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HomeMy WebLinkAboutRes1993-109 . . . Sponsored by: Tones CITY OF SEWARD, ALASKA RESOLUTION NO. 93-109 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, APPROVING AN AGREEMENT WITH OTHER RAILBEL T UTILITIES FOR RECEIPT OF INTERTIE GRANT FUNDS WHEREAS, the Alaska State Legislature appropriated $90 Million in grant funds to construct two transmission linesj and WHEREAS, Chugach Electric Association is to receive $46,800,000 of these funds for the construction of an intertie between Anchorage and the Kenai Peninsulaj and WHEREAS, receipt of the grant funds is contingent upon the seven railbelt utilities reaching agreement on refinancing the unfunded portion of the line, ownership, access rights and operational controlj and WHEREAS, it is in the public interest for the city of Seward to approve this agreement in order to make funds available for construction of this much needed public facilityj NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. The Railbelt Utilities lntertie Agreement, attached and incorporated herein by reference, is hereby APPROVED, and the City Manager is authorized to execute said agreement on behalf of the city of Seward. Section 2. This resolution shall take effect immediately upon its adoption. PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this 26th day of July, 1993. THE CITY OF SEWARD, ALASKA fJ(h~ lAC}' C~, Dave W: Crane, Mayor . . . C-'1':rV<-1 ( ( INTERTIE GRANT AGREEMENT This Agreement is entered into this ?h ~ay of October, 1993, by Golden Valley Electric Association, Inc. ("GVEA"), Fairbanks' Municipal Utilities System ("FMUS"), Municipality of Anchorage d/b/a Anchorage Municipal Light and Power ("ML&P"), Chugach Electric Association, Inc. ("CEA"), Alaska Electric Generation and Transmission Cooperative, Inc. (" AEG&T"), on behalf of its members (Matanuska Electric Association, Inc. ("MEA"), and Homer Electric Association, Inc. ("HEA"), "Additional Parties"), and City of Seward ("Seward") ("Participating Utilities" within the meaning of Section 2 of SB 126), and the State of Alaska, Department of Administration ("DOA"), and the Alaska Industrial Development and Export Authority ("AIDEA"). The parties agree as follows: 1. Purpose. The purpose of this Agreement is to satisfy the statutory conditions precedent to DOA's transfer of the grant funds and to provide for the expeditious transfer of such funds to the grant recipients for the purpose of partial funding of the design and construction of new electric transmission interties between Healy and Fairbanks and between Anchorage and the Kenai Peninsula. Specifically, this Agreement is intended to satisfy the conditions of SB 126 ~~ l(b) and (c) and ~~ 2(b) and (c). 2. Additional Agreements. The Participating Utilities hereby agree that any additional agreements (whether among the Participating Utilities or with other entities) that may be necessary or useful to carry out the purposes of this Agreement and SB 126 shall be negotiated in good faith. Such additional agreement(s) shall address ownership participation ("Participation Agreement"), project management, and project operation. 3. Ownership. Pursuant to this and any other necessary agreements, the Participating Utilities shall hold undivided ownership interest as tenants in common in the proportion set forth in Attachment I to this Agreement, such proportions being based on the relationship of the Participants' 1990/1991/1992 three-year average non-coincident peak demand to the sum of the Participating Utilities' 1990/1991/1992 three-year average non-coincident system peak demands unless the Participating Utilities agree to a different allocation of specific project capacity in the Participation Agreement. All intertie costs shall be borne by those Participating Utilities which execute Participation Agreements with respect to such Interties. 4. Statutory Conditions. The Participating Utilities hereby agree to the conditions of SB 126, specifically set forth below. 4.1 Design and Construction Costs. The Participating Utilities agree to pay the design and construction costs of the Healy-Fairbanks transmission intertie that exceed $43,200,000 and the design and construction costs for the Anchorage-Kenai Peninsula transmission intertie that exceed $46,800,000 [SB 126 ~~ l(b)(l) and 2(b)(l)]. 4.2 O&M Costs. The Participating Utilities agree to pay the operation and maintenance (O&Iyt) costs for the Healy-Fairbanks and the Anchorage-Kenai Peninsula interties [SB 126 ~~ 1(b)(2) and 2(b)(2)]. . 