HomeMy WebLinkAboutRes1994-014
.
.
.
Sponsored by: Tones
CITY OF SEWARD, ALASKA
RESOLUTION NO. 94-014
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, APPROVING THE 1994 ALASKA
INTERTIE PROJECT PARTICIPANTS AGREEMENT
WHEREAS, the State of Alaska has by statute authorized and has partially funded
the design and construction of two segments of high voltage electric power transmission
line (the Project); and
WHEREAS, the State has required that participating utilities enter into a joint
participants agreement setting forth the terms for providing the remaining funds needed
to design, construct, operate and maintain the Project; and
WHEREAS, the City Council finds that it is in the public interest for the city of
Seward to participate in the Project;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
Section 1. The 1994 Alaska Intertie Project Participants Agreement, a copy of
which is attached and incorporated herein by reference, is hereby APPROVED.
Section 2. The City Manager is hereby authorized to execute the Participants
Agreement, in substantially the form attached to this resolution including minor wording
changes, for and on behalf of the City of Seward.
Section 3. This resolution shall take effect immediately upon its adoption.
PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this
10th day of January, 1994.
THE CITY OF SEWARD, ALASKA
~ LJ. r~
Dave W. Crane, Mayor
..
.
.
.
DRAFT #2+
December 29M, 1993
J:\dhr\ 15289-00.005\Part02+b1.doc
1993 ALASKA INTERTIE PROJECT
PARTIC~ANTSAGREEMENT
by and among
ALASKA ELECTRIC GENERATION & TRANSMISSION COOPERATIVE, INC.,
The MUNIC~ALITY OF ANCHORAGE d/b/a MUNIC~AL LIGHT & POWER,
CHUGACH ELECTRIC ASSOCIATION, INC.,
The MUNIC~ALITY OF FAIRBANKS
d/b/a! FAIRBANKS MUNIC~AL UTll..ITIES SYSTEM,
GOLDEN VALLEY ELECTRIC ASSOCIATION, INC.,
The CITY OF SEWARD d/b/a! SEWARD ELECTRIC SYSTEM,
("Participants")
and
HOMER ELECTRIC ASSOCIATION, INC.,
MATANUSKA ELECTRIC ASSOCIATION, INC.,
("Additional Parties")
December --, 1993
.
.
.
.
PARTICIPANTS AGREEMENT
TillS AGREEMENT ("Agreement") dated as of December --' 1993, is entered into by
and among the Parties hereto, namely the ALASKA ELECTRIC GENERATION &
TRANSMISSION COOPERATIVE, INC., The MUNICIPALITY OF ANCHORAGE d/b/a
MUNICIPAL LIGHT & POWER, the CHUGACH ELECTRIC ASSOCIATION, INC., The
MUNICIPALITY OF FAIRBANKS d/b/a! FAIRBANKS MUNICIPAL UTILITIES SYSTEM,
the GOLDEN VALLEY ELECTRIC ASSOCIATION, INC., The CITY OF SEWARD d/b/a!
SEWARD ELECTRIC SYSTEM, each of which shall be a "Participant," and the HOMER
ELECTRIC ASSOCIATION, INC., and the MATANUSKA ELECTRIC ASSOCIATION, INC.,
each of which shall be an "Additional Party."
WITNESSETH:
WHEREAS, the State of Alaska ("State") has by statute authorized, and has partially
funded, the design and construction of two segments of high voltage electric power transmission
line, namely (I) a Healy-Fairbanks Segment, and (2) an Anchorage-Kenai Peninsula Segment
(said two Segments referred to collectively as "the Project"); and
WHEREAS, the State's action is intended to benefit the general public through greater
electric power reliability and improved efficiency of electric power supply for consumers served
by electric utilities that agree, collectively, to provide the remaining funds needed to design, con-
struct, operate and maintain the Project; and
WHEREAS, each Party hereto is an electric utility or operates as an electric utility, and is
entitled under the relevant State statutes to be a party to this and other contractual agreements
that are necessary to the Project; and
WHEREAS, each Party hereto has already executed the Intertie Grant Agreement ("Grant
Agreement") and Grant Transfer And Delegation Agreement for the Project, which are attached
to this Agreement as Exhibits A(I) and A(2); and
WHEREAS, each Party has independently detennined that its participation in the Project
under the terms and conditions set forth in this and related Agreements is prudent under the
circumstances, and that over its expected useful life the Project is likely to produce net economic
benefits (directly and through improved reliability) for the electric ratepayers served by that Party;
NOW THEREFORE, IN CONSIDERATION of the mutual covenants set forth herein, the
Parties agree as follows:
Section 1. PARTIES
(a) Participants And Additional Parties As Parties To This Aereement. The Parties
to this Agreement are the Participants, as defined in Section I(b), and the Additional Parties, as
defined in Section l(c). As further set forth in Section 5(a) and in other provisions of this
Agreement, the Participants will own (as tenants in common) certain transmission facilities that
I PARTICIPANTS AGREEMENT -- Page I
Draft #2+, Printed 12/29/93
..
.
.
.
are the subject of this Agreement, and will exercise the rights and bear the responsibilities of such
ownership. The Additional Parties are electric utilities who collectively constitute Alaska Electric
Generation and Transmission Cooperative, Inc., one of the Participants, and whose systems will
be electrically interconnected with, and will affect and be affected by, the transmission facilities
that are the subject of this Agreement. The Additional Parties will participate in the governance
and control of the Project, but will not be among the owners of such facilities.
(b) Participants. The Participants are the ALASKA ELECTRIC GENERATION &
TRANSMISSION COOPERATIVE, INC. ("AEG&T"), The MUNICIPALITY OF
ANCHORAGE d/b/a MUNICIPAL LIGHT & POWER ("ML&P"), the CHUGACH ELECTRIC
ASSOCIATION, INC. ("Chugach"), The MUNICIPALITY OF FAIRBANKS d/b/a!
FAIRBANKS MUNICIPAL UTILITIES SYSTEM ("FMUS"), the GOLDEN VALLEY
ELECTRIC ASSOCIATION, INC. ("GVEA"), and The CITY OF SEWARD d/b/a! SEWARD
ELECTRIC SYSTEM ("SES").
(c) Additional Parties. The Additional Parties are the HOMER ELECTRIC ASSOCI-
ATION, INe. ("BEA") and the MATANUSKA ELECTRIC ASSOCIATION, INC., ("MEA").
Section 2. TERM OF AGREEMENT
(a) Effective Date. This Agreement shall become effective at 24:00 hours on the first
date that it has been executed by all of the Parties ("Effective Date").
(b) Expiration Date. Unless earlier terminated pursuant to other provisions of this
Agreement, this Agreement shall expire at 24:00 hours on the first date that the Project has
reached the end of its actual useful life ("Expiration Date"), as reasonably determined by the
Intertie Participants Group ("IPG").
Section 3. DEFINITION AND SCOPE OF THE PROJECT
(a) The Healv-Fairbanks Se2ment. The Healy-Fairbanks Segment of the Project shall
consist of a 138-kV (minimum) electric power transmission line between Healy, Alaska, and the
proposed Wilson Substation in south Fairbanks, Alaska, the routing and design of which will be
approved by the lPG, and a description of which will thereafter be attached hereto as Exhibit B
and incorporated by reference herein. The proposed Wilson Substation shall be designed to
accommodate appropriate direct interconnection for FMUS, and FMUS shall interconnect to the
Project at that location within 18 months of the Date of Commercial Operation of the Healv-
Fairbanks Segment.
(b) The Anchora2e-Kenai Peninsula Se2ment. The Anchorage-Kenai Peninsula
Segment of the Project shall consist of a 138-kV (minimum) electric power transmission line
between Anchorage, Alaska, and the Kenai Peninsula of Alaska, the routing and design of which
will be approved by the lPG, and a description of which will thereafter be attached hereto as
Exhibit C and incorporated by reference herein.
I PARTICIPANTS AGREEMENT -- Page 2
Draft #'},+, Printed 12/29/93
.
.
.
Section 4. THE PARTICIPANTS
(a) ParticiDants' Shares. Each Participant's rights to Project capacity, and each Partici-
pant's responsibility for Project costs, shall be determined as set forth in this Agreement on the
basis of that Participant's Share of each Project Segment. The Parties have computed and agreed
upon the respective individual Participants' Shares in a manner consistent with applicable statutory
provisions. Unless otherwise changed in accordance with this Agreement, each Participant's
Share with respect to both Segments shall initially be as follows:
AEG&T ...................................... 25.79%
of which:
HEA..........................11.60%
MEA......................... 14.19%
ML&P ........................................ 22.43%
Chugach...................................... 30.23%
FMUS ........................................ 4.70%
GVEA ........................................ 15.41%
SES ........................................ 1.44%
(b) Chanl!es In ParticiDants' Shares. Except as otherwise specifically provided herein,
changes in Participants' Shares shall be subject to the terms and conditions set forth in this Section
4(b). If either or both Additional Parties change their Shares independently of one another, then
the Shares of AEG&T shall be dividedpartitioAcd into separate Shares of HEA and MEA in
accordance with their interests in each Segment of the Project as applicable at the time of such
divisionpartitioA. In the event of such divisionpartitioR and for the purposes of this Section 4(b),
the Additional Parties shall be deemed Participants:,
(1) General Conditions.
(A) Except as provided in Sections 4(b)(3), 4(b)(4), and 4(b)(6), no
Participant's Share or any portion thereof shall be assigned or transferred,
voluntarily or involuntarily, to any entity, unless said entity:
(i) is capable of being a "participating electric utility" for purposes
of Sections 1 and 2 of chapter 19 SLA 1993, which authorize and partially
fund the Project; and
(ii) is capable of carrying out all the electric utility services, duties,
obligations, and functions of a Participant, as reasonably determined by the
IPG;
(iii) has validly assumed, in writing, all of the transferring
Participant's obligations hereunder, provided that such assignment or
transfer shall not relieve the transferring Participant of its obligations under
this Agreement (although said transferring Participant may become
I PARTICIPANTS AGREEMENT -- Page 3
Draft #~+, Printed 12/29/93
.
.
.
secondarily liable and the transferee may become primarily liable) without
the express written approval of the IPG; and
(iv) has provided the Parties with an opinion of counsel that this
Agreement is enforceable against the transferee or assignee.
(2) Consent. Except as provided in sections 4(b)(3) and 4(b)(4), no Participant's
Share shall be changed (i.e., increased or decreased, including eliminated or reduced to
zero), either voluntarily or involuntarily, by assignment or otherwise, except with the prior
written consent of:
(A) each and every Participant, which consent shall not be unreasonably
withheld;
(B) any Project lender, bondholder, bond fund trustee, or other party
whose consent is a precondition to any such a change by that Participant as a result
of agreements or arrangements entered into by that Participant for the purpose of
financing the Project; and
(C) if applicable, any lender or regulatory agency whose consent the
Participant(s) may require in order to increase, decrease, or eliminate its (their)
respective Participant's Share(s).
(3) Limited automatic ri!!hts of withdrawal.
(A) Generallv. Each Participant other than GVEA and FMUS shall have
a limited automatic right of withdrawal from participation in the Healy-Fairbanks
Segment, and each Participant (including GVEA and FMUS) shall be entitled to
withdraw from participation in the Anchorage-Kenai Peninsula Segment, but, in
each case, only in accordance with the provisions of this Section 4(b)(3).
