns with the current and updated information. Mr. Fogle commended Mr. Thayer’s team for the impressive and unprecedented amount of work they have accomplished. He is proud of AEA. Alaska Energy Authority Page 8 of 8 Vice-Chair Kendig expressed appreciation to staff for the herculean task of the GRIP 3 application process while concurrently working on the tremendous efforts of the AESTF. Chair Pruhs commented on the importance that the Board promotes affordable and reliable energy, as well as supports the staff’s focus on opportunities and challenges. He expressed appreciation to staff for the impressive report and believes that AEA and the State will be in a better position because of these efforts. 11. ADJOURNMENT There being no further business of the Board, the AEA meeting adjourned at 11:28 am. ________________________________________________ Curtis W. Thayer, Secretary 813 W Northern Lights Blvd, Anchorage, AK 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG DATE: January 23, 2024 TO: Alaska Energy Authority Board of Directors FROM: Curtis Thayer, Executive Director RE: Amending Resolution Regarding Financing of the Bradley Lake Hydroelectric Project The purpose of this memo is to recommend approval of Alaska Energy Authority Resolution No. 2024-02 - Providing for Amending Prior Resolutions Regarding Financing of the Bradley Lake Hydroelectric Project. RESOLUTION NO. 2024 - 02 RESOLUTION OF THE ALASKA ENERGY AUTHORITY PROVIDING FOR AMENDMENTS TO RESOLUTION 2022-07 REGARDING THE SALE OF NOT TO EXCEED $200,000,000 OF ALASKA ENERGY AUTHORITY POWER REVENUE BONDS, ELEVENTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT); PROVIDING FOR AMENDMENTS TO THE TENTH SUPPLEMENTAL RESOLUTION OF THE AUTHORITY TO SECURE SAID BONDS; AUTHORIZING AMENDMENTS TO AND THE EXECUTION OF THE LOAN AGREEMENT BETWEEN THE AUTHORITY AND PURCHASER OF THE SAID BONDS; DELEGATING CERTAIN AUTHORITY TO THE CHAIR, THE BOARD MEMBER DESIGNEE OF THE CHAIR, THE EXECUTIVE DIRECTOR AND THE CHIEF FINANCIAL OFFICER; AND PROVIDING FOR RELATED MATTERS. RESOLUTION PURPOSE SUMMARY Resolution No. 2024-02 provides for the approval of revisions to prior resolutions and related documentation with respect to the prior issuance and sale of not to exceed $200,000,000 of Alaska Energy Authority Power Revenue Bonds, Eleventh Series (Bradley Lake Hydroelectric Project) (the “Series 2022 Bonds”). If consents from the Purchaser are received the amendments to the Series 2022 Bond financing documents would expand the project definition to allow Series 2022 Bond proceeds to be used to fund the HVDC submarine circuit crossing Cook Inlet from Nikiski in the Southern region to Beluga in the Central region to maximize transfer capability between regions and minimize spinning reserves, thereby reducing fuel usage, and reducing carbon emissions (the “Underwater HVDC Transmission Line”) and included as a project purpose by the DOE GRIP Grant designation. Expanding the definition of Series 2022 Bond project definition will also allow for additional flexibility for funding projects consistent with the GRIP Grant funds. Authorization of the resolution is contingent on subsequent consents and approvals from National Cooperative Services Corporation (the “Purchaser”), the Alaska Department of Law with respect to confirming the Underwater HVDC Transmission Line is Required Project Work, and the Bradley Lake Project Management Committee. Alaska Energy Authority Page 2 of 4 SUPPORTING DOCUMENTATION • Memo from Executive Director • Resolution 2024-__ Providing For Amendments to Resolution 2022-07 Regarding the Sale of Not To Exceed $200,000,000 Of Alaska Energy Authority Power Revenue Bonds, Eleventh Series (Bradley Lake Hydroelectric Project). • Resolution 2022-06 – (previously adopted) • Resolution 2022-07 (the “Tenth Supplemental Resolution”)– (previously adopted) • Grip3 Railbelt Application • Department of Energy GRIP Grant Letter • Letter to Governor, State of Alaska Requesting State Match • Letter to Department of Law Regarding Required Project Work • Power Sales Agreement PROJECT DESCRIPTION TENTH SUPPLEMENT RESOLUTION The Issuance Resolution with respect to the Series 2022 Bonds provided for a project described as a Transmission Project. Transmission Project means the acquisition, improvement and development of the electric transmission line systems between the Bradley Junction and Soldotna Substation, the electric transmission line systems between the Soldotna Substation and the Sterling Substation, the electric transmission line systems between the Sterling Substation and the Quartz Creek Substation, and of battery energy storage systems, in each case including associated rights-of-way and permits, collectively approved by the Committee as Required Project Work. Based on the Required Project Work determinations of the Department of Law approved projects were set forth in Resolution 2022-08. PROJECT DESCRIPTION GRIP GRANT The proposal and application for the GRIP Grant was pursued following the issuance of the Series 2022 Bonds. The application for the GRIP Grant was all encompassing with respect to significant project needs of the Bradley Lake Project and Alaska Railbelt electric needs. Thus, the application encompassed a broader project description than the Transmission Project description used at the time of the Series 2022 Bond issuance. The GRIP Grant project description is more expansive and per the acceptance letter “selection is conditioned upon your organization’s agreement to propose, for DOE’s consideration, a project work scope that eliminates the 2 overhead AC transmission lines and prioritizes (first) underwater HVDC and (second, if feasible) one or both BESS at a federal funding amount of no greater than $206.5M. The non-federal cost share must be at least 50% of the total project costs, consistent with the statutory requirement. The conditions must be resolved to the satisfaction of the DOE” (See attached Department of Energy GRIP Grant Letter). The first prioritized project underwater HVDC was not included within the project description for use of the Series 2022 Bonds. Alaska Energy Authority Page 3 of 4 REVISED PROJECT DESCRIPTION SERIES 2022 BOND PURCHASER The Series 2022 Bonds were purchased by a sole purchaser – National Cooperative Services Corporation (the “Purchaser”). It was determined since the Series 2022 Bonds were purchased by a single entity a request for amendments to the Series 2022 Bonds and related documents would be beneficial to determine consistent use of the Series 2022 Bond proceeds related to the GRIP Grant definition in order to expand the use of the Series 2022 Bond proceeds with GRIP Grant funds. Use of the Series 2022 Bond proceeds for the HVDC line would require consent from the Purchaser and corresponding revisions to the Tenth Supplemental Resolution, Loan Agreement and Series 2022 Bonds. Pursuant to conversations with Fred Eeoff, Financial Advisor with respect to the Series 2022 Bonds, expansion of the Transmission Project definition to include the underwater HVDC line should be economically neutral to the Purchaser. Initial discussions with the Purchaser have been positive and the expectation is a final answer by the end of January. REQUIRED PROJECT WORK – REQUEST TO DEPARTMENT OF LAW As with the Series 2022 Bonds project description, the GRIP Grant project description with respect to the underwater HVDC line had not been previously considered by the Department of Law regarding the required designation as Required Project Work. On December 21, 2023, a letter was sent to Attorney General Taylor requesting confirmation the underwater HVDC line is Required Project Work as defined in the Power Sales Agreement. On January 18, 2024, the Attorney General provided an initial response confirming the underwater HVDC transmission line was Required Project Work. It is anticipated a formal memorandum from the Department of Law will also be received by the end of January. BENEFITS TO CONSUMERS & RAILBELT ENERGY SYSTEM RELATED TO ALL FUNDING The upgrades of transmission lines and acquisition of BESS’s will provide multiple benefits to consumers as follows: • Cost sharing – The Railbelt Utilities, through the BPMC, will split the cost of the upgrade or purchase (debt service on the financing), operation and maintenance of the assets. • Lower energy losses – Upgraded line and BESS will substantially reduce energy losses from resistance and spinning reserves. • Grid Stability - The construction and coordination of Battery Energy Storage Systems (BESS) in the Southern, Central and Northern regions to reassert control over the Grid’s operating point (Frequency) and mitigate the small-signal instability that occurs between the Bradley Project and the grid. Will also add significant grid stability to Dixon and Bradley Lake. • Better 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 resources available for use on this transmission segment, and the ongoing costs would be spread more equitably to a wider group of ratepayers benefiting from Bradley Lake power. • Increased Reliability – Reduction in risk of outages from power quality or natural events and related costs for power for ratepayers throughout the Railbelt. • Future Benefits – Allows for un-constraining Bradley power, which would decrease line lines, increase the capacity of power transmitted, increase the stability of transmission Alaska Energy Authority Page 4 of 4 system power, and allow for additional renewable energy projects to be constructed on the Kenai Peninsula. • New Renewable Energy projects and increased stability will benefit the Railbelt Energy System. These improvements are required irrespective of the nature of fuel supply diversity and de-carbonization solutions BENEFITS TO AMENDED DEFINITION TO INCLUDE UNDERWATER HVDC TRANSMISSION LINE Amending the Series 2022 Bond definition of Transmission Project will allow for more efficient funding of capital needs of Bradley Lake Hydroelectric Project and provide for efficient blending of Series 2022 Bond proceeds with GRIP Grant funds and State Match to increase and expand scope to meet all benefits to consumers set forth above. 4856-1840-5534\2 ALASKA ENERGY AUTHORITY RESOLUTION NO. 2024 - 02 RESOLUTION OF THE ALASKA ENERGY AUTHORITY PROVIDING FOR AMENDMENTS TO RESOLUTION 2022-07 REGARDING THE SALE OF NOT TO EXCEED $200,000,000 OF ALASKA ENERGY AUTHORITY POWER REVENUE BONDS, ELEVENTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT); PROVIDING FOR AMENDMENTS TO THE TENTH SUPPLEMENTAL RESOLUTION OF THE AUTHORITY TO SECURE SAID BONDS; AUTHORIZING AMENDMENTS TO AND THE EXECUTION OF THE LOAN AGREEMENT BETWEEN THE AUTHORITY AND PURCHASER OF THE SAID BONDS; DELEGATING CERTAIN AUTHORITY TO THE CHAIR, THE BOARD MEMBER DESIGNEE OF THE CHAIR, THE EXECUTIVE DIRECTOR AND THE CHIEF FINANCIAL OFFICER; AND PROVIDING FOR RELATED MATTERS. WHEREAS, the Alaska Energy Authority ("Authority") is authorized by Title 44, Chapter 83, of the Alaska Statutes, as amended, to issue bonds for the purpose of carrying out its corporate purpose and power, including the establishment or increase of reserves to secure or to pay for bonds; and WHEREAS, the Authority has, pursuant to the Power Revenue Bond Resolution, adopted by the Board on September 7, 1989, as amended and supplemented ("Master Bond Resolution"), issued ten series of power revenue bonds subject to terms and conditions set forth in the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power (the "Power Sales Agreement") dated as of December 8, 1987, by and among the Chugach Electric Association, Inc., Golden Valley Electric Association, Inc., the City of Seward d/b/a Seward Electric System, and Alaska Electric Generation & Transmission Cooperative, Inc., and as Additional Parties Homer Electric Association, Inc. and Matanuska Electric Association, Inc. (collectively, "Power Purchasers") and the Authority; and WHEREAS, the Master Bond Resolution authorizes the issuance of additional bonds for purposes of financing costs and expenses of planning, designing, acquiring, constructing, installing capital improvements in connection with the Bradley Lake Hydroelectric Project ("Bradley Project") subject to terms and conditions set forth therein and the Power Sales Agreement; and WHEREAS, pursuant to the request of the Power Purchasers the Authority, pursuant to Resolution No. 2022-06, previously determined to issue its Power Revenue Bonds, Eleventh Series (Bradley Lake Hydroelectric Project), in an aggregate principal amount not to exceed $270,000,000 to provide funds to be used to (a) pay all or a portion of the costs of the acquisition, improvement and development of the electric transmission line systems between the Bradley Junction and Soldotna Substation, the electric transmission line systems between the Soldotna Substation and the Sterling Substation, the electric transmission line systems between the Sterling Substation and the Quartz Creek Substation, and of battery energy storage systems, in each case including associated rights-of-way and permits, all of which will become an integral part of the Project; (b) fund a debt service reserve account; and (c) pay costs incurred in connection with the issuance of the Bonds (collectively, the "Project"); and 4856-1840-5534\2 WHEREAS, subsequent to the adopting of Resolution No. 2022-06 the Authority, pursuant to Resolution No. 2022-07, approved a tenth supplemental resolution (the “Tenth Supplemental Resolution”) setting forth the terms and provisions of the issuance, sale and delivery of its Power Revenue Bonds, Eleventh Series (Bradley Lake Hydroelectric Project), in an aggregate principal amount not to exceed $200,000,000 (the "Series 2022 Bonds") to provide funds to be used for the purpose of (1) financing a portion of the costs of the Transmission Project, (2) making a deposit to the Capital Reserve Fund, sufficient to satisfy the Capital Reserve Fund Requirement and (3) paying costs of issuance of the Bond. The Bond of such Series shall be designated and entitled “Power Revenue Bond, Eleventh Series (Bradley Lake Hydroelectric Project); and WHEREAS, the Series 2022 Bonds were issued on November 30, 2022, under and pursuant to and secured by the Master Bond Resolution and the Tenth Supplemental Resolution; and WHEREAS, provisions were made for the sale of the Series 2022 Bonds pursuant to a Loan Agreement entered into between the Authority and National Cooperative Services Corporation (the "Purchaser"); and WHEREAS, subsequent to the issuance of the Series 2022 Bonds the Authority was awarded pursuant to letter dated October 3, 2023, and issued by the U.S. Department of Energy the Authority to receive a funding opportunity grant in the amount of $206,500,000 (the “GRIP Grant”), subject to meeting certain additional requirements including providing for an equal amount of state match funds (the “State Match”); and WHEREAS, portions of the Bradley Lake Hydroelectric Project to be funded by the proceeds of the Series 2022 Bonds may also be funded by funds to be provided pursuant to the GRIP Grant; and WHEREAS, the GRIP Grant also provides for funding an HVDC submarine circuit crossing Cook Inlet from Nikiski in the Southern region to Beluga in the Central region to maximize transfer capability between regions and minimize spinning reserves, thereby reducing fuel usage, and reducing carbon emissions (the “Underwater HVDC Transmission Line”); and WHEREAS, in order to fund the necessary state match necessary to receive the total funds awarded pursuant to the GRIP Grant the Authority has also requested moneys be provided from the State of Alaska pursuant to a request to the Governor, State of Alaska; and WHEREAS, pursuant to a letter dated December 22, 2023, the Authority, as required pursuant to the Power Sales Agreement and prior to the incurrence of debt must receive a determination from the Alaska Department of Law the Underwater HVDC Transmission Line is Required Project Work; and WHEREAS, the Authority now desires to expand the Bradley Lake Hydroelectric Project to include the Underwater HVDC Transmission Line provided for funding pursuant to the GRIP Grant, along with such other necessary requests of the Purchaser to amend the bond documents accordingly (the Bradley Lake Hydroelectric Project, Transmission Project, Underwater HVDC Transmission Line and other approved projects of the Department of Energy shall hereinafter collectively be referred to as the “Bradley Lake Hydroelectric and Transmission Project”). NOW, THEREFORE, BE IT RESOLVED BY THE ALASKA ENERGY AUTHORITY, AS FOLLOWS: 4856-1840-5534\2 Section 1. In order to provide funds to finance the Bradley Lake Hydroelectric and Transmission Project the Authority is hereby authorized, conditioned upon approval and receipt of all necessary consents and approvals from the Purchaser, the Alaska Department of Law, the Bradley Lake Project Management Committee and any other necessary parties, to amend any and all of the necessary Series 2022 Bond financing documents and Series 2022 Bonds previously executed to expand the uses of Series 2022 Bond proceeds to fund any and all portions of the Bradley Lake Hydroelectric and Transmission Project. Section 2. In order finance, construct and equip all, or any part, of the Bradley Lake Hydroelectric and Transmission Project and to consummate the transactions contemplated in the Tenth Supplemental Resolution, as amended, subject to appropriate insertions and revisions, be and the same hereby is in all respects authorized, approved and confirmed, and that the Chair, the Board member designee of the Chair, Executive Director or Chief Financial Officer of the Authority (each, an "Authorized Officer") be, and each of them hereby is, authorized, empowered, and directed to execute Series 2022 Bonds, as amended, whether by manual or facsimile signature, to seal the Series 2022 Bonds, as amended, with the official seal of the Authority (manually or by facsimile), and to deliver, for and on behalf of the Authority, the Series 2022 Bonds, as amended, to the Purchaser; and that the provisions of the Tenth Supplemental Resolution, as amended, and Series 2022 Bonds, as amended, be and the same hereby is authorized, approved and confirmed and is incorporated herein by reference. Section 3. The Series 2022 Bonds, as may be amended to carry out the purposes hereof, do not constitute an indebtedness or other liability of the State of Alaska, or any political subdivision thereof, except the Authority. The Authority does not pledge the faith and credit of the State of Alaska, or any political subdivision thereof (except the Authority) to the payment of the Series 2022 Bonds, as amended, and the issuance of the Series 2022 Bonds, as amended, does not obligate the State of Alaska or any political subdivision thereof (except the Authority) to apply money, or levy or pledge any form of taxation whatsoever to, payment of the Series 2022 Bonds, as amended. The Authority has no taxing power. Section 4. The form and content of the Loan Agreement, as amended, be and the same hereby are in all respects authorized, approved and confirmed and each Authorized Officer be and hereby are authorized, empowered and directed to execute and deliver the Loan Agreement, as amended, for and on behalf of the Authority, with such changes, modifications, additions, and deletions therein as shall to them seem necessary, desirable or appropriate, their execution of the Loan Agreement, as amended, to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Loan Agreement now before this meeting, and that, from and after the execution and delivery of the Loan Agreement, as amended, each Authorized Officer be and they hereby are authorized, empowered, and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Loan Agreement, as amended and as executed. Section 5. The form and content of the Tenth Supplemental Resolution and providing of the security therefor to the repayment of the Series 2022 Bonds to U.S. Bank Trust Company, National Association, as Trustee, for the security of the Series 2022 Bonds, including necessary counterparts, but with such changes, modifications, additions, and deletions therein as shall to them seem necessary, desirable, or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions, or deletions thereto from such form, and that the final 4856-1840-5534\2 Tenth Supplemental Resolution, as amended, is hereby authorized, approved, confirmed and adopted in accordance with the Master Bond Resolution and is incorporated herein by reference. Following execution and delivery of the Tenth Supplemental Resolution, as amended, each Authorized Officer be and they hereby are authorized, empowered, and directed to do all such acts and things and to execute all such documents as may be necessary or convenient to carry out and comply with the provisions of the Tenth Supplemental Resolution, as amended and as executed. Section 6. The Board of the Authority acknowledges and re-confirms the Bradley Lake Project Management Committee desires to allocate approximately 65% of proceeds of the Series 2022 Bonds toward transmission upgrades and approximately 35% of proceeds of the Series 2022 Bonds toward the battery energy storage system serving the Kenai Peninsula, South Central, and Interior Alaska. The Authority will use commercially reasonable efforts to effectuate such allocation; provided, however, the Authority in its discretion, may deviate from such allocation, in order to fulfill its purpose and duties, as set forth in State law. Section 7. The Authorized Officers be, and each of them hereby is, authorized to execute and deliver for and on behalf of the Authority any and all additional certificates, documents, opinions or other papers and perform all such other acts as they may deem necessary or appropriate in order to implement and carry out the intent and purposes of this Resolution, and all of the acts and doings of the Authorized Officers of the Corporation that are in conformity with the intent and purposes of these resolutions, whether heretofore or hereafter taken or done, shall be and the same are hereby in all respects ratified, confirmed and approved as the acts and deeds of the Corporation. Section 8. This Resolution does hereby incorporate by reference, as though fully set out herein, the provisions of the Act, the Master Bond Resolution, the Tenth Supplemental Resolution, the Series 2022 Bonds, and the documents presented to this meeting. Section 9. All prior resolutions of this Board or any parts thereof in conflict with the foregoing resolutions are hereby repealed to the extent of such conflict. Section 10. The recitals to this Resolution, including definition of terms, are incorporated into this Resolution as if fully set forth herein. Terms used herein and not otherwise defined shall have the meanings as set forth in the Tenth Supplemental Resolution, as amended. Section 11. Resolution shall become effectively immediately upon its passage and approval. 4856-1840-5534\2 DATED at Anchorage, Alaska, this 24th day of January, 2024. _________________________________ Chair ATTEST: ____________________________________________ Secretary Tenth Supplemental Resolution Page 1 4146-3513-2990.9 ALASKA ENERGY AUTHORITY RESOLUTION NO. 2022-07 A SUPPLEMENTAL RESOLUTION AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF POWER REVENUE BOND, ELEVENTH SERIES (BRADLEY LAKE HYDROELECTRIC PROJECT), IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $200,000,000 AND DETERMINING RELATED MATTERS Pursuant to the terms and conditions set forth in the Alaska Energy Authority Power Revenue Bond Resolution, adopted on September 7, 1989 (as amended and supplemented, the “Resolution”) and the Authority’s Resolution No. 2022-06, adopted on October 26, 2022, this Supplemental Resolution is adopted as follows: ARTICLE I Definitions and Authority Section 101.Short Title. This resolution may hereafter be cited by the Authority, and is hereinafter sometimes referred to, as the “Tenth Supplemental Resolution.” Section 102.Definitions. (A)All defined terms contained in the Resolution shall have the same meanings in this Tenth Supplemental Resolution as such defined terms are given in Section 102 of the Resolution. (B)In addition, as used in this Tenth Supplemental Resolution, unless the context shall otherwise require, the following terms shall have the following respective meanings: Adder shall mean twenty (20) basis points. Advance means each advance of funds by the Purchaser to the Authority under the Bond. Advance Request means a request from the Authority to the Purchaser, in the form of Exhibit A to the Loan Agreement, or otherwise in form and substance satisfactory to the Purchaser, to make an advance. Authorized Denomination means $25,000 and integral multiples of $1.00 in excess thereof. Bond means the Bond of the Authority authorized by this Tenth Supplemental Resolution and herein designated “Power Revenue Bond, Eleventh Series.” Tenth Supplemental Resolution Page 2 4146-3513-2990.9 Designated Representative means the Authority’s Executive Director and Chief Financial Officer. DTC means The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York, and its successors and assigns. DTC Participant means a trust company, bank, broker, dealer, clearing corporation and any other organization that is a participant of DTC. Fixed Rate means (a) for the Initial Advance (i) for the Initial Fixed Rate Term, (y) six and 06/100 percent (6.06%) per annum so long as the Initial Advance is made on or prior to December 1, 2022, or (z) if the Initial Advance is made after December 1, 2022, such other fixed rate as may be agreed to in writing by the parties plus the Adder, and (ii) thereafter shall mean (y) such fixed rate as is then available for loans similarly classified pursuant to the Purchaser’s policies and procedures then in effect plus the Adder, or (z) such other fixed rate as may be agreed to in writing by the parties plus the Adder and (b) for the Second Advance, (i) such fixed rate as is then available for loans similarly classified pursuant to Purchaser’s policies and procedures then in effect plus the Adder, or (ii) such other fixed rate as may be agreed to in writing by the parties plus the Adder. Fixed Rate Term means, (a) for the Initial Advance, initially, the Initial Fixed Rate Term and thereafter shall mean the specific period of time that a Fixed Rate is in effect for the Initial Advance, and (b) for the Second Advance, the specific period of time that a Fixed Rate is in effect for the Second Advance. Initial Advance shall mean the first Advance in the aggregate principal amount of $166,013,134. Initial Fixed Rate Term shall mean the period from the Closing Date to December 30, 2032. Interest Rate Reset Date shall mean the first day following the expiration of the Fixed Rate Term for an Advance. Letter of Representations means the Blanket Issuer Letter of Representations dated October 24, 1997, from the Authority to DTC. Loan Agreement means that certain loan agreement, or similar type agreement, between the Authority and the Purchaser relating to the sale of the Bond. Second Advance means the second Advance, in the maximum principal amount of $33,986,866. Second Advance Period means the period beginning on the Interest Reset Date and ending on the date that is thirty (30) days thereafter. Purchaser means National Cooperative Services Corporation. Tenth Supplemental Resolution Page 3 4146-3513-2990.9 Transmission Project means the acquisition, improvement and development of the electric transmission line systems between the Bradley Junction and Soldotna Substation, the electric transmission line systems between the Soldotna Substation and the Sterling Substation, the electric transmission line systems between the Sterling Substation and the Quartz Creek Substation, and of battery energy storage systems, in each case including associated rights-of-way and permits, collectively approved by the Committee as Required Project Work. Variable Rate means the variable rate established by the Purchaser from time to time for loans similarly classified pursuant to the Purchaser’s policies and procedures then in effect. Section 103.Authority for this Resolution. This Tenth Supplemental Resolution is adopted pursuant to the provisions of the Act and the Resolution. ARTICLE II Authorization; Terms and Issuance Section 201.Authorization, Principal Amount, Interest Rate, Designation and Series. (A)In order to provide funds necessary for the purposes specified in Section 204 of the Resolution, in accordance with and subject to the terms, conditions and limitations established herein and in the Resolution, a Series of Power Revenue Bonds is hereby authorized to be issued in a maximum aggregate principal amount not to exceed $200,000,000. The Bond is being issued for the purpose of (1) financing a portion of the costs of the Transmission Project, (2) making a deposit to the Capital Reserve Fund, sufficient to satisfy the Capital Reserve Fund Requirement and (3) paying costs of issuance of the Bond. The Bond of such Series shall be designated and entitled “Power Revenue Bond, Eleventh Series (Bradley Lake Hydroelectric Project).” (B)The Bond shall be issued in the form of a draw down obligation to be funded in up to two Advances. The Bond will be issued and sold to the Purchaser as a single bond and will be dated as of the date hereof. The Initial Advance shall be drawn on the date hereof and shall be in the principal amount of $166,013,134. During the Initial Fixed Rate Term the Initial Advance shall bear interest at the Fixed Rate. Thereafter the Initial Advance shall bear interest at the Fixed Rate from time to time in effect for the Initial Advance for the applicable Fixed Rate Term or the Variable Rate, as provided in the Loan Agreement. Subject to the terms and conditions of the Loan Agreement, the Authority shall be permitted to request that the Purchaser advance the Second Advance in the principal amount not to exceed $33,986,866 during the Second Advance Period. The Second Advance shall bear interest at the Fixed Rate from time to time in effect for the Second Advance for the applicable Fixed Rate Term or the Variable Rate, as provided in the Loan Agreement. (C)The Authority hereby finds and determines that the establishment in the Resolution of the Capital Reserve Fund will enhance the marketability of the Bond. Section 202.Purposes; Construction Fund; Reserve Fund. (A)The purpose for which the Bond is being issued is to (1) finance costs and expenses of planning, designing, acquiring, and construction of the Transmission Project, (2) make a deposit to the Capital Reserve Fund, sufficient to satisfy the Capital Reserve Fund Requirement and (3) Tenth Supplemental Resolution Page 4 4146-3513-2990.9 pay costs of issuance of the Bond. The Authority is of the opinion and hereby determines that the Transmission Project is necessary to keep the Project in good and efficient operating condition, consistent with (1) sound economics for the Project and Purchasers (as defined in the Resolution) and (2) national standards for the industry. The Committee has, by resolution, deemed the Transmission Project as Required Project Work pursuant to the terms of the Power Sales Agreement. (B)There is hereby established within the Construction Fund the Eleventh Series Construction Account. The Trustee shall deposit proceeds of the Bond, in the amount of $153,716,038.03 into the Eleventh Series Construction Account and shall hold such proceeds for the payment of Costs of Acquisition and Construction of the Transmission Project in accordance with Section 503 of the Resolution; provided, however, that the Designated Representative may instruct the Trustee to hold a portion of such proceeds or such other amounts for payment of Costs of Issuance in an amount not to exceed $157,250.00, and the Trustee shall apply such proceeds or such other amounts to pay such costs as instructed by the Designated Representative. (C)There is hereby established within the Capital Reserve Fund the Eleventh Series Capital Reserve Account. The Trustee shall deposit proceeds of the Bond in the amount of $12,454,345.97 into the Eleventh Series Capital Reserve Account and shall hold such amounts in accordance with Section 508 of the Resolution. Section 203.Issue Date and Form; Book-Entry. (A)The Bond shall be dated as of the date of delivery of the Bond to the Purchaser. (B)The Bond shall be registered initially in the name of the Purchaser of the Bond, and shall be issued initially in the form of a single Bond. Registered ownership of the Bond, or any portions thereof, may not thereafter be transferred except as provided in paragraph (D) below. (C)The Authority confirms its appointment of the Trustee to serve as the Bond Registrar under the terms of the Resolution. (D)In the case of any transfer of ownership of the Bond, the Trustee shall, upon receipt of the Outstanding Bond, together with a written request of an Authorized Officer and a new Bond authenticate a single new Bond, registered in the name of a new person, entity or depository, or its nominee, as the case may be, all as specified in such written request. (E)If the Bond is subsequently held in book-entry form under this Section, the Authority and the Trustee may treat DTC (or its nominee) as the sole and exclusive registered owner of the Bond registered in its name for the purposes of payment of principal or Redemption Price of and interest on the Bond, selecting the portions thereof to be redeemed, giving any notice permitted or required to be given to Bondholders under the Resolution, registering the transfer of such Bond and obtaining any consent or other action to be taken by Bondholders and for all other purposes whatsoever, and neither the Authority nor the Trustee shall be affected by any notice to the contrary. Neither the Authority nor the Trustee shall have any responsibility or obligation to any DTC Participant, any person claiming a beneficial ownership interest in the Bond under or through DTC or any DTC Participant, or any other person not shown on the registration books of the Trustee as being a registered owner with respect to the accuracy of any records maintained by Tenth Supplemental Resolution Page 5 4146-3513-2990.9 DTC or any DTC Participant, the payment by DTC or any DTC Participant of any amount in respect of the principal or Redemption Price of or interest on the Bond, any notice which is permitted or required to be given to Bondholders under the Resolution, the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of the Bond, or any consent given or other action taken by DTC as Bondholder. The Trustee shall pay from monies available under the Resolution all principal and Redemption Price of and interest on Bond only to or upon the order of DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority’s obligations with respect to the principal or Redemption Price of and interest on the Bond to the extent of the sum or sums so paid. Section 204.Places and Manner of Payment. Payment of interest on the Bond will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee, or, upon the written request of a registered owner of at least $1,000,000 in principal amount of Bond received at least 15 days prior to an interest payment date, by wire transfer in immediately available funds to an account in the United States of America designated by such registered owner; principal of the Bond will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the Authority kept at the corporate trust office of the Trustee with the final installment of principal payable at the corporate trust office of the Trustee upon surrender of the Bond representing such principal. Both principal of and interest on the Bond are payable in any coin or currency of the United States of America which, on the respective dates of payment thereof, shall be legal tender for the payment of public and private debts. If the Bond shall subsequently be registered in the name of “Cede & Co.,” or its registered assigns, as nominee of DTC, payment of principal and interest thereon shall be made as provided in the Letter of Representations and the operational arrangements referred to therein as amended from time to time. Section 205.Maturities and Interest Rate. The Bond shall be issued in Authorized Denominations, shall mature on June 30, 2050, and shall bear interest as provided in Section 201(B) hereof, all as further determined by the Designated Representative pursuant to Section 301 and Section 303 hereof. Section 206.Numbers and Letters. Bond shall be numbered and lettered in such manner as the Designated Representative shall determine prior to delivery thereof. Section 207.Redemption. The Bond shall be subject to redemption (including redemption by application of sinking fund payments) as determined by the Designated Representative pursuant to Section 301 hereof. Section 208.No Redemption of Bond from Construction Fund Moneys. The Bond shall not be subject to redemption pursuant to subsection 503(8) of the Resolution. Tenth Supplemental Resolution Page 6 4146-3513-2990.9 ARTICLE III Sale and Delivery of Bond Section 301.Sale of Bond. (A)The Bond shall be sold at negotiated sale to the Purchaser pursuant to the terms of the Loan Agreement. The Designated Representative is hereby authorized to negotiate terms for the purchase of the Bond, review, approve and execute the Loan Agreement, with such terms as are approved by him or her pursuant to this Section and consistent with this Tenth Supplemental Resolution. The Authority’s financial advisor has advised the Authority that market conditions are fluctuating and, as a result, the most favorable market conditions may occur on a day other than a scheduled meeting date of the Authority. The Authority has determined that it would be in the best interest of the Authority to delegate to the Designated Representative for a limited time (not to exceed 90 days following the date of adoption of this Tenth Supplemental Resolution) the authority to approve the final interest rate or rates, interest payment dates, aggregate principal amount, terms of redemption and redemption rights and principal amounts of each principal installment/maturity date of the Bond, subject in all events to the terms herein stated. The Designated Representative is hereby authorized to approve the final interest rate or rates, interest payment dates, principal installment/maturity date(s), principal installments/maturities, terms of redemption and redemption rights for the Bond in the manner provided hereafter so long as the aggregate principal amount of the Bond does not exceed $200,000,000; provided, however, that notwithstanding the foregoing the Designated Representative is not authorized, empowered, or directed to execute or deliver the Loan Agreement until the Committee, or its designee for the Transmission Project, shall have approved the final terms of the Loan Agreement and shall have requested the Authority to execute and deliver the Loan Agreement. In determining the final interest rate or rates, interest payment date or dates, aggregate principal amount, principal installment/maturities dates, principal installments, terms of redemption and redemption rights, the Designated Representative, in consultation with Authority staff and the Authority’s financial advisor shall take into account those factors that, in his or her judgment, will result in the most favorable terms for the Bond, including, but not limited to current financial market conditions and current interest rates for obligations comparable in tenor and quality to the Bond. Subject to the terms and conditions set forth in this Section 301, the Designated Representative is hereby authorized to execute the final form of the Loan Agreement, upon the Designated Representative’s approval of the final interest rate or rates, interest payment dates, aggregate principal amount, principal installments/maturities, terms of redemption and redemption rights set forth therein. Such terms shall be set forth in Exhibit A to the Loan Agreement and an exhibit setting forth such final terms of the Bond shall be attached to this Tenth Supplemental Resolution as Exhibit A, and thereby incorporated into this Tenth Supplemental Resolution. The authority granted to the Designated Representative by this Section 301 shall expire 90 days after the date of approval of this Tenth Supplemental Resolution. If a Loan Agreement for the Bond has not been executed within 90 days after the date of final approval of this Tenth Supplemental Resolution, the authorization for the issuance of the Bond shall be rescinded, and the Bond shall not be issued nor their sale approved unless such Bond shall have been re-authorized by resolution of the Authority. The resolution re-authorizing the issuance and sale of such Bond may be in the Tenth Supplemental Resolution Page 7 4146-3513-2990.9 form of a new Supplemental Resolution repealing this Tenth Supplemental Resolution in whole or in part or may be in the form of an amendatory resolution approving a Loan Agreement or establishing terms and conditions for the authority delegated under this Section 301. (B)Upon the passage and approval of this Tenth Supplemental Resolution, each Designated Representative is authorized and directed to undertake all action necessary for the prompt execution and delivery of the Bond to the Purchaser and to execute the Loan Agreement and all closing certificates and documents required to effect the closing and delivery of the Bond in accordance with the terms of the Loan Agreement. Section 302.Delivery of Bond. The Chair, the Board member designee of the Chair, Executive Director, Chief Financial Officer and such other person or persons as may be designated by the Executive Director are specifically designated as Authorized Officers as defined in the Resolution, and they hereby are severally authorized, after execution of the Bond, to deliver the Bond to the Trustee for authentication under the Resolution and, upon authentication and upon receipt of the balance of the purchase price of the Bond, to deliver to the Trustee a written order in the name of the Authority directing the Trustee to deliver the Bond to or upon the order of the Purchaser and to receive the proceeds of sale of the Bond and give a written receipt therefor on behalf of the Authority, to apply said proceeds and the other moneys required to be transferred or deposited in accordance with the terms of the Resolution and this Tenth Supplemental Resolution and in such manner as is required to cause the conditions precedent to the issuance of the Bond to be complied with, and to do and perform or cause to be done and performed, for and on behalf of the Authority, all acts and things that constitute conditions precedent to the authentication and delivery of the Bond or that are otherwise required or convenient to be done and performed by or on behalf of the Authority prior to or simultaneously with the delivery of the Bond. Such Authorized Officers are hereby severally authorized for and on behalf of the Authority to do or cause to be done all acts and things required or desirable to be done by the Authority under and pursuant to the terms of the Resolution and in accordance with the terms and conditions of the Loan Agreement. Section 303.Other Matters. The Designated Representative are further authorized from time to time, without further action from the Board, to select the Fixed Rate Term applicable to each Advance, to submit the Advance Request to the Purchaser to issue the Second Advance in the amount determined by the Authorized Officer, to adjust the amortization of the Advances and to take such actions as are necessary or desirable to administer the in each case as provided in the Loan Agreement. ARTICLE IV Paying Agent Section 401.Appointment of Paving Agent. U.S. Bank Trust Company, National Association is appointed Paying Agent for the Bond pursuant to Section 902 of the Resolution. Tenth Supplemental Resolution Page A-1 4146-3513-2990.9 EXHIBIT A BOND TERMS 1. The purpose of the Advances is to finance capital costs of the Transmission Project, make a deposit to the Capital Reserve Fund and pay Note issuance costs. 