4.3 Rates. The costs of construction of the Anchorage-Kenai Peninsula intertie in excess of $46,800,000 plus accrued interest, the cost of operation and maintenance of that intertie, and other costs approved by the Participants shall first be recovered through a 1.5 mill/kWh charge for all energy generated by the Bradley Lake Hydroelectric Project. The costs of construction of the Healy-Fairbanks intertie in excess of $43,200,000 plus accrued interest, the cost of operation and maintenance of that intertie, and other costs approved by the Participants shall first be recovered through a 1.5 mill/kWh charge for . . . energy generated by the Bradley Lake Hydroelectric Project for the benefit of receiving utilities in Fairbanks and an additional 1.5 mill/kWh charge to be paid by the receiving utility for 60 percent of the non-Bradley Lake energy transmitted on the existing GVEA transmission line and the new northern intertie between Healy and Fairbanks. Remaining costs of the two interties not recovered by the above 1.5 mill/kWh charges shall be allocated among the Participating Utilities in the proportion set forth in Attachment 1. 4.4 Access and Wheeling. All Participating Utilities agree to provide the other Participating Utilities access both on the new intertie and over the Participating Utilities' systems to and from the intertie for the purpose of assured access to resources, economy energy transactions, and other similar uses. Terms and rates for such access shall be resolved in the Participation Agreement. Resulting rates will be submitted to the Alaska Public Utilities Commission, if required, but this Agreement is not conditional upon APUC approval of such rates. 4.5. Warranties. The Participating Utilities hereby represent and warrant that they have either resolved all material terms and conditions relating to the development, use, and operation of the interties and to the access to the systems to and from the interties or have appropriate forums or procedures, as applicable, to resolve such issues in a fair and equitable fashion. 5. Design and Construction Management. The Participating Utilities agree to contract with GVEA to design and construct the Healy-Fairbanks power transmission intertie and agree to contract with CEA to design and construct the Anchorage-Kenai Peninsula power transmission intertie, subject to the availability of adequate financing and in accordance with Prudent Utility Practices and construction agreements which contain provisions for adequate oversight to maintain quality and cost control, and to ensure that total project costs do not exceed amounts budgeted by the Participants' Group and its Participating Utility members. Consistent with the above conditions, it is agreed and understood that GVEA and CEA, as contractors, will be free to subcontract all or any portion of the work associated with the design and construction of the above projects. If, for any reason, GVEA and/or CEA elect not to act as the contractors of the interties, the Participating Utilities may contract for construction with one or more of the other Participating Utilities or Additional Parties. 6. Intertie Participants Group. As common owners of the interties, the Participating Utilities agree to form the Intertie Participants Group (IPG) for the purpose of exercising their rights and responsibilities as owners. Each Participating Utility shall be represented on the lPG, and the IPG shall form a technical advisory subcommittee on which each Participating Utility shall be represented, except that MEA and HEA shall be represented on the IPG and any subcommittees, each of which shall be a voting member, and AEG&T shall not be additionally represented. The Participation Agreement shall resolve and adopt voting rights and procedural rules for the operation of the IPG. Total project cost and financing shall be addressed in the Participation Agreement. Intertie design, construction, construction management, and operation and maintenance, among other issues, shall be resolved by the IPG in accordance with its rules and procedures. Relative to design and construction issues, the IPG and its technical advisory subcommittee shall be responsible for oversight of GVEA and CEA construction efforts. Such INTERTIE GRANT AGREEMENT Page 2 . . . ( oversight shall include approval of at least project scope (including routing and points of interconnection), cost estimates and budget, approval of construction agreements, significant change orders, receipt and review of at least monthly reports, and auditing of design and construction funds. Neither the IPG nor any individual Participating Utility shall attempt to make claims against GVEA and CEA for any decisions made by the IPG. Upon completion and commercial operation of the interties, the IPG shall be responsible for all decisions relating to the ongoing operations, maintenance, repair, and improvement of the interties. 