(B) Timin!!. A Participant that withdraws from participation in either
Segment may do so only by delivering written notice to the other Participants on
or before a particular date (hereinafter the "decision date") reasonably established
by the IPG. The decision date shall be a date certain, after completion of the
requisite Anchorage-Kenai Peninsula Segment route studies and cost estimates, on
which a final decision will be made to proceed or not to proceed with construction
of that Segment along a particular route and with particular end points. The
Participants will cooperate with one another in good faith to help devise and
implement such additional procedures, including reasonable meeting and
notification schedules, as the IPG may adopt to facilitate decisionmaking on the
potential transfers and assumptions of rights and obligations among Participants
that may occur pursuant to this Section 4(b)(3).
(C)
obli!!ations.
Effect of withdrawal on Particioant Shares and related
The Participant's Share of any withdrawing Participant shall be
I PARTICIPANTS AGREEMENT -- Page 4
Draft #2?', Printed 12/29/93
.
.
.
reallocated among other Participants in accordance with paragraph (D) below.
The withdrawal of any Participant from the Healy-Fairbanks Segment, however,
shall become effective only one year after the Date of Commercial Operation of
that Segment, or, if later, one year after the date of that Participant's withdrawal
notice. Until its withdrawal becomes effective, such Participant shall remain liable
for all costs and obligations associated with its Participant's Share of the Healy-
Fairbanks Segment. The withdrawal of any Participant from the Anchorage-Kenai
Peninsula Segment shall become effective sixty (60) days after the decision date,
subject to the last sentence of Section 4(b )(3)(D)(ii).
(D) Reallocation of the ParticiDant's Share of a withdrawinl!:
ParticiDant.
(i) Healv-Fairbanks Sel!:ment. The Participant's Share of a
Participant that withdraws from the Healy-Fairbanks Segment shall first be
offered to other Participants in that Segment in proportion to the respective
Participant's Shares of such other Participants in that Segment. Any por-
tion of the withdrawing Participant's Share that remains available after this
first-round offer shall next be acceDted byetferea te FMUS and GVEA in
proportion to their respective Participant's Shares. Drovided. that FMUS
shall not be reauired to acceDt said Dortion to the extent FMUS's total
ParticiDant's Share of the Healy-Fairbanks SelZJllent would thereby exceed
15%. If any portion of the withdrawing Participant's Share remains avail-
able after this second-round offer, then that portion shall be accepted by
GVEA. [Note: SutOR belie-/e:i a differeRt arrllRgemeRt wa:i made,
Rllmely thllt Fl\rus hlld the ehoiee of steppiRg up, gettiRg eVE.". to
agree to tlllte IllllFger Share, or -:;ithdl'llwiRg. Still aR i:i:iue.]
(ii) Anchoral!:e-Kenai Peninsula Sel!:ment. The Participant's
Share of a Participant that withdraws from the Anchorage-Kenai Peninsula
Segment shall first be offered to all remaining Participants in that Segment,
in proportion to their respective Shares in that Segment. Any portion of
the withdrawing Participant's Share that remains available after this first-
round offer shall next be offered to all Participants in that Segment that
have committed to withdraw from the Healy-Fairbanks Segment ("South-
only Participants"). If and to the extent that the South-only Participants
decline to accept this second-round offer, then the withdrawing
Participant's Share (or any remaining portion thereof) shall again be offered
to all remaining Participants in that Segment (including the South-only
Participants) in proportion to the respective Participant's Shares of such
Participants in that Segment. Each such Participant shall either accept such
third-round offer, obtain agreement from another Participant to accept such
third-round offer, or shall itself withdraw from participation in that
Segment. In the event this process leads one or more additional
Participants to withdraw from participation in that Segment, then their
Participant's Shares shall be offered to the remaining Participants in a like
I PARTICIPANTS AGREEMENT -- Page 5
Draft #2+, Printed 12/29/93
.
.
.
first-round, second-round, and third-round manner. If, at the conclusion of
this process, one or more Participants have accepted Participant's Shares in
the Anchorage-Kenai Peninsula Segment that total one hundred percent
(100%), then construction of the Segment shall commence and there shall
be no further automatic rights of withdrawal available to any Participant;
otherwise this Project Segment shall be considered Abandoned and all
Participants in it (notwithstanding the attempted withdrawal of any of them
under this paragraph) shall proceed, in accordance with procedures the IPG
shall adopt, to wind up this Project Segment. No Participant shall in that
event be excused from its Participant's Share of any obligations associated
with this Project Segment until all such obligations have been satisfied.
(E) Financial arrane:ements with a Participant that withdraws from
participation in the Healv-Fairbanks See:ment. Upon acceptance of a transfer
and assumption by one or more other Participants of the rights and obligations
associated with the Participant's Share of a Participant that withdraws from
participation in the Healy-Fairbanks Segment, and after such withdrawal becomes
effective pursuant to Section 4(b)(3)(C), the Participant(s) assuming such rights
and obligations shall proceed to pay the withdrawing Participant's Annual Payment
Obligations and Assessments for that Project Segment. Such payment shaH
include any then-unamortized amounts of the transferring Participant's Share of
such Design and Construction Costs as may exceed the sum total of the Grant
Funds plus available interest thereon for that Segment. In the event that the
withdrawing Participant's Share of Design and Construction Costs for that
Segment has not been financed through a collective financing arrangement, then
the Participant(s) assuming such Share shall pay the withdrawing Participant
directly, over a period of twenty-five (25) years (unless otherwise agreed) and on a
mutually-agreed amortization schedule, for amounts that would at that time be
unamortized, assuming said withdrawing Participant's Share had been financed by
means of a collective financing arrangement or other loan.
(F) In the event a Participant exercises the limited right of withdrawal
pursuant to Section 4(b)(3), then each remaining Participant shall continue to be a
Member with a single vote, notwithstanding its assumption of the transferring
Participant's Share, but the Share of said remaining Participant shall be increased
by the amount transferred for all other purposes, including for purposes of
determining the affirmative vote of Members whose percentage Shares exceed
50% under Section 6(e)(3)(a).
(4) Default and Step-up. If, by reason of a Participant's default or otherwise by
operation of law (including by order of any regulatory body with jurisdiction), a
Participant's Share is reduced or eliminated, or a Participant ceases to be a Participant and
ceases to pay the costs associated with its Participant's Share, then the Shares of the
remaining Participants shall be proportionately increased so that the total of all Shares
continues to equal 100%. No Party shall initiate or otherwise seek such an order
reducing or eliminating its Share or terminating its role as a Participant.
I PARTICIPANTS AGREEMENT -- Page 6
Draft #~,+, Printed 12/29/93
.
.
.
(5) Voluntary Transfers. In the event that a Participant transfers or assigns its
Share or portion thereof to another Party, the Share of the transferee shall be increased
accordingly, but it shall continue to be a Member with a single vote on the IPo. In the
event that a Participant transfers or assigns its Share or portion thereof to an entity that is
not a Party, the transferee may become a Member with a single vote on the IPG.
(6) Assil!nment for Security Purposes. Nothing in this Agreement shall prevent
an assignment of a Party's rights hereunder for security purposes only, or shall prevent a
financing entity with recorded or secured rights from exercising all rights and remedies
available to it under law or contract, provided that performance of this Agreement is not
thereby impaired. The Parties shall have the right to be reasonably notified by the
financing entity prior to the time of exercise that it is exercising such rights or remedies.
Section 5. RIGHTS & OBLIGATIONS OF PARTICIPANTS
(a) Ownershio As Tenants In Common. The Participants shall be owners of each
Segment of the Project (including all personal and real property interests thereof) as tenants in
common, with undivided interests and obligations with respect to all Project Segment assets and
liabilities in the proportionate amounts of their respective Participants' Shares. Except as
otherwise provided hereunder, the Participants shall share in the Project Segment's benefits,
burdens, and risks only in proportion to their respective Participants' Shares, notwithstanding that
the IPG may select one or more individual Participants to manage, design, build, finance, operate,
and/or maintain the Project Segment or portions thereof on behalf of the Participants collectively.
(b) Waivers.
(1) Ril!ht of oartition. Each Participant hereby waives (on behalf of itself and of
any assignee or transferee of all or any portion of its respective Participant's Share) any
right or power that a tenant in common might otherwise possess to compel a partition of
the Project or any element thereof as commonly held property; provided, that this
provision shall not prevent the Additional Parties or any other Parties from seeking to
divide AEG&T's Participant's Share into two Participant's Shares in proportion to the
actual interests of said Additional Parties applicable at that time.
(2) Claims al!ainst other Parties. Each Party shall be entitled to enforce this
Agreement; provided, that no Party shall be entitled, without the prior approval of the
IPG, to assert claims against a Participant based on or arising out of that Participant's acts
or omissions as a Construction Manager or an O&M Manager.
(c) Pavment Oblil!ations. Each Participant shall (1) meet in timely fashion each and all
of its obligations under this Agreement, including without limitation its obligations to make
payments of money for or with respect to the Project, and (2) make such payments of money in
such amount, in such manner, and at such time as may be required by this Agreement, or by
operation of law.
I PARTICIPANTS AGREEMENT -- Page 7
Draft #2,1, Printed 12/29/93
.
.
.
(d) Ril!:hts And Duties Rel!:ardinl!: Use OfPartv's Facilities.
(1) Dutv of Parties to allow use of their own transmission caDacitv. Each
Party shall make available to the other Parties, on a just and reasonable and nondiscrimi-
natory basis, and in the manner and subject to the conditions set forth in this Section 5(d),
capacity in that Party's own non-Project electric power transmission facilities for the
purpose of affording the Participants access to/from the Project in order that each may
make use of the Project.
(2) Initial terms and conditions l!:oveminl!: Chul!:ach facilities. Subject to
approval by the Alaska Public Utilities Commission ("Commission"), the use of Chugach's
facilities for access to/from the Anchorage-Kenai Peninsula Segment by other Parties shall
be governed initially by the terms and conditions, including rates, described in Exhibit
D( I), attached hereto and incorporated by this reference herein. Chugach shall submit
said terms and conditions to the Commission for review and shall seek approval thereot:,
(3) Terms and conditions l!:oveminl!: GVEA facilities. The terms and
conditions governing use of GVEA facilities are set forth in Exhibit D(2). attached hereto
and incoroorated bv this reference herein.
(~) Other terms and conditions. When appropriate to effect the duty set forth
in ~section 5(d)(I) under circumstances other than those described in ~section~ 5(d)(2)
and 5(d)(3), the Parties shall promptly negotiate in good faith in an effort to reach
agreement on reasonable terms and conditions, including rates, that will apply when a
particular Party provides to Participants access to/from either Project Segment over its
non-Project transmission facilities. Any such terms and conditions that become effective
shall be set forth in Exhibit D, and shall be attached hereto and incorporated by reference
herein during such time as they remain effective.
(~4) Submission of terms and conditions to the Commission. If, despite the
good faith negotiation efforts of the Parties, agreement is not reached on the terms and
conditions governing the Participants' use of any particular Party's non-Project transmis-
sion facilities, then that Party shall submit to the Commission for review and approval the
terms and conditions, including rates, which that Party proposes with respect to its
facilities.
~) Additions to Exhibit D. Any terms and conditions, including rates, that
ultimately become effective through order of the Commission or of a reviewing court shall
be set forth in Exhibit D, and shall be attached hereto and incorporated by reference herein
during such time as they remain effective.
Section 6. DECISION MAKING BY THE PARTICIPANTS
(a) Nature of the IPG.
I PARTICIPANTS AGREEMENT -- Page 8
Draft #2+, Printed 12/29/93
.
.
.
