HB 446: "An Act establishing and relating to the power cost equalization endowment fund; relating to the power cost equalization and rural electric capitalization fund; authorizing and relating to the sale of the four dam pool hydroelectric project; establishing and relating to joint action agencies created to purchase power projects; and providing for an effective date."
00HOUSE BILL NO. 446 01 "An Act establishing and relating to the power cost equalization endowment fund; 02 relating to the power cost equalization and rural electric capitalization fund; 03 authorizing and relating to the sale of the four dam pool hydroelectric project; 04 establishing and relating to joint action agencies created to purchase power 05 projects; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. The uncodified law of the State of Alaska is amended by adding a new 08 section to read: 09 FINDINGS. The legislature finds that 10 (1) adequate and reliable electric service at affordable rates is a necessary 11 ingredient of a modern society and a prosperous developing economy; 12 (2) at the current stage of social and economic development in the state, direct 13 participation by the state is necessary to assist in keeping rates in high-cost service areas to 14 affordable levels;
01 (3) providing a long-term stable source for financing power cost equalization 02 will permit and encourage the electric utility industry and its lenders to develop plans, make 03 investments, and take other actions that are necessary or prudent to provide adequate and 04 reliable electric service at affordable rates, and to meet the health and safety needs of residents 05 of the state; 06 (4) revenue that was anticipated to be generated from the state-owned four dam 07 pool hydroelectric project under the existing power sales agreement and that the legislature 08 intended to provide a long-term source of financing for power cost equalization will no longer 09 be available upon the sale of the four dam pool project; 10 (5) the proposed sale under the memorandum of understanding dated April 11, 11 2000, provides the state with fair value for the four dam pool hydroelectric project, relieves 12 the state of the significant financial risks and obligations with respect to the project, and 13 provides a stable long-term financing source for power cost equalization; and 14 (6) establishment of joint action agencies under this Act and the sale of the 15 four dam pool hydroelectric project to the joint action agency to be formed by the four dam 16 pool local public utilities ensures local control of power generation resources necessary for 17 a healthy economy and benefits the communities and their ratepayers by providing for stable 18 energy rates. 19 * Sec. 2. AS 42.05.431(c) is amended to read: 20 (c) Notwithstanding (b) of this section, 21 (1) a wholesale agreement for the sale of power from a project licensed 22 by the Federal Energy Regulatory Commission on or before January 1, 1987, and 23 related contracts for the wheeling, storage, regeneration, or wholesale repurchase of 24 power purchased under the agreement, entered into between the Alaska Energy 25 Authority and one or more other public utilities or among the utilities after October 31, 26 1987, and before January 1, 1988, and amendments to the wholesale agreement or 27 related contract, and the wholesale agreement or related contract assigned by the 28 Alaska Energy Authority to a joint action agency formed under AS 42.45.310 that 29 purchases the project from the Alaska Energy Authority, are not subject to review 30 or approval by the commission until all long-term debt incurred for the project is 31 retired , or, for a wholesale agreement or related contract assigned to a joint action
01 agency formed under AS 42.45.310, until all long-term debt incurred to pay the 02 purchase price to the Alaska Energy Authority is retired ; and 03 (2) a wholesale agreement or related contract described in (1) of this 04 subsection may contain a covenant for the public utility to establish, charge, and 05 collect rates sufficient to meet its obligations under the contract; the rate covenant is 06 valid and enforceable. 07 * Sec. 3. AS 42.45 is amended by adding new sections to read: 08 Article 1A. Power Cost Equalization Endowment Fund. 09 Sec. 42.45.070. Power cost equalization endowment fund established. (a) 10 The power cost equalization endowment fund is established as a separate fund of the 11 authority. The fund consists of 12 (1) the endowment account; and 13 (2) the equalization account. 14 (b) The endowment account is established as a separate account of the fund 15 in the authority. The endowment account of the fund consists of 16 (1) legislative appropriations to the fund that are not designated for 17 expenditure for the purpose of power cost equalization; 18 (2) accumulated earnings of the fund; 19 (3) gifts, bequests, and contributions of money and other assets given 20 to the fund that are not designated for the equalization account; and 21 (4) payments received after June 30, 2001, for the sale of power made 22 to the state by the purchasing utilities under the memorandum of understanding dated 23 April 11, 2000 between the Alaska Energy Authority and the purchasing utilities. 24 (c) The equalization account is established as a separate account of the fund 25 in the authority. The equalization account of the fund consists of 26 (1) the annual transfer to the equalization account from the endowment 27 account provided for in (d) of this section; 28 (2) legislative appropriations to the fund that are designated for 29 expenditure for the purpose of power cost equalization; and 30 (3) gifts, bequests, and contributions of money and other assets given 31 to the fund that are designated for the equalization account.