2. The aggregate Commitment is $200,000,000.00. 3. The Closing Date referred to in Section 1.01 of the Loan Agreement is November 30, 2022, or on such other Business Day thereafter as may be agreed to by the Borrower and NCSC, so long as all the conditions set forth in Section 4.01 of the Loan Agreement have been fulfilled. 4. The Note executed pursuant to the Loan Agreement is as follows: LOAN NUMBER AMOUNT AK403-A-9003 $200,000,000.00 5. Amortization schedule for the Initial Advance during the Initial Fixed Rate Term: 3610 Collins Ferry Road, Morgantown, WV 26505 ● 1450 Queen Avenue SW, Albany, OR 97321 ● 626 Cochrans Mill Road, Pittsburgh, PA 15236 October 3, 2023 SENT VIA ELECTRONIC MAIL Curtis Thayer Alaska Energy Authority 813 W. Northern Lights Blvd. Anchorage, AL 99503 cthayer@akenergyauthority.org SUBJECT: Selection of Application for Negotiation under Topic Area 3 of Funding Opportunity Announcement Number DE-FOA-0002740, titled “BIL – Grid Resilience and Innovation Partnerships (GRIP)” Dear Curtis Thayer: We are pleased to provide this update on your application. The Grid Deployment Office within the Department of Energy (DOE) has completed its evaluation of your application submitted in response to the subject Funding Opportunity Announcement (FOA). The application below has been recommended by the Grid Deployment Office for negotiation of a financial assistance award: Application/Project Title: Railbelt Innovative Resiliency Project; Principal Investigator Name: Bryan Carey; Grants.GovTracking Number: GRANT13888581. Your application was conditionally selected. Selection is conditioned upon your organization’s agreement to propose, for DOE’s consideration, a project work scope that eliminates the 2 overhead AC transmission lines and prioritizes (first) underwater HVDC and (second, if feasible) one or both BESS at a federal funding amount of no greater than $206.5M. The non-federal cost share must be at least 50% of the total project costs, consistent with the statutory requirement. The conditions must be resolved to the satisfaction of the DOE. Receipt of this letter does not authorize you to commence with performance of the project. DOE makes no commitment to issue an award and assumes no financial obligation with the issuance of this letter. Applicants do not receive an award until award negotiations are complete and the Contracting Officer executes the funding agreement. Sincerely, Jacqulyn Wilson Contracting Officer Finance and Acquisition Center 2 cc: FOA File Bryan Carey, bcarey@akenergyauthority.org Corporate Office Central Peninsula Service Center 3977 Lake Street 280 Airport Way Homer, Alaska 99603-7680 Kenai, Alaska 99611-5280 Phone (907) 235-8551 Phone (907) 283-5831 FAX (907) 235-3313 FAX (907) 283-2353 November 9, 2023 The Honorable Michael Dunleavy Governor of Alaska Office of the Governor P.O. Box 110001 Juneau, AK 99811-0001 RE: GRIP Matching Funds Dear Governor Dunleavy: You challenged the Railbelt utilities to take bold steps to create a modern electric grid that drives sustainable economic development in the state and results in the cost-effective delivery of energy to the citizens of the Railbelt. The Alaska Energy Authority (AEA) and the Railbelt utilities through the Bradley Lake Project Management Committee (BPMC) secured a federal commitment of $206.5 million for Grid Resilience and Innovation Partnerships (GRIP) Topic Area 3: Grid Innovation through the United States Department of Energy (DOE) Grid Deployment Office (GDO).1 A cost share of 100 percent, or $206.5 million, is required for AEA to receive these funds from DOE guaranteeing that the $413 million Railbelt Innovative Resiliency (RIR) project is built in Alaska. AEA could enter into the grant agreement as early as Quarter 2 2024 using these funds to construct a High Voltage Direct Current (HVDC) submarine cable to serve as a parallel transmission route off the Kenai Peninsula and to purchase multiple battery energy storage systems (BESS). Governor, we responded to your challenge, and we now challenge you to join us in our efforts to bring a $413 million infrastructure project to fruition in Alaska. We request that you include $206.5 million, for matching funds, in your budget scheduled for release on December 15, 2023. Securing State funding for the matching funds ensures that we will be ready to start developing the RIR project in 2024 making significant progress during your last term as Governor — all without raising the cost of power for the 75 percent of Alaskans residing within the Railbelt. By including the matching funds of $206.5 million in your budget, we will be able to build a resilient, clean, smart, low-cost, and unconstrained electrical grid to support a fuel-diverse energy backbone necessary to safeguard Alaska’s energy security. As you know the existing electric grid does not support the free transfer of energy throughout the Railbelt. However, this project would make significant progress in building an electric grid that is not constrained by a limited electrical transmission system allowing energy to be produced at the lowest cost anywhere on the Railbelt and freely transferred to where it is needed. 1 Over 700 applications were submitted for Grip Topic Area 3 funds and Alaska was one of 58 applications awarded funding. Governor Dunleavy November 9, 2023 Page 2 You challenged us to collaborate and share energy resources to strengthen and build the Railbelt grid of the future that allows our members, our national defense infrastructure, and communities access to clean low-cost energy resources from any source on the Railbelt. This project is a critical foundational step in our joint effort to remove the existing technical constraints on the grid making that reality possible. In closing, we request you include the matching funds of $206.5 million to ensure these mission- critical initiatives are funded. We stand united with AEA in our request for incorporation of the $206.5 million in the State budget. We appreciate your leadership as we collaborate to pioneer the future Alaskan energy landscape. We look forward to partnering with your Administration to pursue these initiatives. Should you have any questions or concerns please feel free to contact me at your earliest opportunity. Sincerely, Brad Janorschke BPMC Chair cc: Curtis W. Thayer, Alaska Energy Authority John Burns, Golden Valley Electric Association Tony Izzo, Matanuska Electric Association Arthur Miller, Chugach Electric Association Rob Montgomery, City of Seward 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 MEMORANDUM State of Alaska Department of Law TO: FROM: Curtis Thayer Executive Director Alaska Energy Authority Stefan A. Saldanha Senior Assistant Attorney General Public Corporations and Governmental Affairs Section DATE: FILE NO.: TEL. NO.: SUBJECT: November 10, 2021 2021103317 (907) 269-6612 Bradley Lake Project - Whether the upgrade of the SQL meets the definition of “Required Project Work” CONFIDENTIAL COMMUNICATION The participants in the Bradley Lake hydroelectric facility (“Bradley Lake Project”) have requested the Department of Law to review whether a series of upgrades and equipment purchases can be considered required project work under the project agreement. The proposed work is outlined in a letter from the Bradley Project Management Committee (“BPMC”), dated August 20, 2021, and for the purpose of this memorandum will be considered to be agreed upon by all participants. The main agreement governing the Bradley Lake Project is the Power Sales Agreement (“PSA”). The BPMC has encouraged the Department of Law to break up the review of the list of requested upgrades and equipment purchases. This memorandum will be one of a series analyzing work requested by the participating utilities. In this memorandum, we review the upgrade of the Sterling to Quartz Creek transmission line (the line, “SQL” and the upgrade work, “SQL Upgrade”).1 This analysis is important for State financial reasons, because if found to be required project work as defined in the PSA (“Required Project Work”), future payments paid by the participating utilities to the State of Alaska under the PSA could be reduced by the costs of the work. 1 We have researched this question internally at the Department of Law, and reviewed historical documents concerning AEA and the Bradley Lake Project. However, we have not analyzed other aspects of this transaction, such as the political, financial, tax or accounting aspects. Curtis Thayer, Executive Director November 10, 2021 Re: Is the SQL Upgrade “Required Project Work”? Page 2 of 6 CONFIDENTIAL COMMUNICATION 1. Transmission Line Upgrade within the Bradley Lake Project Issue: Does the SQL Upgrade meet the requirements of the PSA to be considered Required Project Work? Short Answer: The SQL Upgrade should be considered Required Project Work under the PSA. Additional analysis required by the PSA should also be done by the relevant experts with respect to how the SQL Upgrade is consistent with sound economics and national standards in the industry. 2. Most recent DOL interpretation of Required Project Work The Department of Law most recently reviewed work on the Bradley Lake Project in May 2020.2 That transaction involved AEA’s purchase of the SQ Line and related assets and rights (“SQ Acquisition”) to improve transmission of Bradley Lake power. It was structured as a purchase by AEA for the Bradley Lake Project from Homer Electric Association. We found that the SQ Acquisition would constitute Required Project Work. The SQL Acquisition closed on December 17, 2020. It was financed through the issuance of $17 million in bonds by AEA that were purchased by AIDEA in a private placement transaction. Because this was Required Project Work, all debt service will be deductible against payments owed to the State during the term of the bonds (19 years). This will result in a reduction of approximately $23.9 million being paid to the State. Our memorandum and related analysis came to the following conclusions that do not need to be re-analyzed here. • Required Project Work appears to be a catch-all that combines several different types of projects, such as construction, equipment replacement or purchase of new equipment. • AEA has the statutory powers to carry out the transaction because the SQL Acquisition was considered an addition or improvement of the existing Bradley Lake Project. However, considering the potential impact to State government finances, it is something that should be made widely known such as by communication with the legislature. 2 The memorandum, dated May 20, 2020, reviews the PSA and historical project work in more detail than this memorandum in analyzing the prior transaction. Curtis Thayer, Executive Director November 10, 2021 Re: Is the SQL Upgrade “Required Project Work”? Page 3 of 6 CONFIDENTIAL COMMUNICATION • No other historical projects were similar to the SQL Acquisition, and other historical analysis did not shed much light on the interpretation that should be used for future projects. This is reasonable because due to the original construction bond termination, the State will help to fund Required Project Work going forward in accordance with the PSA. • With the approval of all Parties to the PSA, and studies or reports supporting the economics and industry standards, the SQL Acquisition can be seen as Required Project Work necessary to keep the Bradley Lake Project in good and efficient operating condition. 3. Can the SQL Upgrade be considered as Required Project Work? a. Description of SQL Upgrade The SQL Upgrade involves the replacement and upgrade of the current transmission line from Sterling to Quartz Creek on the Kenai Peninsula, a distance of approximately 39.3 miles. The SQL is part of the critical transmission path from Bradley Lake to ratepayers along the Railbelt.3 An upgrade of the line, which was built in the early 1990’s, is also important for grid stability and improvements. It will increase the line’s capacity, which is currently 115 kV. At the current capacity, there is a restriction on Bradley Lake power that may be transferred on the SQ Line. The Bradley Lake project is rated for 120 MW, but it rarely runs at this power level, because the transmission grid is not suitable. When it was first built in the early 1990’s, the electrical infrastructure in Southcentral Alaska was very different. This current medium-capacity line also incurs high line losses, which are estimated at 13,459 MWh per year, which can be valued at $672,950 per year. The upgrade would cost approximately $53.3 million, or a $1.4 million per mile. The high cost per mile is because it goes through a national wildlife refuge, is partially in an aquatic environment and is remote and subject to harsh Alaska weather. This would upgrade the line to 230kV, which with other upgrades to the grid would allow more utilization of Bradley Lake power. For example, Bradley Lake could be better used as a peaking electrical generator, displacing at times natural gas turbines and perhaps even lowering greenhouse gas emissions and costs. Line losses are estimated to be significantly reduced to 2,315 MWh per year, resulting in an approximate savings of $557,000 per year. 3 The current importance of SQL to the Bradley Lake Project was outlined in the previous DOL memorandum, dated May 20, 2020. Curtis Thayer, Executive Director November 10, 2021 Re: Is the SQL Upgrade “Required Project Work”? Page 4 of 6 CONFIDENTIAL COMMUNICATION The overall time period for design and construction of a new line is expected to be 6-7 years. This breaks down to about 3-4 years in design and permitting, and 2-3 years of construction, which must be carefully planned due to weather and seasonal requirements of the Kenai National Wildlife Refuge. This large implementation project would require specialist staff, equipment and materials to be brought in from the lower 48. The newer higher capacity line will run along the existing easement, and would completely replace the existing transmission line. These works would be overseen by the BPMC, and planning, design and construction and other rights and obligations would be done in accordance with the Bradley Lake agreements. The corresponding bond issuances are estimated at approximately $53.3 million for this project. The financing structure has not been determined yet, but could include multiple issuances of both short- and long-term financing. It may involve multiple tranches of AEA bonds on behalf of the Bradley Lake Project, which cost to the utilities (and ratepayers) is defrayed by the State of Alaska as part of the PSA. b. Statutory analysis AEA has broad statutory authority with respect to the Bradley Lake Project and in particular to comply with the terms of the PSA. However, AEA is no longer allowed to construct or acquire new power projects, such as hydroelectric facilities or interties, without legislative approval.4 AEA also has the power to “improve, equip, operate and maintain power projects”, such as the Bradley Lake Project, which project has been approved by the legislature.5 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.6 Because this project will improve and maintain the assets of the Bradley Lake Project, the Department of Law concludes that the SQL Upgrade is within AEA’s statutory powers. c. Contractual language analysis 4 SLA 1993, ch. 18, Sec. 10. 5 AS 44.83.080(5). 6 AS 44.84.080(11). Curtis Thayer, Executive Director November 10, 2021 Re: Is the SQL Upgrade “Required Project Work”? Page 5 of 6 CONFIDENTIAL COMMUNICATION As mentioned, the Required Project Work definition in the PSA combines several types of projects: “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.7 As outlined above, the SQL Upgrade can be described as a renewal, replacement, improvement or betterment of the Bradley Lake Project. It should be considered as Required Project Work as defined in the PSA. The utilities are confident that the SQL Upgrade is consistent with sound economics and will meet national standards for the industry. To that end, the utilities plan to perform a formal economic analysis and have a consultant opine on the consistency of the SQL Upgrade with national standards for the industry. This was also done prior to the SQL Acquisition. Finally, the BPMC must approve any alternative methods of carrying out and funding Required Project Work, inherently protecting all participants’ rights. There may be alternative methods of carrying out and funding this project, so the BPMC may also review these specific alternatives prior to the agreement on the SQL Upgrade. d. Comparison with previous project works An earlier project replacing transmission equipment is most similar to the SQL Upgrade. As part of the Bradley Lake Project in 1993, AEA installed two static VAR compensation systems (SVCs), which control line voltages, to improve the transmission of Bradley Lake power. They are located in substations in Soldotna and Dave’s Creek on the Kenai Peninsula. Both substations are along the transmission path of Bradley Lake power. On April 21, 2016, as the original SVCs were nearing the end of their life, the BPMC decided to replace them with a full system upgrade. The approximate cost of this work was $7.2 million with a service life of at least 20 years. AEA determined that the SVC replacement was Required Project Work in accordance with the PSA. 7 Section 1(hh), p.7, PSA. Curtis Thayer, Executive Director November 10, 2021 Re: Is the SQL Upgrade “Required Project Work”? Page 6 of 6 CONFIDENTIAL COMMUNICATION There are several similarities between these two upgrade projects. Besides being related to power transmission, both are replacement and improvement projects to equipment that was already part of the Bradley Lake Project. It is clear that the SQL is critical for transmission of Bradley Lake power to the Railbelt. In terms of location, both the SVCs and the SQL Project are located similarly on the transmission path of Bradley Lake power. In summary, the SQL Upgrade would not be a completely unique transaction for the Bradley Lake Project, and a similar project was thought to be Required Project Work. 4. Conclusion The SQL Upgrade should be considered Required Project Work under the PSA as a replacement and improvement work for the Bradley Lake Project. With the approval of all Parties to the PSA, and opinions supporting the economics and compliance with industry standards, the SQL Upgrade can be seen as necessary to keep the Bradley Lake Project in good and efficient operating condition. MEMORANDUM State of Alaska Department of Law TO: FROM: Curtis Thayer Executive Director Alaska Energy Authority Stefan A. Saldanha Senior Assistant Attorney General Public Corporations and Governmental Affairs Section DATE: FILE NO.: TEL. NO.: SUBJECT: January 24, 2022 2021103317 (907) 269-6612 Bradley Lake Project - Whether the long-term repair and replacement program meets the definition of “Required Project Work” CONFIDENTIAL COMMUNICATION The participants in the Bradley Lake hydroelectric facility (“Bradley Lake Project”) have requested the Department of Law to review whether a series of upgrades and equipment purchases can be considered required project work under the project agreement. The proposed work is outlined in a letter from the Bradley Project Management Committee (“BPMC”), dated August 20, 2021, and for the purpose of this memorandum will be considered to be agreed upon by all participants. The main agreement governing the Bradley Lake Project is the Power Sales Agreement (“PSA”). The BPMC has encouraged the Department of Law to break up the review of the list of requested upgrades and equipment purchases. In this memorandum, we review the long-term repair and replacement of infrastructure and equipment at the Bradley Lake Project as outlined in a detailed report by D. Hittle & Associates, Inc., dated December 7, 2021 (“engineer’s report”).1 This analysis may have an important fiscal impact to the State, because if found to be required project work as defined in the PSA (“Required Project Work”), future payments paid by the participating utilities to the State of Alaska under the PSA could be reduced or eliminated. 1 We have researched this question internally at the Department of Law, and reviewed historical documents concerning AEA and the Bradley Lake Project. However, we have not analyzed other aspects of this transaction, such as the political, financial, tax or accounting aspects. Curtis Thayer, Executive Director January 24, 2022 Re: Is long-term repair and replacement “Required Project Work”? Page 2 of 6 CONFIDENTIAL COMMUNICATION 1. Long-term repair and replacement within the Bradley Lake Project Issue: Is the long-term repair and replacement program as outlined in the engineer’s report Required Project Work? Short Answer: The long-term repair and replacement program as outlined in the engineer’s report should be considered Required Project Work under the PSA. 2. Recent DOL interpretations of Required Project Work The Department of Law most recently reviewed work on the Bradley Lake Project in 2020 and 2021.2 Those transactions involved the purchase (“SQ Acquisition”) and upgrade (“SQ Upgrade”) of the transmission lines in the Soldotna to Quartz Creek area and related assets and rights, which improve transmission of Bradley Lake power. We found that the SQ Acquisition and Upgrade would constitute Required Project Work. The SQL Acquisition closed on December 17, 2020. It was financed through the issuance of $17 million in bonds by AEA that were purchased by AIDEA in a private placement transaction. Because this was Required Project Work, all debt service will be deductible against payments owed to the State during the term of the bonds. This will result in a reduction of approximately $23.9 million being paid to the State. The SQL Upgrade has been approved by the BPMC, but financing is still under discussion. It will take some time to determine the design, procure services and equipment, and carry out the eventual construction. The cost estimate for the SQ Upgrade is $53 million. Our memoranda and related analysis came to the following conclusions that do not need to be re-analyzed here. Required Project Work in the PSA appears to be a catch-all that combines several different types of projects, such as construction, infrastructure upgrade or replacement or purchase of new equipment and related rights. AEA has the statutory powers to carry out such work because they were considered an addition or improvement of the existing Bradley Lake Project. However, considering the potential impact to State government 2 The memorandum, dated November 10, 2021, reviews the PSA and historical project work in more detail than this memorandum. Curtis Thayer, Executive Director January 24, 2022 Re: Is long-term repair and replacement “Required Project Work”? Page 3 of 6 CONFIDENTIAL COMMUNICATION finances, it is something that should be made publically known, such as by communication with the legislature. With the approval of all Parties to the PSA, and studies or reports supporting the economics and industry standards, the works could be seen as Required Project Work necessary to keep the Bradley Lake Project in good and efficient operating condition. 3. Can the long-term repair and replacement outlined in the engineer’s report be considered as Required Project Work? a. Description of the long-term repair and replacement program - engineer’s report On a regular basis, the long-term repair and replacement costs at the Bradley Lake Project are estimated by a specialty engineering firm, D. Hittle & Associates, Inc. The report contains inspection notes, recommendations and projected expenditures. Except for the transmission lines, it reviews all of the infrastructure and equipment comprising the Bradley Lake Project. The infrastructure inspected includes the powerhouse, living quarters, dams, roads, bridges, and airport. Systems and equipment inspected include the electrical, water and sewage systems, boats, trucks, heavy machinery and snow machines. The latest report is dated December 7, 2021, and estimates approximately $64.1 million in repair and replacement costs for a period from 2022 to 2056, or an average annual cost of about $1.7 million. The report provides extensive guidance. A noteworthy comment in the report is: Another significant issue for the [Bradley Lake Project] is the obsolescence of certain components and equipment. In particular, control systems over the years have transitioned from mechanical relays and manual switches to digital controls. The systems at [Bradley Lake Project] have generally been upgraded over time, however, some components are in need of replacement since parts are no longer readily available.3 Of particular interest for this memo, it notes that “[t]he [Bradley Lake Project] is of an age when small things need attention” and “as the [Bradley Lake Project] ages these small things will become bigger problems and increase the level of maintenance 3 Estimated Long-Term Repair and Replacement Costs, D. Hittle & Associates, Inc., Dec. 7, 2021, at page 3. Curtis Thayer, Executive Director January 24, 2022 Re: Is long-term repair and replacement “Required Project Work”? Page 4 of 6 CONFIDENTIAL COMMUNICATION required to maintain a first-class facility or allow for conditions to deteriorate to the point that major capital replacements will be required that could have been deferred.”4 Historically, these on-going capital costs have been paid for by the utilities with annual contributions to the budget and without financing through an AEA bond issuance. However, because the utilities are planning several other projects requiring bond financing, these costs could now be included in a new AEA bond issuance. These repair and replacement works would likely be overseen by the BPMC with direct supervision by Homer Electric Association, who contracts with AEA to operate and maintain the Bradley Lake Project. b. Statutory analysis AEA has broad statutory authority with respect to the Bradley Lake Project and in particular to comply with the terms of the PSA. However, AEA is no longer allowed to develop, construct or acquire new power projects, such as hydroelectric facilities or interties, without legislative approval.5 AEA does have the power to “improve, equip, operate and maintain power projects”, such as the Bradley Lake Project, which project has been approved by the legislature.6 Because this work will repair, replace and/or maintain the assets of the Bradley Lake Project, the Department of Law concludes that this work is within AEA’s statutory powers. c. Contractual language analysis As mentioned, the Required Project Work definition in the PSA combines several types of projects: “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, 4 Id. at page 4. 5 SLA 1993, ch. 18, Sec. 10. 6 AS 44.83.080(5). Curtis Thayer, Executive Director January 24, 2022 Re: Is long-term repair and replacement “Required Project Work”? Page 5 of 6 CONFIDENTIAL COMMUNICATION consistent with (1) sound economics for the Project and the Purchasers, and (2) national standards for the industry.7 The repair and replacement program in the engineer’s report should clearly be considered required project work. The engineer’s report also provides support for the work to be considered “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.” Even though this repair and replacement program has not been considered Required Project Work in the past, there is no indication in the PSA that this change in financing of this program should have any impact on its status as Required Project Work. Section 24 (Waiver Not Continuing) of the PSA is helpful in that “[a]ny waiver at any time by either party … shall not be considered a waiver with respect to any subsequent default, right or matter.” Finally, the BPMC must approve any alternative methods of carrying out and funding Required Project Work, inherently protecting all participants’ rights. There may be alternative methods of carrying out and funding this work, so the BPMC may also review these specific alternatives prior to the agreement. d. Comparison with previous project works An earlier project replacing transmission equipment is most similar to this long- term repair and replacement work. As part of the Bradley Lake Project in 1993, AEA installed two static VAR compensation systems (SVCs), which control line voltages, to improve the transmission of Bradley Lake power. They are located in substations in Soldotna and Dave’s Creek on the Kenai Peninsula. Both substations are along the transmission path of Bradley Lake power. On April 21, 2016, as the original SVCs were nearing the end of their life, the BPMC decided to replace them with a full system upgrade. The approximate cost of this work was $7.2 million with a service life of at least 20 years. AEA determined that the SVC replacement was Required Project Work in accordance with the PSA. There are several similarities between these two projects. Both involve replacement and improvement work to equipment that was already part of the Bradley Lake Project. The items to be repaired or replaced in the engineer’s report are important or even critical for the operation of the Bradley Lake Project. 7 Section 1(hh), p.7, PSA. Curtis Thayer, Executive Director January 24, 2022 Re: Is long-term repair and replacement “Required Project Work”? Page 6 of 6 CONFIDENTIAL COMMUNICATION In summary, the long-term repair and replacement work would not be a completely unique transaction for the Bradley Lake Project, and the similar project of SVC replacement was also thought to be Required Project Work. 4. Conclusion The long-term repair and replacement work as outlined in the engineer’s report should be considered Required Project Work under the PSA. With the approval of all parties to the PSA, the long-term repair and replacement work can be seen as necessary to keep the Bradley Lake Project in good and efficient operating condition. MEMORANDUM State of Alaska Department of Law TO: FROM: Curtis Thayer Executive Director Alaska Energy Authority Stefan A. Saldanha Senior Assistant Attorney General Public Corporations and Governmental Affairs Section DATE: FILE NO.: TEL. NO.: SUBJECT: April 27, 2022 2021103317 (907) 269-6612 Bradley Lake Project - Whether the purchase of battery systems meets the definition of “Required Project Work” CONFIDENTIAL COMMUNICATION The participants in the Bradley Lake hydroelectric facility (“Bradley Lake Project”) have requested the Department of Law to review whether a series of infrastructure upgrades and equipment purchases can be considered required project work under the governing agreement. In this memorandum, we review the purchase of battery energy storage systems (“BESS”).1 This analysis is important for State financial reasons, because if found to be required project work (“Required Project Work”) as defined in the Power Sales Agreement (“PSA”), future payments paid by the participating utilities to the State of Alaska under the PSA could be reduced or eliminated by the costs related to such development. However, since we have already approved as Required Project Work sufficient developments to expend all payments due to the State, there is also the question of prioritization and financing of Required Project Work and AEA’s involvement. 1. Purchase of BESS by the Bradley Lake Project Question A: Does the purchase of BESS meet the requirements of the PSA to be considered Required Project Work? 1 We have researched this question internally at the Department of Law, and reviewed historical documents concerning AEA and the Bradley Lake Project. However, we have not analyzed other aspects of this transaction, such as the political, financial, tax or accounting aspects. Curtis Thayer, Executive Director April 27, 2022 Re: Is the BESS purchase “Required Project Work”? Page 2 of 11 CONFIDENTIAL COMMUNICATION Short Answer A: The purchase of BESS should be considered Required Project Work under the PSA. Additional analysis required by the PSA should also be done by the relevant experts with respect to how this purchase is consistent with sound economics and national standards in the industry. Question B: What are AEA’s rights with respect to prioritization or other determinations about Required Project Work? Short Answer B: It should be noted that AEA has considerable rights under the PSA and the BPMC bylaws to determine the necessity, scheduling and the approaches to financing of Required Project Work. To the extent that AEA has preferences, AEA is able to make these known at the BPMC and may exert control over certain approval issues. 2. Most recent DOL interpretations of Required Project Work The BPMC has recommended the following proposed developments and asked the Department of Law whether they constitute Required Project Work under the PSA: 1. The purchase of certain transmission line assets, including the Sterling to Quartz Creek (“SQ line”) from HEA; 2. The upgrade of the SQ line; 3. The long-term (34 years) repair and replacement program at the Bradley Lake Project; and 4. The upgrade of the Bradley Junction to Soldotna transmission line (“BJS line”). The Department of Law, in memoranda dated May 19, 2020, November 10, 2021, January 24, 2022, and March 7, 2022 concluded that AEA had the legal authority to carry out these four developments, and that they were authorized under the PSA’s Required Project Work provision. Our memoranda and related analysis came to the following conclusions that do not need to be re-analyzed here. Required Project Work appears to be a catch-all that combines several different types of projects, such as construction, maintenance, repair or purchase of new equipment whether to improve operations or to replace existing equipment. Curtis Thayer, Executive Director April 27, 2022 Re: Is the BESS purchase “Required Project Work”? Page 3 of 11 CONFIDENTIAL COMMUNICATION AEA has the statutory powers to carry out transactions considered a replacement, repair or improvement of assets related to the Bradley Lake Project. Historically, the Bradley Lake Project has not carried out many large replacement or improvement developments, which make comparisons difficult. These upcoming developments are breaking new ground under the PSA. With the approval of all Parties to the PSA, and studies or reports supporting the economics and industry standards, large replacements and improvements to the Bradley Lake Project can be seen as Required Project Work necessary to keep it in good and efficient operating condition. The payments to the State under the PSA can be reduced or eliminated by annual debt service for Reduced Project Work. The location of the developments is not required to be within the historical boundaries as outlined in the PSA, so long as the development can be substantially linked to the Bradley Lake Project. 3. Can the BESS purchase be considered as Required Project Work? a. Description of BESS The utilities are now suggesting the purchase by the Bradley Lake Project of BESS. The ask is for three systems, estimated at a cost of $115-145 million: 1. The HEA BESS, operating in Soldotna since January 19, 2022, and valued at $45 million, with financing from commercial lenders; 2. The Anchorage BESS, estimated to cost $60 million, and the procurement process has been started; and 3. A replacement or significant upgrade to Golden Valley Electric’s (GVEA) existing BESS, estimated to cost between $10-40 million. Curtis Thayer, Executive Director April 27, 2022 Re: Is the BESS purchase “Required Project Work”? Page 4 of 11 CONFIDENTIAL COMMUNICATION BESS have many uses. GVEA on its website focuses on the impact of its battery on power outages.2 In 2019, 49 outages were prevented.3 HEA also features its battery on its website.4 It focuses on the benefits of renewable energy integration and lowered greenhouse gas emissions during outages due to use of batteries, instead of firing up a diesel or natural gas-powered generator. Neither of the pages mention that the batteries could have uses with respect to the Bradley Lake Project. While BESS have the uses as outlined above, the link to the Bradley Lake Project is highly technical. The utilities received a new power engineer’s report showing that the BESS will improve power oscillations that may be caused and/or exacerbated by the Bradley Lake Project. Such oscillations could cause damage to the power grid and the Bradley Lake powerhouse in a severe case. According to the utilities, as the Railbelt grid has evolved, these oscillations have increased in recent years. The report has been prepared by Electric Power Systems, Inc., based in Anchorage, and it is entitled Railbelt Oscillation Investigation and Mitigation Study, which is dated February 21, 2022 (“Engineer’s Report”). The Engineer’s Report analyzes historical data, in particular, data recorded during and after a sudden, large outage on June 3, 2021, and makes conclusions on whether the damaging oscillations were caused by the Bradley Lake Project and what might cause, dampen or resolve the oscillations when they might re-occur. The Engineer’s Report analyzes the potential mitigation effects of the existing HEA battery, the Soldotna BESS, on the oscillations related to the Bradley Lake Project. It concludes the existing HEA battery to be sufficient to mitigate the impacts of the oscillations. The addition of either the HVDC line or Soldotna BESS can provides (sp) a beneficial impact on the transient response of the system. In the base case without the HVDC line and the Soldotna BESS, the transient response of the system is unstable. In the subsequent cases where either the HVDC line, the Soldotna BESS, or both components are in-service, the transient response of the system is stable.5 2 See https://gvea.com/battery-system/. 