(1) Each Participant or Additional Party, as the case may be, shall exercise certain
of its rights and carry out certain of its responsibilities with respect to the design, planning,
construction, operation, management and, as appropriate, partial funding of the Project by
acting through the IPG in accordance with this Agreement or with rules adopted by the
IPG pursuant to this Agreement. When used in this Agreement, the term "IPG" refers to
the Participants and Additional Parties acting collectively as set forth herein. Nothing in
this Agreement is intended to establish the IPG as a separate entity, nor do the Parties
intend to delegate any authority or confer any powers or impose any obligations on the
lPG, apart from the authority, powers and obligations of each Participant and Additional
Party expressly conferred pursuant to this Agreement. The IPG shall have no power or
authority to take actions which modify, directly or indirectly, the terms and conditions of
this Agreement.
(2) The lPG, in making certain decisions and carrying out certain Project activities
with respect to the ownership and management of the Project, shall at all times act in accordance
with voting procedures and rules set forth in or adopted pursuant to tnis Agreement.
(b) Membershio. The IPG shall consist of the following initial members ("Members"),
each of which shall be entitled to one vote as further set forth herein: ML&P, Chugach, FMUS,
GVEA, SES, HEA, and MEA. No Member shall obtain an additional vote through merger with,
acquisition of, or assignment from any other Member. In the event a Party ceases to have a
Share, either directly or, in the case of an Additional Party, indirectly, then said Party shall cease
to be a Member.
(c) Desil!:nation of reoresentatives. Each Member shall designate one representative
and one alternative representative to the IPG. Each Member shall notify all other Members in
writing of the names, addresses, and telephone numbers of its representative and designated alter-
nate. Any Member may change its designated representative or alternate representative at any
time and shall promptly provide written notice of such change to the Members. The alternative
representative shall serve as the designated representative in the absence of the designated repre-
sentative.
(d) Meetinl!:s.
(1 ) Annual Meeting. The annual meeting of the IPG shall be the first regular
meeting of each Project Year, and shall be convened for the purpose of electing officers
and transacting such other business as may come before the meeting.
(2) Regular Meetings. Regular meetings shall be held at least quarterly, with the
specific date and time to be determined by the IPG.
(3) Special Meetings. Special meetings of the IPG may be called by the Chairman
or by three Members at any time by so advising the Secretary of the IPG. Business at a
special meeting of the IPG shall be limited to the purpose stated in the notice of such
special meeting.
I PARTICIPANTS AGREEMENT -- Page 9
Draft #2,'1', Printed 12/29/93
.
.
.
(4) Ouorum. At all meetings of the IPG, the presence of the representatives of
any five Members shall constitute a quorum for the transaction of business.
(e) Manner of Actin!!:.
( 1 ) IPG actions may be taken by any reasonable voting method, provided that any
Member may request an open roll call vote. A Member may not vote on a matter solely or
primarily affecting a Segment of which said Member does not hold a Share, either directly
or, in the case of an Additional Party, indirectly. Telephonic participation shall constitute
presence at a meeting of the IPG. All actions taken via teleconferencing shall be taken by
roll call vote.
(2) Except as otherwise provided herein, all actions of the IPG that are decided by
vote shall require a majority vote of the Members, such vote to be taken during a meeting
at a time when a quorum is present.
(3) The actions listed in this Section 6(e)(3) shaH require (a) the affirmative vote
of a majority of the Members, and (b) the affirmative vote of those Members whose
Participant's Shares of Project capacity total greater than 50% ("double majority"), but
only if at least three Members are eligible to vote on such actions. Otherwise the actions
listed in this Section 6(e)(3) shall require the affirmative vote of those Members whose
Participant's Shares total greater than 50%. and shall be made in l!:ood faith and consistent
with Prudent Utilitv Practice for the benefit of both SelZIllent Particioants.
(A) Approval and modification of Construction Budget.
(B) For each Project Segment, selection, removal, or replacement of the
Construction Manager and the O&M Manager, subject to the requirements of
Sections 7 and 9, and approval of terms and conditions of the Construction and
O&M Agreements.
(C) Adoption and modification of the budget of Annual Project Costs.
(0) Establishing for each Project Year the estimated Annual Payment Ob-
ligation of each Participant, together with a schedule for each Participant of
payments that such Participant shall be required to make during the year.
(E) Determination after the conclusion of each Project Year of the actual
Annual Project Costs for that Year.
(F) Evaluation of necessity for and scheduling for major change orders,
Required Project Work and Optional Project Work; provided. that Optional
Project Work may be undertaken only if all Parties agree that said Work is
consistent with the terms of this Agreement, including Section 6(a) hereof
I PARTICIPANTS AGREEMENT -- Page 10
Draft #2+, Printed 12/29/93
.
.
.
(G) Determination of the appropriate amount of and method for obtaining
insurance for or related to the Project.
(H) Creation of specific Project accounts or funds, if any, and deter-
mination of minimum funding amounts for the same.
(I) Adoption or amendments of procedural rules of the IPG (except for
procedures for dispute resolution, which shall be adopted or amended by
unanimous agreement).
(J) Final approval of maintenance schedules, breaker settings, and similar
protocols for each Segment (to be proposed to the IPG in the first instance by the
O&M Managers).
(K) Determination of when the Project has reached the end of its actual
useful life.
(L) Determination of whether claims may be asserted against any Party
providing Project services under a related agreement.
(M) Adoption of procedures for Assessments pursuant to Section
1O(e)(2).
(N) Approval of material routing and design decisions for each Project
Segment. The IPG shall select among potential alternative routings and end points
for the Project Segments reasonably and in good faith in order to (1) satisfY such
reasonable objectives for electric reliability, transfer capability, safety,
feasibilitveertaiaty, environmental quality, and similar objectives as the IPG may
adopt for the Project consistent with Prudent Utility Practice, at (2) the lowest
reasonably expected Project cost; provided, that the northern terminus of the
Healy-Fairbanks Segment shall be located at the proposed Wilson substation and
designed to accommodate direct interconnection by FMUS unless FMUS expressly
and in writing approves a different location or design.
(0) Relief of a Participant of its obligations pursuant to this Agreement as
a consequence of assignment or transfer.
(P) Adoption of standards and procedures pursuant to which a Party may
be compensated by the others for any reasonable cost, expense, or loss (or portion
thereof) that (i) such Party would not have incurred but for the Project, and (ii)
should properly be considered a cost of the Project.
(Q) All other matters that this Agreement would otherwise allow to be
decided by a simple majority of the Members, but that the IPG decides, by double
majority vote, should require the affirmative vote of a double majority.
I PAR nCIP ANTS AGREEMENT -- Page 11
Draft #2+, Printed 12/29/93
.
.
.
(4) All significant actions or determinations of the IPG shall be reduced to writing
and promptly disseminated among the Participants in the form of meeting minutes or IPG
Resolutions, provided that failure to comply strictly with this provision shall not by itself
render said action or determination invalid.
(5) Decisions on which onlv two Members are eligible to vote shall be subiect to
notice and opportunity to comment bv the minoritv Participant. and to appeal to the
Commission for consistencv with s;zood faith and Prudent Utilitv Practice for the benefit of
both Ses;zment Participants.
(t) Committees.
(1) Designation. The IPG may appoint committees from time to time, subject
to such conditions as may be prescribed by the IPG. The designation of any such commit-
tee shall not relieve the IPG or any Member of any responsibility by law or the Agreement.
(2) Powers. Any delegation of decisionmaking authority by the IPG to any
committee, officer, or other individual shall be evidenced in writing.
(g) Officers.
(1) Number. The officers of the IPG shall initially consist of a Chairman, a Vice
Chairman, a Secretary, and a Treasurer, who shall serve at the pleasure of the IPG. The
IPG may reduce the number of its officers and may elect such other officers and agents as
it shall deem necessary, who shall hold office for such terms and shall exercise such
powers and perform such duties consistent with this Agreement as shall be determined
from time to time by the IPG. The IPG may, by separate resolution, provide for the
indemnification of its officers, Members, and the members of any special purpose commit-
tees appointed by the IPG.
(2) Election and Term of Office. Officers shall be elected by the IPG at its
annual meeting. Only designated representatives of Members shall be eligible to serve as
officers. Each officer shall hold office until a successor is elected and accepts office unless
the officer resigns or is removed by the IPG.
(3) Vacancies. In the event any vacancy occurs in any elected office of the lPG,
the remaining members of the IPG shall elect a successor to the office at the next regular
or special meeting of the IPG.
(J!g) Auditine: Standards and Procedures.
(1) Unless otherwise waived by the lPG, an annual audit of each Project Segment
shall be performed by qualified independent auditors selected by the IPG. The primary
purpose of the audits shall include verification of Project expenses and determination of
amounts to be carried forward or collected pursuant to an annual true-up of Project costs.
I PARTICIPANTS AGREEMENT -- Page 12
Draft #~?, Printed 12/29/93
.
.
.
(2) In accordance with rules established by the IPG, the IPG shall (a) keep or
cause to be kept complete and accurate records and accounts for each Segment of the
Project, which records and accounts shall be subject at reasonable times to inspection by
any Participant, and (b) require Construction Managers and O&M Managers to provide
progress reports, transaction records, Project certifications, or other information that the
IPG reasonably deems relevant to Project ownership or operation.
Section 7. CONSTRUCTION MATTERS
(a) Construction Mana2er. GVEA shall serve as the Construction Manager of the
Healy-Fairbanks Segment, and Chugach shall serve as the Construction Manager of the An-
chorage-Kenai Peninsula Segment, unless said Managers elect to withdraw or are removed
pursuant to Section 70). Each Construction Manager shall be responsible for the preparation of
its Project Segment's design for approval by the IPG and shall be responsible for the construction
of its respective Segment of the Project utilizing Prudent Utility Practices and subject to con-
struction budgets approved by the IPG. Each Construction Manager shall be responsible for
selecting and supervising any design engineering firms or subcontractors necessary for the suc-
cessful completion of construction of its Segment of the Project.
(b) Project Schedules/Commercial ODeration. Each Construction Manager shall, upon
execution of the apposite Construction Agreement, proceed with the design, right-of-way
acquisition, permits, and construction with due diligence and in accordance with Prudent Utility
Practice; provided, that detailed design and construction of the Anchorage-Kenai Peninsula
Segment shall not commence until after completion of the process described in Section 4(b)(3).
Each Construction Manager shall submit a Project schedule to the IPG, and shall use its
reasonable best efforts to achieve the scheduled dates of commercial operation, but shall not be
responsible for delays which are beyond its reasonable control.
(c) Project Bud2ets/Constructjon Costs. Each Construction Manager shall,
immediately upon execution of the apposite Construction Agreement, prepare a budget of the
total estimated Design and Construction Costs of the Healy-Fairbanks or Anchorage-Kenai
Peninsula Segments, as the case may be, and submit that Construction Budget to the IPG,
together with Construction Budgets for the 1994 calendar year, for approval by the IPG;
provided, that in the case of the Anchorage-Kenai Peninsula Segment, the first such budget shall
be prepared for submission to the IPG only after the Segment's routing and end points have first
been selected. Thereafter, no less than one hundred and twenty (120) days before the beginning
of each succeeding Construction Year, each Construction Manager shall submit to the IPG for its
approval a budget (or, as the case may be, a revised budget) for each succeeding Construction
Year. The IPG shall approve a budget or revised budget no less than 60 days before the
beginning of each succeeding Construction Year.
The Construction Managers shall not without the express approval of the IPG incur costs
or obligate funds beyond those amounts contained in an approved budget.
The Construction Managers shall not make material intra-budget transfers without the
IPG's approval.
I PARTICIPANTS AGREEMENT -- Page 13
Draft #'i,1', Printed 12/29/93
.
.
.