01 (d) On February 1 of each year, the commissioner of revenue shall transfer to 02 the equalization account seven percent of the market value of the endowment account 03 as of that date. 04 (e) Nothing in this section creates a dedicated fund. 05 Sec. 42.45.080. Powers and duties of the commissioner of revenue. (a) The 06 commissioner of revenue is the fiduciary of the fund. In managing the fund, the 07 commissioner shall 08 (1) have the same powers and duties as are provided in AS 37.10.071; 09 and 10 (2) invest the endowment account of the fund in a manner likely to 11 achieve at least a seven percent nominal return over time. 12 (b) In managing the fund, the commissioner shall 13 (1) consider the status of the fund's capital and the income generated 14 on both a current and probable future basis; 15 (2) determine the appropriate investment objectives; 16 (3) establish investment policies to achieve the objectives; and 17 (4) act only in regard to the best financial interests of the fund. 18 Sec. 42.45.085. Use of the equalization account of the fund. (a) Money in 19 the equalization account of the fund may be appropriated for the following purposes: 20 (1) funding the power cost equalization and rural electric capitalization 21 fund (AS 42.45.100); 22 (2) reimbursement to the Department of Revenue for the costs of 23 establishing and managing the fund; and 24 (3) reimbursement of other costs of administration of the fund. 25 (b) The balance remaining in the equalization account that, at the end of the 26 fiscal year, has not been appropriated, or that has been appropriated but not expended, 27 shall be invested until appropriated or expended. 28 Sec. 42.45.099. Definitions. In AS 42.45.070 - 42.45.099, 29 (1) "endowment account" means the account established in 30 AS 42.45.070(b); 31 (2) "equalization account" means the account established in
01 AS 42.45.070(c); 02 (3) "fund" means the power cost equalization endowment fund 03 established in AS 42.45.070. 04 * Sec. 4. AS 42.45.070(b) is amended to read: 05 (b) The endowment account is established as a separate account of the fund 06 in the authority. The endowment account of the fund consists of 07 (1) legislative appropriations to the fund that are not designated for 08 expenditure for the purpose of power cost equalization; 09 (2) accumulated earnings of the fund; 10 (3) gifts, bequests, and contributions of money and other assets given 11 to the fund that are not designated for the equalization account; and 12 (4) repayments of principal and income that would have been 13 deposited in the former four dam pool transfer fund under former AS 42.45.050 14 [PAYMENTS RECEIVED AFTER JUNE 30, 2001, FOR THE SALE OF POWER 15 MADE TO THE STATE BY THE PURCHASING UTILITIES UNDER THE 16 MEMORANDUM OF UNDERSTANDING DATED APRIL 11, 2000 BETWEEN 17 THE ALASKA ENERGY AUTHORITY AND THE PURCHASING UTILITIES]. 18 * Sec. 5. AS 42.45.100(b) is amended to read: 19 (b) The fund shall be administered by the authority as a fund distinct from the 20 other funds of the authority. The fund is composed of 21 (1) money appropriated to provide power cost equalization to eligible 22 electric utilities and to provide grants for utility improvements; 23 (2) money appropriated from the National Petroleum Reserve - Alaska 24 special revenue fund under AS 37.05.530(g); 25 (3) money appropriated from the equalization account 26 (AS 42.45.070(c)) of the power cost equalization endowment fund 27 (AS 42.45.070(a)) under AS 42.45.085(a); 28 (4) gifts, bequests, and contributions from other sources; and 29 (5) [(4)] interest earned on the fund balance. 30 * Sec. 6. AS 42.45.100 is amended by adding a new subsection to read: 31 (d) If the amount available to the fund under (b) of this section is less than
01 $15,700,000 for a fiscal year, subject to appropriation, an amount necessary to cover 02 the shortfall shall be deposited into the fund from the dividend made available under 03 AS 44.88.088 by the board of directors of the Alaska Industrial Development and 04 Export Authority. 05 * Sec. 7. AS 42.45.100(d) is amended to read: 06 (d) If the amount available to the fund under (b) of this section is less than 07 $15,700,000 for a fiscal year, subject to appropriation, an amount necessary to cover 08 the shortfall , up to the sum of $9,000,000 for the fiscal year, shall be deposited into 09 the fund from the dividend made available under AS 44.88.088 by the board of 10 directors of the Alaska Industrial Development and Export Authority. 11 * Sec. 8. AS 42.45 is amended by adding a new section to article 5 to read: 12 Sec. 42.45.310. Acquisition of power project. (a) Two or more public 13 utilities that purchase power from a power project acquired or constructed as part of 14 the former energy program for Alaska and owned by the Alaska Energy Authority 15 under AS 44.83.396, may form a joint action agency under AS 42.45.300 and this 16 section to purchase the power project from the Alaska Energy Authority if the 17 purchase and sale of project has first been authorized by law. 18 (b) The agency may 19 (1) acquire, own, operate, and manage one or more power projects; and 20 (2) participate in the design, development, construction, operation, and 21 maintenance of a generating or transmission facility. 22 (c) The agency is an instrumentality of the public utilities that form the 23 agency, but has a separate and independent legal existence from the public utilities. 24 In addition to the powers authorized under AS 42.45.300, the agency has the power 25 to 26 (1) adopt bylaws of the agency; 27 (2) sue and be sued; 28 (3) carry out the authorized purposes of the agency; 29 (4) subject to (e) of this section, issue revenue bonds and secure 30 financing that are not obligations of either the state or the public utilities that formed 31 the agency to provide financing to carry out the authorized purposes of the agency.