7. Transfer of Grant Funds. DOA hereby transfers the grant funds of $43,200,000 to GVEA and $46,800,000 to CEA to be held by Alaska Industrial Development & Export Authority (AIDEA). GVEA and CEA agree that such funds shall be held by AIDEA for the benefit of all Participating Utilities, with instructions to AIDEA that no funds are to be released, encumbered, assigned, or pledged until a Participation Agreement and a Grant Administration Agreement, each in a form satisfactory to AIDEA, have been executed by all of the Participating Utilities and, as applicable, the Authority. Pursuant to AS 44.88. 190(b ), grant funds held by AIDEA and all interest earned thereon shall not be or constitute monies of the State. The Participating Utilities agree to negotiate in good faith with the intent of executing a Participation Agreement by November 30, 1993. The Participating Utilities and the Authority agree to negotiate in good faith with the intent of executing a Grant Administration Agreement by November 30, 1993. In the event that the Healy-Fairbanks intertie is not, for any reason, constructed, GVEA agrees that AIDEA shall return any unexpended funds and any interest earned thereon to DOA. ill the event that the Anchorage-Kenai Peninsula intertie is not, for any reason, constructed, CEA agrees that AIDEA shall return any unexpended funds and any interest earned thereon to DOA. No Participating Utility shall unreasonably delay progress toward completion of the interties. 8. Use of Funds. The parties agree to use funds described in paragraph 7 solely for the purposes of design and construction of the Healy-Fairbanks and Anchorage-Kenai Peninsula interties, including all acts necessary for completion of these projects. The parties further agree to return to the State any unexpended grant funds and any interest earned thereon not needed for this purpose. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first above written. STATE PARTIES: STATE OF ALASKA, DEPARTMENT OF ADMlNISTRA~ BY:~_ ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AU'fHORITY AD~TION il . ;I! By: ,1t~/ en ; ~f}Y INTERTIE GRANT AGREEMENT Page 3 . . . ( ADDmONAL PARTIES: MAT ANfSKA ELECTRIC ASSOCIATION, INe. BY.~ Wo HOMER ELECTRIC ASSOCIATION, INC. By ~~~ PARTICIPATING UTILITIES: GOLDEN VALLEY ELECfRIC ASSOCIATION, INC. By: FAIRBANKS MUNICIPAL UTILITIES SYSTEM By: ~~ - . By: INTERTIE GRANT AGREEMENT Page 4 . . . / \ Attachment 1 INTERTIE GRANT AGREEMENT Page 5 ALASKA ELECTRIC GENERA nON & TRANSMISSION COOPERATIVE, INC. By:wL~ ~~ MUNICIPALITY OF ANCHORAGE d/b/a ANCHORAGE MUNICIPAL LIGHT & ::WER ~W . . . Attachment 1 INTERTIE OWNERSHIP INTERESTS Golden Valley Electric Association, Inc. Fairbanks Municipal Utilities System Anchorage Municipal Light and Power Chugach Electric Association, Inc. 15.41 % 4.70% 22.43% 30.23% Alaska Electric Generation & Transmission Cooperative, Inc. 25.79% Matanuska Electric Association, Inc. 14.19 % Homer Electric Association, Inc. 11.60% City of Seward 1.44% TOTAL 100.00% NOTE: The above percentage ownership interests are subject to recomputation in the Participation Agreement utilizing consistent system peak data and methodology unless the Participating Utilities agree to a different allocation of specific project capacity (Section 3 of this Agreement). INTERTIE GRANT AGREEMENT Page 6 . . . GRANT TRANSFER AND DELEGATION AGREEMENT I. RECITALS l.1 The legislature appropriated the sum of $43,200,000 to Golden Valley Electric Association for the purpose of constructing a power transmission intertie between Healy and Fairbanks to benefit all utilities participating in the intertie. The appropriation is to be administered as a designated grant under AS 37.05.316. The appropriation named the Department of Administration as the grantor agency. 1.2 The legislature appropriated the sum of $46,800,000 to Chugach Electric Association for the purpose of constructing a power transmission intertie between Anchorage and the Kenai Peninsula to benefit all utilities participating in the intertie. The appropriation is to be administered as a designated grant under AS 37.05.316. The appropriation named the Department of Administration as the grantor agency. 1.3 The grant appropriations contain conditions which must be satisfied before the grants can be made. The grant appropriation requires that these conditions be establ ished in an agreement executed by and between the Department, AIDEA and the participating utilities. 1.4 The designated grant recipients and the participating utilities have executed an Intertie Grant Agreement which, among 1 . . . other matters, addresses the statutory preconditions. The department and AIDEA have determined that the Intertie Grant Agreement substantially satisfies the statutory preconditions. 1.5 Upon execution of the Intertie Grant Agreement by the Department and AIDEA, the Department is legally authorized to make the grants to the designated grant recipients. 