The Construction Managers shall not be compensated for their services as Construction
Managers, except that each Construction Manager may include within the Project budget a
reasonable amount for labor (i.e., compensation, including associated payroll benefits) to the
extent directly assigned to the Project by that Construction Manager. Any such costs contained in
Project budgets shall be set out in sufficient detail so as to allow the IPG to assess the
reasonableness of those costs. The Construction Managers may also include within the Project
Budget an amount for its general and administrative overhead, including construction overhead,
of 0.5 % of Design and Construction Costs.
(d) Advancement of Funds. The IPG shall instruct the administrator under the Grant
Administration Agreement ("Grant Administrator") to advance funds to each Construction
Manager (1) either upon the submission of progress payment invoices from subcontractors
certified as to accuracy by said Construction Manager or direct labor invoices submitted by said
Construction Manager showing personnel and hours involved in connection with the Project, or
(2) otherwise in accordance with the Grant Administrative Agreement.
(e) Chan2e Orders. The Construction Managers may not enter into or agree to major
change orders without the prior approval of the IPG. Each Construction Manager may, however,
agree to minor change orders without the approval of the IPG; the Construction Manager shall
report all such minor change orders in that Construction Manager's next applicable construction
report to the IPG. Minor change orders are defined as those changes to the design or
construction of the Project which are not expected to affect the Project capacity, general routing,
points of interconnection, or basic design of the structures, and which are not expected to exceed
$50,000 individually or, in the aggregate, exceed the approved budget for that phase of the design
or construction.
(I) Separate Books and Records. Each Construction Manager shall maintain separate
books and records for the design and construction of its Segment of the Project. Such books and
records shall be available to the Participants for their inspection. Copies of such books and re-
cords shall be made available to any Participant upon request provided that such Participant
reimburses the Construction Manager for the reasonable cost of reproducing or otherwise making
available such books and records.
(g) Monthlv Reports. During construction, each Construction Manager shall submit
montWy reports to the IPG setting out in sufficient detail the status of the design and construction
of its Segment of the Project so as to allow the IPG to compare the percentage of completion of
the Project with total expenditures as a percentage of budgeted amounts. Each Construction
Manager shall immediately inform the members of the IPG by fax of any design or construction
problems encountered which, in that Construction Manager's opinion, might result in significant
future litigation, the request for a major change order, or a significant deviation from the Project
schedule. The IPG may from time to time establish standards and criteria for determining what
constitutes "significant" litigation and "major" change orders for purposes of this provision.
(h) Audit. The IPG, or any Participant, shall have the right to audit the books and
records of each Construction Manager at any time. The costs of such an audit shall be borne by
I PARTICIPANTS AGREEMENT -- Page 14
Draft Wi?, Printed 12/29/93
.
the party requesting the audit unless such audit discloses that the Construction Manager has (1)
failed in some significant manner or (2) acted in bad faith, in performing its obligations under the
Construction Agreement, in which case the Construction Manager shall pay the reasonable costs
of the audit.
(i) Liability of Construction Man3l!:er. The Participants are entitled to compel each
Construction Manager to disgorge any unjust enrichment gained in connection with its
performance under the Construction Agreement. Each Construction Manager shall also be
responsible for the consequences of its own intentional or willful misconduct, or of its grossly
negligent action in performance of its obligations under the Construction Agreement (including
such actions by its officers, employees, or agents); provided, that the Construction Manager shall
not be liable (except with other Participants, and to the extent of its Participant's Share of Project
liabilities) for:
(1) Damages resulting from design or construction decisions presented to and
approved by the IPG; and/or
(2) The intentional or negligent acts of engineering design firms or subcontractors
retained by the Construction Manager, provided that the Construction Manager has made
a good-faith effort to supervise and inspect the activities of such engineering design firms
or subcontractors, and/or
(3) Damages or other costs and expenses resulting from the Construction
Manager's ordinary negligence in the performance of its duties as Construction Manager.
The Participants shall treat such damages, costs, and expenses as costs of the Project, to be
recovered from all Participants in proportion to their Participant's Shares; provided, that the
Construction Manager shall remain obligated as a Participant to pay its Participant's Share of any
Project costs, including the costs of any indemnification.
(j) Removal or Withdrawal of Construction Manal!er. The IPG may remove the
Construction Manager for reasonable cause, and may replace that Construction Manager with
another Party; provided that the IPG gives the Construction Manager at least thirty (30) days'
prior notice in writing and reasonable opportunity to cure. All Members of the IPG may
participate in the vote for such removal and replacement. The Construction Manager may, for
any reason, voluntarily withdraw from its duties as Construction Manager if written notice thereof
is tendered no less than 60 days prior to the anticipated date of commencement of construction.
After commencement of construction, the Construction Manager may withdraw from said duties
only upon reasonable notice (but not less than 90 days) and only for good cause shown. In either
event, the Construction Manager shall use its reasonable best efforts to cooperate with the new
Construction Manager, and to mitigate any costs arising from the withdrawal and replacement of
the Construction Manager.
(k) Duty to Nel!otiate Construction Al!reement. The Parties shall negotiate in good
faith in an effort to reach agreement on reasonable terms and conditions for, and to enter into, a
I PARTICIPANTS AGREEMENT -- Page 15
.
.
.
limited to planning, pennitting, design, acquisition of real property interests, construction,
equipment, testing, and insurance costs, but not administrative and general costs of any
Participant, State agency, political subdivision, or Construction Manager, except pursuant
to Section 7(c), unless such costs are expressly approved by the IPG prior to being
incurred.
(b) Additional Financin2. Notwithstanding any other provision of this Agreement, and
in order to complete the Project, each Participant shall pay its Participant's Share of any Design
and Construction Costs that exceed the sum total of the Grant Funds plus available interest
thereon ("Additional Costs").
(1) The Parties recognize the possibility of completing the Project through
collective financing arrangements, including bonds issued by AIDEA or other State
agency, as may be provided by separate agreement.
(2) If the Parties agree unanimously, each in its own discretion, to participate in a
collective financing arrangement and to approve the Bond Resolution adopted to imple-
ment said collective financing arrangement, then amounts required to be paid during each
Project Year by the Participants pursuant to said Bond Resolution shall be included in
Annual Project Costs. Each Participant shall discharge its obligation, in whole or in part,
to pay its Participant's Share of Additional Costs through payment of its Participant's
Share of Annual Debt Service and certain other Annual Project Costs in accordance with
Section 10 and any applicable Bond Resolution.
(3) Each Participant reserves the right to finance separately its Participant's Share
of Additional Costs, or any other payments required by this Agreement. Such seoarate
financinll: shall not imoair any Party's lell:al rill:hts or oblill:ations under this All:reement. In
the event the Parties do not agree to a collective financing arrangement, then each Party
shall pay, by any lawful means, its own Participant's Share of Additional Costs and other
payments required by this Agreement.
(4) The time and manner of payment of such Additional Costs shall be detennined
by the IPG in accordance with its rules. Each Participant shall pay its Participant's Share
of Additional Costs upon receipt of certification in the same manner as is provided in
paragraph 8(a)(3) for the disbursement of Grant Funds by the Trustee.
(5) The IPG may take appropriate actions to facilitate collective financing among
some or all of the Parties, but the costs of collective financing arrangements undertaken by
less than all of the Participants shall not be considered Project Costs or be borne by other
Participants.
(c) Disoosition of Unexoended Grant Funds. To the extent pennitted by applicable
law, any Grant Funds that remain unexpended after the Date of Commercial Operation each
Segment of the Project shall be held and applied for use in connection with the Project for the
benefit of the Participants, as provided for in rules to be adopted by the IPG. Any Grant Funds
that remain unexpended after Abandonment of the Project and discharge of outstanding
I PARTICIPANTS AGREEMENT -- Page 17
Draft #cg,+, Printed 12/29/93
.
.
.
obligations in connection therewith shall be deposited to the account of AIDEA for return to the
State.
(d) Insurance. The Participants shall obtain and maintain insurance on the Project during
design and construction if and as determined by the IPG in accordance with Section 6.
Section 9. OPERA nON & MAINTENANCE: RELATED MA TIERS
(a) Selection Of O&M Manal!ers. GVEA shall serve as the O&M Manager for the
Healy-Fairbanks Segment, and shall be removable only for reasonable cause, after reasonable
notice and opportunity to cure. Chugach shall be the initial O&M Manager for the Anchorage-
Kenai Peninsula Segment for a period of three (3) years from and after the Date of Commercial
Operation of that Segment; during such period, the IPG may remove Chugach for reasonable
cause after reasonable notice and opportunity to cure, and thereafter the IPG may remove
Chugach after reasonable notice by the affirmative vote of Members whose Participant's Shares in
total exceed fifty percent (50%). Chugach shall subcontract with AEG&T and/or HEA to provide
some or all of the Project maintenance services for Project facilities located on the Kenai
Peninsula, if and to the extent that doing so will reduce Project expenses. The Parties shall
negotiate in good faith in an effort to reach agreement on reasonable terms and conditions for,
and to enter into, an O&M Agreement containing terms and conditions consistent with this
Agreement. The rights and obligations of the O&M Manager(s) and of the IPG and its Members
with respect to the Project shall also be governed by the O&M Agreement(s) for the Project.
(b) Duties Of Parties Re: Electrical Connection & Coordination. Because each Par-
ty's own facilities will be electrically interconnected, directly or indirectly, with the Project, each
Party shall operate and maintain its own facilities in a prudent and reasonable manner. The Parties
agree that:
(1) they will negotiate in good faith to reach agreement on such protocols as may
be necessary to ensure that the efficient operation of the Project is consistent with and
adequately supported by (A) the Parties' interconnected systems, and (B) reasonable
coordination of the Parties' respective system operations; and
(2) each Party shall in good faith operate its own system in a manner that will
reasonably accommodate operation of the Project, but nothing in this Agreement shall
obligate any Party to (A) operate its system in a manner inconsistent with its own needs
and requirements, or (B) incur solely for the benefit of the Project or its operation, or for
the benefit of the other Parties, any uncompensated cost, expense, or loss in the design,
construction, maintenance, or operation of that Party's own system.
(c) Interveninl! Taos & Other Connections. No Party or other entity shall be allowed
to establish an intervening tap or other electrical connection to the Project except in accordance
with standards and rules promulgated by the IPG to protect the Project's operation, financing,
capability, and electric integrity.
Section 10. PROJECT COSTS & COST RECOVERY
I PARTICIPANTS AGREEMENT -- Page 18
Draft #21, Printed 12/29/93
.
.
.
(a) Funds & Accounts. The following funds and accounts shall be owned by the
Participants in proportion to their Participants' Shares, or, if established through Participants'
contributions, then in proportion to said contributions. Said funds and accounts shall be held and
administered in accordance with the provisions of this Agreement, with rules adopted by the IPG,
or with applicable requirements set forth in any controlling Bond Resolution:
(I) Grant Account. All Grant Funds, including available interest thereon, as
described in Section 8(a) above.
(2) Funds and Accounts established pursuant to any applicable Bond
Resolution.
(3) Operating Fund, including a Working Capital Account therein.
(b) ODeratinl! Budl!et.
(I) The IPG shall adopt in each Operating Year (and revise as necessary or
prudent during such Operating Year), in accordance with its rules, an Operating Budget of
Annual Project Costs for that Operating Year, which budget shall be in an amount
estimated by the IPG to be sufficient to pay all Annual Project Costs. Such budget of
Annual Project Costs shall be composed of separate budgets for each Segment of the
Project, and shall be broken down into categories approved by the IPG. No less than 120
days prior to the beginning of each Operating Year the O&M Managers for each Segment
shall prepare and submit to the IPG an annual budget of costs, which budget (or a revised
budget) the IPG shall approve or disapprove no later than sixty (60) days prior to the
beginning of said Operating Year; provided, that the annual budget shall include costs
attributable to overhead or administrative and general costs of the O&M Manager, any
Participant, or any agency or political subdivision of the State only to the extent that said
costs are approved by the IPG before they are incurred, are reasonably incurred for labor
directly employed by that O&M Manager in performance of its duties under the O&M
Agreement, and would not have been incurred but for the activities undertaken as O&M
Manager.