3 Id. 4 See https://www.homerelectric.com/my-cooperative/power-generation/battery- energy-storage-system-has-arrived/ 5 Engineer’s Report, p.18. Curtis Thayer, Executive Director April 27, 2022 Re: Is the BESS purchase “Required Project Work”? Page 5 of 11 CONFIDENTIAL COMMUNICATION The report also mentions that an Anchorage-located BESS would also be helpful to mitigate the damaging oscillations. We also note that the control of over frequency on the Kenai could be accomplished with the proposed Anchorage area BESS for loss of the Anchorage – Fairbanks intertie and some contingencies may require the combined capability of both BESS systems. For system reliability and performance, both BESS locations should be used to ensure adequate capability to prevent the severe oscillations. For the purposes of this study, references to the Soldotna BESS should also include the understanding that the Anchorage area BESS is also part of the proposed solution.6 However, nowhere in this report is the current or future upgrade to the GVEA BESS mentioned. When this point was raised by AEA, the utilities received a new report from their engineer. This addendum report is entitled, “Addendum to the Railbelt Oscillation Investigation and Mitigation Study” and dated March 28, 2022 (“Addendum”).7 It focuses on the value of an upgraded GVEA BESS. It uses a hypothetical situation, where a very large load such as a mining operation in the GVEA service territory is suddenly disconnected from the grid. This would likely cause large damaging oscillations, but with batteries at Soldotna and Fairbanks, so long as properly optimized for this purpose, the grid and the Bradley Lake Project could be protected from the damaging oscillations. The Addendum concludes: The additional of (sp) BESSs in Fairbanks and in Anchorage and/or the Kenai can stabilize the system and reduce the risk of the Bradley Lake plant going out of step. However, the BESSs logic must be revised such that each BESS resource contributes during the over- frequency condition and helps stabilize the overall Railbelt response.8 The BPMC recognizes the responsibility of the Bradley Lake Project for these oscillation incidents and to maintain operations in good repair. The Bradley Lake Project can be seen as responsible for correcting the instability issue on the Railbelt System caused or exacerbated by its facilities in the most economical manner and in accordance with prudent utility practice. Re-working the Bradley Lake powerhouse is not as 6 Id., p.12. 7 Note that the Addendum was received by email on April 8, 2022. 8 Addendum, p.1. Curtis Thayer, Executive Director April 27, 2022 Re: Is the BESS purchase “Required Project Work”? Page 6 of 11 CONFIDENTIAL COMMUNICATION economically reasonable or practical as purchasing BESS, primarily because of the high cost of shutting down power generation. The purchase of the existing BESS in Soldotna, the installation of one in Southcentral Alaska, and the upgrade or replacement of one in the Interior, appears to be necessary to keep the Bradley Lake Project in good and efficient operating condition and is supported by the Engineer’s Report and the Addendum. The corresponding bond issuances are estimated at approximately $115-145 million for the BESS purchase. The financing structure has not been determined yet. The financing needs for the battery development is likely to be combined with the other development work in process. It is likely that AEA issues one series of long-term bonds in the amount of $200-300 million in the near future to take advantage of the current interest rates. These AEA bonds issued on behalf of the Bradley Lake Project should be cost effective, taking advantage of lower costs of a government issuer, the cost shifting allowed under the PSA, i.e. no repayment to the State since it is Required Project Work, and perhaps other federal subsidies and programs designed to incentivize new energy projects. b. Statutory analysis AEA has broad statutory authority with respect to the Bradley Lake Project and in particular to comply with the terms of the PSA. However, AEA is no longer allowed to construct or acquire new power projects, such as hydroelectric facilities or interties, without legislative approval.9 AEA also has the power to “improve, equip, operate and maintain power projects,” such as the Bradley Lake Project, which has been approved by the legislature.10 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.11 Statutory changes in 1993 eliminated AEA’s power to construct and acquire new power projects, and AEA’s ongoing powers were strictly limited to the Energy Program for Alaska, namely Bradley Lake Project and the Alaska Intertie.12 When a BESS is not used for the Bradley Lake Project, this could be considered an unauthorized power 9 SLA 1993, ch. 18, Sec. 10. 10 AS 44.83.080(5). 11 AS 44.84.080(11). 12 Chap. 18 SLA 1993. Specifically, the words “construct, acquire, construction, acquisition” were deleted, and new power projects were made subject to legislative approval. Curtis Thayer, Executive Director April 27, 2022 Re: Is the BESS purchase “Required Project Work”? Page 7 of 11 CONFIDENTIAL COMMUNICATION project. In such characterization, AEA would not have the powers to acquire or manage it, except with legislative approval. There is little evidence to support this argument. The Engineer’s report and Addendum supports the linkage of the BESS to the Bradley Lake Project using historical data and simulations. The utilities are in favor of managing the BESS for the Bradley Lake Project. It is uncertain how it will be managed among the utilities, other than such use and management will be beneficial to ratepayers and the public in general and will support AEA’s statutory purpose. Note, however, that it is unlikely that AEA, as potential owner of the BESS, will be paid directly by utilities for non-Project uses of the BESS, such as for outage management. This is not in itself a problem for AEA. It is also permitted to “to make grants or loans to any person and enter into contracts or other transactions regarding the grants or loans.”13 So AEA can grant use of the BESS to the participating utilities when not used by the Bradley Lake Project. Based primarily on the Engineer’s Report and Addendum, the Department of Law concludes that the purchase of BESS for the Bradley Lake Project is within AEA’s statutory powers. c. Contractual language analysis As mentioned, the Required Project Work definition in the PSA combines several types of projects: “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.14 As explained by the Engineer’s Report and Addendum, the purchase of BESS can be described as an improvement or betterment of the Bradley Lake Project. It should be considered as Required Project Work as defined in the PSA. 13 AS 44.83.080(16). 14 Section 1(hh), p.7, PSA. Curtis Thayer, Executive Director April 27, 2022 Re: Is the BESS purchase “Required Project Work”? Page 8 of 11 CONFIDENTIAL COMMUNICATION The utilities are confident that the BESS purchase is consistent with sound economics and will meet national standards for the industry. To that end a formal economic analysis will be carried out, and a consultant or engineer will opine on the consistency of the BESS purchase with national standards for the industry. This is also being done prior to the other developments deemed Required Project Work. Finally, the BPMC must approve any alternative methods of carrying out and funding Required Project Work, inherently protecting all participants’ rights. There may be alternative methods of carrying out and funding this purchase, so the BPMC may also review these specific alternatives. d. Comparison with previous project works There are two earlier developments that the BESS purchase can be compared to, the 2016 decision to replace the static VAR compensation systems (SVCs) and the 2020 decision to purchase the SQ line and other transmission assets and rights. In summary, the purchase of the BESS would not be a completely unique transaction for the Bradley Lake Project, and similar projects were thought to be Required Project Work. i. SVCs As part of the Bradley Lake Project in 1993, AEA installed two static VAR compensation systems (SVCs), which control line voltages, to improve the transmission of Bradley Lake power. They are located in utility-owned substations in Soldotna and Dave’s Creek on the Kenai Peninsula. Both substations are along the transmission path of Bradley Lake power. On April 21, 2016, as the original SVCs were nearing the end of their life, the BPMC decided to replace them with a full system upgrade. The approximate cost of this work was $7.2 million with a service life of at least 20 years. AEA determined that the SVC replacement was Required Project Work in accordance with the PSA. However, for financial reasons, this expenditure was not financed using AEA bonding, and so did not impact payments to the State under the PSA. There are several similarities with the purchase of BESS. Both are large technical equipment related to the power transmission of the Bradley Lake Project. Both are improvement projects to equipment benefitting the Bradley Lake Project. In terms of location, both the SVCs and BESS are located similarly on the transmission path of Bradley Lake power, and somewhat distant to the core part of the Bradley Lake Project, Curtis Thayer, Executive Director April 27, 2022 Re: Is the BESS purchase “Required Project Work”? Page 9 of 11 CONFIDENTIAL COMMUNICATION comprising the powerhouse, the dam and the lake. In fact, one of the BESS and SVC are located in Soldotna. The main difference is that the original SVC equipment was part of the Bradley Lake Project from the start, and SVCs can be thought of as early stage batteries with respect to managing power transmission. A BESS is fairly new technology, and BESS were not available at the start of the Bradley Lake Project in the early 1990’s. ii. SQ Line Acquisition In 2020, the BPMC approved the purchase of certain assets (“SQL acquisition”) for $17 million: the SQ line; transmission capacity from Soldotna to Sterling, and other agreements between the parties. The Department of Law, in a May 19, 2020 memorandum, concluded that AEA had the legal authority to acquire the SQ line and related assets, concluding that the transaction was authorized under the PSA contract’s Required Project Work provision in order to improve delivery of power from the Bradley Lake Project. It was also concluded that AEA had the statutory authority to acquire the transmission line as an improvement to the Bradley Lake Project under AS 44.83.080(5) which grants AEA the authority “to improve, equip, operate, and maintain power projects.”15 There are several similarities with the purchase of BESS. Both are large infrastructure related to the power transmission of the Bradley Lake Project. Both are acquisition projects of infrastructure, benefitting the Bradley Lake Project as shown by expert opinions and the utilities. In terms of location, both the SQ line and BESS are located similarly on the transmission path of Bradley Lake power, and somewhat distant to the core part of the Bradley Lake Project. The main difference is that the SQ acquisition is for traditional transmission assets wholly dedicated to the Bradley Lake Project and was important to transmission of project power from the start. As mentioned, BESS is fairly new technology, which was not contemplated at the start of the Bradley Lake Project, but now can be shown to be important to its efficiency. 15 There were also two technical opinions received approving the acquisition: O&D (Operations and Dispatch) Subcommittee of the BPMC, comprising engineers from the participating utilities, and an independent consultant, EES Consulting, approved the SQL acquisition with respect to compliance with national standards in the industry and declaring it sound economically. Curtis Thayer, Executive Director April 27, 2022 Re: Is the BESS purchase “Required Project Work”? Page 10 of 11 CONFIDENTIAL COMMUNICATION 4. AEA’s Role in Required Project Work The utilities have been busy planning to spend monies made available under the PSA. Once financed by AEA as Required Project Work, the costs of these developments will be subsidized because they will reduce payments to the State due under the PSA. However, there is a limit to the subsidy provided by the State to roughly $12.45 million in debt service per year. To the extent that financing costs exceed this amount, a prioritization of developments is likely to occur to reduce cost and minimize any out of pocket amounts needed. The PSA provides AEA with considerable rights to carry out and finance Required Project Work.16 Additionally, the BPMC Bylaws require AEA approval, along with a majority of utility interest, to determine the scheduling and financing of such work.17 The BPMC bylaws state the following: 5.10.5 The following matters shall require the affirmative vote of at least four representatives of the Purchasers whose percentage shares of Project capacity are greater than 51% plus the affirmative vote of the representative of the Authority. … (e) Evaluation of necessity for and scheduling of Required Project Work. … (f) Selection among alternative methods that involve the Authority for funding Required Project Work. (emphasis added). 5. Conclusion The BESS purchase should be considered Required Project Work under the PSA as an improvement work for the Bradley Lake Project. AEA has certain rights under the PSA and bylaws to determine necessity, scheduling and financing for Required Project 16 PSA, Sec. 4(c), p.9. 17 Bylaws of BPMC, p.4, section 5.10.5(e), (h). Curtis Thayer, Executive Director April 27, 2022 Re: Is the BESS purchase “Required Project Work”? Page 11 of 11 CONFIDENTIAL COMMUNICATION Work, which AEA could use to help determine a priority of developments should financing be constrained. With the approval of all Parties to the PSA, and opinions supporting the economics and compliance with industry standards, the purchase of BESS can be seen as necessary to keep the Bradley Lake Project in good and efficient operating condition. MEMORANDUM State of Alaska Department of Law TO: FROM: Curtis Thayer Executive Director Alaska Energy Authority Stefan A. Saldanha Senior Assistant Attorney General Public Corporations and Governmental Affairs Section DATE: FILE NO.: TEL. NO.: SUBJECT: May 19, 2022 2021103317 (907) 269-6612 Bradley Lake Project - Whether the upgrade of the SS Line meets the definition of “Required Project Work” CONFIDENTIAL—DOCUMENT The participants in the Bradley Lake hydroelectric facility (“Bradley Lake Project”) have requested the Department of Law to review whether a series of proposed developments can be considered required project work under the Power Sales Agreement (“PSA”). For the purpose of this memorandum, we will consider these proposed developments to be agreed upon by all participants. In this memorandum, we review the upgrade of the Soldotna to Sterling transmission line, whether as a new line or the replacement of the existing line (the line, “SS line” and the upgrade or replacement work, “SS Upgrade”).1 This analysis is important for State financial reasons, because if found to be required project work as defined in the PSA (“Required Project Work”), future payments paid by the participating utilities to the State of Alaska under the PSA could be reduced by the debt service payments related to the work. 1. Transmission Line Upgrade within the Bradley Lake Project Issue: Does the SS Upgrade meet the requirements of the PSA to be considered Required Project Work? 1 We have researched this question internally at the Department of Law, and reviewed historical documents concerning AEA and the Bradley Lake Project. However, we have not analyzed other aspects of this transaction, such as the political, financial, tax or accounting aspects. Curtis Thayer, Executive Director May 19, 2022 Re: Is the SS Upgrade Required Project Work? Page 2 of 5 CONFIDENTIAL - DOCUMENT Short Answer: The SS Upgrade should be considered Required Project Work under the PSA. Additional analysis required by the PSA should also be done by the relevant experts regarding its economics and consistency with national standards in the industry. 2. Recent DOL interpretations of Required Project Work The BPMC has begun work on the following developments and asked the Department of Law whether they constitute Required Project Work under the PSA: 1. The purchase of certain transmission line assets, including the Sterling to Quartz Creek line (SQL) from HEA; 2. The upgrade of the SQL; 3. The long-term repair and replacement program at the Project; 4. The upgrade of the Bradley Junction to Soldotna transmission line (BJS line); and 5. The purchase of three battery energy storage systems (BESS). The Department of Law, in memoranda dated May 19, 2020, November 10, 2021, January 24, 2022, March 7, 2022 and April 27, 2022, concluded that these developments were considered Required Project Work under the PSA. In each case, it was also concluded that AEA had the statutory authority to improve the Bradley Lake Project under AS 44.83.080(5) which grants AEA the authority “to improve, equip, operate, and maintain power projects.” Our memoranda came to the following relevant conclusions that do not need to be re-analyzed here. • Required Project Work appears to be a catch-all that combines several different types of developments for the benefit of the Bradley Lake Project, such as repair, maintenance, renewal, replacement, improvements or betterments. • There is no requirement in the PSA that the Required Project Work be located in areas originally part of the Bradley Lake Project such as that identified in Exhibit C of the PSA, which describes some of the project assets. • A development may have non-Project uses and still be considered Required Project Work. Curtis Thayer, Executive Director May 19, 2022 Re: Is the SS Upgrade Required Project Work? Page 3 of 5 CONFIDENTIAL - DOCUMENT 3. Can the SS Upgrade be considered Required Project Work? a. Description of SS Upgrade The utilities are now seeking to finance the upgrade of the transmission line from Soldotna to Sterling on the Kenai Peninsula (SS Line). The estimated cost of this upgrade is $14-15 million. The Bradley Lake Project already owns two segments of the main transmission path northwards: the 20-mile transmission line from the powerhouse to Bradley Junction, and the 40-mile transmission line from Sterling to Quartz Creek. The Bradley Lake Project also already owns certain rights on the SS line, namely transmission capacity subject to HEA’s native load and rights to require maintenance and upgrades to the line. The utilities plan for the upgrade of the SS line is still unclear, because design and planning has not started. The tentative plan is to build a new 230kV transmission line. The utilities have presented a preliminary agreement in the form of a letter of intent to AEA, dated Februar y 16, 2022. In summary, the letter of intent provides that AEA on behalf of the Project would take ownership of the facilities added and increased capability as assets of the Project. HEA would retain its current rights in existing infrastructure and rights of way. While the line loss due to the state of the line has not been calculated for the SS line, it is thought to be less than the SQL, which is approximately $672,950 per year. While the line losses are not eliminated with an upgrade, the larger capacity lines at 230 kV have significantly less line losses. b. Statutory analysis AEA is no longer allowed to construct or acquire new power projects, such as hydroelectric facilities or interties, without legislative approval.2 However, AEA has the power to “improve, equip, operate and maintain power projects”, such as the Bradley Lake Project, which has been approved by the legislature.3 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.4 2 SLA 1993, ch. 18, Sec. 10. 3 AS 44.83.080(5). 4 AS 44.84.080(11). Curtis Thayer, Executive Director May 19, 2022 Re: Is the SS Upgrade Required Project Work? Page 4 of 5 CONFIDENTIAL - DOCUMENT Because this project will significantly improve the Bradley Lake Project, we conclude that the SS Upgrade is within AEA’s statutory powers. c. Contractual analysis As mentioned, the Required Project Work definition in the PSA combines several types of projects: “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.5 The SS Upgrade can be described as an improvement or betterment of the Bradley Lake Project because of its benefits to the transmission of Bradley Lake-generated power. The utilities argue that major infrastructure assets such as the SS line should become part of the project. This will allow them to be managed by the BPMC, costs will be mutualized and disputes should be minimized. Finally, the BPMC must approve any alternative methods of carrying out and funding Required Project Work, inherently protecting all participants’ rights. There may be alternative methods of carrying out and funding this project, so the BPMC may also review these specific alternatives prior to the agreement on the SS Upgrade. d. Comparison with previous project works There are two earlier developments that the SS Upgrade can be compared to, the upgrade of the SQL and the BESS purchase. We argued that the purchase and the upgrade to the SQL was Required Project Work because it was clearly an improvement to the Project as it is critical for the transmission of Project power. Similarly, an upgrade to the SS line is also critical for the transmission of Project power. While reviewing the BESS purchase, we determined that non-Project uses do not by themselves limit the determination of whether a development is Required Project Work. There may also be non-Project uses for the upgraded SS line, such as transmission 5 Section 1(hh), p.7, PSA. Curtis Thayer, Executive Director May 19, 2022 Re: Is the SS Upgrade Required Project Work? Page 5 of 5 CONFIDENTIAL - DOCUMENT of HEA’s native load, but they do not take away from the significance of the line for the Project. In summary, the SS Upgrade would not be a completely unique transaction for the Bradley Lake Project, and projects with similar characteristics were thought to be Required Project Work. 4. Conclusion The Department of Law concludes that the SS Upgrade should be considered Required Project Work under the PSA as an improvement work for the Bradley Lake Project. With the approval of all Parties to the PSA, and opinions supporting the economics and compliance with industry standards, the SS Upgrade can be seen as necessary to keep the Bradley Lake Project in good and efficient operating condition. ALASKA ENERGY AUTHORITY RESOLUTION NO. 2024-01 RESOLUTION OF THE ALASKA ENERGY AUTHORITY RATIFYING GOVERNORS SUBMISSION OF FY25 OPERATING BUDGET & CAPITAL BUDGET WHEREAS, the operating and capital budget of the Alaska Energy Authority (“the Authority”) are subject to the Executive Budget Act; WHEREAS, the FY25 operating and capital budget submissions for the Authority are included in the Governor’s State operating and capital budget submissions to the Alaska State Legislature (“the Legislature”) and are set out in Attachment A; WHEREAS, the Governor’s State operating and capital budget submissions, including the Authority’s operating and capital budget submissions, are subject to appropriation by the Legislature; and WHEREAS, the Board provides oversight for the Authority and its finances. NOW, THEREFORE, BE IT RESOLVED BY THE ALASKA ENERGY AUTHORITY AS FOLLOWS: Section 1. The Authority’s FY25 operating and capital budget submissions are ratified by the Board. The final FY25 operating and capital budget are subject to approval and appropriation by the Legislature. Dated at Anchorage, Alaska, this 24th day of January 2024. ____________________________________ J. Dana Pruhs, Chair ______________________________________ [SEAL] Curtis W. Thayer, Secretary 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 TO: Curtis Thayer, Executive Director FROM: Rebecca Garrett, Rural Programs Manager DATE: January 10, 2024 SUBJECT: AEA Rural Programs & Projects Highlights Emergency Response This fall Project Managers and Circuit Riders made an effort to preventatively stabilize several communities – Circle, Napaskiak, Manokotak, and Nelson Lagoon. Circle and Napaskiak were successful. There are many other communities AEA is actively working with that are operating on only one diesel genset or that are in extremely precarious situations. Manokotak is in design for a Rural Power System Upgrade, but has not been completely funded and is in a difficult situation. In December AEA declared an emergency and has been working on a response with the State Emergency Operation Center (SEOC). Active emergency response updates are provided to the board immediately. Training This report covers July through December 2023. Alaska Energy Authority (AEA), with funding from the Denali Commission, provided training at the Alaska Vocational Technical Center (AVTEC) facility in Seward, Alaska for eight power plant operators in classes that started September 11. Three students returned and completed the two week in person lab, the final requirement for certification in December. Three others will return in January to complete the lab. Three bulk fuel operators completed a class from August 21 – September 1, 2023. Seven students attended the person in charge (PIC) training on October 16-20, 2023. These trainings are key components to the maintenance, operations, and extension of the serviceable life of rural energy infrastructure and assets. Furthermore, this provides workforce development including well-paying local jobs in rural communities. Circuit Rider staff offered itinerant training in seven communities for bulk fuel operators and seventeen for powerhouse operators. There are seven training programs for power plant operators, bulk fuel operators, utility management, the Circuit Rider program, and emergency response, with a total budget of nearly $10M. Rural Power System Upgrades (RPSU) The Venetie powerhouse was energized on October 3rd, 2023. The distribution upgrade will be completed in 2024. The Akiachak DERA project was energized a few weeks later. This project Alaska Energy Authority Page 2 of 3 resulted in completely new components for Akiachak. Four new diesel gensets, radiators, and switchgear, only the powerhouse structure was not replaced. The community of Circle was greatly impacted by spring flooding on the Yukon River which ultimately destroyed their powerhouse. AEA successfully applied for and received emergency stabilization funds from the Denali Commission to place three diesel gensets in the powerhouse for the winter and get the switchgear operational. This project was completed, only replacing the engines to AEA’s stock and a few punch list items remain. Newly constructed powerhouse modules for Napaskiak and Rampart are currently being assembled in south-central Alaska. Local operators will be invited to Anchorage to participate in the testing of the module before transporting the modules on-site in the spring. Once the modules are delivered, extensive onsite training will be conducted with the local operators and utility managers before transferring the project over to the community. The Napaskiak and Rampart collectively accrued an estimated total of $10 million. The projects experienced unprecedented cost increases at an approximate rate of 43% over the course of design for these powerhouse upgrades. These cost increments are consequences of inflation, logistics delays/unavailability, and workforce deficits. On those accounts, the RPSU Program has started shifting towards maintenance and improvement projects instead of full replacement. Power system upgrades for Nelson Lagoon and Manokotak have been delayed to 2025. AEA continues to work with the communities and seek funding for both of these projects as the designs are coming together. These two projects are estimated at over $10 M. The Distribution Inventory and Assessment (I&A) was delayed for a period of time as the survey was improved. Six sites have been completed to date and about ten more locations are currently in the queue. AEA has several distribution projects active and pending funding in the communities of Port Heiden, Venetie, Rampart, Kipnuk, Nelson Lagoon, and Manokotak. From system replacement to maintenance and improvement to I&A, there are forty-four rural power system projects total with an overall budget of over $40M. Bulk Fuel Upgrades (BFU) Approximately 400 eligible bulk fuel facilities all over Alaska experience a growing difficulty with aging infrastructure and increased ocean and river erosion. Approximately 400 eligible bulk fuel facilities all over Alaska experience a growing difficulty with aging infrastructure, capacity concerns, permafrost degradation, environmental threat, and increased ocean/river erosion. The Bulk Fuel Inventory & Assessment (I&A) has been completed for about 200 facilities in about 100 communities. We are about 60% complete with the planned assessments and are working on quality control and refining the facility scoring over the winter months. The I&A will provide accurate information on the current Alaska Energy Authority Page 3 of 3 condition of bulk fuel facilities consequentially producing the same benefits realized in the Powerhouse Systems I&A program. Similar to Circle, Russian Mission was also affected by the flood from the Yukon River. AEA put together a small M&I project to stabilize the tank farm and make it safe to use over the winter. Russian Mission will also receive a Conceptual Design Report (CDR) for a new tank farm which is the first step towards receiving a new tank farm. As always, funding the construction of new tank farms is an ongoing challenge. In today’s market, construction of new bulk fuel tank farms roughly cost between $5-8 million. With limited funding, the BFU program has transitioned heavily towards maintenance and improvement (M&I) type projects that require local matching funds to ensure project completion. Under this program, each community has a list of maintenance projects, estimated costs, and priority for each project. There are fourteen M&I projects in various stages. Currently, there are thirty-three active bulk fuel projects with a total budget of over $34M. AEA continues to seek funding for the Ekwok BFU project. Award No Project Name DC FundingPerf. Period Beg Perf. Period ThruActions Since Last ReportEstimated Jobs Created Permanent Jobs Created 01432-13Tatitlek BFU 1,472,000.00 6/1/2013 6/30/2024 Extended Period of Performance15 201474-10Chalkytsik BFU (2) 517,500.00 6/16/2015 6/30/2024 Extended Period of Performance15 201485-06START Communities Technical Assistance 375,000.00 11/1/2015 6/30/2024 None2001492-11Beaver BFU 608,000.00 7/6/2016 6/30/2024 Extended Period of Performance5201500-09Bulk Fuel Operator Training 1,985,000.00 9/1/2016 9/30/2025 None3001515-10Circuit Rider Program 1,425,000.00 1/1/2017 12/31/2024 None3001516-08RPSU - Maintenance & Improvement 748,776.00 10/1/2016 12/31/2024 None20 001523-09Miscellaneious Small M&I Projects 2,945,000.22 6/1/2017 12/31/2025 None20 001525-07Training - Advanced Power Plant Operators 872,514.00 8/15/2017 6/30/2023 None3001544-06Training - Itinerant Electric Utility 500,000.00 3/1/2018 12/31/2023 None3001548-08RPS Maintenance & Improvement Program-Statewide 3,540,000.00 5/1/2018 12/31/2025 None20 001551-07Venetie RPSU 2,250,000.00 5/1/2018 12/31/2025 None5201557-03Barge Headers and Fill Lines 3,976,820.00 10/1/2018 12/31/2024 Extension and additional funding in process60 001571-03Nunapitchuk BF 3,522,546.00 8/15/2019 12/31/2024 Extended Period of Performance30 201574-03Nikolai RPSU 1,733,740.00 8/1/2019 12/31/2023 None5201575-06Nelson Lagoon - RPSU 1,585,455.00 8/1/2019 12/31/2025 None5201576-04Rampart - RPSU 1,733,740.00 8/1/2019 12/31/2024 None5201577-05Napaskiak - RPSU 335,455.00 8/1/2019 12/31/2024 None26 201592-03Scammon Bay BFU 1,200,000.00 2/17/2020 12/31/2025 Extended Period of Performance additional funding in process3501600-03AEEE - Village Energy Efficiency Program - State 875,000.00 6/15/2020 12/31/2025 Extended Period of Performance3001611-03AEA Data Library 100,000.00 9/1/2020 6/30/2024 None1001618-01Fivemile Creek Hydroelectric Project R2,R4 2,880,000.00 9/1/2020 6/30/2024 None65 201628-03DC Craig High School Biomass Project 440,417.00 11/1/2020 12/31/2025 Extended Period of Performance0201645-02O&M Manual Conversion & Training 75,000.00 4/1/2021 12/31/2024 Extended Period of Performance4001646-01Bulk Fuel Inventory and Assessment 1,230,000.00 4/1/2021 12/31/2025 None20 001647-01Port Heiden Phase 1 Distribution Upgrades 1,905,600.00 4/1/2021 12/31/2024 None8001666-01Littoral Power Systems Hydrokinetic Project 80,642.00 11/15/2021 3/31/2023 Extension in process1001704-01Chalkyitsik RPSU 200,000.00 10/1/2022 12/31/2025 Extended Period of Performance5201705-01Middle Kuskokwim Failure Mitigation Plan 200,000.00 10/1/2022 3/31/2024 Extension in process5201731-00Shungnak BFU 3,296,032.04 1/1/2023 3/31/2024 None60 301735-00Ruby Powerhouse Leveling 200,000.00 1/15/2023 12/31/2024 None5001761-00Tuluksak Bulk Fuel M&I 200,000.00 1/15/2023 12/31/2024 None5001767-00AVTEC Powerplant Lab Upgrade 250,000.00 1/1/2023 9/30/2024 None5001771-00Distribution System Inventory and Assessment - Statewide 267,051.64 4/1/2023 12/31/2025 None7001784-00Power Plant Operator Training 225,000.00 7/1/2023 9/30/2025 None3001793-00Circle Emergency Powerhouse Repairs 320,000.00 6/1/2023 6/30/2024 None5001825-00Kwethluk Emergency Generator Repairs & Replacement 350,000.00 12/15/2023 12/31/2024 New Project5Total Funding for Active DC Awards:44,421,289 Less Total Spending on Active DC Awards:(36,666,726) TTotal Funding Remaining on Active DC Awards:7,754,563 Active Denali Commission AwardsAs of 01/08/2024C:\Users\rgarrett\Desktop\Budgets Board Meeting\2024.1.10 Active DC Awards1 OF 1 PAYMENTS RECEIVED LATE FEES RECEIVED INTEREST + LATE FEES ($501,814)$543 $126,071 16 TOTAL # OF PPF LOANS LOAN DASHBOARD REPORT For Board Meeting on 1/24/2024 AEA POWER PROJECT LOAN FUND FISCAL YEAR-TO-DATE LOAN PORTFOLIO ACTIVITY (07/01/2023 - 12/31/2023) LOAN ACTIVITY EARNINGS LOAN CATEGORY STARTING BALANCE FUNDS DISBURSED ENDING BALANCE INTEREST RECEIVED AEA Power Project Fund $26,927,747 $5,450,000 $31,875,933 $125,528 LOAN PROGRAM SUMMARY Outstanding Loans $31,875,933.15 Uncommitted Cash Balance $2,951,240.23 Loan Commitments $5,482,643.78 Total Loan Program $40,309,817.16 0 $0 0.000% TOTAL # OF DELINQUENT LOANS LOANS DELINQUENT AMOUNT ($) % OF DELINQUENT LOANS ($) TO PORTFOLIO BALANCE Page 1 TOTAL ($) $2,288,872 $393,492 $790,245 $13,598,494 $18,260,870 $2,077,103 $37,409,077 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 ALEUTIANS $2,288,872 - - 3 BRISTOL BAY $393,492 - - 1 LOWER YUKO- KUSKOKWIM $790,245 - - 2 RAILBELT $8,555,494 $48,500 $4,994,500 5 SOUTHEAST $18,260,870 - - 1 YUKON-KOYUKUK/U TANA $1,586,959 $490,144 - 4 TOTAL $31,875,933 $538,644 $4,994,500 16 AEA PPF LOANS BY PROJECT TYPE AEA PPF LOANS BY PROJECT TYPE - BALANCE (NEW & OUTSTANDING) PROJECT TYPE # OF PROJECTS PROJECT TYPE BALANCE DIESEL 5 HYDRO $21,768,756.46 HYDRO 4 SOLAR $10,996,154.82 SOLAR 3 TRANSMISSION $1,966,667.00 WIND 2 WIND $1,383,325.14 BIOMASS 1 DIESEL $1,230,031.07 TRANSMISSION 1 BIOMASS $64,142.44 Page 2 $14,681 ($9,762)($13,770)($16,140) $34,200 $14,681 $4,919 ($8,851)($23,989) $10,211 $950,973 $941,098 $927,182 $899,929 $934,034 1.65% -1.10% -1.56% -1.88% 3.85% 1.65% 0.55% -1.00% -2.79% 1.15% -4.00% -3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% ($200,000) $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 July August September October November Power Cost Equalization (PCE) Endowment Fund (Managed by APFC) Reporting of Investment Gain (Loss) by Month and YTD and Fund Balance by Month as of 11/30/2023 Investment Gain (Loss) Monthly Investment Gain (Loss) YTD Fund Balance Investment Rate of Return Monthly Investment Rate of Return YTD ALASKA ENERGY AUTHORITY PCE Program Management Report January 9, 2024 PCE Program Management Report Page | 1 OPERATIONAL ACTIVITY UMR Summarized Activity Reports (Excludes AVEC) RCA Suspended Communities Perryville - 02/13/2023 King Cove - 02/24/23 Birch Creek Tribal Council - 02/07/23 Beaver - 02/07/2023 Rampart – 01/04/24 Communities more than 3 months behind in submitting their monthly reports: Note: All suspensions are by RCA Project Project Name AR Code Stage Comments 332070 King Cove PCE 18225003 04 Suspended-FY23 reports filed but being held; Rates currently under floor so not participating 332490 Platinum PCE 18225003 05 Missed Filing Deadline for FY23 Reports 332570 Stevens Village PCE 19225003 04 Missed Filing Deadline for FY23 Reports 332710 Tuluksak PCE 19225003 10 Suspended; No reports filed 332170 Larsen Bay PCE 21225003 01 Rates currently under floor so not participating 332470 Perryville PCE 21225003 04 Suspended; No reports filed 331840 Chalkyitsik PCE 21225003 08 Missed Filing Deadline for FY23 Reports 331810 Birch Creek PCE 22225003 06 Suspended; No reports filed 331790 Beaver PCE 22225003 08 Suspended-FY23 reports filed but being held 331030 Akiak PCE 23225003 08 Missed Filing Deadline for Remaining FY23 Reports 332210 Manokotak PCE 23225003 08 Mar 23-July 23 reports held for additional information 332340 Nome PCE 23225003 12 July - Nov SNP 332520 Rampart PCE 23225003 12 Suspended 1/4/24 331770 Arctic Village PCE 24225003 01 331780 Atmautluak PCE 24225003 01 331940 Egegik PCE 24225003 01 332140 Koyukuk PCE 24225003 01 ALASKA ENERGY AUTHORITY PCE Program Management Report January 9, 2024 PCE Program Management Report Page | 2 332450 Pedro Bay PCE 24225003 01 Community Facility Requests Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Received 0 5 2 1 4 Approved 1 0 2 0 1 Denied 1 0 1 2 3 Pending 0 0 10 9 0 Community Facility Pending Retroactive Adjustments 26 eligible not paid. Staff has followed up with utilities on all. ALASKA ENERGY AUTHORITY PCE Program Management Report January 9, 2024 PCE Program Management Report Page | 3 FINANCIAL PCE Endowment Fund Information requested from finance, but not received as of report date. AEA PCE Appropriation Analysis 813 W Northern Lights Blvd, Anchorage, AK 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG January 26, 2024 The Honorable Gary Stevens President of the Senate Alaska State Legislature State Capitol Room 111 Juneau, Alaska 99801 Dear President Stevens and Speaker Tilton, Pursuant to Alaska Statute AS 42.45.045(d)(3), the Alaska Energy Authority (AEA) is pleased to provide its Round 16 Renewable Energy Fund (REF) recommendations to the 33rd Legislature for their consideration of project funding. On June 29, 2023, AEA released its Request for Applications (RFA) for Round 16 of the Renewable Energy Fund grant program, completing its four-stage review of those applications received in December 2023. On January 9, 2024, AEA presented its project funding recommendations to the Renewable Energy Fund Advisory Committee (REFAC), as required by statute. With only one abstention, the REFAC approved all 24 projects as recommended by AEA. These recommended projects are now advanced to the Legislature via this letter, for Fiscal Year 2025 funding consideration. The State of Alaska’s Fiscal Year 2025 proposed capital budget includes $5 million for REF Round 16 grant funding. At the time of the Fiscal Year 2025 Budget submission it was unknown as to the number of projects, and the corresponding funding request that would be recommended by the REFAC. With the proposed budget of $5 million, there would be insufficient funding to cover the current Round 16 recommendations. Additional funds in the amount of $27 million would need to be allocated to fund all of the current Round 16 recommendations. From 2008 to 2024, appropriations totaling nearly $317 million were allocated in support of REF projects. That State funding has leveraged an additional $300 million from local sources to develop projects designed to reduce and stabilize the cost of energy in Alaska. An independent impact analysis commissioned by AEA and conducted by a third-party research consultancy, completed in December 2023, reported that the REF program has offset approximately 85 million gallons of diesel fuel (e.g. five percent of all petroleum consumed in Alaska in 2021), 2.2 million cubic feet of natural gas, and 1,063,500 net metric tons of carbon dioxide since its inception in 2008. As the program has matured, the quality of the proposed projects has improved, and the knowledge base for designing, constructing and operating renewable energy projects in Alaska’s diverse climates and terrain has advanced. The program remains unique in its ability to fund The Honorable Cathy Tilton Speaker of the House Alaska State Legislature State Capitol Room 208 Juneau, Alaska 99801 Alaska Energy Authority Page 2 of 2 projects across all development phases, serving as a catalyst for the continued pursuit of integrating proven technologies, and implementing those nascent, within Alaska’s energy portfolio. AEA and the REFAC request that the Legislature consider funding all 24 recommended Round 16 REF projects at a total capital request of $32 million. The annual REF status report and a summary of those Round 16 recommendations to the Legislature are enclosed as attachments to this transmittal letter. Sincerely, Curtis W. Thayer Executive Director CC: Alaska Energy Authority Board Alaska State Legislature Attached: REF Round 16 Status Report REF Recommended Projects List REDUCING THE COST OF ENERGY IN ALASKA Renewable Energy Fund Round 16 Status Report Alaska Energy Authority —Renewable Energy Fund –Round XVI REDUCING THE COST OF ENERGY IN ALASKA SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS Alaska State LegislatureJanuary 2024 REDUCING THE COST OF ENERGY IN ALASKA 2 SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS Table of Contents REF Overview Page 3 REF Statutory Guidance Page 4 Round XVI Request for Applications Schedule Page 5 REF Evaluation Process Page 6 REF Funding Limits Page 10 Proposed REF Capitalization for Round 16 (FY2025)Page 11 REF Received Applications Summary Page 12 Non-Recommended Applications Summary Page 14 REFAC Roles Page 18 REFAC Current Members Page 19 Recommended Applications Summary Page 20 Applications Forwarded for Legislature’s Decision on Funding Page 22 Partial Funding Recommendations Page 25 REDUCING THE COST OF ENERGY IN ALASKA Renewable Energy Fund (REF) Overview Established in 2008, the REF is a unique and robust competitive grant program, which provides critical financial assistance for statewide renewable energy projects. The REF’s sunset date provision was repealed with House Bill 62, signed into law by Governor Dunleavy on May 25, 2023. $317 million in REF appropriations by the State. 