01 (d) The agency is created by a written agreement among the public utilities 02 forming the agency. Each public utility forming the agency shall adopt the terms of 03 the agreement by ordinance or resolution. Subject to (c) of this section, the agreement 04 establishing the agency may define the powers, functions, and activities of the agency, 05 and specify the means by which they shall be performed. The agreement may 06 establish the rights and responsibilities of the public utilities that form the agency. If 07 applicable, the agreement shall provide for 08 (1) apportionment between the public utilities forming the agreement 09 of responsibility for providing finances to the expenses incurred in the performance of 10 the functions or activities; 11 (2) apportionment of fees or other revenue derived from the functions 12 or activities and the manner in which the revenue shall be accounted for; 13 (3) the transfer of personnel and the preservation of employment 14 benefits; and 15 (4) the rights of the public utilities forming the agency to terminate the 16 agreement, subject to (e) of this section, including resolving disputes if the public 17 utilities are unable, upon termination of the agreement, to agree on the transfer of 18 personnel or the division of assets and liabilities between the parties to the agreement. 19 (e) The public utilities forming the agency shall pledge and agree with the 20 holders of revenue bonds or other financing secured under this section, including with 21 a state entity that provides financing, that the public utilities and the agency will not 22 terminate the agency or take any other action that would limit or alter the rights and 23 powers vested in the agency by this section to fulfill the terms of a contract made by 24 the agency with the holders and that the public utilities and the agency will not in any 25 way impair the rights and remedies of the holders until the bonds, together with the 26 interest on them with interest on unpaid installments of interest, and all costs and 27 expenses in connection with an action or proceeding by or on behalf of the holders are 28 fully met and discharged. The agency may include this pledge and agreement of the 29 public utilities and the agency, insofar as it refers to holders of bonds of the agency, 30 in a contract with the holders and, insofar as it relates to a state entity, in a contract 31 with the state entity.
01 (f) Only to the extent any of the public utilities forming the agency is subject 02 to the particular tax is the agency subject to state and local ad valorem, income, or 03 excise taxes that may be assessed or levied against property, assets, income, and 04 receipts of the agency, or the electric cooperative tax (AS 10.25.540 - 10.25.570). 05 (g) A loan, investment, or other financial aid provided to the agency by the 06 state or any political subdivision of the state does not constitute a violation of 07 AS 37.10.085. 08 (h) In this section, 09 (1) "agency" means a joint action agency formed under this section; 10 (2) "public utility" has the meaning given the term in AS 42.05.990; 11 (3) "state entity" means a state department, authority, or other 12 administrative unit of the executive branch of state government. 13 * Sec. 9. The uncodified law of the State of Alaska is amended by adding a new section 14 to read: 15 LEGISLATIVE AUTHORIZATION TO CONVEY. (a) Notwithstanding 16 AS 44.83.396, the joint action agency to be formed by the purchasing utilities may purchase, 17 and the Alaska Energy Authority may sell, the four dam pool hydroelectric project under the 18 memorandum of understanding. 19 (b) The Alaska Industrial Development and Export Authority may issue bonds or 20 otherwise extend financing to the joint action agency to be formed by the purchasing utilities, 21 for the purposes and upon the terms set out in the memorandum of understanding. The total 22 principal amount of the bonds and other financing provided by the authority under this 23 subsection may not exceed $110,000,000. 24 (c) The Department of Community and Economic Development and the Alaska 25 Energy Authority may modify and amend the loan agreement and note to 26 (1) suspend the enforcement of rights and obligations, including payment 27 obligations, under the loan agreement and note; and 28 (2) fully release, extinguish, and retire the debt and all other rights and 29 obligations under the loan agreement and note upon completion of the purchase and sale of 30 the four dam pool hydroelectric project under the memorandum of understanding. 31 (d) In this section,