(2) In accordance with rules established by the IPG, the Participants shall establish
for each Operating Year the estimated Annual Payment Obligation of each Participant,
together with a schedule for each Participant of payments that such Participant shall be
required to make during the Operating Year pursuant to Section lO(d) of this Agreement,
which payment schedule shall be (i) designed to recover such estimated Annual Payment
Obligation from that Participant during the Operating Year, and (ii) revised during such
Operating Year to reflect any revisions to the Operating Budget. After the conclusion of
each Operating Year, the IPG shall determine the actual Annual Project Costs for that
Project Year, the actual Annual Payment Obligation of each Participant for that Operating
Year, and the amount of any additional payment required from (or the amount of any
refund to be returned to) each Participant to ensure that the total of all payments received
from each Participant for each Operating Year is equal to that Participant's Annual
I PARTICIPANTS AGREEMENT -- Page 19
Draft #~,+, Printed 12/29/93
.
.
.
Payment Obligation for that Operating Year. Said payment or refund shall be made in
periodic installments as an adjustment to the Participants' billing statement over the next
succeeding Operating Year, unless otherwise determined by the IPG.
(c) Exoenditure ofProiect Funds.
(1) The Participants shall exercise overall control over the disbursement of funds
to pay Annual Project Costs through the lPG, which shall act in accordance with its rules,
the Operation and Maintenance Agreement, and any applicable Bond Resolution. The
Participants shall exercise their powers as members of the IPG to consider and either
approve or disapprove (i) any activities related to managing the Project that are required
by the IPG to be approved prior to commencing said activities, (ii) any payments or
reimbursements to the O&M Manager for costs incurred and expenditures made that are
not in accordance with the approved operating budget, and (iii) any changes to the
operating budget, as provided for in Section 6.
(2) Payments and reimbursements for Annual Project Costs shall be made only for
costs incurred and expenditures made pursuant to the approved annual budget or
otherwise as approved by the IPG. Documentation required to make draws against the
Operating Fund shall be provided in the manner determined by the IPG in accordance with
the O&M Agreement, and shall be evidenced by a certification executed by the Chairman
or Treasurer of the lPG, or otherwise as the IPG may by rule determine.
(3) The Participants, through the lPG, shall also consider and act upon such
modifications and amendments to the budget as are proposed by the O&M Manager or on
the initiative of any Participant. Any revisions to the operating budget shall be made in
accordance with Section 9(b)(2) of this Agreement.
(d) Recovery of Annual Proiect Costs.
(1 ) Each Participant agrees and is hereby obligated to pay all Annual Payment
Obligations, Energy Charges and Assessments for the appropriate Project Segment, as set
forth in this Section lO(d). To the extent provided in the Bond Resolution, if any, each
Participant shall make said payment whether or not the Project is completed or its
operation is terminated, intenupted or suspended in whole or in part. A Participant's
Annual Payment Obligation for each Project Segment equals the actual Annual Project
Costs for that Segment, less the total amount of actual Energy Charges incurred by all
Participants during each Project Year for that Segment, and less any revenues received
during said Project Year that are allocable to said Segment, multiplied by the Participant's
Percentage Share in that Segment. Such Annual Payment Obligation is exclusive of any
Assessments for that Segment duly adopted by the Participants acting through the IPG.
(2) "Annual Project Costs" for each Project Segment means costs and expenses of
every type, except as provided in subsection (3) of this Section 10(d), resulting from the
ownership, operation and maintenance of that Segment, that are incurred or paid by the
I PARTICIPANTS AGREEMENT -- Page 20
Draft #2?-, Printed 12/29/93
.
.
.
Participants, acting through the lPG, during each Project Year in connection with that
segment, including but not limited to the following:
(A) Operation and maintenance costs relating to the Project ("O&M");
(B) Other costs, reimbursements or compensation as may be allowed
under any O&M Agreement;
(C) Insurance, as determined by the IPG in accordance with Section 6 of
this Agreement;
(D) Amounts required to be set aside by the Participants for the payment
of debt service, or for any reserve or contingency fund, by any Bond Resolution;
(E) Professional services, including accountants and auditors, insurance
consultants, attorneys, engineers. arbitration or alternative dispute resolution
professionals;
(F) Costs of the lPG, but only to the extent approved by the IPG prior to
being incurred; and
(G) Other necessary and appropriate costs, but only to the extent
approved by the IPG.
(3) "Annual Project Costs" shall exclude:
(A) Design and Construction costs financed under Section 8 of this
Agreement (but not the costs of debt service and related expenses associated with
such financing);
(B) Renewals and replacements funded by insurance proceeds or by
Assessment or any specially-dedicated funds or accounts.
(4) From and after the Date of Commercial Operation of each Segment, each
Participant shall make payment, in a manner to be provided by IPG resolution, for that
individual Participant's Energy Charge amounts.
(A) "Energy Charge" means
(i) for the Anchorage-Kenai segment of the Project, a 1.5 mill/kwh
charge for all energy generated by the Bradley Lake Hydroelectric Project,
to be paid by each Participant for its Bradley Lake energy (including, in the
case of AEG&T, for the Bradley Lake energy ofHEA and MEA); and
(ii) for the Healy-Fairbanks segment of the Project, a 1.5 mill/kwh
charge for energy generated by the Bradley Lake Hydroelectric Project for
I PARTICIPANTS AGREEMENT -- Page 21
Draft #2,+, Printed 12/29/93
.
.
.
receipt by utilities in Fairbanks, and an additional 1.5 milllkwh 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 Healy-
Fairbanks segment of the Project, in each case net oflosses.
(B) The IPG may provide by resolution for the Participants to pay Energy
Charges in advance, in which case the IPG Treasurer shall estimate each
Participant's Energy Charges for the upcoming Operating Year. The Treasurer
may rely on historical data, energy transfer forecasts, or other relevant information
in preparing such estimates.
(C) The IPG shall establish procedures for collecting information
regarding each Participant's Energy Charges due, and the manner of their payment.
(5) Prior to the beginning of each Project Year, the Treasurer of the IPG shall
prepare and mail to each Participant a pro forma statement showing a detailed estimate of
the Annual Project Costs, a detailed estimate of the Participant's Annual Payment
Obligation, and the amount of equal payments to be made by the Participant in the upcom-
ing Project Year. Said statement may be in lieu of the issuance of periodic bills to each
Participant.
(6) The IPG shall adopt all other procedures for billing and collection, including
accounting for extraordinary receipts.
(e) Assessments.
(1) The Participants agree to fund by Assessment amounts that the Participants
determine are needed to pay for the prevention or correction of any major loss or damage,
and for major replacements or renewals, to keep each Project Segment in good operating
condition to the extent that such costs are not covered by insurance or by borrowed
money, the debt service of which is included in Annual Project Costs. "Assessment"
means the Participants' duly-approved obligation to pay the total amount, according to
each Participant's Share and any agreed schedule, of any such contingency.
(2) When a Construction Manager, O&M Manager, or Participant requests an
Assessment for any contingency or renewal and replacement, the IPG shall consider such
request at its next regular or special meeting. The IPG may, in its discretion, continue
consideration of such request to future meetings. The IPG shall approve an Assessment
pursuant to the procedures established in Section 6 of this Agreement.
Section 11. USE OF PROJECT CAPACITY
(a) Use OfProiect Caoacity When No Transmission Caoacity Constraint Exists. At
all times after the Date of Commercial Operation of each Project Segment when (1) that
Segment's facilities and any parallel utility-owned transmission facilities are both in normal
operation, and (2) the total combined transfer capabilities of those facilities are sufficient to allow
I PARTICIPANTS AGREEMENT -- Page 22
Draft #2,1, Printed 12/29/93
.
.
.
all desired transmission by all Participants to take place simultaneously between, respectively,
Healy and Fairbanks, and Anchorage and the Kenai Peninsula (i.e., at all times when parallel
facilities are in operation and no transmission capacity constraint exists), then no distinction will
be made between power transmitted over the facilities of that Project Segment and power
transmitted over the parallel utility-owned transmission facilities, and, instead, all such power shall
be deemed to move over the facilities of the Project Segment. Transmission access to/from the
facilities of the Project Segment over the facilities of any Participant shall be in accordance with
the applicable terms and conditions set forth in Section 5(d).
(b) Ooeration For Stabilitv. If, on either Segment, the Project facilities and the parallel
utility-owned transmission facilities are both in operation, then the combined total transfer
capability or operating limit of the parallel transmission facilities will be the stability-limited
amount, not the thermal limit of those facilities, as reasonably established through agreement
between the IPG and the owner of the parallel utility-owned facilities. If, on either Segment,
either the Project facilities or the parallel utility-owned transmission facilities are not in operation,
then the operating limit of the remaining facilities shall be that which is reasonably established, as
the case may be, by the IPG for the relevant Project Segment, or by the owner of the parallel
utility-owned transmission facilities, under the circumstances as they exist at that time.
(c) Fixed Caoacitv Shares When Caoacitv Is Or Mav Be Constrained.
(1) If either Project Segment is in operation but the parallel utility-owned
transmission facilities are not, then each Participant shall be entitled to its Participant's
Share of the transfer capability of the facilities of that Project Segment, as established by
the IPG.
(2) If the parallel utility-owned transmission facilities are in operation but the
facilities of the Project Segment are not, then the owner of the parallel utility-owned
transmission facilities will provide wheeling and related services to the other Participants
under the applicable terms and conditions set forth in Section 5(d).
(3) If the Project facilities and the parallel utility-owned transmission facilities are
both in operation, but for either Segment their total combined transfer capabilities are not
sufficient to allow all desired transmission by all Participants to take place simultaneously
(i.e., if Project and parallel facilities are both in operation but a transmission capacity con-
straint exists), then so long as such constraint exists the available transmission capacity
shall be allocated between the applicable Project facilities and the parallel utility-owned
facilities by one of the following methods:
(A) The IPG and the owner of the parallel utility-owned facilities may by
agreement establish any reasonable allocation of such capacity, or
(B) The parallel utility-owned facilities shall be deemed to have the
transfer capability that they would have if operated alone, less some amount
reasonably adopted by the IPG to reflect the reliability/stability benefits such
facilities receive from the existence of the parallel Project facilities. The remainder
I PARTICIPANTS AGREEMENT -- Page 23
Draft #2,+, Printed 12/29/93
.
.
.
of the total combined transfer capability shall be deemed to be that of the Project
facilities, and shall be available to each Participant in accordance with its
Participant's Share.
(d) No Dutv To Transmit Power For Ultimate Consumers. The Project represents a
bulk power transmission facility whose benefits are made possible by the agreement of the
Participants to assume responsibility for various costs on behalf of their respective customers
collectively. The Project is not a common carrier. No Party has assumed any duty to use its
Participant's Share of Project capacity to transmit power for individual users/consumers or for
non-utility generators.
Section 12. MISCELLANEOUS PROVISIONS
(a) Waiver Not Continuinl!. Any waiver at any time by any Party to this Agreement of
its rights with respect to any default of another Party, or with respect to any other matter arising
in connection with this Agreement, shall not be considered a waiver with respect to any prior or
subsequent default, right or matter.
(b) Applicable Law. The laws of the State of Alaska (including without limitation the
equal opportunity laws set forth in AS 18.80.220, as the same may be amended from time to time)
shall govern the interpretation and application of this Agreement and the actions of the parties
hereunder.