100+ operational projects, 44 in development, and 18 projects funded for FY24. The 33rd Alaska State Legislature appropriated $17 million for 18 projects recommended by AEA and approved by the REF Advisory Committee. The REF funds projects across all development phases, serving as a catalyst for the continued pursuit of integrating proven and nascent technologies within Alaska’s energy portfolio. 03 REDUCING THE COST OF ENERGY IN ALASKA REF Statutory Guidance (AS 42.45.045) ELIGIBLE PROJECTS MUST: Be a new project not in operation in 2008, and -be a hydroelectric facility; -direct use of renewable energy resources; -a facility that generates electricity from fuel cells that use hydrogen from renewable energy sources or natural gas (subject to additional conditions); -or be a facility that generates electricity using renewable energy. -natural gas applications must also benefit a community that: o Has a population of 10,000 or less, and o does not have economically viable renewable energy resources it can develop. ELIGIBLE APPLICANTS INCLUDE: electric utility holding a certificate of public convenience and necessity (CPCN); independent power producer ; local government; or, or other governmental utility, including a tribal council and housing authority. 04 REDUCING THE COST OF ENERGY IN ALASKA REF Rounds 16 Timeline June 29, 2023 August 29, 2023 January 9, 2024 January 25, 2024 July 1, 2024December 2023 Request for Application Posted AEA’s Evaluation of Applications Complete Application Submission Deadline Meeting with Renewable Energy Fund Advisory Committee (REFAC) If Capital Funds Are Appropriated by Legislature, and approved by the Governor, Issuance of Grant Agreements Can Begin AEA Provides Recommendations Approved by REFAC to Legislature 29 REDUCING THE COST OF ENERGY IN ALASKA 5 REDUCING THE COST OF ENERGY IN ALASKA REF Evaluation Process: Stage 1 Eligibility and Completeness The REF evaluation process is comprised of four stages. Stage 1 is an evaluation of the applicant, project eligibility and, completeness of the application, as per 3 AAC 107.635. This portion of the evaluation process is conducted by AEA staff. •Applicant eligibility is defined as per AS 42.45.045 (l). •“electric utility holding a certificate of public convenience and necessity under AS 42.05, independent power producer, local government, or other governmental utility, including a tribal council and housing authority;” •Project eligibility is defined as per AS 42.45.045 (f)-(h) and is provided on the preceding page. •Project completeness: •An application is complete in that the information provided is sufficiently responsive to the RFA to allow AEA to consider the application in the next stage (Stage 2) of the evaluation. •The application must provide a detailed description of the phase(s) of project proposed. Applications that fail to meet the requirements of Stage 1 are rejected by the Authority. Each applicant whose application is rejected is notified of the Authority’s decision. 6 STAGE 1 CRITERIA PASS/FAIL Applicant eligibility, including formal authorization and ownership, site control, and operation PASS/FAIL Project Eligibility PASS/FAIL Complete application,including Phase description(s)PASS/FAIL REDUCING THE COST OF ENERGY IN ALASKA REF Evaluation Process: Stage 2 Technical and Economic Feasibility Stage 2 is an evaluation concerning technical and economic feasibility. This portion of the evaluation process is conducted by AEA staff, Alaska Department of Natural Resources, and contracted third-party economists. The following items are evaluated as part of the Stage 2evaluation, as required per 3 AAC 107.645: •Project management, development, and operations; •Qualifications and experience of project management team, including on-going maintenance and operation; •Technical feasibility –including but not limited to sustainable current and future availability of renewable resource, site availability and suitability, technical and environmental risks, and reasonableness of proposed energy system; and, •Economic feasibility and benefits –including but not limited to project benefit-cost ratio, project financing plan, and other public benefits owing to the project. All Stage 2 criteria are weighted as follows as part of the evaluation process. Applications that score below 40 points in this stage are automatically rejected by the Authority, however, those projects scoring above 40 may also be rejected as under 3 AAC 107.645(b) has the Authority to reject applications that it determines to be not technically and economically feasible, or do not provide sufficient public benefit. 7 CRITERIA CRITERIA DESCRIPTION WEIGHT 1 Project management, development, and operation 25% 2 Qualifications and experience 20% 3 Technical feasibility 20% 4.a Economic benefit-cost ratio 25% 4.b Financing plan 5% 4.c Other public benefit 5% REDUCING THE COST OF ENERGY IN ALASKA REF Evaluation Process: Stage 3 Project Ranking Stage 3 is an evaluation concerning the ranking of eligible projects. This portion of the evaluation process is conducted by AEA staff in conjunction with solicitation from the Renewable Energy Fund Advisory Committee (REFAC) . The following items are evaluated as part of the stage three evaluation, as required per 3 AAC 107.655-660: •Cost of energy •Applicant matching funds •Project feasibility (levelized score from stage 2) •Project readiness •Public benefits (evaluated through stage 2 benefits) •Sustainability •Local Support •Regional Balance •Compliance All Stage 3 criteria are weighted as follows as part of the evaluation process. The Stage 3 scoring is used to determine the ranking score. 8 CRITERIA CRITERIA DESCRIPTION WEIGHT 1 Cost of Energy 30% 2 Matching Funds 15% 3 Project Feasibility (levelized score from Stage 2)25% 4 Project Readiness 5% 5 Public Benefits 10% 6 Sustainability 10% 7 Local Support 5% 8 Regional Balance Pass/Fail 9 Compliance Pass/Fail REDUCING THE COST OF ENERGY IN ALASKA REF Evaluation Process: Stage 4 Regional Spreading Stage 4 is a final ranking of eligible projects, as required per 3 AAC 107.660, which gives “significant weight to providing a statewide balance of grant money, taking into consideration the amount of money available, number and types of projects within each region, regional rank, and statewide rank.” This portion of the evaluation process is conducted by AEA staff in conjunction with solicitation of advice from the Renewable Energy Fund Advisory Committee (REFAC). As statutorily required per AS 42.45.045 and set forth in 3 AAC 107.660, the authority is to solicit advice from the REFAC concerning making a final list / ranking of eligible projects. The following items are evaluated as part of the stage four evaluation, as required per 3 AAC 107.660: •Cost of energy burden = [HH cost of electric + HH heat cost] ÷ [HH income] 9 Cumulative through Round 15 Total Round 1-15 Funds Cost of Power Allocation Population Even Split Energy Region Grant Funding % Total Cost burden (HH cost/HH income) Allocation cost of energy basis Additional funding needed to reach 50% % of target allocation % Total Allocation per capita basis Allocation per region basis Aleutians $18,383,998 6%13.50%$27,352,549 ($4,707,724)67%1%$3,225,814 $26,416,303 Bering Straits $23,486,724 8%16.18%$32,769,215 ($7,102,116)72%1%$3,938,859 $26,416,303 Bristol Bay $15,866,614 5%15.99%$32,386,656 $326,714 49%1%$2,763,603 $26,416,303 Copper River/Chugach $28,163,273 10%10.23%$20,723,627 ($17,801,460)136%1%$3,198,033 $26,416,303 Kodiak $16,659,519 6%6.96%$14,095,649 ($9,611,694)118%2%$5,116,531 $26,416,303 Lower Yukon-Kuskokwim $39,888,116 14%21.01%$42,550,198 ($18,613,017)94%4%$10,428,334 $26,416,303 North Slope $2,069,151 1%2.56%$5,191,136 $526,417 40%1%$3,913,896 $26,416,303 Northwest Arctic $29,166,133 10%16.94%$34,315,088 ($12,008,589)85%1%$3,033,763 $26,416,303 Railbelt $31,253,205 11%5.72%$11,594,529 ($25,455,941)270%77%$224,530,668 $26,416,303 Southeast $65,672,877 23%8.23%$16,669,020 ($57,338,367)394%10%$28,490,396 $26,416,303 Yukon-Koyukuk/Upper Tanana $18,933,832 7%26.13%$52,931,665 $7,532,000 36%1%$1,939,434 $26,416,303 Statewide $1,035,888 0%0.00% TOTAL $290,579,331 100%$290,579,331 100%$290,579,331 $290,579,331 REDUCING THE COST OF ENERGY IN ALASKA REF Funding Limits REF Round XVI Grant Funding Limits Phase Low Energy Cost Areas*High Energy Cost Areas** Total Project Grant Limit $2 Million $4 Million Phase I:Reconnaissance Phase II:Feasibility and Conceptual Design The per project total of Phase I and II is limited to 20% of anticipated construction cost (Phase IV), not to exceed $2 Million. Phase III: Final Design and Permitting 20% of anticipated construction cost (Phase IV), and counting against the total construction grant limit below. Phase IV:Construction and Commissioning $2 Million per project, including final design and permitting (Phase III) costs, above. $4 Million per project, including final design and permitting (Phase III) costs, above. Exceptions Biofuel projects Biofuel projects where the applicant does not intend to generate electricity or heat for sale to the public are limited to reconnaissance and feasibility phases only at the limits expressed above. Biofuel is a solid, liquid or gaseous fuel produced from biomass, excluding fossil fuels. Geothermal projects The per-project total of Phase I and II for geothermal projects is limited to 20% of anticipated construction costs (Phase IV), not to exceed $2 million /$4 million (low/high cost areas). Any amount above the usual $2 million cap spent on these two phases combined shall reduce the total Phase III and IV grant limit by the same amount, thereby keeping the same total grant dollar cap as all other projects. This exception recognizes the typically increased cost of the feasibility stage due to test well drilling. REF Round XVI funding limits are governed by the requested phase(s) in the application and the technology type applied. Low vs High Cost Energy Areas: *Low Energy Cost Areas are defined as communities connected to the Railbelt electrical grid or with a residential retail electric rate of below $0.20 per kWh, before Power Cost Equalization (PCE) reimbursement is applied. For heat projects, low energy cost areas are communities with natural gas available as a heating fuel to at least 50% of residences, or availability expected by the time the proposed project is constructed. **High Energy Cost Areas are defined as communities with a residential retail electric rate of $0.20 per kWh or higher, before PCE funding is applied. For heat projects, high energy cost areas are communities that do not have natural gas available as a heating fuel. 10 REDUCING THE COST OF ENERGY IN ALASKA Proposed REF Capitalization for FY2025 / Round XVI The State of Alaska FY2025 proposed capital budget allocates $5 million for REF Round 16 grant funding of recommended projects. The current list of 24 recommended applications yields a total grant request of $32,006,012. With the proposed REF budget of $5 million, there would be insufficient funding to cover the current Round 16 recommendations. Additional funding of $27.06 million would need to be allocated to fund all of the current Round 16 recommendations or some of the Round 16 recommendations will not be funded. The table to the right indicates historical REF program funding from the inception of the REF program to the FY2024 appropriation. $17M was approved in the FY2024 capital budget for REF Round 15, the largest REF capitalization since FY2014. 11 REDUCING THE COST OF ENERGY IN ALASKA AEA received 29 applications with a total grant request of $39.5 million. One application was submitted past the deadline and deemed ineligible, reducing the total grant request to $37.8 million for the remaining 28 applications. Round XVI –Received Applications Summary 12 Applications by Energy Region No.of Applications REF Funds Requested Bering Straits 1 $ 4,000,000 Bristol Bay 5 $ 7,166,471 Lower Yukon-Kuskokwim 6 $ 4,609,666 Northwest Arctic 1 $ 4,000,000 Railbelt 9 $ 9,147,514 Southeast 4 $ 5,661,724 Yukon-Koyukuk Tanana 2 $ 3,231,113 Total 28 $37,816,488 Applications by Technology No.of Applications REF Funds Requested Biomass 3 $2,607,514 Hydro 8 $ 8,505,236 Natural Gas 1 $ 150,000 Solar 9 $ 17,166,182 Storage 4 $ 5,698,827 Wind 3 $ 3,688,729 Total 28 $37,816,488 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 Biomass Hydro Natural Gas Solar Storage Wind Requested Funding By Technology $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 Funding By Energy Region REDUCING THE COST OF ENERGY IN ALASKA Round XVI –Received Applications Summary The table to the right indicates the number of applications received by requested phase, along with the corresponding grant request totals. Per the current RFA, there are four phases, listed below in chronological order, for which an applicant may request funding: (1)Reconnaissance (2)Feasibility and Conceptual Design (3)Final Design and Permitting (4)Construction Several applications received in Round 16 requested funding for more than one phase. 13 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 Requested Funding by Project Phase Applications by Project Phase No.of Applications REF Funds Requested Construction 13 $ 18,505,570 Design 1 $ 883,012 Design, Construction 8 $ 14,554,156 Feasibility 3 $ 3,430,500 Reconnaissance 1 $ 121,250 Reconnaissance, Design 1 $ 52,500 Reconnaissance, Feasibility 1 $ 269,500 Total 28 $37,816,488 REDUCING THE COST OF ENERGY IN ALASKA Stages 1 and 2 Review: Non-Recommended Applications Summary 14 In AEA’s Stage 1 evaluation, as per 3 AAC 107.635, it was determined that one application was ineligible and was rejected. This application was submitted after the published deadline. The applicant was notified of the rejection and did not appeal. In AEA’s Stage 2 evaluation of technical and economic feasibility, as per 3 AAC 107.645, four applications received scores below 40 points and were not recommended by the Authority. Two applicants appealed their rejections as per 3 AAC 107.650 –“Requests for reconsideration”. Upon AEA’s due consideration and review of the appeals, both rejections were upheld, and final written notices were issued to those applicants. With an initial receipt of 29 applications and five applications rejected during Stages 1 and 2, there are 24 remaining applications that are recommended in REF Round 16. In terms of grant funding requests, $1.7 million was rejected in Stage 1 and a total of $2 million rejected in Stage 2. The total grant funds request is further reduced by $3.8 million owing to five of the remaining 24 applications receiving recommendations for partial funding due to various reasons discussed later in the presentation, yielding a total of $32 million in grant funds requested. Partial funding recommendations, which are discussed further along in the presentation, were made in full consideration of project phases applied for, application scoring, project scope eligibility, and household cost of energy. With the current proposed REF fund allocation of $5 million for FY2025, there are insufficient REF funds to cover one-hundred percent of the applications recommended in Round 16. REDUCING THE COST OF ENERGY IN ALASKA Stage 1 Non-Recommended Applications 15 Below is the 1 application rejected during the Stage 1 evaluation: Application Number Applicant Application Name Technology Phase Community Funds Requested Election District Rejection Reason 16029 Chugach Electric Association Godwin Creek Hydroelectric Project Hydro Feasibility and Conceptual Design Railbelt $1,729,000 various Application was submittedafter the published deadline. REDUCING THE COST OF ENERGY IN ALASKA Stage 2 Non-Recommended Applications 16 Below are the 4 applications that were rejected during the Stage 2 evaluation: Application Number Applicant Application Name Technology Phase Community Funds Requested Election District Rejection Reason 16002 City of North Pole, Alaska North Pole CHP Conceptual Design Project Natural Gas Feasibility North Pole $150,000 33-Q Insufficient information to complete the technical and financial evaluations. 16011 Mark K. Johnson dba Beric Alaska Energy Beric Alaska Energy Solar One Solar, Storage Recon, Design Railbelt $52,500 various Insufficient information to complete the technical and financial evaluations. 16017 Native Village of Port Heiden Port Heiden Turbine, Battery, ETS Construction Wind, Other Construction Port Heiden $949,750 37-S Application did not meet the minimum score of 40 in Stage 2. 16027 City of Tenakee Springs dba Tenakee Springs Electric Department Indian River Construction Project Matching Funds Hydro Construction Tenakee Springs $890,000 2-A Application did not meet the minimum score of 40 in Stage 2. REDUCING THE COST OF ENERGY IN ALASKA Stage 2 –Non-Recommended Application Reasoning 17 App. #Project Funds Requested Partial Funding Reasoning 16002 North Pole CHP Conceptual Design Project $150,000 Project did not achieve the required 40 points, as per Section 4 of the REF Round 16 RFA to advance onto stage 3. AEA staff identified several issues with the application including: •Application was for a natural gas project but did not include support for why renewable resources were not viable; •Insufficient information was included in the application to complete economic and technical evaluations; •Estimated total cost of final project is vague, between $40 and $80 million; •No commentary provided as to how applicant would go about securing funding for future phases; and, •The site is known to be contaminated.The application states that the site will be cleaned per ADEC requirements but specificrequirements are not stated. 16011 Beric Alaska Energy Solar One $52,500 Project did not achieve the required 40 points, as per Section 4 of the REF Round 16 RFA to advance onto stage 3. AEA staff identified several issues with the application including: •Insufficient information was included in the application to complete economic and technical evaluations; •No information provided regarding the qualifications and experience of contractors; •No discussion on the project benefit or fuel displacement; •Scope of project is unclear; and, •No commentary provided as to how applicant would go about securing funding for future phases. 16017 Port Heiden Turbine, Battery, ETS Construction $949,750 Project did not achieve the required 40 points, as per Section 4 of the REF Round 16 RFA to advance onto stage 3. AEA staff identified several issues with the application including: •Project has poor economics resulting in a benefit/cost ratio below 1; •Requested phase is for construction but the applicant has not secured funding to complete needed upgrades to its distribution system; and, •The distribution upgrades should be completed before adding renewables to the system. 16027 Indian River Construction Project Matching Funds $890,000 Project did not achieve the required 40 points, as per Section 4 of the REF Round 16 RFA to advance onto stage 3. AEA staff identified several issues with the application including: •Project has poor economics resulting in a benefit/cost ratio below 1; •Requested phase is for construction but the applicant has not secured funding to complete the phase and grants applied for and pending decisions would not cover the full cost; and, •Required FEMA repairs should be completed prior to moving forward with the rest of the construction. REDUCING THE COST OF ENERGY IN ALASKA REFAC Roles Statutes (AS 42.45.045) •AEA “in consultation with the advisory committee…develop a methodology for determining the order of projects that may receive assistance….” •AEA “shall, at least once each year, solicit from the advisory committee funding recommendations for all grants.” Regulations (3 AAC 107.660) (a) To establish a statewide balance of recommended projects, the authority will provide to the advisory committee established in AS 42.45.045 (i) a statewide and regional ranking of all applications recommended for grants. (b) In consultation with the advisory committee established in AS 42.45.045 (i), the authority will (1) make a final prioritized list of all recommended projects, giving significant weight to providing a statewide balance of grant money, and taking into consideration the amount of money that may be available, number and types of projects within each region, regional rank, and statewide rank 18 REDUCING THE COST OF ENERGY IN ALASKA REFAC Advisory Committee 19 NAME TITLE SECTOR APPOINTED BY Clay Koplin Chief Executive Officer, Cordova Electric Cooperative Small rural electric utility Governor Rose,Chris Founder / Executive Director, RenewableEnergy Alaska Project (REAP)Business/organizationinvolved in renewable energy Governor Iliodor Philemonof III Government Relations Administrator, Calista Corporation Representative of an Alaska Native Organization Governor Amberg, Alicia Executive Director, Associated General Contractors of Alaska Denali Commission Governor Janorschke,Bradley General Manager,Homer Electric Association Large urban electric utility Governor Stedman, Bert Senator Senate Member 2 Senate President Wilson, David Senator Senate Member 1 Senate President Carpenter, Ben Representative House Member 2 Speaker of the House Cronk, Mike Representative House Member 1 Speaker of the House REDUCING THE COST OF ENERGY IN ALASKA There are 24 recommended applications, totaling a request of $32 million. Round XVI –Recommended Applications Summary 20 Applications by Energy Region No.of Applications REF Funds Requested Bering Straits 1 $ 4,000,000 Bristol Bay 4 $ 6,144,569 Lower Yukon-Kuskokwim 6 $ 3,226,092 Northwest Arctic 1 $ 3,675,000 Railbelt 7 $ 6,957,514 Southeast 3 $ 4,771,724 Yukon-Koyukuk Tanana 2 $ 3,231,113 Total 24 $32,006,012 Applications by Technology No.of Applications REF Funds Requested Biomass 3 $2,607,514 Hydro 7 $ 7,615,236 Solar 8 $ 13,670,456 Storage 4 $ 5,373,827 Wind 2 $ 2,738,979 Total 24 $32,006,012 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 Biomass Hydro Solar Storage Wind Recommend Funding by Technology $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 Recommend Funding by Energy Region REDUCING THE COST OF ENERGY IN ALASKA Round XVI Geographical Distribution of Recommended Applications 21 REDUCING THE COST OF ENERGY IN ALASKA Applications Forwarded to the Legislature for a Decision on Funding 22 *If appropriated by the Legislature and approved the Governor, this funding would become effective July 1, 2024 for inclusion in the Fiscal Year 2025 budget. Orange line indicates the limit of recommended projects able to be funded with a $5 million appropriation; funding additional projects will require an increased appropriation to the total recommended funding amount. The Kotzebue Community Scale Energy Storage and Inertia Project would only be funded up to $991,887. Recommended Projects Recommendation App. #Applicant Project Title Phase Energy Region Election District Technology Community Grant Funds Requested Matching Funds Stage 3 Score Benefit / Cost Ratio HEC RegionRank State Rank Funding Level Funding Amount 16028 Tanana Chiefs Conference Ruby Community Solar PV and Battery Storage Design, Construction Yukon-Koyukuk/Upper Tanana 36-R Solar, Storage Ruby $2,008,113 $874,906 90 1.23 $12,913 1 1 Full w/Special Provision $2,008,113 16005 Solstice Energy LLC Kenai Peninsula Solar Farm Design, Construction Railbelt various Solar HEA service area $2,000,000 $48,027,664 88 1.77 $7,120 1 2 Full $2,000,000 16022 Kotzebue Electric Association Kotzebue Community Scale Energy Storage and Inertia Construction Northwest Arctic 40-T Storage Kotzebue $4,000,000 $3,500,000 85 1.73 $7,920 1 3 Partial $3,675,000 16015 Alaska Electric & Energy Coop AEEC / KPB CPL Landfill Gas CHP Project Construction Railbelt 6-C Biomass Homer $1,115,014 $875,000 84 1.61 $7,120 2 4 Full $1,115,014 16013 Igiugig Village Council Igiugig Tribal Utility Solar PV Design, Construction Bristol Bay 37-S Solar Igiugig $1,723,709 $20,933 77 1.03 $13,627 1 5 Full $1,723,709 16008 City of Pelican, Utilities Pelican Hydro Relicensing Project, Restoration, Repair Design, Construction Southeast 2-A Hydro Pelican $650,474 $50,000 76 1.63 $6,374 1 6 Full $650,474 16020 Naknek Electric Association Naknek Solar PV on Cape Suwarof Construction Bristol Bay 37-S Solar Naknek $3,210,000 $900,000 74 0.57 $9,551 2 7 Partial $3,137,848 16014 Goat Lake Hydro, Inc.Goat Lake Storage Expansion Study Reconnaissance Southeast 3-B Hydro Skagway $121,250 $52,250 71 0 $6,371 2 8 Full $121,250 Please see related summary report for details concerning the evaluation and description of the individual applications. REDUCING THE COST OF ENERGY IN ALASKA 23 Recommended Projects Recommendation App. #Applicant Project Title Phase Energy Region Election District Technology Community Grant Funds Requested Matching Funds Stage 3 Score Benefit / Cost Ratio HEC RegionRank State Rank Funding Level Funding Amount 16003 Nuvista Light &Electric Coop Nuvista Kwethluk Wind and Battery Project Completion Construction Lower Yukon-Kuskokwim 38-S Wind, Transmission, Storage Kwethluk $738,979 $0 71 0.67 $7,869 1 9 Full w/Special Provision $738,979 16007 Alaska Village Electric Cooperative Quinhagak Battery Energy Storage System Project Construction Lower Yukon-Kuskokwim 38-S Storage Quinhagak $443,956 $707,625 70 0.88 $6,962 2 10 Full $443,956 16018 City of Nenana Nenana Biomass District Heat System, Final Phase Construction Yukon-Koyukuk/Upper Tanana 36-R Biomass Nenana $1,223,000 $168,322 69 1.14 $6,864 2 11 Full $1,223,000 16025 Puvurnaq Power Kongiganak 100 kW Solar Energy Design, Construction Lower Yukon-Kuskokwim 38-S Solar Kongiganak $728,603 $674,330 69 0.6 $9,427 3 12 Partial $720,453 16009 Alaska Renewables Railbelt Wind Diversification Alaska Renewables Feasibility Railbelt various Wind, Transmission, Storage Railbelt $2,000,000 $2,187,000 69 1.22 $5,458 4 13 Full $2,000,000 16001 City of Homer Homer Energy Recovery Project Construction Railbelt 6-C Hydro Homer $280,000 $90,000 68 0.01 $7,120 5 14 Full $280,000 16026 Atmautluak Tribal Utilities Atmautluak ETS Installation, Integration and Commissioning Construction Lower Yukon-Kuskokwim 38-S Wind, Other Atmautluak $286,227 $188,160 68 0.29 $8,538 4 15 Full $286,227 16021 Southeast Alaska Power Agency Southeast Alaska Grid Resiliency (SEAGR)Design, Construction Southeast 1-A, 2A Hydro Ketchikan, Petersburg, Wrangell $4,000,000 $18,592,510 68 0 $6,730 3 16 Full $4,000,000 Please see related summary report for details concerning the evaluation and description of the individual applications. Applications Forwarded to the Legislature for a Decision on Funding REDUCING THE COST OF ENERGY IN ALASKA 24 ** Note: On Jan. 9, 2024, the REFAC voted to change the rank for application #16024 from a rank of 11 to a rank of 23 due to potential technical risks associated with fuel supply commitments. Recommended Projects Recommendation App. #Applicant Project Title Phase Energy Region Election District Technology Community Grant Funds Requested Matching Funds Stage 3 Score Benefit / Cost Ratio HEC RegionRank State Rank Funding Level Funding Amount 16006 Alaska Village Electric Cooperative, Chevak Battery Energy Storage System Project Construction Lower Yukon-Kuskokwim 38-S Storage Chevak $968,644 $0 66 0.62 $6,902 5 17 Full $968,644 16023 Pedro Bay Village Council Knutson Creek Hydro Project Construction Construction Bristol Bay 37-S Hydro Pedro Bay $400,000 $7,200,000 65 0.08 $9,390 3 18 Full w/Special Provision $400,000 16016 Akiachak, Ltd Akiachak Native Community 200 kW Solar Energy Project Design, Construction Lower Yukon-Kuskokwim 38-S Solar Akiachak $1,443,257 $2,265,809 64 0.33 $8,870 6 19 Partial w/Special Provision $67,833 16019 Nome Joint Utility System NJUS Solar Nome Banner Ridge Solar Farm Construction Bering Straits 39-T Solar Nome $4,000,000 $50,000 60 0.57 $9,139 1 20 Full $4,000,000 16012 Matanuska Electric Association Hunter Creek Hydroelectric Feasibility Study Project Feasibility Railbelt various Hydro, Transmission, Storage MEA service area $1,280,500 $384,500 58 0.67 $5,920 6 21 Full $1,280,500 16010 City of Chignik Chignik Hydroelectric Power System Design Bristol Bay 37-S Hydro Chignik $883,012 $44,346 57 1.06 $7,701 4 22 Full $883,012 **16024 Golden Valley Electric Healy Unit 2 Coal to Biomass Fuel Conversion Recon, Feasibility Railbelt various Biomass GVEA service area $269,500 $58,500 70 0 $8,420 3 23 Full $269,500 16004 Utopian Power LLC Sterling Solar Project Design, Construction Railbelt 8-D Solar Sterling $2,000,000 $2,000,000 37 0.7 $7,120 7 24 Partial w/Special Provision $12,500 Applications Forwarded to the Legislature for a Decision on Funding REDUCING THE COST OF ENERGY IN ALASKA Round XVI –Partial Funding Reasoning 25 App. #Project RequestedFunding Recommended Funding Partial Funding Reasoning 16022 Kotzebue Community Scale Energy Storage and Inertia $4,000,000 $3,675,000 Maximum award amount per project is currently $4 million for high energy cost areas as per section 1.15 of the Round 16 RFA. InRound 13, KEA was awarded a REF grant (#7013018) in the amount of $325,000 for the study and design of the now proposed BESSsystem. As such, the requested amount of $4 million is reduced correspondingly by $325,000 to provide a revised funding recommendation of $3,675,000. 16020 Naknek Solar PV on Cape Suwarof $3,210,000 $3,137,848 Partial Funding adjustment is owing to exclusion of funding for final design cost of $71,152 which is currently ongoing and already funded. Only costs incurred after July 1, 2024, and which are within the scope of the grant agreement are eligible for funding under the REF program.Revised funding recommendation: $3,137,848 16025 Kongiganak 100 kW Solar Energy $728,603 $720,453 Costs associated with the applicant's administration of the REF grant are not eligible uses of REF funds. The line item for "AEA Grant and NTP" for $8,150 is therefore removed from the funding recommendation, yielding a revised funding recommendation of $720,453. 16016 Akiachak Native Community 200 kW Solar Energy $1,443,257 $67,833 Funding for final design only in Round 16 is recommended prior to recommendation for funding the construction phase,which will better inform the additional solar capacity integration.AEA requested a copy of the USDA award, solar resource study, and updated HOMER model from the applicant. Applicant provided the USDA grant agreement, but neither the solar resource study, or the updated HOMER model. The applicant may re-apply in a future REF round for the construction phase once the final design is completed.In addition, funding for grant administration is not allowable under the REF program. The $8,150 for the line item entitled "AEA award and NTP" under the final design budget is removed from the funding recommendation, for a recommendation of $67,833 in Round 16. 16004 Sterling Solar Project $2,000,000 $12,500 Funding for final design and permitting recommended prior to recommendation for funding the construction phase. Many aspects ofthe project at this juncture are unclear and need to be revised. The applicant may re-apply in a future REF round for the construction phase once the final design is completed. AEA staff identified several issues with the application including:lack of detail on proposed system design, no letters of support included,not specific in stating required permits,lack of discussion of model results and no technical analysis of proposed system was provided. As part of the evaluation process and pursuant to 3 AAC 170.655(b), 5 applications, as provided below, have been recommended for partial funding. Partial funding recommendations were made in full consideration of project phases applied for, application scoring, project scope eligibility, and household cost of energy. REDUCING THE COST OF ENERGY IN ALASKA 26 SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS ALASKA ENERGY AUTHORITY 813 West Northern Lights Blvd. Anchorage, Alaska 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Toll Free (Alaska Only) 888-300-8534 Community Applicant Name Project Name Election DistrictRecommnended FundingRuby Ruby Community Solar PV and Battery Storage Tanana Chiefs Conference 36-R $ 2,008,113 HEA service area Kenai Peninsula Solar Farm Solstice Energy LLC various $ 2,000,000 KotzebueKotzebue Community Scale Energy Storage and InertiaKotzebue Electric Association, Inc. 40-T $ 3,675,000 Homer AEEC / KPB CPL Landfill Gas CHP Project Alaska Electric & Energy Cooperative, Inc. 6-C $ 1,115,014 Igiugig Igiugig Tribal Utility Solar PV Igiugig Village Council 37-S $ 1,723,709 Pelican Pelican Hydro Relicensing Project, Restoration, Repair City of Pelican, Pelican Utilities 2-A 650,474$ NaknekNaknek Solar PV on Cape SuwarofNaknek Electric Association, Inc. 37-S $ 3,137,848 Skagway Goat Lake Hydro Storage Expansion Study Goat Lake Hydro, Inc. 3-B $ 121,250 KwethlukNuvista Kwethluk Wind and Battery Project Completion Nuvista Light and Electric Cooperative Incorporated 38-S $ 738,979 QuinhagakQuinhagak Battery Energy Storage System Project Alaska Village Electric Cooperative, Inc. 38-S $ 443,956 Nenana Nenana Biomass District Heat System, Final Phase City of Nenana 36-R $ 1,223,000 KongiganakKongiganak 100 kW Solar Energy Project Puvurnaq Power Company 38-S $ 720,453 Railbelt Railbelt Wind Diversification Alaska Renewables Alaska Renewables LLC various $ 2,000,000 Homer Homer Energy Recovery Project City of Homer various $ 280,000 AtmautluakAtmautluak ETS Installation, Integration and Commissioning Atmautluak Tribal Utilities 38-S $ 286,227 Ketchikan, Petersburg, Wrangell Southeast Alaska Grid Resiliency (SEAGR) Southeast Alaska Power Agency (SEAPA) 1-A, 2-A $ 4,000,000 ChevakChevak Battery Energy Storage System Project Alaska Village Electric Cooperative, Inc. 38-S $ 968,644 Pedro Bay Knutson Creek Hydro Project Construction Pedro Bay Village Council 37-S $ 400,000 AkiachakAkiachak Native Community 200 kW Solar Energy Project Akiachak, Ltd 38-S $ 67,833 Nome NJUS Solar Nome Banner Ridge Solar Farm Nome Joint Utility System 39-T $ 4,000,000 MEA service area Hunter Creek Hydroelectric Feasibility Study Project Matanuska Electric Association various $ 1,280,500 ChignikChignik Hydroelectric Power System City of Chignik37-S $ 883,012 GVEA service area Healy Unit 2 Coal to Biomass Fuel Conversion Golden Valley Electric Association various $ 269,500 SterlingSterling Solar ProjectUtopian Power LLC 8-D $ 12,500 TOTAL32,006,012$ *If appropriated by the Legislature and approved the Governor, this funding would become effective July 1, 2024 for inclusion in the Fiscal Year 2025 budget.Alaska Energy Authority - Renewable Energy Fund - Round 16 - Recommended Projects to Legislature***Orange line indicates the limit of recommended projects able to be funded with a $5 million appropriation; funding additional projects will require an increased appropriation to the total recommended funding amount. The Kotzebue Community Scale Energy Storage and Inertia Project would only be funded up to $991,887. 813 W Northern Lights Blvd, Anchorage, AK 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG January 30, 2024 Representative Ben Carpenter, Chair Legislative Budget and Audit Committee Alaska State Legislature Alaska State Capitol Room 24 Juneau, Alaska 99801 Commissioner Julie Sande Alaska State Bond Committee Department of Commerce, Community and Economic Development P.O. Box 110400 Juneau, Alaska 99811-0400 Subject: Estimate and Statement of Withdrawals from Capital Reserve Funds Dear Representative Carpenter and Commissioner Sande: AS 44.83.110(h) requires that the Alaska Energy Authority shall annually prepare a revised estimate of the need to withdraw money from the capital reserve funds of the Authority and a statement of all withdrawals that have occurred from the date of issuance of the bonds to the end of the preceding calendar year. The Alaska Energy Authority currently maintains capital reserve funds subject to the reporting requirements of AS 44.83.110(h) with respect to the following bonds for the Bradley Lake Hydroelectric project: $40,000,000 Alaska Energy Authority Power Revenue Bonds, Seventh Series (Battle Creek Diversion Project) $1,239,000 Alaska Energy Authority Power Revenue Bonds, Eighth Series (Battle Creek Diversion Project) $17,000,000 Alaska Energy Authority Power Revenue Bonds, Tenth Series (Transmission Line Projects – SSQ Line) $166,013,134 Alaska Energy Authority Power Revenue Bonds, Eleventh Series (Bradley Lake Required Project Work) The original estimate of an amount of funds to be withdrawn from the capital reserve fund during the term of the bond issues was zero. There has been no change in the Authority 's original estimate. In order to maintain the capital reserve fund at the appropriate level, the bond documents provide for the withdrawal of investment earnings from the fund to be Alaska Energy Authority Page 2 of 2 used as specified in the bond documents. The bond documents also define the capital reserve fund requirement, which decreases under certain circumstances, including a reduction in debt service arising from a refunding . Except for investment earnings and reductions related to changes in the capital reserve fund requirement, no withdrawals from the capital reserve fund have occurred from the dates of issuance of the bonds through December 31, 2023. Sincerely, Curtis W. Thayer Executive Director Alaska Energy Authority CPRG Measure Proposal: Electric Vehicle Charging Infrastructure Basic Information: 1. Implementing Organization: Must be a municipality, tribe, state agency, council of governments, tribal consortium or coalition of eligible entities. NGOs/utilities may submit measures only as a sub-awardee of an eligible entity. a. AEA and DOT&PF 2. Designated sub-awardee/contractor, if applicable: If a specific non-eligible entity will be involved in implementing the measure, they should be listed here. This includes non- governmental organizations and for-profit contractors. a. N/A 3. Geographic scope: This can be the community, region or statewide. For regional scope, ideally identify specific communities, census area, and/or ANCSA region. a. Statewide 4. CPRG Measure Contact: a. Name: Josi Hartley (AEA), Adam Moser (DOT&PF) b. Title: Renewable Energy and Energy Efficiency Program Manager (Josi), Program Development Chief (Adam) c. Phone: 907-854-2824, 907-465-2985 d. Email: Jhartley@akenergyauthority.org, adam.moser@alaska.gov Proposed Measure Overview: 1. Measure Summary: Provide several paragraphs of narrative about the proposed measure and your organization’s ability to implement in. Topics to address include: a. Efficacy of your measure at providing substantial, long term emissions reductions b. Your organization’s capacity to scale and implement work on proposed measures The installation of EVSE in urban and destination areas addresses a gap in current funding, aiming to alleviate range anxiety for electric vehicle (EV) drivers and stimulate EV adoption in Alaska. This project, aligned with the state’s NEVI strategic plan, involves strategically placing Level 2 and Level 3 charging stations. Level 2 chargers cater to urban areas for convenient daily charging, while Level 3 chargers are situated in destination spots for quick recharges during long journeys. In collaboration with DOT&PF, AEA is actively working to implement Alaska’s share of the National Electric Vehicle Infrastructure (NEVI) funding. This joint effort seeks to efficiently utilize resources to establish a comprehensive EV charging network. The significance of this infrastructure development lies in addressing the current funding gaps, reducing range anxiety through strategic charging station placement, and fostering increased EV adoption by facilitating seamless charging experiences. The installation of additional EV charging infrastructure would increase the adoption of EVs in the state by reducing range anxiety and barriers to EV adoption. The funding would be distributed in the same manner as the NEVI funding. 