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Sponsored by: Tones CITY OF SEWARD, ALASKA RESOLUTION NO. 93-034 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, APPROVING A MEMORANDUM OF UNDERSTANDING REGARDING RAILBELT INTERTIE PROJECTS WHEREAS, construction of a new south intertie to connect the Kenai Peninsula to Anchorage and a North Intertie to connect Anchorage to Fairbanks is necessary to assure the railbelt communities have reliable electrical power at a reasonable cost; and WHEREAS, sufficient funds remain in the Railbelt Energy Fund to fund the cost of a portion of the construction; and WHEREAS, it is anticipated that the balance of the funds must be obtained by state bonds; and WHEREAS, a Memorandum of Understanding dated March 3, 1993, between the Railbelt Utilities Managers and the Alaska Energy Authority lists several commibnents proposed for adoption by all parties regarding funding, construction, ownership, operations and maintenance of payment of cost of the project; and WHEREAS, several bills have been introduced to the state legislature for the purpose of funding construction of the interties; and WHEREAS, it is reasonable to believe that, in order for a bill to be favorably considered by the legislature and supported by the Governor, it must include most, if not all, of the commibnents listed in the Memorandum of Understanding. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. The Memorandum of Understanding, dated March 3, 1993, between the Alaska Energy Authority and the Railbelt Utility Managers, is incorporated herein by reference. Section 2. The City is agreeable to the commibnents contained in the Memoran- dum of Understanding. Section 3. It is in the public interest to support legislation that implements the principles set forth in the Memorandum of Understanding. Section 4. This resolution shall take effect immediately upon its adoption. . MEMORA.~DUM OF UNDERSTANDING REGARDING RAlLBEL T rNTERTIE PROJECTS ( Restructuring) THIS MEMORANDUM OF UNDERSTANDING dated the 3rd day of March . 199~ is entered into by the ALASKA ENERGY AUTHORITY (" Authority"), and CHUGACH ELECTRIC ASSOCIATION, INC., GOLDEN VALLEY ELECl'RIC ASSOCIATION. INC.. HOMER ELECfRlC ASSOCIATION, INC., ~ATANUSKA ELECTRIC ASSOCIATION, INC., the MUNICIPALITY OF ANCHORAGE, d/b/a MUNICIPAL UGHT AND POWER, the CITY OF SEWARD, d/b/a SEWARD ELECTRIC SYSTEM and the ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE, INC., represented by and through HOMER ELECfRlC ASSOCIATION, INC. and MATANUSKA ELECTRIC ASSOCIATION, INC. ("Utilities") for the purpose of setting forth a set of terms regarding fuuding and constructlou of additional Railbelt transmissioD facilities. 'I WITNESSETH: '. . ., A. The Authority desires to fulf1l1 its mission of facilitating the development of reliable energy systems that satisfy the requirementS of AIACllcllft consumers at the lowest reasonable cost; B. The Utilities each own and operate electric utility facilities and are engaged in the business of collectively providing electric service to more than seventy percent (700.4) of Alaskan consumers; C. The Authority has constructed an electrical tpn!lTl1i!!..<don system between Healy and Willow ("Existing Intcrtie") to interconnect the Railbelt Utilities; D. The Utilities desire to further improve Railbelt traft!lmill$ion reliability and power tran!lTl1ission capability by financially cooperating with the Authority and coIJStI'Uding additional tran!m\i!l!llion facilities between Healy and Fairbanks and between Anchorage and Soldotna ("New Interties" or "Project"); Eo The Authority is developing a financial restructuring proposal for consideration by the 1993 Legislature that would pool available energy assets and revenues for the purpose of funding various energy projects and programs around the State, including New Intcrties, interties or energy projects for Southeast Alaska and the Copper Valley region, conservation, and Power Cost Equalization; and. . F. The Authority and Utilities agree that a COmprehensive proposal providing energy benefits throughout the State offers promise for securing sufficient funds to develop the New Intenies. .' NOW THEREFORE, the parties agree as follows: - mMORANDUM OF UNDERSTAo.'iDING RAILBEL T INTERnE PROJECTS (RestructUriD~) 2 . 