1.6 In accordance with the Department's grant administration responsibilities, the Department determines that it is essential to establish terms and conditions with respect to the obligation or expenditure of grant funds. The Department further determines that the Authority possesses the expertise necessary to establish and administer appropriate terms and conditions with respect to administration of the grants. 1.7 The department and the participating utili ties have determined that the purpose of the grant appropriations and the intent of the legislature can best be accomplished if AIDEA is designated as the custodian for the full amount appropriated. AIDEA will provide for custody and administration of the grant appropriation. 1.8 The department has the authority to make this agreement under AS 37.05.316, AS 37.05.l70, among other provisions of law. AIDEA has the authority to make this agreement under AS 44.88.080(9), (11), and (17), among other provisions of law. 2 . . . II . AGREEMENT In consideration of the promises set out below, the parties agree as follows: 2.1 The Department and AIDEA hereby agree to execute the Intertie Grant Agreement. 2.2 Upon execution of the Intertie Grant Agreement by all Participating utilities, the Department and the Authority, and subject to the limitations and conditions described herein, the grants authorized in sec. 1 and 2 of ch. 19 SLA 1993 are hereby made, respectively, to Golden valley Electric Association and to Chugach Electric Association for the benefit of the Participating utilities. 2.3 AIDEA is delegated all powers and duties of the Department of Administration associated with the administration of the grant appropriations made in sees. 1 and 2 of ch. 19 SLA 1993. 2.4 The AIDEA shall exercise the delegation granted by this agreement according to all statutes and regulations applicable to the administration of grants to named recipients under AS 37.05.316 by the Department of Administration. IH addition, no grant funds may be disbursed until the Authority and the Participating utilities enter into a Grant Administration Agreement which addresses, among other matters: 3 . . . (a) a disbursement schedule which establishes ceilings, subject to upward adjustment by the Authority for phases of Project development; (b) the reimbursement of unobligated or unexpended grant funds to the extent development of an intertie project is unreasonably delayed by the Participating utilities; (c) the submittal of a Participation Agreement among the Participating utilities; (d) a determination by the Participating utilities of which, if any, of the contractual obligations relating to the grant(s) will be submitted to the Alaska Public Utilities Commission; and (e) a schedule which limits the expenditure of grant funds until the participating utilities have demonstrated the ability to raise all additional amounts needed to complete construction of the intertie(s). 2.5 The Participating utilities hereby request that AIDEA agree to serve as custodian on behalf of the recipients of the grant appropriations made in secs. land 2, ch. 19 SLA 1993. As custodian, AIDEA will, on behalf of the grant recipients, hold the sums appropriated. AIDEA may designate an institutional trustee to accomplish this purpose. 2.6 Pursuant to AS 44.88.190 (b), the grant funds held by AIDEA and any interest or other income thereon shall not be or constitute money of the state. However, amounts held in custody 4 . . . under this agreement will be invested consistent with the principles set out in AS 37.10.071. AIDEA will consult with the grant recipients before adopting an investment strategy for the amount in custody. 2.7 Interest earned from investment of the amount in custody will be retained by AIDEA, kept separate from all other funds and accounts of AIDEA and expended for the purposes of the grants, expended for the costs of any custodial arrangements with a private financial institution or, if the purpose of a grant cannot be accomplished, returned to the state treasury. The parties set out below execute this agreement on this 5th day of November , 1993 in Anchorage, Alaska. D~artment of Administration c~~ Nancy Bear Usera, commissioner ~. "s"l i j - :,/ -' if , 1171711.J 'h'. '- ,() 'f RJ.ley Snell Executive Director Electric Association Golden Valley Electric Association Association Municipal Light & Power Alaska Electric Transmission ~"J3.~ (H ~ f(~ 5 . . . r Fairbanks Municipal utilities system ..... -r F:\AIDEA\ENERGY\KAE0962 Qr~ 6 CITY OF SEWARD, ALASKA RESOLUTION NO. 93-109 AYES: NOES: ABSENT: ABSTAIN: Bencardino, Crane, Darling, Krasnansky, Sieminski & Swartz None White None ATTEST: APPROVED AS TO FORM: Wohlforth, Argetsinger, Johnson & Brecht, Attorneys for the city of Seward, Alaska ~;(~ City Attorney (City Seal)