2. Estimated Emissions Reduction: If an estimate of CO2e reduction is available, please share here. Other estimate metrics such as gal. of fuel-use reduction or kWh/BTU of energy use reduction is also allowable, and should be shared here. Based on the International Council on Clean Transportation’s (ICCT’s) Global Comparison of the Life-Cycle Greenhouse Gas Emissions of Passenger Cars[1], an estimated amount of carbon emissions was determined for Internal Combustion Engine (ICE) vehicles and Electric Vehicles (EVs). The ICCT report identified life-cycle emissions per mile driven and also categorized the emissions into Passenger Cars (PCs) and Sport Utility Vehicles (SUVs). A comparison was made between the two fuels for PCs and SUVs, and it was determined that electric PCs have an annual benefit of 13.4 g CO2 / mile reduction and electric SUVs have an annual benefit of 15.2 g CO2 / mile reduction. Alaska’s vehicular fleet is comprised of 76% trucks and SUVs and 24% PCs and minivans, so a blended rate was compiled. Since Alaskan’s drive an average of 11,111 miles per year[2], the result is each EV conversion results in a reduction of 166,665 g CO2, or 455 tons CO2 per year. The National Renewable Energy Lab estimates that by 2030 there will be a need for 28 million charging ports to support the estimated 33 million EVs on the road[3]. This conclusion results in the need for 0.848 ports per EV. Therefore, each port can be concluded to reduce emissions by 536 tons CO2 per year. This measure can be applied to each port deployed and scaled as the program expands. Further, Alaska will measure the adoption rates as it relates to the increase in the number of ports to determine if further correlation exists. The measure will also be compared with port usage to ensure that the station and ports are receiving usage to support the carbon reduction claims. Each site will follow requirements and standards set in Title 23 for the National Electric Vehicle Infrastructure (NEVI) program in that four ports will be deployed at each site. Each site will provide a benefit of reducing CO2 emissions by 2,144 tons per year. [1] https://theicct.org/wp-content/uploads/2021/07/Global-Vehicle-LCA-White-Paper-A4-revised-v2.pdf [2] https://www.policygenius.com/auto-insurance/average-miles-driven-by-state/ [3] https://www.nrel.gov/docs/fy23osti/85654.pdf 3. Community Benefits: Please provide several paragraphs of narrative regarding community benefits of your measure. Measures must provide community benefits and avoid disbenefits. a. Examples of benefits include energy cost reduction, reduced air and noise pollution, increased quality labor/workforce development and improved quality of life. b. If your measure primarily affects urban Alaska, please address how the measure would benefit low-income and disadvantaged communities. • Improve clean transportation access through the location of chargers and increase the number of EV charging stations in Justice40 areas. • Decrease the transportation energy cost burden by enabling reliable access to affordable charging. • Increase the clean energy job pipeline, job training, and enterprise creation in disadvantaged communities. Increase the number of new clean energy jobs and jobs related to clean energy. • Reduce environmental exposures to transportation emissions. • Positive economic impacts to business owners through the indirect impacts of retail/site sales while patrons charge. • Knowledge sharing and program awareness, community opportunities for engagement about the program. • This is a direct air quality improvement to the communities in which the ports are deployed. If the ports are deployed in or near Justice40 communities, it is expected that these communities will experience these benefits. Everyone benefits from cleaner air, and each EV that replaces an ICE vehicle showcases that benefit to all Alaskans. In urban areas such as Fairbanks, a reduction in vehicle emissions will greatly aid the air quality where, often in the winter months, there are temperature inversions that trap pollution near the ground. Proposed Measure Details: If the details aren’t finalized, please provide your best estimate. If your measure is included in a plan, planning staff will follow up with support to further define these. 1. An Implementation Schedule: Please provide an implementation timeline including milestones for specific milestones like procurement, installation, reporting, etc. For existing efforts, you may note any relevant past milestones. You may identify any roadblocks that exist in the implementation of your measure. • Expect project timeline to be 3 years total. Major project tasks include: o Administer request for applications (RFA) in targeted communities to select site hosts o Competitively select projects o Install and commission EVSE 2. Metrics for Tracking Progress: Please identify the metrics that will be used for tracking measure progress. This can include outputs such as number of: equipment or technology installations, zero-emission vehicles; renewable energy installations and smart meters; electrified appliances (e.g. heat pumps) installed; buildings retrofitted; policies and measures enacted, adopted, and/or expanded; and/or, staff hired. • Increased EV adoption, usage of EV charging stations. • Number of EV charging stations installed against goals/targets • Each site will follow requirements and standards set in Title 23 for the National Electric Vehicle Infrastructure (NEVI) program in that four ports will be deployed at each site. Each site will provide a benefit of reducing CO2 emissions by 2,144 tons per year. • This program can deploy the identified number of ports, track the progress annually to credit the reduction, and be prepared to expand and scale for future added benefits. Proposed Measure Budget: If there’s no current cost estimates, we can work with you to assess what to ask based on grant tiers. 1. Cost Estimates, as possible: Please provide an estimated cost/budget of your measure; include costs by measure component and by fiscal year if relevant. You may also attach additional budget documentation. a. Level 3 Charging: Approximately $600,000 per site, 4 ports, 150 kW per port i. Install 15 sites b. Level 2 Charging: Approximately $15,000 per site i. Install 40 sites c. AEA recommended funding request: $10,000,000 2. Funding Sources, if relevant: Please identify non-CPRG funding sources that may support your measure’s implementation. You should note what funding is already committed and what, if any, funding sources are being considered. a. National Electric Vehicle Infrastructure (NEVI) Program b. Charging and Fueling Infrastructure (CFI) Program c. Site Host/Community Match Alaska Energy Authority CPRG Measure Proposal – Dixon Diversion Basic Information: 1. Implementing Organization: Alaska Energy Authority 2. Designated sub-awardee/contractor, if applicable: N/A 3. Geographic scope: Statewide impact, Dixon Glacier, Kenai Peninsula 4. CPRG Measure Contact: a. Name: Ryan McLaughlin b. Title: Infrastructure Engineer c. Phone: (907)771-3012 d. Email: rmclaughlin@akenergyauthority.org Proposed Measure Overview: 1. Measure Summary: Provide several paragraphs of narrative about the proposed measure and your organization’s ability to implement in. Topics to address include: a. Efficacy of your measure at providing substantial, long term emissions reductions b. Your organization’s capacity to scale and implement work on proposed measures The Dixon Diversion project is an expansion of the Alaska Energy Authority (AEA)-owned Bradley Lake Hydroelectric project. This project will convey water from the toe of the Dixon Glacier via a diversion dam and 5 mile long underground tunnel into Bradley Lake. From Bradley Lake water will flow through an existing hydroelectric power plant connected to the main state electric grid (Railbelt). The project will also include modifications to the Bradley Lake Dam to raise the full pool height by 14 feet. The combination of additional water received from the Dixon Glacier Basin and additional storage capacity in Bradley Lake will lead to an increase in energy of ~182,000 MWh per year (over baseline of ~400,000 MWH/yr). This would equate to an approximately 50% increase in energy from the Bradley Lake hydroelectric project, which currently supplies ~10% of the Railbelt’s electric demand. This increase in energy is possible with a very small footprint. The Dixon Diversion project will construct ~1 mile of new road, utilize <5 acres for the diversion dam, underground tunnel, and inundation of 200 acres by higher lake level. The lake is an alpine lake with no fish or development. AEA is currently studying the hydrology, geology, and fish and wildlife impacts of the proposed project. Studies will be conducted over the next 2 years in preparation for a FERC license amendment. Energy numbers will continue to be refined based on hydrology data collected and minimum instream flows determined for fish passage up the Martin River. Geotechnical investigations will take place summer 2024 near the entrance and exit of the Dixon Tunnel. Construction of the project is expected to take place in 2027-2030. AEA owns the Bradley Lake Hydroelectric project which was constructed in 1991. In 2020 AEA successfully constructed the Battle Creek Diversion project, which was a similar expansion to the Bradley Lake project. AEA is the most qualified State Agency to implement this project, however this is a Capital Infrastructure project and is not a scalable implementation measure. 2. Estimated Emissions Reduction: If an estimate of CO2e reduction is available, please share here. Other estimate metrics such as gal. of fuel-use reduction or kWh/BTU of energy use reduction is also allowable, and should be shared here. The Dixon Diversion project will directly offset 182,000 MWh/year of natural gas generated electricity on the Railbelt. Using EPA/s U.S. weighted average Greenhouse Gas Equivalencies Calculator (AVERT), this equates to 128,983 metric tons of CO2 offset / year. The additional water storage will enable utilities to regulate non-firm energy generators on the limited grid and in-directly allow additional non- form generation development on the grid. 3. Community Benefits: Please provide several paragraphs of narrative regarding community benefits of your measure. Measures must provide community benefits and avoid disbenefits. a. Examples of benefits include energy cost reduction, reduced air and noise pollution, increased quality labor/workforce development and improved quality of life. b. If your measure primarily affects urban Alaska, please address how the measure would benefit low-income and disadvantaged communities. There are many benefits to this project that will impact all Alaskans. This would be one of the largest renewable projects constructed in the State of Alaska. Hydroelectric power is cheap and reliable energy that will lower the cost of electricity for all Railbelt consumers, and indirectly lower the cost of energy for Power Cost Equalization (PCE) ratepayers. The project will help reduce the demand for natural gas generated electricity. The storage component of this hydro project allows Railbelt utilities to reliably dispatch renewable power year-long, which is a significant advantage over other renewable resources such as solar and wind. The project can be completed on a very small footprint, and the environmental impact is extremely small for a project of this magnitude. This project will have a direct positive impact to the ~40% (75%-80% of Alaska’s population) of Railbelt census tracts identified as low-income or disadvantaged, and an indirect benefit to every ratepayer in a PCE community (rural & disadvantaged communities). Proposed Measure Details: If the details aren’t finalized, please provide your best estimate. If your measure is included in a plan, planning staff will follow up with support to further define these. 1. An Implementation Schedule: Please provide an implementation timeline including milestones for specific milestones like procurement, installation, reporting, etc. For existing efforts, you may note any relevant past milestones. You may identify any roadblocks that exist in the implementation of your measure. A detailed schedule can be provided. On a high level, 2024-2025 will be primarily data collection, investigations, and environmental studies. The FERC License Amendment will be filed by 2026. The dam raise may take place in 2028, and the Dixon Diversion and Tunnel Construction is expected to take place 2029-2030. Project implementation plan is subject to change. 2. Metrics for Tracking Progress: Please identify the metrics that will be used for tracking measure progress. This can include outputs such as number of: equipment or technology installations, zero-emission vehicles; renewable energy installations and smart meters; electrified appliances (e.g. heat pumps) installed; buildings retrofitted; policies and measures enacted, adopted, and/or expanded; and/or, staff hired. This project will report greenhouse gas reductions based on avoided emissions of energy generated. Proposed Measure Budget: If there’s no current cost estimates, we can work with you to assess what to ask based on grant tiers. 1. Cost Estimates, as possible: Please provide an estimated cost/budget of your measure; include costs by measure component and by fiscal year if relevant. You may also attach additional budget documentation. The current total project budget is expected at $342,000,000, which includes contingency. 2. Funding Sources, if relevant: Please identify non-CPRG funding sources that may support your measure’s implementation. You should note what funding is already committed and what, if any, funding sources are being considered. $5MM in State of Alaska funds are currently being used for preliminary studies and design work. $1MM has been expended from Renewable Energy Fund grant awarded to the project. There is a need for an additional $7MM in State funds, included in AEA’s FY25 Capital Request, for continued studies to support a Federal Energy Regulatory Commission (FERC) License Amendment including feasibility, hydrological, geological, fisheries, water quality, and geomorphology studies. Alaska Energy Authority CPRG Measure Proposal – Renewable Energy Fund Basic Information: 1. Implementing Organization: Alaska Energy Authority (AEA) 2. Designated sub-awardee/contractor, if applicable: sub-awards to REF applicants, consisting of Independent Power Producers, Electric Utilities, Local Governments, and Governmental Entities 3. Geographic scope: Statewide 4. CPRG Measure Contact: a. Name: Karen Bell b. Title: Manager of Planning c. Phone: (907) 771-3951 d. Email: kbell@akenergyauthority.org Proposed Measure Overview: 1. Measure Summary: Provide several paragraphs of narrative about the proposed measure and your organization’s ability to implement in. Topics to address include: a. Efficacy of your measure at providing substantial, long term emissions reductions b. Your organization’s capacity to scale and implement work on proposed measures The Renewable Energy Fund (REF) is a unique and robust competitive grant program, which provides critical financial assistance for statewide renewable energy projects, across a variety of project phases. Since its inception in 2008, the REF has secured more than $317 million in state-appropriated grant funding for renewable energy development. REF’s benefits have been detailed in an independent impact analysis, as commissioned by AEA and conducted by a third-party research consultancy, completed in December 2023. Per the report, the REF program since inception has offset approximately 85 million gallons of diesel fuel (e.g. five percent of all petroleum consumed in Alaska in 2021), 2.2 million cubic feet of natural gas, and 1,063,500 net metric tons of carbon dioxide. Furthermore, the REF has yielded a cumulative net energy cost savings of an estimated at $53 million, with the avoided cost of fine particulate matter (PM2.5) from offset emissions estimated between $29 and $40 million. REF’s impact on Alaska’s workforce statewide is estimated at 2,931 added jobs. In addition to significant direct state investment through the REF, REF projects have also leveraged REF funds to secure over $300 million in other external investment. REF funds have been utilized as matching funds for federal funding opportunities, and to incentivize local contributions, or applied as additional project capital with loans under AEA’s Power Project Loan fund. In May 2023, the REF program was renewed in perpetuity with the passage and signing into law of House Bill 62 by Governor Mike Dunleavy. The REF, by statute, is administered by the Alaska Energy Authority (AEA), a public corporation of the State of Alaska. AEA serves as the State's energy office and lead agency for statewide energy policy and program development and whose mission is “reduce the cost of energy in Alaska.” AEA has experienced personnel dedicated to administering the REF program and managing the grant awards. AEA, in coordination with a 9-member advisory committee, has successfully administered the REF since its inception. 2. Estimated Emissions Reduction: If an estimate of CO2e reduction is available, please share here. Other estimate metrics such as gal. of fuel-use reduction or kWh/BTU of energy use reduction is also allowable, and should be shared here. As referenced in our response to question 1, the REF program since inception has offset approximately 85 million gallons of diesel fuel (e.g. five percent of all petroleum consumed in Alaska in 2021), 2.2 million cubic feet of natural gas, and 1,063,500 net metric tons of carbon dioxide. AEA is currently evaluating applications submitted in REF Round 16, the Program’s most recent solicitation, to prepare recommendations to be submitted to the Alaska State Legislature for funding consideration in January 2024. The initial grant request totaled $37,817,000. The REF budget allocation is currently set at $5 million in the Governor’s budget, as released in mid-December 2023. In tracking funding appropriations for recent REF funding rounds, there has been demonstrated increasing support for REF funding, with the most recent solicitations having secured state appropriations for REF program in the range of $15 to $17 million. Final REF funding will be determined upon passage of the enrolled FY2025 capital budget, as subject to budget deliberations between members of the Legislature and the Governor’s office. While the final funding amount for the REF is unknown at this juncture, it can be reasonably anticipated that a portion of those projects recommended in Round 16 will go unfunded, although there remains an opportunity for the REF’s advisory committee to request revisions to AEA’s recommended projects prior to AEA’s submission of its recommendations to the Legislature and the Governor, which would impact the number of recommended projects going unfunded. AEA had third party contracted economists review the 28 applications submitted in Round 16, of which 24 applications passed the economic and technical feasibility evaluations. Based on an economic model used to evaluate REF projects, the estimated emissions reduction for these 24 applications would be equivalent to 1,186.857 tons of CO2 annually, or 24,278,625 tons CO2 avoided over the life of the projects spanning 10 to 50 years. This estimate is on the high end for emissions reductions owing to an application which seeks funding for a feasibility study to investigate 3 different wind sites. If only 1 of these 3 sites was to be developed the estimated emissions reduction for REF Round 16 projects would be equivalent to 450,938 tons of CO2 annually, or 9,561,177 tons CO2 avoided over the life of the projects spanning 10 to 50 years. The estimated emissions reduction for REF Round 15 projects that were recommended but ultimately not funded would be equivalent to 14,084 tons of CO2 annually, or 459,959 tons CO2 avoided over the life of the projects spanning 20 to 50 years. The estimated emissions reduction for feasibility and design projects that were funded in REF Rounds 13, 14, and 15 and that would likely be ready to initiate construction phases within the next few years would be equivalent to 945,479 tons of CO2 annually, or 19,679,262 tons CO2 avoided over the life of the projects spanning 20 to 50 years. Community Benefits: Please provide several paragraphs of narrative regarding community benefits of your measure. Measures must provide community benefits and avoid disbenefits. a. Examples of benefits include energy cost reduction, reduced air and noise pollution, increased quality labor/workforce development and improved quality of life. b. If your measure primarily affects urban Alaska, please address how the measure would benefit low-income and disadvantaged communities. The Renewable Energy Fund provides many benefits to local communities, with 80% of past awards granted to non-Railbelt communities. Such benefits include but are not limited to, mitigating Alaskan communities’ reliance on carbon-based fuels such as diesel and natural gas which are subject to significant price volatility; reducing Alaskans’ exposure to harmful airborne particulate matter through the offset of diesel generation with renewable generation; lowering and stabilizing the long-term cost of energy through carbon-based fuel savings for Alaskan communities via offset by low-cost and “free-fuel” renewable generation; increasing energy security through the development of distributed renewable generation and diversification of energy generation sources; and creating new jobs through continued investment in the renewable energy industry, and ancillary industries statewide. Proposed Measure Details: If the details aren’t finalized, please provide your best estimate. If your measure is included in a plan, planning staff will follow up with support to further define these. 1. An Implementation Schedule: Please provide an implementation timeline including milestones for specific milestones like procurement, installation, reporting, etc. For existing efforts, you may note any relevant past milestones. You may identify any roadblocks that exist in the implementation of your measure. Understanding the period of performance for CPRG implementation grants is limited to 5 years, AEA proposes capitalizing the REF fund with $100 million to fund 20 to 40 renewable energy projects. AEA will release a solicitation for projects in the Fall of 2024, encouraging past applicants to reapply for projects that were not funded, or only partially funded in previous rounds. Projects will be forwarded to the Legislature for in January of 2025 for funding consideration. Those projects selected for funding will receive grant awards by August 2025. Project implementation plans will differ based on the respective project. At a high level, we expect procurement to occur from Fall 2025 to Spring 2026 and construction to be complete in 2027 and 2028. 2. Metrics for Tracking Progress: Please identify the metrics that will be used for tracking measure progress. This can include outputs such as number of: equipment or technology installations, zero-emission vehicles; renewable energy installations and smart meters; electrified appliances (e.g. heat pumps) installed; buildings retrofitted; policies and measures enacted, adopted, and/or expanded; and/or, staff hired. The REF program will be tracked through a variety of impact metrics including: Total program expenditures and budget category expenditures ($), renewable capacity deployed (MW), battery storage capacity deployed (MWh), renewable power produced (MWh), CO2 emissions avoided (tons CO2), and the reduction in diesel used (gallons). Proposed Measure Budget: If there’s no current cost estimates, we can work with you to assess what to ask based on grant tiers. 1. Cost Estimates, as possible: Please provide an estimated cost/budget of your measure; include costs by measure component and by fiscal year if relevant. You may also attach additional budget documentation. Total proposed program budget is $100 million. Based on past experience, AEA believes this funding could reasonably be expended on REF projects within the 5 year period of performance as required for CPRG measures. Funding Sources, if relevant: Please identify non-CPRG funding sources that may support your measure’s implementation. You should note what funding is already committed and what, if any, funding sources are being considered. The REF is funded by the State through appropriations by the Legislature. The REF does not have dedicated funding, and the Legislature is not statutorily obligated to fund any REF projects as recommended by AEA. For REF Round 15, the most recently completed funding round, $17 million in funding was appropriated for 18 projects. 7 projects with a total grant request of $8 million were recommended but not funded. Funding for the REF has correlated historically with the fiscal health of the state. Owing to state budget constraints over the past decade, the REF went unfunded in fiscal years 2016, 2017, 2019, and 2020. Alaska Energy Authority CPRG Measure Proposal: Rural Energy; DERA Expansion, Distribution Upgrades, and VEEP Basic Information: 1. Implementing Organization: Must be a municipality, tribe, state agency, council of governments, tribal consortium or coalition of eligible entities. NGOs/utilities may submit measures only as a sub-awardee of an eligible entity. a. AEA 2. Designated sub-awardee/contractor, if applicable: If a specific non-eligible entity will be involved in implementing the measure, they should be listed here. This includes non- governmental organizations and for-profit contractors. a. N/A 3. Geographic scope: This can be the community, region or statewide. For regional scope, ideally identify specific communities, census area, and/or ANCSA region. a. Statewide 4. CPRG Measure Contact: a. Name: Rebecca Garrett b. Title: Rural Programs Manager c. Phone: 907-771-3042 d. Email: rgarrett@akenergyauthority.org Proposed Measure Overview: Measure Summary: Provide several paragraphs of narrative about the proposed measure and your organization’s ability to implement in. Topics to address include: 1. General Summary and Scope of Measure: a. Diesel Emissions Reduction Act (DERA) Program Expansion: i. Alaska Energy Authority (AEA) will issue sub-award grants to replace diesel engines in rural Alaska communities to expand the scope of EPA’s existing DERA program. Rural communities in Alaska are not connected to the electrical grid and must generate their own electricity. Small diesel power plants are used to generate power. These plants have at least one diesel engine running continuously. Rural Alaska communities rely on these power plants for their prime power; however, many of these power plants use older technology, high emitting engines. This program would fund the replacement of non-certified and lower tier diesel engines with Tier 2 and 3 marine engines and low PM emitting nonroad engines. These engines are equipped with electronically controlled governors, which improves performance and reduces emissions. ii. AEA compiles a priority list for engine replacements within the community, highlighting eligible communities. Presently, the demand for these initiatives surpasses the available funding resources. b. Distribution System Upgrades: i. AEA will issue sub-award grants to upgrade distribution systems in rural Alaska communities. The framework for this program will follow the process of AEA’s existing Rural Power System Upgrade (RPSU) program. Rural communities in Alaska are not connected to the electrical grid and must generate their own electricity. These small microgrids are typically diesel generated with some renewable generation. The distribution systems were built for a 30-year life but are now approaching 50+ years old with aging poles and sagging lines that create a life and health safety risk, and lower overall system efficiency through line losses. ii. AEA is currently working on a distribution inventory and assessment to rank the highest need communities. iii. Upgrading the distribution infrastructure will improve overall system efficiency by reducing line losses and diesel fuel usage at the powerhouse. Distribution upgrades also ensure that the microgrids are well-equipped for renewable energy, enabling the local distribution systems to effectively manage the fluctuations introduced to the system. Distribution upgrades ensure the system is properly balanced to handle the different systems on each leg, whether it is renewable generation or an electric stove used to take advantage of excess wind. iv. Presently, the demand for these initiatives surpasses the available funding resources. c. Village Energy Efficiency Program (VEEP): i. Through a Request for Applications (RFA), AEA will issue sub-award grants to qualified high-energy cost communities in order to upgrade public buildings and infrastructure with energy efficient materials. 2. Efficacy of your measure at providing substantial, long term emissions reductions a. DERA: i. Power generation in rural communities is expensive compared to more urban areas. To help contain costs, engines in the power plants must use technology that will last. All engines used under the DERA grant will be configurations that have been proven to be reliable and long-lived. ii. Record drawings will be prepared for each grantee documenting the completed work. Operations and Maintenance (O&M) manuals will be updated and incorporate manufacturer’s recommended maintenance and service intervals for all generation equipment. AEA will continue to provide technical support (as requested) through its Circuit Rider Maintenance program to assist communities to maximize the useful life of the installed generation equipment. iii. AEA anticipates that diesel engines will continue to be used for many years in rural Alaska for prime power generation. The estimated useful life of a DERA engine in a prime power application is 60,000-hours, over a 10-year period. Replacing older technology engines with newer, cleaner and more efficient engines will provide fuel savings, emission reductions and health benefits for many years. b. Distribution: i. Line loss is a known problem for Alaska’s rural utilities. Generally, utilities like to see line loss at 10% or lower. In fact, for utilities participating in the Power Cost Equalization (PCE) program, there can be penalties for line loss at 12% or higher. c. VEEP: i. Over the last three VEEP solicitations, 56 communities in rural Alaska have offset a total of 1,189,463 kWh/year. There are many communities in rural Alaska who could benefit from VEEP projects. Energy efficiency is one of the most effective means of reducing diesel consumption in rural Alaska. Presently, the demand for these initiatives surpasses the available funding resources. 3. Your organization’s capacity to scale and implement work on proposed measures AEA’s core programs work to diversify Alaska’s energy portfolio, lead energy planning and policy, invest in Alaska’s energy infrastructure and provide rural Alaska with technical and community assistance. The impact of AEA’s programs extend to the construction of rural power generation and bulk fuel facilities, distribution systems and transmission lines, renewable energy asset construction and integration, and ad-hoc maintenance and improvement of aging infrastructure. AEA commenced the construction of powerhouses for rural and tribal communities upon its inception in 1976. Since then, AEA has touched on the power generation systems and worked with stakeholders from nearly every community in the state to provide supply and demand energy services. In the past two years, AEA has overseen ten rural powerhouse upgrade projects at different stages of development in the communities of Akhiok, Napaskiak, Nikolai, Venetie, Rampart, Nelson Lagoon, Manokotak, Circle, Akiachak, and Arctic Village. AEA has administered the DERA program since the Federal Fiscal Year (FFY) 2015. In addition to rural energy infrastructure projects, AEA has administered three VEEP solicitations over the last three rounds for a total of $2.8 MM of project funds administered, and 1,189,463 kWh offset. AEA currently has an additional $2.5 million in VEEP funding available for applications, for a total of ~$5 million over three years. 4. Estimated Emissions Reduction: If an estimate of CO2e reduction is available, please share here. Other estimate metrics such as gal. of fuel-use reduction or kWh/BTU of energy use reduction is also allowable, and should be shared here. a. DERA: A recent project from our FFY 21/22 program is Akiachak where two engines were replaced. In Akiachak, the 2021 DERA State Clean Diesel Program replaced two uncontrolled engines (Gen 1 & 2). Two gensets will periodically run in parallel to meet Akiachak’s peak electric loads. Akiachak uses approximately 138,000 gallons of diesel fuel to generate about 1,931,000 kWh annually. The resulting emission reductions are shown in the tables below. Akiachak Annual Results (short Tons) NOx PM2.5 HC CO CO2 Baseline Engines 23.62 1.25 1.83 8.20 1554 Replacement Engines 18.08 0.09 .046 4.42 1448 Percent Reduced 23% 93% 75% 46% 7% Over a 10-year lifespan would have the following savings: Annual Results (short Tons) NOx PM2.5 HC CO CO2 Baseline Engines 236.16 12.55 18.28 82.02 15539 Replacement Engines 180.82 0.87 4.63 44.24 14482 Percent Reduced 23% 93% 75% 46% 7% Short-term outcomes - Non-certified, and lower tier diesel engines will be taken out of service, and replaced with cleaner, more fuel-efficient certified marine Tier 2 and Tier 3, and low PM emitting nonroad engines. Engine replacements will lead to an immediate reduction in diesel fuel use and lower emissions. Medium-term outcomes - The new electronically controlled certified marine engines and low PM emitting nonroad engines will save diesel fuel along with associated reductions in exhaust emissions. Long-term outcomes - AEA anticipates that diesel engines will continue to be used for many years, in rural Alaska, for prime power generation. The estimated useful life of a DERA engine in a prime power application is 60,000-hours, over a 10-year period. Replacing older technology engines with newer, cleaner, and more efficient engines will provide fuel savings, emission reductions, and health benefits for many years. b. Distribution: i. In FY21 Nelson Lagoon generated 295,844 kWh and used 25,203 gallons of diesel, with a diesel efficiency of 11.74 kWh/gal. The utility accounted for 250,057 kWh, leaving 45,856 kWh unaccounted for, reporting a line loss of 15.5%. By improving the distribution system and reducing the line loss to 8%, Nelson Lagoon would realize an annual savings of $11,330 per year. ii. In FY21, Venetie generated 322,500 kWh and used approximately 32,309 gallons of fuel, with a fuel efficiency of 9.98 kWh per gallon of fuel. With the production of 322,500 a year and the utility only accounting for 239,325 kWh, this means 83,175 is being lost. By improving the distribution system and reducing the line loss to 8%, Venetie would realize an annual savings of 57,375 gallons of diesel and $487,687 at the current cost of fuel (April 2022 $8.50/gallon). iii. The current minor distribution upgrades in Napaskiak include the purchase and installation of high-efficiency transformers. These measures will reduce line loss and save 3,000 gallons of diesel per year and $20,550 at the current cost of fuel (December 2023 $6.85/gallon). iv. Each of the above example projects in Nelson Lagoon, Venetie and Napaskiak provide an diesel offset benefit, creating long term emissions reductions. Additionally, the distribution improvements in these communities prepare the community for the addition of renewable energy to their grid. c. VEEP: i. Wells Fargo VEEP Solicitation: • 35 Communities • 599,241 kWh offset annually (streetlights only), • Project Budget: $1,549,021 ii. Denali Commission Solicitation: • 21 Communities • 590,222 kWh offset annually (streetlights only) • Project Budget: $1,221,341 iii. Traditional VEEP 2005-2015: • 121 Communities • 1,147,025 kWh offset annually • This VEEP included full building retrofits, insulation, boiler replacement, windows, weather sealing, and even a ground source heat pump. There were significant savings in heating oil as well as the kWh noted above. • Project Budget: $10,210,000 5. Community Benefits: Please provide several paragraphs of narrative regarding community benefits of your measure. Measures must provide community benefits and avoid disbenefits. Examples of benefits include energy cost reduction, reduced air and noise pollution, increased quality labor/workforce development and improved quality of life. a. DERA: Power generation in rural Alaska depends on diesel engines, often operating in the center of a village, close to homes, workplaces, and the school. The proximity of power plants to these buildings may pose an increased health risk. Replacing older engines in these facilities with ones that meet more stringent emission requirements will reduce emissions production. In addition, improved efficiency will require less fuel, again reducing emissions, and with the added benefit of lowered costs. In rural communities, diesel fuel can cost up to $10 a gallon. Any savings on fuel is a significant cost savings. Alaska is unique in its diesel use. Power in rural villages is typically generated from diesel in small systems, thus using a disproportionally large quantity of diesel. b. Distribution: Distribution upgrade projects result in many benefits, extending beyond immediate infrastructure enhancements: i. Energy Efficiency: Upgrades introduce modern technologies, optimizing energy usage and reducing costs. Upgrades result in line loss reduction, which improves the efficiency of the energy system and lessens diesel usage. ii. Environmental Impact: Integration of renewable sources minimized reliance on polluting generators, contributing to sustainability. iii. Reduced Diesel Consumption: Less reliance on diesel generators lowers emissions, improving air quality and environmental health. iv. Resilience: Modernized infrastructure enhances community resilience to disruptions, ensuring a reliable power supply. v. Health and Safety: Replacement of aging structures, leaning power poles, sagging lines, reduces accidents and enhances public safety and system reliability. vi. Economic Opportunity: Reliable energy infrastructure attracts businesses, fostering economic development and job creation. vii. Community Empowerment: Access to sustainable energy solutions improves overall quality of life, fostering education, skill development and entrepreneurship. c. VEEP: This program reduces long-term fixed energy costs in the communities through energy efficiency improvements including outdoor lighting retrofits. Not only do these upgrades provide a rapid return on investments and significant cost savings, but they also add to the safety of these communities by increasing visibility in school yards, public work facilities, and streets. Proposed Measure Details: If the details aren’t finalized, please provide your best estimate. If your measure is included in a plan, planning staff will follow up with support to further define these. 