(c) Section Headinl!s. The Section headings in this Agreement are for convenience only,
and do not purport to and shall not be deemed to define, limit or extend the scope or intent of the
section to which they pertain.
(d) No Third Party Beneficiaries. In promising perfonnance to one another under this
Agreement, the Parties intend to create binding legal obligations to and rights of enforcement in
(a) one another, and (b) such assignees or successors in interest of the Parties as may enjoy a right
to enforce this Agreement by virtue of provisions of this Agreement that expressly create such a
right in such assignees or successors in interest. By entering into this Agreement, the Parties
expressly do not intend to create any obligation or liability, or promise any perfonnance to, any
third party, nor have the Parties created for any third party any right to enforce this Agreement.
(e) Execution In Counteroarts. This agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
(t) Severabilitv: Effect Of Partial Invaliditv. If after this Agreement has become
effective any article, paragraph, clause or provision of this Agreement shall be finally adjudicated
by a court of competent jurisdiction or a regulatory agency with jurisdiction over the parties to be
invalid or unenforceable, or if any administrative agency with authority over the parties shall
require changes to this Agreement, then the parties shall in good faith meet promptly to negotiate
lawful amendments or modifications to this Agreement that will effectuate the original intent of
I PAR TICIP ANTS AGREEMENT -- Page 24
Draft #2+, Printed 12/29/93
.
.
.
this Agreement and return the parties as nearly as possible to the position that each would have
enjoyed in the absence of such judicial, regulatory, or administrative action.
(g) Notices & Comoutation Of Time. Any notice required by this Agreement to be
given to any Party shall be effective when it is received by such Party, and in computing any
period of time from such notice, such period shall commence at 12:01 p.m. prevailing time at the
place of receipt on the date of receipt of such notice. Whenever this Agreement calls for notice to
or notification by any Party the same (unless otherwise specifically provided) shall be in writing
and directed to the General Manager of the Party notified. If the date for making any payment or
performing any act is a day on which banking institutions are closed in the place where payment is
to be made or a legal holiday, payment may be made or the act perfonned on the next succeeding
day which is neither a legal holiday nor a day when banking institutions are closed in such place.
(h) Insoection Of Facilities. For purposes of this Agreement, each Party may, but shall
not be obligated to, inspect any other Party's facilities relating to the Project at any time upon
reasonable notice, but such inspection or failure to inspect shall not render the inspecting party, its
officers, agents or employees, liable or responsible for any injury, loss, damage, or accident
resulting from defects in such electric installation, or for violation of this Agreement.
(i) Remedies Cumulative. No remedy conferred upon or reserved to the Parties hereto
is intended to be exclusive of any other remedy or remedies available hereunder or now or
hereafter existing at law, in equity, by statute or otherwise, but each and every such remedy shall
be cumulative and shall be in addition to every other such remedy.
G) Covenant of e:ood faith and fair dealine:. In order to permit this Agreement,
throughout its tenn, to be fully effective in accordance with the original intent of the Parties, each
Party agrees that it shall at all times act in good faith and with fair dealing in performing its
obligations and in exercising its rights under this Agreement.
(k) Exhibits Incoroorated Bv Reference. The exhibits attached to this Agreement shall
be incorporated by reference into this Agreement if the provisions of this Agreement identifYing
such exhibits so specifY, but otherwise shall be attached for convenience only.
(I) Successors & Assie:ns. Subject to section 4(b)(6) governing assignment for security
purposes, this Agreement and all of the tenns and provisions hereof shall be binding upon and
inure to the benefit of the respective successors and assignees of the Parties.
(m) Performance Pendine: Resolution Of Disoutes. Pending resolution of any dispute,
each Party shall continue to perfonn its obligations under this Agreement, including but not
limited to the obligation to make the payments required by this Agreement. All Parties shall be
entitled to seek immediate judicial enforcement of this continued perfonnance obligation notwith-
standing the existence of a dispute. Application for such enforcement shall be made to the
Superior Court for the State of Alaska, at Anchorage.
(n) Force Maieure. In the event any Party, by reason of an Uncontrollable Force, is
rendered unable, wholly or in part, to perfonn its obligations under the Agreement (other than its
I PARTICIPANTS AGREEMENT -- Page 25
Draft #2+, Printed 12/29/93
.
.
.
obligations to pay money), then upon said Party giVIng notice and particulars of such
Uncontrollable Force, its obligation to perfonn shall be suspended or correspondingly reduced
during the continuance of any inability so caused, but in no greater amount than required by the
Uncontrollable Force and for no longer period, and the effects of such cause shall, so far as
possible, be remedied with all reasonable and prompt dispatch. The affected Party shall not be
responsible for its delay in perfonnance under this Agreement during delays caused by the
Uncontrollable Force.
(0) Other Al!reements. Except as otherwise expressly provided herein, this Agreement
does not modifY, alter, or amend any other contract or agreement that may exist between or
among any of the Parties.
(p) Amendment Of Al!reement. This Agreement may be amended, extended, or
tenninated at any time by the written consent of all Parties, but no such amendment, extension, or
tennination shall be effective unless approved by the federal and state agencies (if any) whose
approval is required at the time.
(q) Records. The Parties shall make available to each other, for inspection and copying
during business hours, all books, records, plans and other infonnation relating to the Project;
including but not limited to infonnation relating to its cost, construction and operation, and any
calculation or detennination made pursuant to this agreement. In addition to meter records, the
Parties shall keep log sheets and other records as may be needed for the purposes of this
Agreement. In keeping books of account, each Party will, to the extent that different rules are
not prescribed by this Agreement or by federal and state laws or agencies, follow the system of
accounts prescribed for public utilities and licensees by the Federal Energy Regulatory Commis-
sion, except that as long as a Party is a borrower from REA then it shall follow the system of
accounts prescribed by REA for its electric borrowers.
(r) Oblil!ations Several. Notwithstanding any Party's failure to perfonn its obligations
under this Agreement, or any IPG action or inaction under this Agreement, each Party's obligation
to perfonn as called for by this Agreement, including the obligation to make payments under the
tenns of this Agreement, shall be absolute and unimpaired. Except where specifically stated in the
Agreement to be otherwise, the duties, obligations and liabilities of the parties are intended to be
several and not joint or collective. Nothing contained in this Agreement shall ever by construed
to create an association, trust, partnership or joint venture or to impose a trust or partnership
duty, obligation or liability on or with regard to any party. Each party shall be individually and
severally liable for its own obligations under this Agreement.
(s) Mutual Covenants & Warranties.
(1) Retail rate approval. Each Party will aftinnatively and promptly pursue all
administrative and judicial remedies necessary to secure CommissionAlaska Ptlblie Utilities
CommissioR approval of retail rates required to meet the tenns of this Agreement where
Commission approval is required.
I PARTICIPANTS AGREEMENT -- Page 26
Draft #2,+, Printed 12/29/93
.
.
.
(2) Compliance with law. Each Party will take all necessary steps to comply with
applicable federal and state laws and regulations, licenses and permits relating to the use
and operation of the Party's System.
(3) Licenses and permits. The Parties will take all necessary steps within their
control to comply with applicable federal and state laws and regulations, and to obtain and
thereafter comply with all applicable licenses and permits relating to the construction, use
and operation ofthe Project.
(4) Sales and mergers. No Party shall abandon, sell, mortgage, lease or otherwise
dispose of a substantial portion of the Party's system (including by sale to or merger with
any other utility), unless.;
(f\) sush disposal aeeords '.vith the terms of IlflY of the Party's eoveRaRts or
agreements ',vith the holders Elf the Party's bonds, Rates or other e'/ideRses of
indebtedRess relating to the abllflaORffleRt, sale, mortgage, lease or other
dispElsitioR of property Elf the Party's system; Ilfld
(Bj- such disposal is.;
(i) eORsefttea to iR writiRg by a majority of the !PG; or
(ii) m&ee to anElther Party vllueh ....&S a Party 6ft the efl'eeti'/e date
of this .\greemeAt; or
(iii) limited to assets that the Party aeterm!Res to be surplus tEl the
Reeds of that Party's system, em the deJlreeiated value ef assets so disposed
of in any gi'leR year shall not t>>feeea five poreeRt (5%) of the depreeiated
value of the assets of the Party's system prior to the disposal; or
fP4-- evaluated by a gGonsultant aooroved bv the IPG and that
~Gonsultant certifies that, taking into account the other obligations of the Party. the Party
will have (a) substantially the same or greater ability to produce sufficient revenues to
meet its payment obligations as would the Party absent the transaction, and (b) the ability
to perform all obligations under this Agreement.
(t) Indemnification. To the extent permitted by applicable law, each Party shall protect,
indemnify, defend and hold harmless every other Party, its officers, directors, employees, agents,
attorneys, contractors, subcontractors, and successors and assigns from and against any and all
liabilities, damages, claims, demands, judgments, losses, harm, costs, expenses, suits or actions,
including but not limited to appeals and reasonable attorneys' fees, to the extent caused by the
negligent or wrongful acts or omissions of the indemnifying Party, its officers, directors,
employees, agents, attorneys, contractors, subcontractors, and successors and assigns arising out
of or as a result of this Agreement or the performance of any obligations hereunder; provided.
I PARTICIPANTS AGREEMENT -- Page 27
Draft #21, Printed 12/29/93
.
.
.
that the indemnification set forth in this Section is subject to Section 7(i) and shall not require the
Construction Manager to indemnify other Parties in any manner inconsistent with Section 7(i).
(u) Guarantees bv Additional Parties. If AEG&T at any time fails to meet any of its
obligations under this Agreement, then to the extent of such failure by AEG&T and for so long as
such failure continues, HEA and MEA shall each be obligated to meet directly its respective Share
of AEG&T's payment obligation and every other obligation in the same manner as if REA and
MEA were individual Participants obligated to make payments and perform other obligations in
accordance with this Agreement. All rights and remedies available to the other Parties against
AEG&T shall also be available to the other Parties against HEA and/or MEA, as applicable. For
purposes of this Section 12(u), HEA's Share and MEA's Share of Project capacity shall be as set
forth in Section 4(a), as modified by Section 4(b).
(v) Relationship To The Transmission Services A2:reement. The Transmission
Services Agreement (attached as Exhibit E to this Agreement for reference only) shall not be
terminated by this Agreement, but from and after:
(I) January I, 1997, any Party may elect to pay Chugach for wheeling services the
applicable Chugach wheeling rate as approved by the Commission pursuant to Section
5(d) and Exhibit D(I) of this Agreement, in lieu of paying the applicable Chugach
wheeling rate computed in accordance with the Transmission Services Agreement; and
(2) the Effective Date, the provisions of the Transmission Services Agreement
requiring Chugach to provide free Bradley Lake energy storage services in Chugach's
Cooper Lake reservoir will no longer apply.
(w) Consideration Of Other Benefits Facilitated Bv The Proiect. In order to ensure
that all potentially beneficial uses of the Project are appropriately investigated, the Parties agree
that, promptly after this Agreement becomes effective, they will begin to meet periodically in
order to discuss and explore in good faith potential mutually agreeable opportunities to reduce the
costs of providing electric power service to their respective consumers through power pooling,
transmission pooling, reserve sharing, exchanges, economic dispatch, hydrothermal coordination,
maintenance of competitive economy energy markets, and other arrangements.
Section 13. DEFINITIONS.
The following terms shall, for purposes of this Agreement, have the meaning specified.
(a) "Additional Costs" shall have the same meaning given to it in Section 8(b) of this
Agreement.