1. Funding a. The Authority will provide :l Ninety Million Dollar ($90 Million) no interest loan for a term not to exceed fifty (50) years to the Utilities for the New Interties ("State Loan"). State Loan funds ",ill be released by the Authority to the Utilities to meet Project expenses. b. The Authority shall use its best efforts to issue long-term bonds in an amount sufficient to pay any Project costs in excess of the State Loan ("Bonded Amount"). Co The Utilities and the Authority will enter into an agreement providing the terms of repayment of the State Loan and any Bonded Amount ("Financing Agreement"). The Financing Agreement shall provide for a gradual phase-in of the repayment obligation of the State Loan and shall. to the extent feasible. provide for a gradual phase-in of the repayment obligation of any Bonded Amount. The phase-In may be in accordance with proposed financial restrUcturing of the Authority. 1. Construction . The Authority will contract with one or more Railbelt utility organizations approved by the Utilities for construction of the New Interries under terms outlined in the Financing Agreement, subject to legislative approval if required, consistent with the provisions of State law. ., 3. Ownenbip Unless agreed otherwise by the terms of the Financing Agreement, the Authority shall be the initial owner of the New Interties. The Authority shall transfer ownership of the New Interties to one or more Railhelt utility organi7ations approved by the Utilities upon repayment of thc amounts owed by the Utilities to the Authority for the State Loan and the Bonded Amount. The Utilities shall. under terms oudined in the Financing Agreement, be responsible for operation, maintenance. improvements, allocation of costs among the Utilities, .1 and any risks associated with the New Interties prior to a transfcr of ownership. 4. Operation and Maintenance During the term of Authority ownership of the New Interties, the Authority will contract with one or more Railbelt utility organizations approved by the Utilities for operation and maintenance of the New Interties, and will retain oversight responsibility consistent with its ownership obligations. . I 5. Payment of Costs Except as provided in Section I above ("Funding"), the Utilities shall pay all costs associated with construction. operation, and maintenance of the New Interties, including reasonable owner costs, in accordance with terms of the Financing Agreement. . , , . I, ~' t .\ ~ I I -t -, i :\1El\lORAa.'IDUM OF l~DERST.~'lDING RAILBEL T INTERTIE PROJECTS IReslructuriD~J , oJ 6. Support of Legislation The Authority and l'tilities agree to support legislation that implements the principles set forth in this Memorandum of Cnderstanding, and further agree to consult with each other before modifying such suppon, 7. ~ecessary Approvals The obligations of the respective parties set forth in this Memorandum are subject to each obtaining any necessary approvals. including legislative actions as required. The undersigned representatives hereby agree to recommend to their governing bodies the commitments contained in this Memorandum of Understanding. IN WITNESS WHEREOF. the Alaska Energy Authority and the Utilities. as parties. have caused this Memorandum of Understanding to be executed the day and year tirst above written. ALASKA~GY AUTHORITY By: d2l~ CHUGACH~IATION' INC. By: -4 ~ GOLDEN VALLEY ELECI'RIC ASSO ~ By: I ALASKA ELECI'RlC GENERA: ON AND TRANSMISSION COOPERATIVE, INC.lHOMER ELECI'RlC AS?TI~, ~. /2 By:ffig~ ~ ALASKA ELECI'RIC GENERATION AND TRANSMISSION COOPERATIVE, INC.JMATANUSKA ELECfRI: rO~nON, INC. By: (R ~ ~ -lJk- lljfl~ MUNlCIP ALITY F ANCHORAGE d/b/a MUNlCIP IOHT & POWER By: CITY OF SEWARD d/b/a SEWARD ELECTRIC SYSTEM ~~~ ~ By: . . . CITY OF SEWARD, ALASKA RESOLUTION NO. 93-034 PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this 22nd day of March, 1993. AYES: NOES: ABSENT: ABSTAIN: A ITEST: THE CITY OF SEWARD, ALASKA ~~. Q~ Dave W. Crane, Mayor Bencardino, Crane, Krasnansky, Sieminski, Swartz & White None Darling None APPROVED AS TO FORM: Wohlforth, Argetsinger, Johnson and Brecht, Attorneys for the City of Seward ~;:4 Thomas F. Klinkner City Attorney . (City Seal)