1. Implementation Schedule: Please provide an implementation timeline including milestones for specific milestones like procurement, installation, reporting, etc. For existing efforts, you may note any relevant past milestones. You may identify any roadblocks that exist in the implementation of your measure. a. DERA: The goal of the DERA program is to complete projects in one year. Due to the complexities of working in rural Alaska, the limited construction season, and supply chain challenges, AEA typically sees a two-year cycle for DERA projects. A typical timeline is included below: 2 1 2022 2023 24 Days Start Finish O J A J O J A J O J 730 10/1/2021 9/30/2023 T1 90 10/1/2021 12/30/2021 T2 135 10/15/2021 3/30/2022 T3 90 4/1/2022 7/1/2022 T4 180 7/1/2022 12/30/2022 T5 270 1/1/2023 9/30/2023 T6 10/1/2023 12/30/2023 • Task 1: Confirm each rural community has a DERA - eligible engine and prepare emission tables and budget. • Task 2: Design and identify specifications – Procure contractual assistance for the design of the engine/generator installations and development of specifications specific to each installation. • Task 3: Construction procurement – Issue Invitation to Bid (ITB) to select a contractor that will provide engines, generators, and associated equipment, including any required assembly and testing, and installation. • Task 4: Submittals – Contractor delivers submittals for AEA review and approval. • Task 5: Installation and commissioning – Install generator repowers/replacements, and obtain assistance to integrate the electronically controlled engines with the existing switchgear, fuel, exhaust, and cooling systems. If requested, AEA staff will offer technical assistance during the startup and commissioning of the engines. • Task 6: Final close out of award. b. Distribution: Based on the current staffing levels, consulting engineers, and statewide construction contractor support, we believe that AEA could reasonably construct two (2) distribution projects per year. The cost for the upgrade will vary significantly depending on the size of the community, the soil conditions, buried or above ground, and if above ground – how many poles need to be replaced. The projects themselves would take two years to implement. The first year is planning, design, permitting, and purchasing long lead items. Should AEA have funding for multiple projects, a bulk purchase of commonly used, BABA - certified, transformers may be made. This will help move projects through the queue at a more rapid pace. The second season will be for construction. Most locations in Alaska can have construction activities as early as April and as late as October. c. VEEP: AEA has administered three VEEP solicitations over the last three rounds for a total of $2.8 MM of project funds administered, and 1,189,463 kWh offset. AEA currently has an additional $2.5 million in VEEP funding available for applications, for a total of ~$5 million over three years. AEA could reasonably administer $10,000,000 over a five-year period. 2. Metrics for Tracking Progress: Please identify the metrics that will be used for tracking measure progress. This can include outputs such as number of: equipment or technology installations, zero-emission vehicles; renewable energy installations and smart meters; electrified appliances (e.g. heat pumps) installed; buildings retrofitted; policies and measures enacted, adopted, and/or expanded; and/or, staff hired. AEA is in the unique position of administering the Power Cost Equalization (PCE) program. 194 rural Alaskan utilities participate in the program providing monthly reporting of production and financial statistics. This allows AEA to monitor the performance and efficiency of engines replaced under a Diesel Replacement and Distribution upgrade program. Progress would be measured by number of projects completed through each line of effort. Proposed Measure Budget: If there’s no current cost estimates, we can work with you to assess what to ask based on grant tiers. 1. Cost Estimates, as possible: Please provide an estimated cost/budget of your measure; include costs by measure component and by fiscal year if relevant. You may also attach additional budget documentation. a. DERA: Funding per project varies based on the size of the diesel genset and the number of engines replaced. In the example above, Akiachak required two, large, Detroit Diesel Series 60 engines along with appurtenances. The state of Alaska made a significant match. The DERA portion of the budget (with match) was $622,743.29. This is without staff cost. To replace three Diesel gensets, this is a typical budget: Potential Measure Funding Request: AEA Maintains a Rural Power System Assessment that includes a database of nearly 700 diesel gensets located in over 150 communities across the state. If even only one third of the diesel engines are eligible for the DERA program, that is still over 200 diesel gensets that could be replaced and significantly reduce emissions. AEA recommends requesting $10,000,000 for this measure. b. Distribution: i. Nelson Lagoon is designed, AEA is seeking funding for construction. This project is for the replacement of underground distribution, located on the northern coast of the Alaska Peninsula in Western Alaska. The Engineers estimate for this project is currently $3,033,557 ii. Napaskiak minor distribution upgrades are needed to accompany the complete Rural Power System Upgrade (module powerhouse replacement). The ITB results for the work came in at $1,461,000 (December 2023). iii. Venetie project was designed in 2021 and bid in 2021. Due to extremely high costs, it was funded in phases. Complete distribution replacement, and construction will be completed throughout two seasons at a final cost of $2,711,077 iv. Manokotak is designed, AEA is seeking funding for construction. This project is for replacement of aboveground distribution in Southwest Alaska with portions of the aboveground becoming underground. The Engineers estimate $2,916,377 Potential Measure Funding Request: AEA is currently performing a distribution inventory and assessment, like the Rural Power System Assessment referenced above. We only have a portion of the funding needed to complete the work, so the assessments are targeted at the communities that are in the most need. This inventory will help us create a list of high-priority distribution upgrade projects. Projects can be ranked by life, health and safety and prioritized for CO2 emission reduction. AEA recommends requesting $10,000,000 for this measure. c. VEEP: AEA has administered three VEEP solicitations over the last three rounds for a total of $2.8 MM of project funds administered, and 1,189,463 kWh offset. AEA currently has an additional $2.5 million in VEEP funding available for applications, for a total of ~$5 million over three years. AEA could reasonably administer $5,000,000 in VEEP funds over a five year period of performance. AEA recommends requesting $10,000,000 for this measure. 2. Funding Sources, if relevant: Please identify non-CPRG funding sources that may support your measure’s implementation. You should note what funding is already committed and what, if any, funding sources are being considered. a. DERA: i. EPA ii. State Match 50% (1:1) iii. In the past leveraged VW Settlement Funds iv. Denali Commission v. Community Match b. Distribution: i. Denali Commission ii. BIA iii. State iv. Community Match v. USDA - RUS c. VEEP i. Wells Fargo ii. Denali Commission iii. DOE (EECBG, SEP) iv. State v. Community Match Alaska Energy Authority CPRG Measure Proposal – Solar for All Basic Information: 1. Implementing Organization: Alaska Energy Authority 2. Designated sub-awardee/contractor, if applicable: Alaska Housing Finance Corporation 3. Geographic scope: Statewide 4. CPRG Measure Contact: a. Name: Ryan McLaughlin b. Title: Infrastructure Engineer c. Phone: (907)444-7886 d. Email: rmclaughlin@akenergyauthority.org Proposed Measure Overview: 1. Measure Summary: Provide several paragraphs of narrative about the proposed measure and your organization’s ability to implement in. Topics to address include: a. Efficacy of your measure at providing substantial, long term emissions reductions b. Your organization’s capacity to scale and implement work on proposed measures Solar for All (SFA) is a proposed program from the Alaska Energy Authority (AEA) in collaboration with the Alaska Housing Finance Corporation (AHFC) to deploy solar photovoltaic infrastructure across the State of Alaska, specifically targeting low-income and disadvantaged households. The program has two core components: An AEA-managed program funding community solar and battery projects primarily in Rural Alaska, and an AHFC-managed program that would install residential rooftop solar on qualifying households. This program would provide access to renewable energy for many Alaskans that would typically be unable to afford Solar PV, and upon successful implementation a significant amount of CO2 will be reduced through avoided emissions from natural gas generated electricity. The Solar for All program would aim to expend funds within a 5 year timeframe, but the program is fully scalable and able to accept additional funds if available. Solar for All sets aside appropriate amounts of money to support the program through workforce development, technical assistance, enabling rooftop upgrades, and community outreach. The Solar for All program is proposed as a $100MM program and is expected to deploy 14.3 MW of solar PV capacity, 5.7 MWh of battery storage, and directly impacting 6100 households (all of which are low- income and disadvantaged). AEA and AHFC are uniquely qualified to deploy a program of this scale and magnitude. AEA will utilize the framework and lessons learned from the Renewable Energy Fund to manage the community solar portion of the program. AHFC will similarly model the residential rooftop solar program from the successful and impactful Weatherization Program. Solar PV systems have very low operations and maintenance and can reliably produce electricity for over 30 years. Upon installation, these systems will provide long term emissions reductions for the State of Alaska, as well as provide critically needed reliability and resilience to electrical distribution to selected Rural Alaskan communities through installation and integration of Battery Energy Storage Systems. 2. Estimated Emissions Reduction: If an estimate of CO2e reduction is available, please share here. Other estimate metrics such as gal. of fuel-use reduction or kWh/BTU of energy use reduction is also allowable, and should be shared here. If fully funded ($100MM) this program is estimated to avoid emissions equivalent to 11,202 tons of CO2 annually, or 336,060 tons CO2 avoided over a 30 year lifecycle. 3. Community Benefits: Please provide several paragraphs of narrative regarding community benefits of your measure. Measures must provide community benefits and avoid disbenefits. a. Examples of benefits include energy cost reduction, reduced air and noise pollution, increased quality labor/workforce development and improved quality of life. b. If your measure primarily affects urban Alaska, please address how the measure would benefit low-income and disadvantaged communities. Alaska’s Solar for All program has many benefits. 100% of the projects constructed under this program would directly impact low-income and disadvantaged households. There will be no required match from participants which will allow access to the benefits of renewable energy to those that wouldn’t typically afford the opportunity. A typical household participating in this program will see an estimated ~40% savings on their annual electric bill. Community Solar PV and Battery projects will also provide reliability and resilience to aging and isolated microgrids throughout the State. Blackouts in these communities can have severe health and safety impacts, especially in the winter months when above-ground water and sewer systems are subject to rapid freeze-ups. Solar PV and Battery systems that are integrated into the existing diesel grid can greatly reduce the frequency and duration of these types of events. This program will also develop a local Alaskan-grown solar workforce, through a well-funded workforce development program combined with an increase in demand for installations. This will catalyze the Alaskan Solar industry and allow for opportunities of future solar development outside the scope of this program. Proposed Measure Details: If the details aren’t finalized, please provide your best estimate. If your measure is included in a plan, planning staff will follow up with support to further define these. 1. An Implementation Schedule: Please provide an implementation timeline including milestones for specific milestones like procurement, installation, reporting, etc. For existing efforts, you may note any relevant past milestones. You may identify any roadblocks that exist in the implementation of your measure. The Solar for All (SFA) program is structured to take place over a 5 year period, with the first full year being a planning period to further refine the program and engage with project partners. 2. Metrics for Tracking Progress: Please identify the metrics that will be used for tracking measure progress. This can include outputs such as number of: equipment or technology installations, zero-emission vehicles; renewable energy installations and smart meters; electrified appliances (e.g. heat pumps) installed; buildings retrofitted; policies and measures enacted, adopted, and/or expanded; and/or, staff hired. The SFA program will be tracked through a variety of impact metrics including: Total program expenditures and budget category expenditures ($), households impacted (#), household electric bill savings ($,%), solar capacity deployed (MW), battery storage capacity deployed (MWh), average rooftop solar array size (kW), solar power produced (MWh), CO2 emissions avoided (tons CO2) Proposed Measure Budget: If there’s no current cost estimates, we can work with you to assess what to ask based on grant tiers. 1. Cost Estimates, as possible: Please provide an estimated cost/budget of your measure; include costs by measure component and by fiscal year if relevant. You may also attach additional budget documentation. Total program budget is $100MM. AEA budgets $41.3MM to directly fund community-owned solar plus battery projects and $5.1MM to fund admin, travel, and various overhead costs. AHFC would receive $40MM through a sub-grant to directly fund residential and multi-family projects, $3.5MM to fund enabling rooftop upgrades, and $3MM for program administration and overhead. The remaining $7.1MM will fund Workforce Development, Technical Assistance, and Community Outreach associated programs. 2. Funding Sources, if relevant: Please identify non-CPRG funding sources that may support your measure’s implementation. You should note what funding is already committed and what, if any, funding sources are being considered. AEA applied for a $100MM grant through EPA’s Solar for All program in October 2023. AEA anticipates notification from EPA to the status of the application in March 2024. This was a nationally competitive $7B program, with intentions to award funds to all 50 States. Alaska had two submissions to this program: one from AEA/AHFC and one from Tanana Chiefs Conference (TCC) in partnership with Alaska Native Tribal Health Consortium (ANTHC). TOPIC 3 CONCEPT PAPER 1.Brief description of the project, including outcomes that would result from the successful completion of the project that align with the strategic goals and objectives of the GRIP program and the applicable GRIP Topic Area. 2,000-character limit. The Railbelt electric grid in Alaska extends over 700 miles from Homer to Delta Junction. The Railbelt is a small, but fully functioning long-distance electric grid that serves three regions and includes over 75% of Alaska’s residents, five critical military bases and generates 80% of the electricity in Alaska. The existing operating voltages, combined with long distances and lack of redundancy, limit the ability of the utilities connected to the grid to transfer low-cost and reliable power to where it is most needed. The Railbelt grid is currently subject to capacity restrictions, vulnerable to natural hazards, and heavily reliant on non- renewable resources. Through this project, 240 miles of HVDC transmission line will be constructed from the Central Region, which serves Anchorage and the neighboring Matanuska-Susitna Borough, to the Northern Region, with the line terminating in Healy. The Project closely aligns with the strategic goals of GRIP Topic 3 to promote environmental justice with construction of a HVDC line substantially increasing interregional transfer capacity between the Central and Northern regions of the grid. This increase in system capacity will improve the resiliency of the entire grid by eliminating congestion, stabilizing long-term costs to consumers, and lowering carbon emissions. This upgrade is necessary to transition to the use of renewable energy sources and stabilize costs for Railbelt consumers, especially the 40% who live in disadvantaged communities (DACs) and/or Alaska Native Village Statistical Areas (ANVSAs). Other project outcomes include the collaboration of this unique team, consisting of nonprofit electric cooperatives, a municipal, and state agencies, to redefine transmission governance and cost-recovery techniques in the Railbelt by advancing the agenda through the state regulatory commission and promoting opportunities to integrate new renewable energy projects. 2.Brief descrip�on of the impact of DOE funding on the project. 2,000-character limit. Without funding made possible through GRIP, this essential project is delayed due to the perceived potential for consumer rate increases. The proposed HVDC extension will reach the entire Railbelt, some 70% of power consumers in Alaska. Consumers outside the Railbelt, such as the residents of 193 remote rural villages, will benefit from energy cost stabilization in the Railbelt due to Alaska’s Power Cost Equalization (PCE) endowment that equalizes rural electric rates with respect to those paid in urban areas. This Project Team has been previously selected for an award for $206.5 million through the first funding round of GRIP Topic 3. That project is currently unlocking $206.5 million in matching funds to construct a HVDC line from the Southern to Central Regions of the Railbelt grid. This Project will utilize a similar combination of funds, expanding on that project to cover the Central Region to the Northern Region, ensuring that consumers from Fairbanks to Homer also receive the maximum benefit. The innovative, upgraded Railbelt grid paves the way for private sector investment in renewable energy and future investment in transmission infrastructure. Completing the line from the Central Region to the Northern Region is estimated to cost $730 million and is expected to unlock additional State and utility matching funds on the order of $365 million. Funding of this project allows the utilities to continue 65-G TOPIC 3 CONCEPT PAPER focusing on integrating large-scale renewable energy projects that can significantly change how energy is delivered to over 75% of Alaska residents. Some of these projects are also pursuing funding from the DOE through the Loan Programs Office. Our Projects’ alignment with DOE’s strategic goals through both DOE -GDO and DOE-LPO promotes a more resilient and economically viable energy landscape, all while demonstrating the benefits of grid modernization. 3.List the primary technologies and/or tools that will be deployed in the project. 2,000 character limit. MULTIPLE TECHNOLOGY This project involves the installation of HVDC-light transmission line and station hardware, comprising poles, towers, and three conductors in a reliable three-conductor bipolar configuration with a neutral. The setup will include self-commutated voltage source converters, station-class large power transformers, and high-voltage DC and AC breakers. These components will likely be necessary for interconnection into the AC grid at both Healy and Beluga. Additionally, in certain areas, HVDC cables or state-of-the-art high-capacity conductors may be required. This is especially relevant for obtaining permitting access through state and national parks, where the infrastructure will probably follow existing DOT/PF rights of way. 4.If the project will be deploying hardware, describe the role and impact of hardware deployment as part of the proposed project scope and iden�fy any elements of this deployment that represent a significant innova�on for the industry and/or project. Enter “N/A” if no hardware will be deployed. 2,000-character limit. The deployment of hardware in this project encompasses the installation of transmission lines and HVDC to AC converter stations equipped with state-of-the-art solid-state (IGBT) voltage source self- commutating converters over a 700-mile area. Given the Railbelt's scale and the planned integration of inverter-based technologies (IBRs) such as wind, solar, battery energy storage systems (BESS), and HVDC this project is a fitting proving ground for implementation of scalable geographically dispersed grid- forming inverters (GFM) in power systems. Data from the project will provide further insights into the impact of high IBR penetration levels on short- circuit current and voltage stability and the economics and effectiveness of GFM compared to synchronous condenser deployment. The findings will inform further advancement and integration strategies for renewable energy sources. Specialized data will be generated and collected for performance in volatile conditions such as snow events, avalanches, volcanos, earthquakes, cold weather, and wind resistance. 5.If the project will be deploying so�ware, describe the role and impact of so�ware deployment as part of the proposed project scope and iden�fy any elements of this deployment that represent a significant innova�on for the industry and/or the project. Enter “N/A” if no so�ware will be deployed. 2,000-character limit. This project will allow for the secure transfer of power from intermittent clean resources between load balancing areas that cannot be scheduled on a normal day-ahead basis. Modified System Control and Data Acquisition (SCADA) software, or more sophisticated high-speed communications and GFM software, may therefore be required when these generation resources are brought online to reflect active 65-H TOPIC 3 CONCEPT PAPER changes in power output and corresponding changes to power flows between load-balancing areas. This will result in the innovative use of the existing software to create dynamic schedules that change based upon SCADA scan rates, or at protective communications speeds as required, and allow multiple load balancing areas to simultaneously regulate intermittent generation resources to maintain frequency control. Maintaining control over the use of the resources will facilitate the construction of lower-cost, renewable energy projects throughout the Railbelt system. 6.If the project will include development of a new business/regulatory/financing approach, describe the approach and the poten�al for and path to replicability or broader adop�on. 2,000- character limit. To facilitate transmission investment and construction, the Regulatory Commission of Alaska (RCA) has agreed to join the project team, subject to their statutory limits. The RCA has agreed to initiate proceedings to investigate novel solutions for sustainable and viable infrastructure development utilizing innovative funding mechanisms for transmission investment cost recovery. The full scope of the proceedings is still under development. Modifications to enabling regulations may be required and will require at minimum a two-year process. One outcome goal for this project is to develop a novel solution for cost effective long-term funding that may well serve as a replicable model. However, the project is not dependent on legislative mandates to be completed. On a parallel path, the Railbelt electric utilities are working in a collaborative manner to address issues of governance, operations and maintenance, and cost-recovery as they relate to transmission of wholesale energy on the Railbelt grid. These efforts will change the regulatory and energy landscape in the Railbelt. This Project, and the projects being proposed as part of the Railbelt’s broader Grid Modernization and Resilience Plan, will serve as catalysts to modernizing not only the physical infrastructure of the grid, but other areas of governance and operations that can streamline processes and provide greater value to the Railbelt’s consumers. 7.Describe the readiness, viability, and expected �ming of the project (include the impact of DOE funding in the response). 2,000-character limit. A similar project covering the Southern to Central Region of the Railbelt was selected for funding in GRIP Round 1. Through negotiations with DOE in the Round 1 funding process, the Project Team has taken DOE’s guidance with Its Round 2 concept paper seeking HVDC solutions to the Railbelt’s resiliency and interregional transmission capability bottleneck. The Project’s plans and estimates have been adjusted accordingly. The project is viable based on the opportunity to follow the already established and fully permitted route of the Alaska Liquid Natural Gas (AKLNG) project, from Beluga to Healy, making the acquisition of the right-of-way (ROW) both feasible and timely. This project may request use of the AKLNG ROW strategically, with potential sharing arrangements where permissible with the Alaska Gasline Development Corporation (AGDC); and, if practical, using the ROW as a reliability buffer in areas like hillsides to minimize tree contact. AGDC is an independent public corporation of the State of Alaska. Additionally, the Project will build upon experience gained through the GRIP Funding Round 1 and utilize its resources strategically to achieve maximum benefits for Railbelt consumers. 65-I TOPIC 3 CONCEPT PAPER Upon securing the grant, we will immediately commence stakeholder engagement, final design, NEPA permitting, regulatory updates, and ROW acquisition, expecting this phase to span two to three years. With design and permits in hand, construction will begin in parallel phases, aiming for completion within an eight-year timeframe. Notably, procurement of converter stations will be strategically delayed, aligning with the GRIP Funding Round 1, HVDC submarine cable acquisition, to the extent it does not delay this project’s schedule. This approach intends to mitigate post-pandemic supply chain issues while maintaining economies of scale for both projects. 8.Iden�fy risks and challenges (e.g. technical, labor, financial, market, environmental, regulatory, security) to project success, and outline mi�ga�on strategies for each risk. 2,000-character limit. As a part of our detailed project management plan, we will develop and maintain a risk register complete with ongoing mitigation strategies. At this point we anticipate these risks to be (1) staffing (2) procurement, cost, and supply chain management and (3) permitting the section near Denali State Park and Denali National Park. To address the national shortage of electrical workers, the Project Team is in ongoing discussions with the IBEW local, NECA, and their Alaska Joint Electrical Apprenticeship and Training Trust (AJEATT) to inform them of project timing, staffing needs and to reinforce a desire to use local workers. For additional needs, staffing will be sourced from the lower 48 states through the IBEW. The Project Team is also working to develop training opportunities for Alaska Native tribal members and shareholders in a proposed partnership between the utilities, IBEW/NECA, and local Native village and regional corporations. The engineering and project management plan will include periodic evaluations of the supply chain for major equipment. The designed schedule is flexible with modular engineering and construction plans to navigate around supply chain challenges while maintaining productivity. Procurement of scarce items will be delayed as much as possible to minimize supply chain and inflationary cost impacts without derailing the schedule. A robust and early stakeholder engagement plan as detailed in the Community Benefit Plan will aid in working through permitting challenges. Further, the project will build in contingencies/options such as using innovative advanced conductors to minimize conductor size and spacing, or potentially undergrounding some portions of the line or routing the line around the state and national parks. It should be noted that an AKDOT managed ROW exists through both parks and AGDC previously obtained permits in both parks because of close coordination with their permitting team. 9.Briefly describe the Project Management Team and any key personnel and project partners, including vendors and suppliers (if iden�fied; if not yet iden�fied, address how the project will secure vendors/suppliers). Indicate whether the Team has the required skills, any prior applicable experience, prior projects with partners, and access to equipment /facili�es to successfully execute the proposed project. If those are not met, explain how the Team will obtain knowledge/access for successful execu�on. 2,000 character limit. 65-J TOPIC 3 CONCEPT PAPER The project team encompasses stakeholder outreach specialists, engineers, and project managers. The Team boasts decades of combined experience in transmission, generation engineering, construction, and operations. For over 30 years, these cooperatives have collaborated on significant projects, from the $328 million (1991 cost) Bradley Lake Hydroelectric Project (BLHP) to the recent $45 million West Fork Upper Battle Creek Diversion, enhancing the BLHP’s energy output by approximately 10%. The team's achievements also include securing a $166 million bond package for upgrading the Sterling to Quartz section of the 115 kV southern transmission line. Key team members include: Curtis Thayer, Executive Director of AEA, has been steering the State's energy office and leading agency for statewide energy policy and program development since 2019. Bryan Carey P.E., Director of Owned Assets at AEA, brings over 20 years of experience managing energy projects, including the Bradley Lake Hydroelectric Project and its transmission assets. Jim Mendenhall P.E., Project Manager at AEA, has over 35 years of project manager experience. Travis Million, COO of GVEA, has over 20 years in electric power systems and system protection. Larry Jorgensen, Director of Power, Fuels, and Dispatch at HEA, brings over 40 years’ experience in the public utility sector. Dustin Highers, Vice President, Corporate Programs at CEA, has 20 years in the utility industry, currently leading Chugach’s energy transition. Ed Jenkin P.E., Chief Energy Transformation Officer at MEA, is a former COO with over 30 years of utility industry experience. Julie Estey, Chief Strategy Officer at MEA, oversees the cooperative’s public and member-facing activities, strategic plans, and special projects. Brian Hickey P.E., former COO of CEA, has over 40 years of Railbelt engineering and operating experience. 10.How will this project reduce innova�ve technology risk, achieve further deployment at-scale, and lead to addi�onal private sector investments? 2,000 character limit. Given the scale and interconnected nature of the Railbelt power system it is realistic to reach levels of penetration that can generate technical results capable of being replicated in larger interconnected grid systems of the lower 48 states and in smaller grid systems internationally. Empirical data and analysis of the effects and acceptable boundaries of deep penetration of IBRs and their performance in terms of stability will inform all interconnected power systems in gauging integration of deeper IBR penetrations in power systems, and thereby reduce the risks of technical innovation by manufacturers and vendors in this particular space. This project is a replicable pilot project not only for grid resilience but for public-private partnerships with state agencies and electric utilities. Leveraging public funds, private investments, and regulatory agencies creates a support network to reduce barriers to project completion. 65-K TOPIC 3 CONCEPT PAPER 11.Describe how the project supports State, local, Tribal, community and regional resilience, in reducing the likelihood and consequences of disrup�ve events, decarboniza�on, or other energy strategies and plans. 2,000 character limit. The Railbelt, characterized by some of the world’s most challenging environmental conditions, emphasizes grid resilience as a top priority. The area has historically faced earthquakes, volcanoes, avalanches, forest fires, extreme temperatures, and landslides, often leaving communities powerless for extended durations. A significant 40% of Railbelt customers reside in ANVSAs and DACs. These ANVSA and DAC regions, among the most vulnerable in the Railbelt, will benefit greatly from enhanced grid reliability, as evidenced by improved transmission reliability indices and energy costs. Furthermore, consumers outside the Railbelt such as the residents of Alaska’s 193 remote rural villages benefit from energy cost stabilization in the Railbelt due to Alaska’s unique PCE endowment that reduces rural residential electric rates up to 70kWh to match the rates paid in urban areas. A minimal reduction in Railbelt electric costs, such as a penny per kWh, could save Railbelt consumers approximately $44 million annually and increase the PCE fund by over $1.5 million each year. The widespread impacts of this project create a solid foundation for environmental justice and equal opportunity for federal investment. This is especially critical as the Railbelt is currently facing declining regional reserves of natural gas in the Southern Region with significant implications given the islanded nature of Alaska’s infrastructure. The State is engaged in ongoing energy planning with a focus on energy security for Alaska’s small and dispersed population. The Railbelt is home to five critical military installations, a Space Force Station, several fighter wings, and the globe’s third largest air cargo port. Jet fuel research and development is a major clean energy initiative. Future projects surrounding hydrogen, decarbonization of the electric grid, and carbon recycling will also benefit from the installation of the new transmission line. 12.What will be the grid-benefi�ng outcomes to be delivered by the project (e.g. number of customers impacted, unlocked clean energy genera�on, improvement in reliability metrics). List 1-3 outcomes maximum. 2,000 character limit. This project in conjunction with the approved Round 1 GRIP project and the proposed installation of the HVDC line has numerous positive outcomes that benefit Railbelt grid consumers as well as others. The two anticipated outcomes with the highest order of magnitude are: o Elimination of the single contingency islanding between the Northern and Central Regions will reduce large scale transient and small signal instability that can result in underfrequency load shed and the threat of system wide or regional collapse. This will improve transmission and generation related reliability indices. o This project will provide reliable access to proposed utility-scale wind and solar projects in the Central and Northern Regions where resilient access is currently limited. The completion of this project will introduce additional potential off-takers, likely increasing the capacity of the resource and reducing its delivered cost through enhanced economies of scale. The construction of towers to support double circuiting is planned. The double 65-L TOPIC 3 CONCEPT PAPER circuit capable towers will be engineered to enable the future construction of an AC local transmission loop. This loop is intended to transport electricity from the decarbonized grid directly to the pipeline compression stations situated along the proposed AKLNG pipeline. Significantly, this corridor, which traverses the west side of the Susitna River drainage, will bring electrical access to a region that currently lacks it. The project will increase interregional transfer capability which will improve heat rates and reduce carbon emissions creating a more resilient interconnection that will foster renewable energy developments, drive governance reform, and foster a broader market for innovations. 13.Demonstrate how this Community Benefits Plan will address community and labor engagement, and how feedback from specific and relevant community stakeholders will be incorporated into the Community Benefits Plan. 4,000-character limit. The Project Team recognizes that broad support for the Project is necessary for successful project implementation. A public participation plan for the Project will be further developed to maximize stakeholder input and communication. The Community Benefits Plan (CBP) will include work sessions before and during the project. The five utilities along with AEA will form hubs for this process. The work sessions will include: •Scope, costs, timeline, and potential impacts. How the public can learn more, track project progress, and how their feedback will be used. •Success stories as well as lessons learned from other electrical infrastructure upgrades conducted on the Railbelt. •Identifying the roles of each utility and AEA in the project. •Communicating metrics that will be used to measure the success of Project implementation, including DEIA goals. The foundation of the public participation plan includes early engagement with the stakeholders to guide project revisions and establish constructive relationships. Discussion topics will include environmental impacts, viewshed impacts, subsistence impacts, state and federal land easements, Power Cost Equalization, workforce development (including apprenticeships), support for minority business enterprises, DEIA recruitment, DEIA workplace policies, and state legislation. Examples of key stakeholders include Alaska Federation of Natives, Alaska Village Electric Cooperative, University of Alaska, Alaska Pacific University, Alaska Black Caucus, Alaska Municipal League, IBEW Local 1547, IUOE Local 302, Alaska State Office of Veterans Affairs, Alaska Chapter of the National Electrical Contractors Association, Alaska Operating Engineers Training Trust, Alaska Joint Electrical Apprenticeship & Training Trust, Railbelt Tribal councils, and Railbelt City Councils. Outreach will be conducted in informal settings in an attempt to recruit a more diverse group of stakeholders. Examples of suitable events include, but are not limited to, the Alaska Federation of Natives convention, Alaska Black Caucus meetings, Alaska State Fair, community farmers’ markets, 65-M TOPIC 3 CONCEPT PAPER Juneteenth programming, Alaska Federation of Filipino Americans programming, Sportsman shows, and music festivals. This robust process is designed to ensure all relevant stakeholders have an opportunity to share their opinions and help shape the project. Barriers to entry in this participation process will be reduced as much as possible. 