(b) "Additional Parties" shall have the same meaning given to it in Section 1 of this
Agreement.
(c) "Agreement" means this 1993 Alaska Intertie Project Participants Agreement, also
referred to herein as Participants Agreement.
I PARTICIPANTS AGREEMENT -- Page 28
Draft #2+, Printed 12/29/93
.
.
.
(d) "Annual Debt Service" means the amount payable by a Participant in or for a
Project Year pursuant to the Bond Resolution.
(e) "Annual Payment Obligation" shall have the same meaning given to it in Section
I O( d)( I) of this Agreement.
(I) "Annual Project Cost" shall have the same meaning given to it in Section 10(d)(2) of
this Agreement.
(g) "Assessment" shall have the same meaning given to it in Section lO(e)(I) of this
Agreement.
(h) "Bond Resolution" means a resolution, ordinance, indenture, or similar instrument,
approved by all of the Parties, pursuant to which bonds, notes or other evidences of indebtedness
(including refunding bonds), are issued, the proceeds of which are used to payor reimburse
Additional Costs, pursuant to a collective financing arrangement entered into by all Parties under
Section 8(b).
(i) "Construction Agreement" means an agreement entered into pursuant to Section
7(k) between the Construction Manager of a Project Segment and the Participants acting through
the IPG setting forth the rights and obligations of the Construction Manager and of the IPG and
its Members and such details regarding the design and construction of that Project Segment as the
Construction Manager and the IPG determine to be necessary.
G> "Construction Budget" means the annual budget for Design and Construction Costs
for a Project Segment as adopted or in effect for a particular Construction Year, and amended or
supplemented from time to time as provided for in this Agreement.
(k) "Construction Manager" means the Participant that, for the benefit of all of the
Participants, manages or carries out the design and construction of either Segment of the Project.
As provided in Section 7(a) of this Agreement, Golden Valley Electric Association, Inc. shall be
the Construction Manager of the Healy-Fairbanks Segment and Chugach Electric Association,
Inc. shall be the Construction Manager of the Anchorage-Kenai Peninsula Segment (unless and
until either is replaced by another Participant by action of the IPG pursuant to Section 7(j)), and
may be referred to collectively herein as Construction Managers.
(I) "Construction Schedule" means a projection of significant design and construction
milestones marking progress from the Effective Date of this Agreement to the projected Date of
Commercial Operation of a Project Segment, to be prepared by the Construction Manager for that
Segment.
(m) "Construction Year" means a Project Year during which a Project Segment is
being designed or is under construction. The first Construction Year starts on the Effective Date
of this Agreement and corresponds to the first Project Year. The last Construction Year for a
Project Segment shall be that portion of the twelve-month period between the last full (i.e. twelve
I PARTICIPANTS AGREEMENT -- Page 29
Draft #21, Printed 12/29/93
.
.
.
month) Project Year and the Date of Commercial Operation. The Construction Year for both
Project Segments shall run concurrently, except that the conclusion of the last Construction Year
for one of the Project Segments (when it reaches its Date of Commercial Operation) shall not
affect the calculation of Construction Years for the other Project Segment, which shall continue
until that segment reaches its Date of Commercial Operation.
(n) "Date of Commercial Operation" means the date on which a Construction Manager
reasonably declares that a Segment of the Project is fully available to be operated on a commercial
basis and in accordance with this Agreement.
(0) "Design and Construction Costs" means all capital costs of the Project, including
but not limited to planning, permitting, design, acquisition of real property interests, construction,
equipment, testing, and insurance costs, but not administrative and general costs of any
Participant, State agency, political subdivision, or Construction Manager, except pursuant to
Section 7(c), unless such costs are expressly approved by the IPG prior to being incurred.
(p) "Effective Date" shall have the same meaning given to it in Section 2(a) of this
Agreement.
(q) "Energy Charge" shall have the same meaning given to it in Section 1O(d)(4).
(r) "Expiration Date" shall have the same meaning given to it in Section 2(b) of this
Agreement.
(s) "Grant Account" means the Healy-Fairbanks Intertie Account or the Anchorage-
Kenai Intertie Account, or both, as established by section 2.02 of the Grant Administration
Agreement.
(t) "Grant Administration Agreement" means the agreement dated among
the Alaska Industrial Development and Export Authority and the Parties to this Agreement setting
forth the terms and conditions governing the administration of Grant Accounts.
(u) "Grant Funds" means the $43,200,000 appropriated by section 1 of ch. 19, SLA
1993, for payment as a grant under AS 37.05.316 for construction of the Healy-Fairbanks
Segment and the $46,800,000 appropriated by section 2 ofch.19, SLA 1993, for payment as a
grant under AS 37.05.316 for construction of the Anchorage-Kenai Peninsula Segment.
(v) "Intertie Grant Agreement" means the agreement dated October 26, 1993 among
the Parties to this Agreement, the Alaska Industrial Development and Export Authority and the
State of Alaska, Department of Administration (DOA) satisfYing the statutory conditions
precedent to DOA's transfer of the Grant Funds and providing for DOA's transfer of such Grant
Funds.
(w) "IPG" is an abbreviation for "Intertie Participants Group" and means the Participants
and Additional Parties acting collectively as set forth in this Agreement. As provided elsewhere in
this agreement, AEG&T, while a Participant, is not a Member of the IPG. The Additional Parties
I PARTICIPANTS AGREEMENT -- Page 30
Draft #2,1, Printed 12/29/93
.
.
.
to this Agreement, HEA and MEA, collectively constitute AEG&T and are individually Members
of the IPG.
(x) "Member" means a member of the IPG. The members of the IPG are identified in
Section 6(b).
(y) "Operating Budget" means the budget for Annual Project Costs as adopted or in
effect for a particular Operating Year, and amended or supplemented from time to time as
provided for in this Agreement.
(z) "Operating Fund" means a fund established pursuant to Section lO(a) of this
Agreement, consisting of Annual Payment Obligations, Energy Charges, Assessments, insurance
proceeds and other revenues available to pay Annual Project Costs.
(aa) "Operating Year" means that Project Year, and is a period used for computation of
Annual Project Costs for a Project Segment or both Segments and preparation of annual budgets
for recovery of the same pursuant to Section 10 of this Agreement. The initial Operating Year for
each Segment shall start on the Date of Commercial Operation of that Segment and continue
through and include the last day of that Project Year. Subsequently, the Operating Year for that
Segment shall be the Project Year.
(bb) "Operation & Maintenance Agreement" may also be referred to herein as O&M
Agreement and means an agreement pursuant to Section 9(a) between the O&M Manager of the
Project or a Project Segment and the Participants acting through the IPG detailing the rights and
obligations of the O&M Manager and of the IPG and its members with regard to the operation
and maintenance of the Project or relevant Project Segment.
(cc) "Operation & Maintenance Manager" may also be referred to herein as O&M
Manager and means the Participant selected by the IPG pursuant to Section 9(a) of this
Agreement to be responsible for the operation and maintenance of the Project or a Project
Segment, for the benefit of all of the Participants. The O&M Manager may exercise this
responsibility by conducting operation and maintenance activities with its own personnel, or by
supervising a contractor selected by the O&M Manager expressly for the purpose of conducting
such activities.
(dd) "Optional Project Work" means project repairs, renewals and replacements,
improvements, betterments, additions, or expansions that do not constitute Required Project
Work.
(ee) "Participants" shall have the same meaning gIven to it In section 1 of this
Agreement.
(0) "Participant's Share" means the percentage interest a Participant holds in the
Project or a Project Segment under the terms of this Agreement. A Participant's Share is used to
calculate its Annual Payment Obligation, including its share of Annual Project Costs, and to
I PAR nCIP ANTS AGREEMENT -- Page 31
Draft #lJ1, Printed 12/29/93
.
.
.
determine its share of Assessments, Additional Costs, or Annual Debt Service, and includes a
Participant's Energy Charges.
(gg) "Project" means the Intertie Project to be designed, constructed, operated and
maintained pursuant to this Agreement, which shall consist of two Segments; the Healy-Fairbanks
Segment defined by Section 3(a) of this Agreement and the Anchorage-Kenai Peninsula Segment
defined by Section 3(b) of this Agreement, which may also be referred to individually herein as a
Project Segment.
(hh) "Project Year" means that calendar year unless and until the IPG converts the
calculation of the Project Year to a fiscal year consisting of a twelve-month period starting on
such date as the IPG shall select. The initial Project Year for purposes of this Agreement shall
start on the Effective Date of this Agreement and continue through and include December 31,
1994. When and if calculation of the Project Year is converted to a fiscal year, the IPG shall
provide for a transition from calendar year to fiscal year by shortening or lengthening the first
Project Year calculated on a fiscal basis. The last Project Year for purposes of this Agreement
shall be that portion of the twelve-month period between the end of the last full (i.e. twelve
month) Project Year and the expiration of this Agreement. For each Project Segment, those
Project Years, or portions thereof, prior to the Date of Commercial Operation are designated
Construction Years (see the definition of Construction Years, above) and those Project Years, or
portions thereof, following the Date of Commercial Operation are designated Operating Years
(see the definition of Operating Years, above).
(ii) "Prudent Utility Practice" means at a particular time any of the practices, methods
and acts engaged in or approved by a significant portion of the electric utility industry at such
time, or which, in the exercise of reasonable judgment in light of facts known at such time, could
have been expected to accomplish the desired results at the lowest reasonable cost consistent with
good business practices, reliability, safety and reasonable expedition. Prudent Utility Practice is
not required to be the optimum practice, method or act to the exclusion of all others, but rather to
be a spectrum of possible practices, methods or acts which could have been expected to
accomplish the desired result at the lowest reasonable cost consistent with reliability, safety and
expedition. Prudent Utility Practice includes due regard for manufacturer's warranties and the
requirements of governmental agencies of competent jurisdiction and shall apply not only to
functional parts of the Project, but also to appropriate structures, landscaping, painting, signs,
lighting and other facilities.
(jj) "Required Project Work" means repairs, maintenance, renewals, replacements,
improvements, or bettennents 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
(2) Prudent Utility Practice.
(kk) "Segment" means either of the two electric power transmission lines and associated
facilities constituting the Project to be designed, constructed, operated and maintained under the
tenns of this Agreement.
I PARTICIPANTS AGREEMENT -- Page 32
Draft #2+, Printed 12/29/93
.
.
.
(II) "Uncontrollable Force" means any cause beyond the control of a Party hereto and
which by the exercise of due diligence that Party is unable to prevent or overcome, including but
not limited to an act of God, fire, flood, volcano, earthquake, explosion, sabotage, and act of the
public enemy, civil or military authority, including court orders, injunctions and orders of
governmental agencies of competent jurisdiction, insurrection or riot, an act of the elements,
failure of equipment, or the inability to obtain or ship equipment or materials because of the effect
of similar causes on carriers or shippers. Strikes, lockouts, and other labor disturbances shall be
considered Uncontrollable Forces, and nothing in this Agreement shall require any Party to settle
a labor dispute against its best judgment; provided, that during any labor dispute all Parties shall
make all reasonable efforts under the circumstances, including, to the extent permitted by law, the
use of replacement personnel and or management personnel and/or other personnel under the
provisions of a mutual aid agreement, to ensure, if possible the continued ability of the Parties to
carry out their obligations under this Agreement.
(mm) "Working Capital Account" means an account within the Operating Fund which
is to be managed so that funds from that account are available to meet reasonable current
expenses and contingencies as they arise in the course of the design, construction, operation and
maintenance of the Project.
Section 14. DEFAULTS AND REMEDIES.