01 (1) "Alaska Energy Authority" means the Alaska Energy Authority created in 02 AS 44.83, successor in interest to the Alaska Power Authority; 03 (2) "Alaska Power Authority" means the former Alaska Power Authority; 04 (3) "authority" means the former Alaska Power Authority; 05 (4) "Copper Valley" means Copper Valley Electric Association, Inc., a 06 cooperatively owned electric utility serving the communities of Valdez, Glennallen, and 07 environs; 08 (5) "department" means the former Department of Commerce and Economic 09 Development; 10 (6) "Department of Commerce and Economic Development" means the former 11 Department of Commerce and Economic Development; 12 (7) "Department of Community and Economic Development" means the 13 Department of Community and Economic Development, successor to the department; 14 (8) "four dam pool hydroelectric project" means the Tyee Lake, Swan Lake, 15 Solomon Gulch, and Terror Lake hydroelectric facilities owned and administered by the 16 Alaska Energy Authority under AS 44.83.396; 17 (9) "joint action agency" means an agency formed under AS 42.45.310, enacted 18 by sec. 8 of this Act; 19 (10) "Ketchikan" means the City of Ketchikan, doing business as Ketchikan 20 Public Utilities, a municipally owned utility serving Ketchikan and environs; 21 (11) "Kodiak" means the Kodiak Electric Association, Inc., a cooperatively 22 owned electric utility serving the Borough of Kodiak; 23 (12) "loan agreement" means the loan agreement effective October 28, 1985, 24 between the State of Alaska, Department of Commerce and Economic Development and the 25 Alaska Power Authority regarding a loan from the power development revolving loan fund 26 to the Alaska Power Authority regarding the four dam pool hydroelectric project; 27 (13) "memorandum of understanding" means the memorandum of 28 understanding dated April 11, 2000, between the Alaska Energy Authority and Copper Valley, 29 Ketchikan, Kodiak, Petersburg, and Wrangell for the purchase and sale of the four dam pool 30 hydroelectric project; 31 (14) "note" means the Promissory Note, dated February 13, 1986, which
01 reflects the authority's obligation to pay the department related to the loan agreement; 02 (15) "Petersburg" means the City of Petersburg, doing business as Petersburg 03 Municipal Power and Light, a municipally owned electric utility serving Petersburg and 04 environs; 05 (16) "purchasing utilities" means Copper Valley, Ketchikan, Kodiak, 06 Petersburg, and Wrangell; 07 (17) "Wrangell" means the City of Wrangell Light Department, a municipally 08 owned electric utility serving Wrangell and environs. 09 * Sec. 10. AS 42.45.050 is repealed. 10 * Sec. 11. AS 42.45.070(b)(4) and AS 44.83.398 are repealed. 11 * Sec. 12. (a) Section 4 of this Act takes effect only if the memorandum of understanding 12 between the Alaska Energy Authority and the purchasing utilities dated April 11, 2000 is 13 terminated before the closing date of the sale of the four dam pool hydroelectric project under 14 that memorandum of understanding. 15 (b) If sec. 4 of this Act takes effect under (a) of this section, sec. 4 of this Act takes 16 effect on the date of termination of the memorandum of understanding described in (a) of this 17 section. The executive director of the Alaska Energy Authority shall certify the date of 18 termination of the memorandum of understanding to the lieutenant governor and the revisor 19 of statutes. 20 * Sec. 13. (a) Section 11 of this Act takes effect only if the Alaska Energy Authority and 21 the joint action agency to be formed by the purchasing utilities under AS 42.45.310, enacted 22 by sec. 8 of this Act, complete the purchase and sale of the four dam pool hydroelectric 23 project as described in the memorandum of understanding dated April 11, 2000. 24 (b) If sec. 11 of this Act takes effect under (a) of this section, sec. 11 of this Act takes 25 effect on the day after the closing date of the sale of the four dam pool hydroelectric project 26 under the memorandum of understanding dated April 11, 2000. The executive director of the 27 Alaska Energy Authority shall certify the closing date of the sale to the lieutenant governor 28 and the revisor of statutes. 29 * Sec. 14. Section 7 of this Act takes effect July 1, 2002. 30 * Sec. 15. Section 10 of this Act takes effect July 2, 2000. 31 * Sec. 16. Except as provided in secs. 12 - 15 of this Act, this Act takes effect July 1,
01 2000.