14.Provide expected number of jobs or workforce development opportuni�es that the project will create. Describe how these posi�ons are the result of community engagement or agreement. Explain how your project will generate quality jobs and that workforce development opportuni�es provided are relevant to impacted communi�es. 4,000 character limit. This project is currently projected to create approximately 100 good-paying new construction jobs and 43 technical Engineering and Administrative during the project with 10-15 new positions created indefinitely. Using the economic multiplier of 1.5 this results in over 200 jobs for eight years and 15-20 positions indefinitely. In addition to new-job creation, investment in this project will retain high-quality, good paying jobs with employer sponsored benefits at all five Railbelt utilities through the creation of new infrastructure that will require operation and maintenance for the next 25 years, as well as by preparing the Railbelt grid for the development of low carbon energy infrastructure projects such as ammonia production, direct air carbon capture, and drop in green jet fuel production. As of 2021, 659 of the 1,071 total employees who work at the five utilities belong to labor unions. These are highly skilled and highly paid positions with the average 2023 wage of a journeyman line worker at these utilities ranging from $54.40 to $58.00 an hour. Railbelt utilities sponsor the following benefits: medical, dental, vision, life insurance, defined contribution retirement plans, 401(k), pension, short-term disability, long/short-term disability, tuition reimbursement, paid time off, and paid holidays. With State support affirmed through the AEA and RCA involvement, the Project’s public participation plan anticipates very few issues establishing partnerships with tribal entities, local governments, and other State of Alaska departments with the goal of matching progressive workforce solutions to project needs. The Railbelt utilities have long-term relationships with organized labor in Alaska. They have used project labor agreements in the past for projects of this scale, such as the construction of the Alaska Intertie. Each of the utilities has collective bargaining agreements with IBEW, among other unions. As outlined in the Project’s public participation plan, the Project Team is engaging its labor partners early in the process to initiate discussions. Items of specific interest are local and targeted hiring goals, card-check neutrality, and programs to attract, train, and retain new workers. We believe that the IBEW is well-positioned to maintain strong labor relations with partner utilities throughout the Railbelt grid modernization and revitalization projects. 15.Iden�fy Community Benefits Plan elements that will support Diversity, Equity Inclusion, and Accessibility, including methods to ensure accountability to specific goals throughout the project. 4,000 character limit. 65-N TOPIC 3 CONCEPT PAPER Alaska offers significant opportunities to engage underserved populations, including American Indian/Alaska Native residents, Pacific Islander residents, and veterans. The Project’s public participation plan is designed to identify workforce partnerships to encourage participation of these and similar communities in the project. This may include meetings with organizations representing DACs to discuss how the Project can best utilize and support minority business enterprises (MBEs), focus groups including minority populations to test effectiveness of communication materials, public outreach targeting events with diverse populations, and hosting public meetings after work to reduce barriers to participation. DEIA goals will be measured against data collected by the AEA and utility HR departments regarding workforce (including contractors’) veteran status, ethnicity, gender, and disability status. DEIA goals, as ratified by utility boards, will be evaluated against this data. The Project Team supports continued development of a skilled, inclusive local workforce via the IBEW-NECA AJEATT, individual utility training programs, and the University of Alaska system. During the Project’s public participation plan, meetings will be held between the project team, the Alaska Operating Engineers/Employers Training Trust (AOEETT), and the AJEATT. These meetings will assess how the apprenticeship programs these organizations offer serve workers facing systematic barriers to employment, and how to reduce those barriers. As noted, a program to allocate several positions in their apprenticeship programs for AI/AN residents affected by the project will be pursued with both IBEW and NECA. Notably, all work performed with GRIP funding will be done in compliance with Alaska public contracting law, which contains provisions for local hire, apprenticeship training, prevailing wages, and other forward-looking policies. Alaska has a unique labor market that results in construction employees on projects of this scale being dispatched by organized labor and benefiting from registered apprenticeship programs represented by the Alaska Apprenticeship Training Coordinators Association (AATCA). AATCA, composed of 16 different construction trades, is a member of the Alaska Works Partnership, a non-profit organization focused solely on getting Alaskans into careers in the construction industry. Alaska Works is jointly funded by the U.S. Department of Labor, the Alaska Department of Labor and Workforce Development, the Alaska Department of Transportation and Public Facilities, and the North American Building Trades Unions. By complying with Alaska public contracting law and engaging registered apprentices on this project, there are assurance of accessing the resources brought to bear by the Alaska Works Partnership in support of local hire, veteran hire, and as diverse a workforce as Alaska has to offer. 16.Iden�fy how this project will contribute to the Jus�ce40 Ini�a�ve goal that 40% of overall benefits flow to disadvantaged communi�es. 4,000 character limit. This project is anticipated to provide significant benefits to Alaska’s ANVSAs DACs both on and off the Railbelt. There are 22 census tracts that qualify as disadvantaged on the Railbelt, with a combined population of 81,921. There are 17 ANVSAs on the Railbelt, with a combined population of 160,486. These communities will receive benefits from grid upgrades, cost stabilization, and long-term resiliency. Because the utilities are owned by the consumers, the consumers receive direct benefits from grid upgrades, cost stabilization, and long-term 65-O TOPIC 3 CONCEPT PAPER resiliency. The Railbelt’s 260,000 residential utility accounts serve 75% of Alaska’s population, 40% of whom live in a DAC or ANVSA . A unique feature of the Project is that it will also have significant economic impacts outside of the Railbelt due to Alaska’s Power Cost Equalization (PCE) program. The PCE endowment program was established in 1985 to provide economic assistance to residents and community facilities in rural Alaska, where electricity rates can be two to five times higher than in urban areas. The primary beneficiaries of PCE are residential customers, who are eligible for subsidy of actual consumption up to 750 kWh. Community facilities are also eligible for actual consumption up to 70 kWh per month per community resident. AEA administers the PCE program by making payments directly to individual utilities enrolled in the program. Any change to the electricity rates in Anchorage and Fairbanks creates a corresponding change in the Average Class Rate AEA uses to calculate PCE for rural utilities, consequently increasing the PCE credit for eligible communities and residents. In FY23 PCE served 193 communities, 154 (82%) of whom qualify as DACs or Tribal lands. Even a one cent decrease in the average class rate will increase the amount that would be issued by AEA to PCE-enrolled DACs by approximately $1,500,000. 65-P DATE DESCRIPTION TOPIC AND AUDIENCELOCATION/DISTRIBUTION TEAM MEMBERJanuary 9, 2024 Host/Presenter Renewable Energy Grant Fund Advisory Committee Meeting In Person/VirtualKaren Bell, Conner EricksonJanuary 9, 2024 Media Inquiry Manokotak, Christina McDermott, KDLG Radio in Dillingham Phone Call Tim SandstromJanuary 2, 2024 Press Release AEA opens application for $22.1 million in grid resilience sub-awards Email/Social Media Brandy M. DixonDecember 21, 2023 Podcast Alaska Powerline Podcast, Michael Rovito, Alaska Power Association Virtual Curtis W. ThayerDecember 20, 2023 Press Release AEA awarded $1.67 million from DOE for EV charging infrastructure in rural Alaska Email/Social Media Brandy M. DixonDecember 19, 2023 Press Release AEA announces $2.6 million in grants available for rural energy projects Email/Social Media Brandy M. DixonDecember 14, 2023 Newsletter AKEVWG December Newsletter Sent to 265 Recipients Email Brandy M. DixonDecember 14, 2023 Host/Presenter Alaska Electric Vehicle Working Group (AKEVWG) Technical Session: Car Dealership Panel DiscussionVirtual Josi HartleyDecember 11, 2023 Press Release AEA launches a new digital library of over 7,500 items Email/Social Media Brandy M. DixonDecember 8, 2023 Media Interview Alaska National Electric Vehicle Infrastructure (NEVI) Plan, Madeleine Ngo, The New York Times Phone CallCurtis W. Thayer, Josi HartleyDecember 6, 2023 PresenterAEA Federal Funding Presentation to 73rd Annual Alaska Municipal League Local Government ConferenceIn Person Conner EricksonDecember 6-8, 2023Attendee/Presenter/Vendor Booth73rd Annual Alaska Municipal League Local Government ConferenceDena’ina Civic and Convention Center, Anchorage, AKAudrey Alstrom, Katherine Aubrey, Karen Bell, Brandy M. Dixon, Conner Erickson, Josi Hartley, Anna M. Larsen, Taase Toli-Moana, Bill Price, Curtis W. ThayerNovember 29, 2023 Attendee/Presenter Legislative Forum: Energy Generation and TransmissionLegislative Information Office, Anchorage , AKBrandy M. Dixon, Curtis Thayer, Tim SandstromNovember 28, 2023 PresenterAEA Overview and Funding Opportunities Presentation to 33rd Annual Bureau of Indian Affairs' Tribal Providers ConferenceIn Person Audrey AlstromNovember 28-30, 2023Attendee/Presenter/Vendor Booth33rd Annual Bureau of Indian Affairs' Tribal Providers ConferenceDena’ina Civic and Convention Center, Anchorage, AKAudrey Alstrom, Katherine Aubrey, Karen Bell, Brandy M. Dixon, Conner Erickson, Josi Hartley, Quinlan Harris, Dawn Molina, Khae Pasao, Bill Price, Yosty Storms, Karen TurnerAEA COMMUNITY OUTREACHLast Updated on January 10, 2024 (6-Month Look Back) 813 W Northern Lights Blvd, Anchorage, AK 99503 • Phone: (907) 771‐3000 Fax: (907) 771‐3044 • Email: info@akenergyauthority.org • Website: akenergyauthority.org DATE DESCRIPTION TOPIC AND AUDIENCELOCATION/DISTRIBUTION TEAM MEMBERNovember 23, 2023 Presenter AEA and Task Force Overview Presentation to Golden Valley Electric Association In Person Curtis W. ThayerNovember 15, 2023 Host Alaska Energy Security Task Force Meeting In-Person/Virtual Curtis W. ThayerNovember 15, 2023 Presenter Institute of Electrical and Electronics Engineers, Alaska's Electric Vehicles Program In Person Josi HartleyNovember 9, 2023 Newsletter AKEVWG November Newsletter Sent to 270 Recipients Email Brandy M. DixonNovember 9, 2023 Media Inquiry Inflation Reduction Act Home Rebate Programs, Madeleine Ngo, The New York Times Email Brandy M. DixonNovember 9, 2023 Attendee Utility Working Group Comms Monthly Check-In Virtual Brandy M. DixonNovember 7, 2023 Press Release AEA and DOT&PF Receive FHWA Approval for FY24 Alaska NEVI Plan Email/Social Media Brandy M. DixonNovember 7, 2023 Host Alaska Energy Security Task Force Meeting In-Person/Virtual Curtis W. ThayerNovember 7, 2023 Media Interview Grid Resilience and Innovation Partnership Program Award, James Brooks, Alaska Beacon Phone Curtis W. ThayerOctober 31, 2023 Host Alaska Energy Security Task Force Meeting In-Person/Virtual Curtis W. ThayerOctober 30, 2023 Media Inquiry Renewable Energy in Alaska, Jim Carlton, The Wall Street Journal Phone Brandy M. DixonOctober 26, 2023 Host AKEVWG Technical Session: Site Host Selection, Schedule and Path Forward In-Person/Virtual Josi HartleyOctober 26, 2023 Media Inquiry Alaska Energy Security Task Force Report Public Testimony, Tim Ellis, KUAC Fairbanks Email Brandy M. DixonOctober 23, 2023 Media Inquiry GRIP 1 and 2 Applications Status, Alan Bailey, Petroleum News Email Brandy M. DixonOctober 19-20, 2023 HostPower Cost Equalization Walk-In Information Session at the 2023 Alaska Federation of Natives ConventionWilliam A. Egan Civic & Convention Center, Anchorage, AKKatherine AubreyOctober 18, 2023 Press Release AEA Secures $206.5 Million from U.S. DOE to modernize Alaska’s energy infrastructure Email/Social Media Brandy M. DixonOctober 16, 2023 Media Inquiry Alaska NEVI Plan, Tim Bradner, Frontiersman Email Brandy M. DixonOctober 16-19, 2023 Attendee 2023 National Association of State Energy Officials (NASEO) Annual MeetingHilton Portland Downtown, Portland, ORCurtis W. ThayerOctober 16, 2023 Media Inquiry Alaska NEVI Plan, Tim Bradner, Frontiersman Email Brandy M. DixonOctober 16, 2023 Newsletter AKEVWG October Newsletter Sent to 266 Recipients Email Brandy M. DixonOctober 16, 2023 Media Inquiry Energy Efficiency and Conservation Block Grant Program, Jenny Willoughby, KTNA Email Brandy M. DixonOctober 13, 2023 Press Release AEA Awarded $1.6 Million in U.S. DOE Funds for Clean Energy Projects in Alaska Email/Social Media Brandy M. DixonOctober 13, 2023 Media Interview Village Energy Efficiency Program, Haley Lehman, Fairbanks Daily News-Miner Phone Curtis W. ThayerOctober 10, 2023 Host Alaska Energy Security Task Force Meeting In-Person/Virtual Curtis W. ThayerOctober 5, 2023 Presenter AEA Infrastructure Update Presentation to Alaska Bankers AssociationWells Fargo, Anchorage, AKCurtis W. ThayerOctober 3-5, 2023 Attendee/Host Alaska-Canada Wood Energy Conference Pipeline Training Center, Fairbanks, AKSean ArcillaOctober 3, 2023 Host Alaska Energy Security Task Force Meeting In-Person/Virtual Curtis W. ThayerAEA Community OutreachPage 2 of 4 DATE DESCRIPTION TOPIC AND AUDIENCELOCATION/DISTRIBUTION TEAM MEMBEROctober 3, 2023 Attendee Atlantic Council: The Frontiers Project MeetingDena’ina Civic and Convention Center, Anchorage, AKAudrey Alstrom, Jim Mendenhall, Curtis W. Thayer September 29, 2023 Co-Host/Attendee Chugach Drive ElectricAnchorage Museum, Anchorage, AKJosi HartleySeptember 28, 2023 Presenter Alaska's Electric Vehicles (EV) Program to Society of American Military EngineersBP Energy Center, Anchorage, AKJosi HartleySeptember 27, 2023 Panelist Alaska Chamber Fall ForumHilton Anchorage, Anchorage AKCurtis W. Thayer September 27, 2023 Presenter AEA Overview and Task Force Update Presentation to EPA Region 10U.S. Courthouse and Federal Building, Anchorage, AKCurtis W. Thayer September 26, 2023 Exhibitor Alaska Grant Symposium (Expo -Style) hosted by Alaska’s Congressional DelegationHotel Captain Cook, Anchorage, AKKaren Bell, Conner Erickson, Quinlan Harris, Jim Mendenhall, Dawn Molina, Ashley Streveler, Wendy SturdivantSeptember 25 and 27, 2023 Presenter/Speaker Alaska Infrastructure Development Symposium Hotel Captain Cook, Anchorage, AKBryan Carey, Josi Hartley, Curtis W. Thayer September 25, 2023 Press Release AEA and DOT&PF Announce First Round of Alaska NEVI Funding Email/Social Media Brandy M. DixonSeptember 21-22. 2023 AttendeeNASEO-NARUC-NGA-NASUCA Western Regional Roundtable: Equity Considerations in Electricity Planning and PolicyDenver, CO Audrey AlstromSeptember 19, 2023 Host Alaska Energy Security Task Force MeetingAEA Office (In-Person/Virtual) Anchorage AKCurtis W. ThayerSeptember 14, 2023 Newsletter AKEVWG September Newsletter Sent to 232 Recipients Email Brandy M. DixonSeptember 13, 2023 Attendee Clean Transportation Leadership RoundtableThe Lakefront Anchorage, Anchorage, AK Josi HartleySeptember 13, 2023 Host/Moderator/Speaker National Hydropower Association Alaska Regional MeetingHotel Captain Cook, Anchorage, AKAudrey Alstrom, Karen Bell, Bryan Carey, Curtis W. ThayerSeptember 7-8, 2023 Attendee/Speaker/Sponsor Alaska Wind WorkshopDena’ina Civic and Convention Center, Anchorage, AKSean Arcilla, Karen Bell, Quinlan Harris, Josi Hartley, Yosty StormsSeptember 7, 2023 Media Inquiry Alaska NEVI Awards, Madeleine Ngo, New York Email Brandy M. DixonSeptember 7, 2023 Host Commercial Property Assessed Clean Energy and Resilience WorkshopAEA Office (In-Person/Virtual) Anchorage AKAudrey Alstrom, Karen Bell, Josi Hartley, Ashley StrevelerAugust 30, 2023 Media Interview Grid Resilience Formula Program Award, Jamie Diep, KBBI AM 890 Phone Curtis W. ThayerAugust 29, 2023 Attendee/Speaker Houston Solar Farm Ribbon CuttingHouston Solar Farm Site Houston, AKBrandy Dixon, Conner Erickson, Curtis W. ThayerAugust 29, 2023 Host Alaska Energy Security Task Force Meeting In-Person/Virtual Curtis W. ThayerAugust 28, 2023 Media Interview Aging Bulk Fuel Tanks, James Brooks, Alaska Beacon PhoneCurtis W. Thayer Tim SandstromAEA Community OutreachPage 3 of 4 DATE DESCRIPTION TOPIC AND AUDIENCELOCATION/DISTRIBUTION TEAM MEMBERAugust 22, 2023 Attendee Alaska Utilities Working Group: Cook Inlet Gas Supply Poll Results Presentation Virtual Brandy M. DixonAugust 21, 2023 Presenter AEA Overview Presentation to City of Seward In-Person Curtis W. ThayerAugust 21, 2023 Meeting United States Department of Agriculture Rural Utilities Service Assistant Administrator and Team In-PersonAudrey Alstrom, Karen Bell, Conner Erickson, Tim Sandstrom, Curtis W. ThayerAugust 18, 2023Staffed State of Alaska Exhibitor BoothAlaska State Fair Energy Day, Palmer Fair Grounds, Palmer, AK In-PersonBrandy Dixon, Conner Erickson, James Mendenhall, Bill Price, Ashley Streveler, Karen Turner, Curtis W. ThayerAugust 16, 2023 Media Interview Grid Resilience Formula Program Award, Alan Bailey, Petroleum News Phone Curtis W. ThayerAugust 15, 2023 Presenter Renewable Energy Fund Round 16 and Alaska NEVI Plan, Alaska Municipal League, Office Hours VirtualKaren Bell Josi HartleyAugust 13, 2023 Attendee Renewable Energy Fair, Chena Hot Springs Resort, Fairbanks, AK Virtual Curtis W. ThayerAugust 11, 2023 Media Interview Grid Resilience Formula Program Award, Jack Barnwell, Fairbanks Daily-News-Miner Phone Curtis W. ThayerAugust 11, 2023 Media Interview Inflation Reduction Act, Riley Rogerson, Anchorage Daily News Phone Curtis W. ThayerAugust 10, 2023 Newsletter AKEVWG August Newsletter Sent to 236 Recipients Email Brandy M. DixonAugust 9, 2023 Press Release AEA Awarded $25.6 Million for Grid Resilience Formula Grant Program Email/Social Media Brandy M. DixonAugust 8, 2023 Host Alaska Energy Security Task Force Meeting In-Person/Virtual Curtis W. ThayerJuly 18, 2023 Host Alaska Energy Security Task Force Meeting In-Person/Virtual Curtis W. ThayerJuly 17, 2023 Media Inquiry Follow Up: Special Section on Rural Energy, Tim Bradner, Mat-Su Valley Frontiersman Email Brandy M. DixonJuly 14, 2023 Media Inquiry Special Section on Rural Energy, Tim Bradner, Mat-Su Valley Frontiersman Email Brandy M. DixonJuly 13, 2023 Newsletter AKEVWG July Newsletter Sent to 235 Recipients Email Brandy M. DixonJuly 12, 2023 Host/Presenter Alaska EV Working Group Technical Session: NEVI Justice40 Benefits In-Person/Virtual Josi HartleyJuly 11, 2023 Press Release AEA Announces $17 Million in Renewable Energy Grants for 18 Statewide Projects Email/Social Media Brandy M. DixonAEA Community OutreachPage 4 of 4 1/9/24, 9:30 AM OPINION: New year brings energy opportunity for Alaska - Anchorage Daily News https://www.adn.com/opinions/2024/01/08/opinion-new-year-brings-energy-opportunity-for-alaska/1/7 Obituaries •Games •ADN Store •e-Edition •Sponsored Content • Promotions •Get our free newsletters ADVERTISEMENT Opinions OPINION: New year brings energy opportunity for Alaska By Zack Fields Updated: 19 hours ago Published: 20 hours ago Alaska News • Politics • Opinions • Talk to us Get our free newslettersSections 1/9/24, 9:30 AM OPINION: New year brings energy opportunity for Alaska - Anchorage Daily News https://www.adn.com/opinions/2024/01/08/opinion-new-year-brings-energy-opportunity-for-alaska/2/7 Wind turbines spin on Fire Island on Thursday, Oct. 13, 2022. Cook Inlet Region, Inc., which owns most of the island, built the 17.6MW project a decade ago and is looking at options to triple the power output. The 11 existing turbines produce about 2% of the annual power generation at Chugach Electric Association. (Loren Holmes / ADN) 2024 presents unprecedented opportunities for energy development in Alaska. Our job as state legislators is to seize that opportunity and work with business and electric cooperative leaders to realize the opportunities created by technological innovation, our congressional delegation and the Biden administration. For the past 20 years, Alaska has gone through one natural gas supply crisis after another. Hilcorp’s decision to stop renewing gas supply contracts to Railbelt utilities creates the risk of sharp increases in electricity and home heating bills. If utilities simply transitioned to imported LNG to replace Cook Inlet gas, that would result in massive cost increases. Dumping money into gas incentives would be even more expensive, and the historic record suggests that gas tax incentives only work temporarily — if at all. Fortunately, help is on the way in the form of major federal infrastructure investments and tax incentives for energy development. These 1/9/24, 9:30 AM OPINION: New year brings energy opportunity for Alaska - Anchorage Daily News https://www.adn.com/opinions/2024/01/08/opinion-new-year-brings-energy-opportunity-for-alaska/3/7 federal investments and policies will help our electric cooperatives reach their goals of diversifying fuel sources and attracting new private investments by independent power producers, which is consistent with the recently released goals of the governor’s energy task force. Alaska’s electric utilities already are working on major investments that would produce more affordable domestic energy. These investments can move forward more quickly and affordably because our congressional delegation worked with the Biden administration to secure a $206.5 million federal investment in transmission and battery energy storage upgrades. Matching this project with state funds is our first task, and will build out transmission from the Kenai to the Mat-Su region. Our utilities are already working on the next round of federal funds to complete the northern rebuild from the Mat-Su to Fairbanks and the critical national defense infrastructure in the Interior. Golden Valley Electric Association is planning a 130MW wind farm in the Interior. Chugach Electric is planning the 120MW Mount Susitna wind project and a 120MW utility scale solar farm at Point Mackenzie. The Alaska Energy Authority and utilities have been working together on the Dixon Diversion project to expand hydro capacity at Bradley Lake. Together, these investments will double the Railbelt’s installed capacity of affordable renewable energy. These projects are critical to reduce cost exposure to expensive imported LNG. I certainly hope private investors and the state are successful in developing the AKLNG natural gas export line, which could provide important gas supply for heating. But it’s important to understand that we should be developing a more robust grid with diversified electric generation regardless of whether AKLNG ends up getting built. As we think about how to advance energy opportunities in Alaska, let’s be cognizant of how the global economy and rapid technological advances affect our state. Geopolitical instability means oil prices are relatively high, which is good for our state budget and jobs. Technological innovation means that solar and on-shore wind generation are the cheapest sources of electric generation. Recent innovation in 1/9/24, 9:30 AM OPINION: New year brings energy opportunity for Alaska - Anchorage Daily News https://www.adn.com/opinions/2024/01/08/opinion-new-year-brings-energy-opportunity-for-alaska/4/7 carbon sequestration, along with important federal tax incentives, mean that some of Alaska’s largest companies are working to deploy large-scale carbon sequestration projects that are good for our economy and the environment. Rapid expansion of electric vehicles and solar photovoltaic, which includes massive amounts of critical minerals like silver, means our mining industry has unprecedented opportunity for growth. Since mining is energy-intensive, building out cheaper renewable electric generation is essential for us to make our mining sector more profitable and competitive. One of Alaska’s major mining executives recently told the Resource Development Council that Alaska’s pricey, fossil-fuel- based energy is an obstacle to investment and more development. When you think about the convergence of these global economic and technological trends, it is all good news for Alaska. We will have a healthy oil industry and we can rapidly expand carbon sequestration that is essential to combat climate change. Renewable energy deployment is good for home and small-business owners, and can lower costs for mine operators who have huge growth opportunities thanks to the global energy transition. Our congressional delegation has led the way in shaping federal policy to advance energy development on all these fronts, for the benefit of our economy and environment. As state policy makers, 2024 brings unprecedented opportunity to work in collaboration with our federal partners, electric cooperatives and energy industry to create long-term economic growth for Alaska. ADVERTISEMENT Zack Fields is in his third term representing downtown Anchorage and nearby neighborhoods including South Addition, Forest Park, Fairview, Valley of the Moon, North Star, and Eastridge. The views expressed here are the writer’s and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)adn.com. Send submissions shorter than 200 words 1/9/24, 11:39 AM Alaska lawmakers eye bills on neighborhood solar, green bank and renewable energy benchmarks - Alaska Public Media https://alaskapublic.org/2024/01/08/alaska-lawmakers-eye-bills-on-neighborhood-solar-green-bank-and-renewable-energy-benchmarks/1/3 Alaska lawmakers eye bills on neighborhood solar, green bank and renewable energy benchmarks Solar array located at the Houston Solar Farm in Houston, Alaska on August 29th, 2023. (Adam Nicely/Alaska Public Media) Alaska lawmakers are set to take up several renewable energy policy proposals starting later this month, including for neighborhood solar projects, loans for sustainable energy programs and setting standards for utilities’ clean power generation. The 33rd Alaska Legislature is scheduled to start its regular session in Juneau on Jan.16, and lawmakers are eyeing renewable energy expansion for many reasons. Progressives highlight the need to scale back fossil fuel emissions, which drive climate change. Others point to the economic benefits of moving away from costly fossil fuels like diesel, especially in rural areas. And just about everyone in Alaska’s Railbelt region is worried about a looming natural gas shortfall threatening to drive up the cost of heat and electricity. There are at least three bills to watch this session that are aimed at growing Alaska’s renewable energy production. Community solar By Kavitha George, Alaska Public Media - Anchorage -January 8, 2024 1/9/24, 11:39 AM Alaska lawmakers eye bills on neighborhood solar, green bank and renewable energy benchmarks - Alaska Public Media https://alaskapublic.org/2024/01/08/alaska-lawmakers-eye-bills-on-neighborhood-solar-green-bank-and-renewable-energy-benchmarks/2/3 Senate Bill 152 would allow neighbors to group together to put up small-scale renewable energy projects. That could be a small solar farm, or even a wind or hydroelectric project. “The idea is really to provide more options for people across Alaska, more energy options,” said Sen. Bill Wielechowski, an Anchorage Democrat sponsoring the bill. Those kinds of small renewable projects are done in conjunction with a local utility company, Wielechowski said. The community members who invested in the project benefit from the electricity it generates, and any extra electricity gets sold back to the utility. “If you’re in a condo association, and you want to put several solar panels on some roofs and provide that energy for people in the association, you can’t do it under the current regulations,” he said. “So this would allow that sort of activity to occur.” Chugach Electric Association pitched a community solar project to the state regulatory commission in 2019, but it was rejected in part because there was no legal framework in place. The utility recently submitted another proposal for a small community solar project that could produce enough electricity to power several dozen homes. The idea to provide regulations for these kinds of neighborhood-level projects gained steam early in the last legislative session, Wielechowski said. He introduced the bill last spring and thinks there will be support for it this session. Green bank Senate Bill 125, proposed by Gov. Mike Dunleavy, would establish what’s called a “green bank” under the Alaska Housing Finance Corporation. Known as the “Alaska Energy Independence Fund,” the green bank would provide loans to families and rural utilities to help finance sustainable energy projects, including power generation and storage, as well as efficiency improvements. Nonpartisan Anchorage Rep. Calvin Schrage spoke about the benefits of a green bank at an event last month hosted by Alaska Common Ground. He said a state-backed program will help subsidize small renewable energy projects and make them more profitable for Outside investors. “It allows us to attract that Outside money and some inside from our local institutions and steer it towards renewable energy projects,” Schrage said. Schrage also noted that the federal government has set aside tens of billions of dollars to fund green banks nationwide under the Inflation Reduction Act. SB 125 and its companion bill in the House are both waiting in finance committees and expected to advance this session. Renewable Portfolio Standard 1/9/24, 11:39 AM Alaska lawmakers eye bills on neighborhood solar, green bank and renewable energy benchmarks - Alaska Public Media https://alaskapublic.org/2024/01/08/alaska-lawmakers-eye-bills-on-neighborhood-solar-green-bank-and-renewable-energy-benchmarks/3/3 Sen. Löki Tobin, an Anchorage Democrat, and Rep. Jesse Sumner, a Wasilla Republican, are pushing a “renewable portfolio standard,” also known as an RPS, for Railbelt utilities. The RPS bill sets benchmarks for how much of a utility’s power generation should come from renewable sources. In this case, the bill proposes a standard to ensure 25% of Railbelt power is generated by renewable methods by 2027, which Tobin calls “very achievable.” It aims for 80% renewables by 2040. Dunleavy is also a proponent of the RPS, though it faces pushback from utilities, who oppose a government mandate and say rushing the ongoing transition to renewable energy sources could result in higher electricity costs. Railbelt utilities are also facing an impending natural gas shortfall, which could result in dramatic increases to residents’ electricity and heating bills. Clean energy advocates say high standards like those in the RPS proposal could save consumers billions of dollars in fuel costs in coming decades. RPS bills in the House and Senate are also awaiting consideration by committees. At the Alaska Common Ground event, Tobin urged passage of the RPS. The technology to rapidly deploy renewables is available, she said, and the climate benefits shouldn’t be ignored. “These aren’t partisan ideas,” she said. “These are ideas that are about what we can invest in to make sure that our young kids have a future and a planet to inherit.” Kavitha George, Alaska Public Media - Anchorage Kavitha George is Alaska Public Media’s climate change reporter. Reach her at kgeorge@alaskapublic.org. Read more about Kavitha here. 813 W Northern Lights Blvd, Anchorage, AK 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG PRESS RELEASE Brandy M. Dixon Communications Director (907) 771-3078 FOR IMMEDIATE RELEASE January 2, 2024 AEA opens application for $22.1 million in grid resilience sub-awards (Anchorage) — Today, the Alaska Energy Authority (AEA) announced the release of a Request for Applications (RFA) for $22.1 million in grant funds to improve electric grid infrastructure resilience against disruptive events. The RFA solicitation period for the Grid Resilience Formula Grant Program will be open through Friday, February 16, 2024, at 4 p.m. Alaska time. AEA will administer the program funds allocated to Alaska by the United States Department of Energy (DOE), as authorized under Section 40101(d) of the Infrastructure and Investment Jobs Act. The program provides $2.5 billion in formula grants to states and tribes to improve electric grid resilience. Under this DOE program, Alaska is estimated to receive approximately $60 million in formula funding for sub-awards over the five-year program period. The program is part of a broader federal effort to accelerate the deployment of transformative electrical infrastructure projects, to ensure the enhanced reliability of such critical utility-scale systems against disruptive events. Funding under this program encompasses an array of eligible resilience activities, including but not limited to transmission infrastructure hardening; vegetation management, power line relocation, replacement, and undergrounding; and monitoring and control technologies. For this RFA, projects proposed that focus on transmission assets of 69-kilovolt and above will be considered to have a greater impact on future grid resiliency. Eligible sub-grantees may include, but are not limited to electric grid operators; electricity storage operators; electricity generators; transmission owner or operators; fuel supplies; and other relevant entities, as determined by the Secretary (of DOE). Prospective applicants can learn more about the Grid Resilience Formula Grant Program and current the RFA by visiting https://www.akenergyauthority.org/grid-resilience-formula-grant- program. ### About the Alaska Energy Authority The Alaska Energy Authority is a public corporation of the state. Its mission is to reduce the cost of energy in Alaska. To achieve this mission, AEA strives to diversify Alaska's energy portfolio increasing resiliency, reliability, and redundancy. To learn more, visit akenergyauthority.org. Power outage plagues Western Alaska town for days https://www.alaskasnewssource.com/2024/01/01/power-outage-plagues-western-alaska-town-days/ 1/3 ANCHORAGE, Alaska (KTUU) - For weeks, many residents in Manokotak have been living in the dark and cold as a generator failure left them without power in the middle of winter. In the days since, there has been uncertainty surrounding when the lights will come back on in the small Western Alaska community. “We need [a] new generator big enough to run community with the school. Logistics is a challenge with bringing one in,” Manokotak Mayor Melvin Andrew said. " [The] airport’s not suitable for aircraft big enough to haul it. Another option is bringing just a motor to run the current ‘big’ generator.” Since Dec. 13, when a generator failure left the community without reliable electricity, the city has had to alternate power to homes by switching lines on a grid, but that has resulted in frequent blackouts, sometimes lasting all day or all night, according to Andrew. Power outage plagues Western Alaska town for days https://www.alaskasnewssource.com/2024/01/01/power-outage-plagues-western-alaska-town-days/ 2/3 During the first week of power issues, Andrew said many in the city had to use personal generators, while others had to seek shelter in the school, which has been turned into an emergency shelter and remains that way to date. On Dec. 21, Manokotak passed an emergency ordinance declaring a disaster and requesting state assistance after the Alaska Energy Authority declared an emergency for Manokotak Power Company, owned and operated by Manokotak Natives, Ltd., State Rep. Bryce Edgmon, who represents most of Bristol Bay and the Alaska Peninsula, said will help the community to approach outside entities for help. “You’re looking at generators that are fairly aged as well, been around a long time. You’re looking at a community having to sort of suddenly pivot and sort of go into emergency shelter mode. That’s not easy to do,” Edgmon said. As reported by the mayor, while the city waited for aid, they have had to endure frozen pipes, lack of heat, and an inability to cook or heat homes, especially in the newer housing units with electric ranges. Andrew said city officials contacted the Bristol Bay Native Corporation and Bristol Bay Native Association for assistance on Dec. 22, agreeing to provide cots, blankets, food, milk, juice, and small propane bottles. The city also started using local emergency management to check on the elderly and disabled and those known to have only electricity to heat and cook. Andrew said the community also faced challenges in getting reliable cell service on the same day. Andrew reported that by Dec. 23, two loads of supplies donated by BBNC, BBNA Fo od Bank, and SAFE had arrived in the city. Andrew also reported that the lights were still unstable, as the city tried to alternate power to homes with power in phases. A Facebook message stated that the school had counted 23 people taking shelter at the time and that community members had been donating food, coffee, and other items. The mayor also reported that the city was preparing for a winter storm and would have to wait for the weather to lift for the initial supplies donated by BBNC, BBNA, and SAFE. The city was dealing with plummeting temperatures and unstable power and had only one small generator for the community, alternating a three-phase grid, Andrew said. The school was running on its own generator, but on Dec. 27, the mayor reported that its lights had also gone out. Power outage plagues Western Alaska town for days https://www.alaskasnewssource.com/2024/01/01/power-outage-plagues-western-alaska-town-days/ 3/3 Manokotak residents received some good news when city officials received the initial supplies they had been waiting for, as reported by the mayor. On Dec. 28, a second set of supplies from BBNC, carrying food from Anchorage, was expected to be in the city over the New Year’s weekend. “Red Cross sent 60 cots with blankets. NAC donated transport to Dillingham [Thursday]. Expect them in Manokotak on [Dec. 30],” Andrew wrote on Thursday. With electricity remaining stable for 30 hours in the community, things were beginning to look up by the New Year’s weekend until Andrew received a message from Alyssa Apalayak, utility manager with the Manokotak Power Company. “[We] have not-so-great news ... one of the parts was the wrong size, but Moses is going to talk with Kyler from AEA. I asked him to call him to explain what is going on and maybe discuss what we need now,” Andrew wrote. The mayor said city officials had to work with used parts with the uncertainty of how long they would last, another setback to what had already been a challenging ordeal. Andrew reported Friday that the power had been on continuously for 48 hours. While the mayor and Rep. Edgmon praised the community, city administrator Nancy George, and the regional local government specialist Cindy Roque for initiating the emergency ordinance request to the governor and banding together, the mayor says they are not out of the woods yet. ”My recommendation to them from here in Dillingham was that they look at this through the lens of sort of an immediate-term fix — which they of course are — but also a long-term fix that might involve barging up an entirely new generator or something like that, when the conditions allow for it later on this year,” Edgmon said. “And as a member of the Alaska legislature, that’s something that myself and Sen. Hoffman will be looking closely at providing that funding for.” Copyright 2023 KTUU. All rights reserved. 