(a) Each of the following shall constitute an Event of Default:
(I) A material breach in performance of this Agreement by a Party, which breach
has continued for a period in excess of sixty (60) days after the defaulting Participant has
been notified in writing that such breach will, unless corrected within such 60-day period,
constitute an Event of Default; such material breaches shall include, but not be limited to,
the failure to make any payments required by this Agreement, including but not limited to
Annual Payment Obligation, Energy Charges, Assessments, and Additional Costs;
(2) A continual or repeated failure or refusal by a Party to perform, substantially
in accordance with this Agreement, all or any of its obligations under this Agreement,
thereby materially impairing the value of this Agreement to the other Parties, which failure
or refusal recurs after the breaching Party has been notified in writing that such breach
will, if repeated, constitute an Event of Default;
(3) A filing by a Party to seek protection under any applicable bankruptcy,
reorganization, insolvency, dissolution or liquidation law, which filing has not been
dismissed within 90 days;
(4) Default under the Bond Resolution or separate financing instrument used by a
Participant to finance all or part of its obligation under this Agreement.
(b) Upon the occurrence of any Event of Default by a Party, any other Party may exercise
any remedy or combination of available remedies, including but not limited to the following:
I PARTICIPANTS AGREEMENT -- Page 33
Draft #2,+, Printed 12/29/93
.
.
.
(1) Termination of this Agreement with respect to that defaulting Party, provided
however that said termination shall not be effective to increase the Annual Payment
Obligations or Assessments of non-defaulting Parties unless termination is first approved
in writing by all Members whose Annual Payment Obligations or Assessments would be
increased as a consequence of said termination;
(2) Suspension or expulsion of the defaulting Party from the IPG and loss of the
defaulting Party's right to use the Project;
(3) An action to recover compensatory or other damages provided by law, or to
seek specific performance of any and all obligations required under this Agreement.
(c) The remedies provided herein for Events of Default are not exclusive and the Parties
retain all rights of action that exist at law and in equity, or pursuant to this Agreement, to remedy
any breach, irrespective of whether said breach constitutes an Event of Default or results in
termination of the Agreement.
I PAR TICIP ANTS AGREEMENT -- Page 34
Draft #2,1, Printed 12/29/93
.
.
.
.
EXHIBIT D(I)
INITIAL CHUGACH WHEELING RATES & RELATED MATTERS
The following rates, terms, and conditions shall apply pursuant to Section S(d)(2) for use
of Chugach's facilities under Section S( d)( 1):
1. Effective date and term. The wheeling rates and related terms and conditions de-
scribed herein shall become effective on January 1, 1997 and shall remain in effect for fifteen (15)
years, i. e., through December 31, 2011.
2. ADDlicabilitv.
(a) The rates and related terms and conditions described herein will apply to electric
power transmitted to or from [either) (the Anchorage-Kenai P~nsulaJ Segment efthe Prejeet"
(i) by Participants ilLor Additional Parties who are participating through LParticipant5 in, thll1e
- - - -
i....:neherage Keaal Penifls1:HaSegment ("Segmeflt"), and (ii) from generators already existing fRett
,\'aRt!l to talk about Healy] as of December 1, 1993.
(b) rffor any reason the Segment is not completed but is instead terminated/abandoned by
the Participants, then the rates and related terms and conditions described herein will apply under
the Transmission Services Alrreement. durin!! the term described in Paralrraoh 1 of this Exhibit
~to electric power that is:
(i) the power of a Wheeling Utility (as defined in the Transmission Services
Agreement) that is also a Participant in the Healy-Fairbanks Segment of the Project at the
time; [We did Rot di,euss this require.eat. StiD aa issue.]
(ii) generated either:
(A) by the Bradley Lake Hydroelectric Project, or,
(B) by the Soldotna No. 1 generating unit, if and to the extent that power
generated by such unit is eligible to receive wheeling services under the terms and
conditions set forth in Section 8(f) of the Transmission Services Agreement; and
(iii) transmitted from the Soldotna Substation to that Wheeling Utility's Delivery
Point, as the latter is defined in the Transmission Services Agreement.
( c) For wheelimz services not within the scooe of Paralrraohs 2( a) or 2(h) of this Exhibit
D(I) and not within the scooe of the Transmission Services Alrreement. Chu!!ach will oreoare (on
request and/or oeriodically) and will submit to the Commission for review and aoorovaL
nondiscriminatorv and iust and reasonable (i) wheelinlZ rates. and (ii) terms and conditions
I PARTICIPANTS AGREEMENT -- Page 35
Draft #21, Printed 12/29/93
.
.
.
1l0verninlZ such wheelinll services. Such rates. terms and conditions may be revised from time to
time.
3. Basic wWheelin!! rate. In each year-, the basic wheeling rate, "R," will be computed
in accordance with the formula set forth in Aooendix AE~it _ of the Transmission Services
Agreement, with the exception that the value of"K" in such formula shall be established at "0.50"
in each year.
4. Cost review and control.
(a) Standard. After the effective date, the costs of any new transmission in-
vestment by Chugach shall be added to the costs used to compute the wheeling rate only if
and to the extent that such transmission investment supports Chugach's bulk power
network transmission system (eIelildiag radial SPUI'll stiU .ad issue), and not
Chugach's retail distribution system. If any investment supports both such systems, then
the costs of that investment shall be allocated equitably and reasonably between such
systems for purposes of applying the foregoing standard.
(b) Procedure. Chugach will provide reasonable notice to the Participants of the
costs of any new transmission investment that Chugach proposes to add to the costs used
to compute the wheeling rate. With such notice, Chugach will also explain in writing why
the inclusion of such costs in the wheeling rate meets the standard set forth above. On
request, Chugach will meet with the Participants to discuss these matters. If, after such
meeting, any Participant believes that including any such costs (hereinafter "disputed
costs") in the wheeling rate would violate the standard set forth above, that Participant
shall so notify Chugach and provide a written explanation for that Participant's position.
In response to any such notice and explanation, and before Chugach makes any final
decision to include any such disputed costs iri the wheeling rate, Chugach may, but shall
not be obligated to, offer to engage in further discussions with that Participant, and/or
afford that Participant additional opportunities to present its position to the Chugach staff
and/or Board, or to a joint Board or other inter-utility panel that Chugach may elect to
convene.
(c) Review. Chugach's final decision to include or not include any such costs in
the wheeling rate, if disputed, shall be submitted to the Commission for resolution of that
isStle aBly. Each Participant shall be entitled to challenge Chugach's decision before the
Commission, but only if and to the extent that such Participant took part in the pre-filing
discussions and presentations described in Paragraph 4(b) abo,":e.
5. Rate applies durin!! Intertie outues. "R" would apply to transmission even at times
when the Segment, having been completed, is out of service and Chugach's parallel transmission
facilities alone are available for wheeling services.
6. Other services. Under the Transmission Services Agreement, Chugach will continue
to provide (a) assured wheeling services, for periods of up to two weeks at a time, at a rate
computed in the same manner as the basic wheelin2ftarmffll rate but using a value of" 1. 15" for
PARTICIPANTS AGREEMENT -- Page 36
Draft. #'},+, Printed 12/29/93
.
.
.
.
the constant "K," and (b) displacement energy purchase services for the Bradley Lake energy of
Wheeling Utilities that cannot be transmitted from the Kenai Peninsula. From and after the
Effective Date of this Agreement, Chugach will no longer continue to provide free reservoir
storage for such energy in Cooper Lake.
7. Other terms and conditions. Such matters as the scheduling of transmission or
displacement purchase services, accounting for line losses, the effect of offsetting flows, and other
matters dealt with in the Transmission Services A2feement (inc1udimz Chugach's duties! aaa the
limitations on such duties. and DriOritv use of its own facilitiestthere0a ( as reasonably fI'Iade
applicable to the circumstances of this Agreement~, ana other matters aealt with ia the
Traasmissioa SerAees .^...greemeat will continue to be governed by the Transmission Services
Agreement.
8. Reciprocal services. Each Participant and Additional Party agrees that, at Chugach's
request, it will make wheeling services available to Chugach over its system, subject to like
conditions and limitations as those set forth in this Exhibit D(I), at a rate no higher than the rate
computed in accordance with the following formula:
Rate
C/E x 0.5
Where "C" represents the applicable utility's annual costs of bulk power network transmission
investments, and "E" represents the firm energy and Bradley Lake energy transmitted annually
over that utility's system.
I PARTICIPANTS AGREEMENT -- Page 37
Draft #2.1, Printed 12/29/93
I'
.
.
.
EXHIBIT D(2)
GVEA WHEELING RATES AND RELATED MATfERSOfFMU8 Power
The following rates, tenns and conditions shall apply oursuant to Section 5( d)(3 )t&-tfie
wheeling afpa'oVer ayer GVB.A.'s eleetrie tnmsaHssion system fer reeeipt by FMUS:
(a) WheeliDi~ RateEfJeeti"le date. The wheelilllz rate for any use of the GVEA system
shall initially be 1.5 millslkwh for the oeriod commencinll with the Date of Commercial Ooeration
of the Healy-Fairbanks Segment. and shall remain in effect at least until the third anniversary
thereof Thereafter. the rate may be revised either by mutual alUeement of GVEA and FMUS or
bv the Commission in a oroceedinll initiated bv either GVEA or FMUS.The terms and eonditic)Rs
set forth in tms BldHbit D 2 sltall become eff~etive on the Date €If Cammercial Operatien of tlte
Healy Fairbanks Segment of tlte Project.
(b) Use of Lines and Calculation of Chal'2es. For ourooses of comouting wheeling
charges. GVEA and FMUS are deemed to transmit 60% of enerlZV transmitted from Healv to
Fairbanks on the Healv-Fairbanks Sellment. and 40% on the existinll GVEA transmission line. At
any time the GVEA line is inooerable. FMUS shall oay to the IPG 1.5 millslkwh for 100% of
oower transmitted. At any time the new Healy-Fairbanks Selmlent is inooerable. FMUS shall oay
to GVEA the then-current rate for 100% of oower transmitted. Durinll any oeriod in which
FMUS is not directly connected to the Wilson substation. FMUS shall be resoonsible for oayment
of wheelinll charlles to GVEA for 100% of enerlZV transmitted and to the IPG for 60% of energy
transmitted. Term. ??
(c) Losses.
(1) Existin2 GVEA Line. FMUS losses shall be incremental on the existing
GVEA line.
(2) Healv-Fairbanks Se2ment. FMUS and GVEA losses on the Healy-
Fairbanks Segment shall be comouted on an average basis.,\pplieaeility. Tlte terms and
conditiens set fertlt in tms BKhibit D 2 shall apply te ~O% ef all energy transmitted to
FMUS I:lsing eitlter tlte Projeet or tlte transmissien faeilities ef GVB:\.
(d) Rate. Tlte rate sltall be 1.5 mills/kwh, [as adjl:lsted pl:lr!il:lllflt to PlH'a8f1lfl1t ( e) €If this
EldJibit D 2.]
[(e) Tlte rate may be adjl:lsted by GVB,^. ne mere titan enee eaelt year to reflect changes
in the east of Ihlng as meast:lred by the CeRSl:Imer Priee IBden fer the ,^.nchorage area.] [insert
correet CPI referenee BREI/or formula.]
I PARTICIPANTS AGREEMENT -- Page 38
Draft #2,1, Printed 12/29/93
.
CITY OF SEWARD, ALASKA
RESOLUTION NO. 94-014
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
Anderson, Crane, Darling, Krasnansky, O'Brien and Sieminski
None
Bencardino
None
APPROVED AS TO FORM:
Wohlfarth, Argetsinger, Johnson &
Brecht, Attorneys for the city of Seward,
Alaska
aJf(~
City Attorney
.
.
(City Seal)