1/9/24, 11:20 AM Manokotak power fails, pipes freeze, city declares emergency - Must Read Alaska https://mustreadalaska.com/manokotak-power-fails-pipes-freeze-city-declares-emergency/1/2 Manokotak power fails, pipes freeze, city declares emergency Some places in Alaska could use a little of that global warming right now. The western Alaska community of Manokotak is under a declared state of emergency after a winter storm earlier this month cut the power. The town of about 450 finally declared the emergency on Dec 21, and has asked the State of Alaska for assistance as more cold weather bears down on the region this weekend, where it is 14 degrees and blizzard conditions. Manokotak is about 25 miles from Dillingham. About 300 people are affected by the power outage and burst water pipes that ensued. Alaska Energy Authority declared an emergency on Dec. 20, and began the process of ensuring stableAlaska Energy power in Manokotak, the city said. The community’s utility is owned by Manokotak Natives Limited, which undertook a renovation project in June 1. The Native village corporation has asked for help from local contractors to troubleshoot and resolve power issues, but faces challenges due to depleting resources and unavailability of contractors and parts. The village corporation does not have the funds to do the repairs. Manokotak Mayor Melvin P. Andrew declared a state of disaster emergency and has requested that Gov. Mike Dunleavy provide disaster assistance. By Suzanne Downing -December 23, 2023 1/9/24, 11:20 AM Manokotak power fails, pipes freeze, city declares emergency - Must Read Alaska https://mustreadalaska.com/manokotak-power-fails-pipes-freeze-city-declares-emergency/2/2 “The city specifically requests disaster relief to cover labor, parts, and equipment needed to make temporary and permanent repairs to the city’s power infrastructure, and to assist in restoring power, water, and sewer to all affected areas and facilities,” the declaration says. Meanwhile, the city government has opened the school for emergency shelter as a winter storm bears down on Saturday. “Check on your neighbors and lend a helping hand,” the city wrote on social media. “Contact emergency services immediately if there is EMERGENCY! TPOs and Health Aides been notified.” The city leaders also asked for prayer: “In all this keep praying.” Suzanne Downing Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969. All Stories The 907 Politics Columns MRAK Show The Social Almanac Newsletter Shop Donate About us Must Read Alaska is news of people, politics, policy, culture, and happenings in Alaska. Contact 4021 West Hill Road, Homer, AK 99603 JDF@mustreadalaska.com The latest © Must Read Alaska Biden vs. America: William Penn historic statue is next to be canceled by Park Service THIS JUST IN January 7, 2024 Linda Boyle: Is the mea culpa by former NIH director on government Covid policies good enough? COLUMNS January 7, 2024 Passengers scramble for alternatives as Alaska Airlines cancels 160 ights THE 907 January 7, 2024 1/9/24, 9:36 AM Manokotak issues state of disaster emergency https://www.kdlg.org/public-safety/2023-12-22/manokotak-issues-state-of-disaster-emergency 1/2 Manokotak issues state of disaster emergency KDLG 670AM | By Christina McDermott Published December 22, 2023 at 2:37 PM AKST A map with Manokotak, Alaska. Manokotak residents have been without power for more than a week after a winter storm passed through the region, according to updates from the City of Manokotak Facebook page. Melvin Andrews, the mayor of Manokotak, issued a state of disaster emergency resolution and requested state aid on December 21. The resolution asked for disaster relief funds to cover the labor, parts and equipment required to repair the city’s power infrastructure. That includes assisting in restoring power, water and sewer utilities to all areas affected by the outage. The community had many elderly and disabled members, and that frigid temperatures have caused pipes in homes to burst and made plumbing inoperable, according to the resolution. Manokotak has opened its school as an emergency shelter. The local government said in a call to KDLG they need supplies like bottled water, propane tanks for heat, and blankets for the school. Blizzard conditions are expected to continue in the area until Saturday afternoon. Manokotak sent an update that the Bristol Bay Native Corporation and the Bristol Bay Native Association had been noti ed of their requests and that the Alaska Energy Donate 1/9/24, 9:36 AM Manokotak issues state of disaster emergency https://www.kdlg.org/public-safety/2023-12-22/manokotak-issues-state-of-disaster-emergency 2/2 Authority is working to resolve the generator issues. Get in touch with the author at christina@kdlg.org or 907-842-2200. Public Safety Christina McDermott Christina McDermott began reporting for KDLG, Dillingham’s NPR member station, in March 2023. Previously, she worked with KCBX News in San Luis Obispo, California, where she focused on local news and cultural stories. She’s passionate about producing evocative, sound-rich work that informs and connects the public. See stories by Christina McDermott Currently Playing on AM 670: Native America Calling 9:00 AM–10:00 AM Up Next: Talk of Alaska Currently Playing FM 89.9: Democracy Now!9:00 AM–10:00 AM Up Next: Think 813 W Northern Lights Blvd, Anchorage, AK 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG PRESS RELEASE Brandy M. Dixon Communications Director (907) 771-3078 FOR IMMEDIATE RELEASE December 20, 2023 AEA awarded $1.67 million from DOE for EV charging infrastructure in rural Alaska Regional community partners sought to participate in AEA's rural EV program (Anchorage) — The Alaska Energy Authority (AEA) was awarded $1.67 million from the National Energy Technology Lab through the Vehicle Technology Office at the United States Department of Energy (DOE), to reduce barriers to electric vehicle (EV) adoption in rural Alaskan communities. DOE’s award will be complemented by an additional $417,496 from AEA and project partners, making a total of $2 million available for electric vehicle supply equipment (EVSE) over the next three years. The Alaska Rural EVSE Deployment (ARED) project will engage with hub communities to identify interest and practical use cases for EVs, install charging infrastructure in rural Alaska, provide technical assistance, and administer EVSE training programs to build workforce capacity. AEA will collaborate with communities to select sites and equipment based on community goals. Approximately nine rural hub communities will be selected to participate in the program. Communities will be selected based on their community grid infrastructure, geographical distribution, and community interest in EVSE. AEA will work to facilitate EV adoption in Alaska’s rural communities by working with its project partners at the Alaska Center for Energy and Power, Ahtna Corporation Inc., Alaska Department of Transportation & Public Facilities, Alaska Municipal League, and Launch Alaska. Beginning in early 2024, AEA and project partners will conduct community outreach to select site hosts. Infrastructure will be installed in the spring of 2025 through the summer of 2026. Funding amounts will vary from community to community. Communities and individuals who are interested in participating or learning more about the ARED program should contact AEA’s EV team at electricvehicles@akenergyauthority.org. ### About the Alaska Energy Authority The Alaska Energy Authority is a public corporation of the state. Its mission is to reduce the cost of energy in Alaska. To achieve this mission, AEA strives to diversify Alaska's energy portfolio increasing resiliency, reliability, and redundancy. To learn more, visit akenergyauthority.org. 1/9/24, 11:44 AM From gas to power lines to a green bank: A look at some of Gov. Dunleavy’s energy proposals - Alaska Public Media https://alaskapublic.org/2023/12/19/from-gas-to-power-lines-to-a-green-bank-a-look-at-some-of-gov-dunleavys-energy-proposals/1/4 From gas to power lines to a green bank: A look at some of Gov. Dunleavy’s energy proposals The Cook Inlet Natural Gas Storage Alaska facility was built the last time there were warnings about potential shortages. (Sabine Poux/KDLL) Gov. Mike Dunleavy outlined a variety of ideas to address Alaska’s energy needs in his budget proposal. Here’s a closer look at a few. Efforts to address a looming gas shortage First, there’s the immediate concern: Southcentral Alaska is running out of natural gas. State officials warned last January that by 2027, established fields in Cook Inlet likely won’t produce enough gas to supply Alaska’s largest population centers. Cook Inlet gas provides 80% to 90% of the Railbelt’s heat and electricity, according to a report from the governor’s Alaska Energy Security Task Force. Gov. Mike Dunleavy says the state will provide incentives. “We’re working on an initiative on Cook Inlet gas. We believe there’s a lot of gas still in Cook Inlet, and we’ve just got to get it out of the ground and get it to get into the pipe,” By Eric Stone, Alaska Public Media - Juneau -December 19, 2023 0:000:00 / 5:15/ 5:15 1/9/24, 11:44 AM From gas to power lines to a green bank: A look at some of Gov. Dunleavy’s energy proposals - Alaska Public Media https://alaskapublic.org/2023/12/19/from-gas-to-power-lines-to-a-green-bank-a-look-at-some-of-gov-dunleavys-energy-proposals/2/4 Dunleavy said during a news conference announcing his budget proposal on Dec. 14. In a recent op-ed in the Anchorage Daily News, Dunleavy said he planned to introduce a bill to “improve the economics” of gas production in Cook Inlet. The bill text hasn’t been made public, but Dunleavy’s office said in October that the proposal would reduce minimum royalties on new projects with an additional cut to royalties for the first ten years of production. He pitched it during his budget release and tied it to efforts to lower the cost of living through stable energy supplies. “We’ve got to make this an inviting place for people with families,” Dunleavy said. “We’ve got to make this an inviting place for young folks to be able to afford.” But it’s unclear whether breaks on royalties would spur enough drilling to ease supply concerns. This year’s royalty-free lease sale that instead relied on profit-sharing yielded only six bids, similar to other recent sales, according to the Alaska Beacon. Dunleavy also referenced the long-hoped for Alaska LNG project, a pipeline that would bring North Slope gas to Nikiski. Despite reports of ambivalence from potential gas customers, Dunleavy said he’s optimistic. “That prospect is still being discussed at high levels in boardrooms around the world,” Dunleavy said. “I came back from New York, and Washington about a month and a half ago, had discussions with folks in some of the investment houses. There is still a desire to get a project going.” Dunleavy’s not the only one with ideas to address the looming gas shortage: House Speaker Cathy Tilton, a Republican from Wasilla, says it’s a priority for her caucus. “I think you’ll see that being one of the top priorities of the Legislature – not just Cook Inlet gas, but energy overall and bringing the cost down for Alaskans,” Tilton said by phone on Monday. She said House Energy Committee Chair George Rauscher plans to introduce a pair of bills at the start of next year’s legislative session to address the issue. An Energy Committee spokesperson said Rauscher, a Sutton Republican, was unavailable for an interview, and Tilton declined to provide details, saying she hadn’t been briefed. A group of Democratic and independent House members called for a shift towards renewable energy in an Anchorage Daily News write up while also recognizing the need to maintain existing gas production. “There’s no silver bullet tax we can cut or megaproject we can build to escape this problem. Instead, we need an all-of-the-above solution that puts the needs of Alaskan consumers and businesses first,” the lawmakers wrote. Upgrades to power lines 1/9/24, 11:44 AM From gas to power lines to a green bank: A look at some of Gov. Dunleavy’s energy proposals - Alaska Public Media https://alaskapublic.org/2023/12/19/from-gas-to-power-lines-to-a-green-bank-a-look-at-some-of-gov-dunleavys-energy-proposals/3/4 Another piece of energy policy Dunleavy outlined during his budget rollout is a wide-ranging plan to upgrade the state’s electrical grid. “Our transmission lines, in many cases, on the Railbelt are old, outdated, and what we want to do is be able to upgrade those lines so that we can put much more power on those lines in anticipation of new energy sources coming into Alaska,” Dunleavy said. In November, the Biden administration announced a $206 million grant for the Alaska Energy Authority. The money would go towards a variety of grid upgrades, including an undersea cable connecting the Kenai Peninsula to a power station on the west side of Cook Inlet, plus two battery facilities to smooth out variations in wind and solar generation. The grant requires a dollar-for-dollar state match spread over several years, which is not yet included in the governor’s budget, said budget director Lacey Sanders. “We just received word about this funding availability, and it’s going to take a little bit of time for us to get a plan that’s well developed,” Sanders said at the budget conference. House Minority Leader Calvin Schrage says power line upgrades would be “transformative” for the Railbelt power grid. The Anchorage independent and former Energy Committee chair points to the Bradley Lake hydroelectric dam on the Kenai Peninsula, which the Alaska Energy Authority says provides some of the cheapest power in the state. “We have an inability to expand that and move the electricity that’s needed in the Interior up to the Interior due to the transmission lines being limited – that electricity gets bottlenecked,” Schrage said in a phone interview Tuesday. “By improving our transmission lines, we can continue to build out renewables that we know work and are very low cost and move them to the places where they need electricity most.” A ‘green bank’ to spur renewable development Dunleavy also called on lawmakers to create a “green bank,” which would finance renewable energy and efficiency programs. “We’re hoping it gets passed this year,” he said. “That’ll be able to, from some estimates, turn one dollar into nine additional dollars with private sector money, as well as some grants.” The governor introduced bills last session – House Bill 154 and Senate Bill 125 – that would create the Alaska Energy Independence Fund within the Alaska Housing Finance Corporation, but the bills did not pass out of committee before the House and Senate adjourned for the year. When it analyzed the bill earlier this year, the state Department of Revenue recommended seeding the account with approximately $40 million split between state and federal funds. Schrage said he’s a fan of the idea, which he said has been successful in other states. 1/9/24, 11:44 AM From gas to power lines to a green bank: A look at some of Gov. Dunleavy’s energy proposals - Alaska Public Media https://alaskapublic.org/2023/12/19/from-gas-to-power-lines-to-a-green-bank-a-look-at-some-of-gov-dunleavys-energy-proposals/4/4 “For example, if you want to put a rooftop solar project in your house, that can oftentimes be very cost-prohibitive up front,” Schrage said. “What this would do is it would create new funding sources to help people deploy these renewable projects.” The House and Senate convene Jan. 16 to start working through the proposals. Eric Stone, Alaska Public Media - Juneau Eric Stone covers state government, tracking the Alaska Legislature, state policy and its impact on all Alaskans. Reach him at estone@alaskapublic.org. Website 813 W Northern Lights Blvd, Anchorage, AK 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG PRESS RELEASE Brandy M. Dixon Communications Director (907) 771-3078 FOR IMMEDIATE RELEASE December 19, 2023 AEA announces $2.6 million in grants available for rural energy projects (Anchorage) — The Alaska Energy Authority (AEA) is accepting applications for the Renewable Energy Village Energy Efficiency Program (RE-VEEP). A total of $2.6 million will be sub-awarded as grants to eligible local governments to support building-scale renewable energy, energy efficiency, and conservation projects in public buildings and facilities located in rural Alaska. Applications are due by 4 p.m. on Tuesday, February 27, 2024. RE-VEEP is open to local governments who were ineligible for direct formula grant funding under the Energy Efficiency and Conservation Block Grant Program through the Office of State and Community Energy Programs at the United States Department of Energy. A list of eligible communities can be viewed here. Following the deadline, AEA will evaluate all applications received and notify approved applicants of their awards by the end of April 2024. All applications and information received will be posted on AEA’s website after sub-award determinations have been made. RE-VEEP is an expansion of the Village Energy Efficiency Program, which was established to reduce per capita consumption through energy efficiency. Through RE-VEEP projects, communities with high energy costs will be able to reduce their energy consumption and costs. AEA will administer RE-VEEP according to federal applicant and project eligibility requirements. For more information on RE-VEEP and to apply for a sub-award grant, visit the RE-VEEP at akenergyauthority.org/re-veep. If you need assistance, please contact the AEA grants manager by email at grants@aidea.org or by phone at (907) 771-3084. ### About the Alaska Energy Authority The Alaska Energy Authority is a public corporation of the state. Its mission is to reduce the cost of energy in Alaska. To achieve this mission, AEA strives to diversify Alaska's energy portfolio increasing resiliency, reliability, and redundancy. To learn more, visit akenergyauthority.org. 1/9/24, 10:44 AM In this issue: Clean Vehicle Tax Credit Updates, Alaska's Latest EV Count, and What We're Reading https://mailchi.mp/c1292453eebb/aea-submits-ev-infrastructure-plan-to-joint-office-13639231 1/5 View this email in your browser Alaska Electric Vehicle Working Group Newsletter, December 14, 2023 Updates to the Clean Vehicle Tax Credit We wrote about Clean Vehicle Tax Credit changes back in our February and May newsletters. During that time, the Inflation Reduction Act had made provisions for “clean vehicles” like plug-in electric vehicles (EV) and fuel cell vehicles to be eligible to receive tax credits of up to $7,500 for a new vehicle, or $4,000 for a used vehicle. One caveat was that the tax credits were non- refundable, meaning that unless buyers owed money on their taxes, they would not get the credit. 1/9/24, 10:44 AM In this issue: Clean Vehicle Tax Credit Updates, Alaska's Latest EV Count, and What We're Reading https://mailchi.mp/c1292453eebb/aea-submits-ev-infrastructure-plan-to-joint-office-13639231 2/5 Change Is Coming It was recently announced that starting in January 2024, instead of waiting until the next tax season to claim the non-refundable credit, buyers will be able to use their clean vehicle credit as an immediate rebate at the point of sale while purchasing an EV, effectively lowering the sale price of the EV (regardless of whether they owe money on their taxes or not). For the buyer to receive the credit, dealers/sellers must report the sale to the Internal Revenue Service (IRS) through an online interface. More information on dealership/seller requirements can be found here. Even though the process for claiming the credit is changing, eligibility for receiving the tax credit remains largely the same today. Buyers themselves must meet these eligibility requirements: Buyers must be purchasing the vehicle for their use (not resale) Buyers must plan on primarily using the vehicle in the United States Buyers must have a modified adjusted gross income of less than $300,000 for married couples filing jointly, $250,000 for heads of households, and $150,000 for everyone else The vehicles they’re buying must meet these eligibility requirements: Manufacturer suggested retail price, or MSRP of less than $80,000 for vans, trucks, and sport utility vehicles or less than $55,000 for all other vehicles Have at least a 7-kilowatt-hour battery capacity Have a gross vehicle weight of less than 14,000 pounds Be made by a qualified manufacturer Undergo final assembly in North America Meet critical mineral and battery requirements. Read more about these requirements in our past newsletter. 1/9/24, 10:44 AM In this issue: Clean Vehicle Tax Credit Updates, Alaska's Latest EV Count, and What We're Reading https://mailchi.mp/c1292453eebb/aea-submits-ev-infrastructure-plan-to-joint-office-13639231 3/5 What if I don’t qualify, or the vehicle I want isn’t eligible for the credit? The restrictions listed above apply to people buying a clean vehicle. However, there may be other options available for consumers who are interested in leasing a clean vehicle. Clean vehicles purchased by a dealer and leased to an individual are technically “commercial” vehicles. They are exempt from the eligibility requirements above, meaning that any leased EV is eligible for the tax credit. However, it’s important to note that the dealer receives the credit (not the person leasing), and it is up to the dealer how to pass along the credit to the person leasing the vehicle, if at all. Some dealers will pass along the credit as a way to lower the monthly lease payment, others could pass along part of the credit, and some might not pass along the credit at all. Drivers interested in leasing a vehicle should check with the dealership to understand their lease agreement stipulations. Alaska’s EV Registrations Steadily Rise 1/9/24, 10:44 AM In this issue: Clean Vehicle Tax Credit Updates, Alaska's Latest EV Count, and What We're Reading https://mailchi.mp/c1292453eebb/aea-submits-ev-infrastructure-plan-to-joint-office-13639231 4/5 According to the latest data from the Alaska Division of Motor Vehicles, there are now over 2,500 EVs registered in Alaska. This continues a trend of steady increase over the past year and a half. What We're Reading Clean Vehicle Tax Credits | Internal Revenue Service (irs.gov) U.S. Department of the Treasury, IRS Release Guidance to Expand Access to Clean Vehicle Tax Credits, Help Car Dealers Grow Businesses | U.S. Department of the Treasury 1/9/24, 10:44 AM In this issue: Clean Vehicle Tax Credit Updates, Alaska's Latest EV Count, and What We're Reading https://mailchi.mp/c1292453eebb/aea-submits-ev-infrastructure-plan-to-joint-office-13639231 5/5 Credits for new clean vehicles purchased in 2023 or after | Internal Revenue Service (irs.gov) How to Lease an EV or PHEV With a $7,500 Tax Credit - Consumer Reports Leasing an EV? There's an EV Tax Credit 'Loophole' for That | Kiplinger Facebook LinkedIn Website The Alaska Energy Authority’s Alaska Electric Vehicle Working Group involves collaborative stakeholders focused on promoting the use of electric vehicles (EVs) in Alaska by removing barriers to EV adoption and increasing access to charging infrastructure. Stay up to date on AEA's EV efforts at our website here. Copyright © 2023 Alaska Energy Authority, All rights reserved. Want to change how you receive these emails? You can update your preferences or unsubscribe from this list. Southcentral AK mayors start energy solution coalition https://www.alaskasnewssource.com/2023/12/13/southcentral-ak-mayors-start-energy-solution-coalition/ 1/2 ANCHORAGE, Alaska (KTUU) - A group of Southcentral Alaska mayors are coming together over fears of a future natural gas production shortage in Cook Inlet. Eleven mayors, including Anchorage Mayor Dave Bronson, are forming a coalition that will consider the energy needs of the region while exploring options to meet those needs, then communicate those findings to constituents. “Together we represent the voices of the communities across the region that will be directly impacted by the looming natural gas shortage,” Bronson said. Bronson said the mayors’ communities represent 75% of Alaska’s population, and have a unique perspective on the concerns surrounding natural gas production in the cook inlet “Anchorage is the single largest — geographically — the single largest user of Cook Inlet natural gas,” Bronson said. Southcentral AK mayors start energy solution coalition https://www.alaskasnewssource.com/2023/12/13/southcentral-ak-mayors-start-energy-solution-coalition/ 2/2 According to the coalition, this Summer the Alaska Utilities Commission produced a report that concluded at current production levels that the state faces an energy crisis by 2027. “Our constituents really don’t have a direct voice, they don’t call producers. They hear from the utilities, but often they hear from utilities when utilities are raising their prices. But we’re responsible for communicating with them on a regular basis, and I don’t want them to panic,” Kenai Peninsula Borough mayor Peter Micciche said. In October, Alaska Gov. Mike Dunleavy said his administration is proposing legislation to incentivize future natural production in the Cook Inlet. The proposal would make it more economically feasible for companies to increase natural gas production in Cook Inlet by reducing the royalty rate on all new oil and gas reserves purchased online for ten years after their startup. “We could all recall back in 2010 when we’d see brownout commercials by the mayors at that time,” Dunleavy said. “That was addressed at that time through some incentives. The coalition said they plan to meet with the governor and other policy makers on solutions like the governor’s incentive plan. “Bring communication and sharing that with our citizens — and the governor and the legislature and anyone else that needs to be involved,” Palmer mayor Steve Carrington said. Micciche said in the long term, he doesn’t think the importation of natural gas is a viable option. “But we certainly can’t write it off today, as a short-or mid-term option, if that’s what we need to meet our demands,” he said. Bronson added that as individual mayors, they certainly have the right to work with local assemblies on policies that would reduce electrical usage or bring on other energy sources. “But that’s not a discussion for this coalition at this time,” he said. Mayor Bronson said the coalition probably will not have its’ first formal meeting until the legislative session starts in January. Copyright 2023 KTUU. All rights reserved. 12/13/23, 3:20 PM Energy task force releases final report | Local News | newsminer.com https://www.newsminer.com/news/local_news/energy-task-force-releases-final-report/article_98de20b4-9862-11ee-8820-efcc2fd2ce82.html 1/4 https://www.newsminer.com/news/local_news/energy-task-force-releases-final-report/article_98de20b4-9862-11ee- 8820-efcc2fd2ce82.html TOP STORY Energy task force releases final report Jack Barnwell Dec 12, 2023 Photo courtesy Todd Paris Photo courtesy Todd Paris A solar panel roof installation goes up on the home of Todd Paris. Photo courtesy Todd Paris An energy task force set up by Gov. Mike Dunleavy to examine strategies for affordable energy published its final report on Dec. 1, the required deadline. The 218-page main volume and corresponding 1,174-page supplemental document are the culmination of several months worth of meetings, presentations and a public comment period. Dunleavy set up the task force with the idea to pursue some of the cheapest energy prices in the U.S. and ultimately reduce power to 10 cents per kilowatt hour for Railbelt communities. 12/13/23, 3:20 PM Energy task force releases final report | Local News | newsminer.com https://www.newsminer.com/news/local_news/energy-task-force-releases-final-report/article_98de20b4-9862-11ee-8820-efcc2fd2ce82.html 2/4 The report looks at various strategies and energy sources, including geothermal, nuclear microreactor, wind, tidal and hydroelectric and examines needed infrastructure improvements such as upgrades to the Alaska Intertie and increased battery storage. The task force’s results don’t see 10 cents per kilowatt coming to fruition in the next several years. Fairbanks averages 25 cents per kilowatt hour, the highest on the Railbelt, while Anchorage averages 18 cents to 21 cents. “There is no magic solution to achieve this goal,” the report states. “The report recommends actions that would help pave the way to a more affordable and sustainable energy future.” The task force report also doesn’t reference any long-term mechanisms or policies, but leaves it to state and federal leaders to determine a course of action. “This report could not and does not prescribe the detailed legislative, regulatory, and policy changes that must be developed through further public discussion and involvement,” the task force summary states. “Instead, it establishes baseline considerations, suggests a prioritization of key public policy concerns, and presents a framework for continuous public engagement.” It identified several short-term struggles and long term solutions. “In the short-term, the Task Force acknowledges that continued reliability for generation and transmission in many areas of the state may require certain actions that are likely to increase costs,” the task wrote in its executive summary. “The expected increase in costs is directly tied to project permitting, available fund or financing, and in the case of the Railbelt, local gas supply market in Cook Inlet.” 12/13/23, 3:20 PM Energy task force releases final report | Local News | newsminer.com https://www.newsminer.com/news/local_news/energy-task-force-releases-final-report/article_98de20b4-9862-11ee-8820-efcc2fd2ce82.html 3/4 The task force added any goals and improvements must be balanced by consideration for things such as increased supply and labor costs and “will depend upon the state of Alaska’s collective response to the recommendations set forth within.” “It is important that investments in the short term do not hinder mid-term and long-term goals of infrastructure improvements for diversified power generation sources,” the task force stated. Over the next 20 years, the report recommends that “significant state and federal investment must be made in energy and power infrastructure to enable the long-term goal of diversified, local, reliable and affordable energy.” Those investments include upgrading transmission and distribution systems to handle a diverse energy portfolio, including renewable energy and battery storage projects. Some projects highlighted in the report include the proposed undersea transmission submarine high voltage direct current transmission line between the Kenai Peninsula and a second high voltage line between Anchorage to Fairbanks. The Alaska Energy Authority secured a $206 million energy grant to help fund the high voltage lines, along with battery storage facilities in Fairbanks and in Southcentral Alaska. However, AEA must provide an equal match before it can be authorized to use the funds. Other recommendations include bringing the Railbelt transmission and storage under the Alaska Energy Authority, developing a clean energy standard diversity power generations and increase the power demand and customer base in order to reduce costs. The report also recommends a final solution on the long-proposed Susitna Watana Hydroelectric Project, which has been mothballed since 2017. The task force report noted the project would be a viable alternative to provide 80% of the Railbelt’s sustainable energy goals by 2040. Federal licensing alone would cost between $50 million and $100 million. The construction price in 2014 was estimated at $5.6 billion, but the price would need to be updated to reflect inflation and current supply chain demands. At least one Railbelt utility, Chugach Electric Association in Anchorage, has stipulated its opposition to bringing the Railbelt transmission line under a centralized control. 12/13/23, 3:20 PM Energy task force releases final report | Local News | newsminer.com https://www.newsminer.com/news/local_news/energy-task-force-releases-final-report/article_98de20b4-9862-11ee-8820-efcc2fd2ce82.html 4/4 jbarnwell The report also dives into rural and coastal communities over the short and long terms, stressing the need to strengthen rural microgrids. A clean energy standard was selected over a renewable energy alternative as “it allows the widest range of generation technologies to compete driving affordability and gives Alaska the most options to diversify.” A renewable energy standard had the added caveat of associated penalties which would be passed along to the state’s various utility co-ops and their members. In its summary, the task force said it established a “goal that the system for generation, transmission and space heating should reflect a significant diversification of energy supply from 2023 metrics and be affordable, sourced within the State of Alaska and, most importantly, reliable.” The full report can be found online at tinyurl.com/3c6t676w. Contact reporter Jack Barnwell at 907-459-7587 or jbarnwell@newsminer.com. 813 W Northern Lights Blvd, Anchorage, AK 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG PRESS RELEASE Brandy M. Dixon Communications Director (907) 771-3078 FOR IMMEDIATE RELEASE December 11, 2023 AEA launches a new digital library of over 7,500 items The library will serve as an online digital repository for Alaska’s energy data (Anchorage) — The Alaska Energy Authority (AEA) launched a new online digital library platform, aimed at improving the public’s ease of access to, and navigation of AEA records, both current and historical. AEA’s new digital library is a robust keyword-based search and query tool for locating Alaska’s energy data from any browser-enabled device with web connectivity. At present, there are over 7,500 publicly available program publications, technical reports, research and feasibility studies, and a vast array of other document formats. “AEA’s new digital library is a significant milestone in a multi-year effort to enhance ease of access to, and ensure the sustainable preservation of the State’s energy records,” said AEA Executive Director Curtis W. Thayer. “Thanks to initial funding from the Denali Commission, we have digitized and made available an extensive amount of current and past energy information, and will continue to add additional documents over the library’s lifetime.” Several digital library items date back prior to AEA’s founding in 1976 and were previously only accessible in print. Following significant scanning and digitization efforts by AEA’s team and local Alaskan service providers, these items are now readily accessible in electronic format. While AEA’s digital library is accessible via mobile devices with browser functionality, it is not optimized for mobile devices. As such, it is recommended that users access the digital library using a non-mobile device enabled with a fully-updated browser. AEA’s digital library can be accessed at akenergyauthority.org/library. ### About the Alaska Energy Authority The Alaska Energy Authority is a public corporation of the state. Its mission is to reduce the cost of energy in Alaska. To achieve this mission, AEA strives to diversify Alaska's energy portfolio increasing resiliency, reliability, and redundancy. To learn more, visit akenergyauthority.org. 1/9/24, 11:22 AM OPINION: We need diverse energy solutions for the Railbelt - Anchorage Daily News https://www.adn.com/opinions/2023/12/15/opinion-we-need-diverse-energy-solutions-for-the-railbelt/1/7 Obituaries •Games •ADN Store •e-Edition •Sponsored Content • Promotions •Get our free newsletters ADVERTISEMENT Opinions OPINION: We need diverse energy solutions for the Railbelt By Donna Mears, Jennie Armstrong, Zack Fields, Alyse Galvin, Andrew Gray, Cliff Groh, Andy Josephson, Genevieve Mina, Calvin Schrage and Andi Story Updated: December 15, 2023 Published: December 15, 2023 Alaska News • Politics • Opinions • Talk to us Get our free newslettersSections 1/9/24, 11:22 AM OPINION: We need diverse energy solutions for the Railbelt - Anchorage Daily News https://www.adn.com/opinions/2023/12/15/opinion-we-need-diverse-energy-solutions-for-the-railbelt/2/7 Power lines are highlighted by the setting sun along Turnagain Arm and the Seward Highway south of Anchorage, Alaska on Sunday, March 26, 2017. (Bob Hallinen photo) Anchorage and the rest of the Railbelt rely heavily on natural gas from Cook Inlet for heating and electricity. Cook Inlet natural gas production is dropping as wells age, and gas producers are not drilling enough replacement wells to keep up. Meanwhile, the largest gas producer in Cook Inlet is not renewing its contracts to supply Anchorage natural gas and electric utilities. Within just five years, if we’re relying on Cook Inlet natural gas, it doesn’t look like we’ll be able to meet the Railbelt’s energy needs. The governor’s Alaska Energy Security Task Force, in a recent report, recommends “a near-term focus on diversifying electricity generation.” We should follow the report’s advice. High costs for more of the same Our gas producers, utilities and some government officials are exploring multiple options to keep the gas flowing, all of which would have serious costs. Some are discussing the Alaska LNG project to bring gas from North Slope fields as a possible solution, but whatever you think of that project, it could not be built in time to meet 1/9/24, 11:22 AM OPINION: We need diverse energy solutions for the Railbelt - Anchorage Daily News https://www.adn.com/opinions/2023/12/15/opinion-we-need-diverse-energy-solutions-for-the-railbelt/3/7 the looming shortage. Chugach Electric is exploring importing natural gas on tankers from British Columbia, but estimates show that that would increase rates by more than 50%, from about $8.50 per thousand cubic feet (mcf) of gas to $13.50/mcf. There’s also been talk of financial incentives, but producers have identified several additional challenges — including the availability of drilling rigs and support services — that would need to be overcome to boost new exploration. These solutions would double down on the same finite energy sources that brought us this crisis, and would leave Alaskans to foot the bill, either in the form of increased rates or with significant State subsidies. A path to a better future We need to utilize an “all-of-the-above” strategy that includes accelerating renewable energy, promoting efficiency and maintaining existing gas production. These approaches are affordable and within our control. ADVERTISEMENT Utilities across the Railbelt are deploying renewables and upgrading transmission infrastructure, but we need to speed up their timelines. Legislators from across the political spectrum are working on legislation to support utilities’ efforts to quickly deploy renewable energy power for the Railbelt. This legislation would support utilities’ integration of renewables into their supply over time while maintaining competitive balance. Similar legislation has accelerated renewable development in other states, and recent federal incentives have slashed the cost of development. Rapidly deploying renewables will conserve the natural gas we have and provide dependable power for Alaskans. We can also be more efficient. The federal Inflation Reduction Act presents a big opportunity to retrofit Alaska for energy efficiency at a discount. New tax credits lower homeowners’ costs by up to 30% when installing energy-efficient appliances, windows, insulation and more. The Alaska Finance Housing Corp. is providing support for energy savings, and we should further encourage this by cutting red tape 1/9/24, 11:22 AM OPINION: We need diverse energy solutions for the Railbelt - Anchorage Daily News https://www.adn.com/opinions/2023/12/15/opinion-we-need-diverse-energy-solutions-for-the-railbelt/4/7 in permitting processes. We also need to ensure our workforce is ready to build a more energy-efficient Alaska. Finally, we must maintain our existing gas production by holding producers to the terms of their State oil and gas leases. All State leases require that the leaseholders must produce whatever resources are economically recoverable. Producers have a right to invest in their highest-yield assets elsewhere, but a contract is a contract. The State should require that gas producers in the Cook Inlet either fulfill their obligations under those leases — or, in the case of Hilcorp, the largest leaseholder, a 2012 consent decree — and maintain production or sell them to an operator willing to fulfill that contract and produce the gas needed to supply the Railbelt. There’s no silver bullet tax we can cut or megaproject we can build to escape this problem. Instead, we need an all-of-the-above solution that puts the needs of Alaskan consumers and businesses first. One that puts the tools to solve our problem in our own hands — one wind farm, one new gas well and one double-pane window at a time. Reps. Donna Mears, Jennie Armstrong, Zack Fields, Alyse Galvin, Andrew Gray, Cliff Groh, Andy Josephson, Genevieve Mina, Calvin Schrage and Andi Story represent Anchorage and Juneau in the Alaska House of Representatives. The views expressed here are the writer’s and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)adn.com. Send submissions shorter than 200 words to letters@adn.com or click here to submit via any web browser. Read our full guidelines for letters and commentaries here.