SCS CSHB 446(FIN): "An Act establishing and relating to the power cost equalization endowment fund; relating to the power cost equalization and rural electric capitalization fund; relating to the Railbelt energy 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."
00SENATE CS FOR CS FOR HOUSE BILL NO. 446(FIN) 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 relating to the Railbelt energy fund; authorizing and relating to the sale of the 04 four dam pool hydroelectric project; establishing and relating to joint action 05 agencies created to purchase power 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 financing source for 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 long-term, stable 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 ensure local control of power generation resources necessary for a 17 healthy economy and benefit the communities and their ratepayers by providing for stable 18 energy rates. 19 * Sec. 2. AS 37.05.520 is amended to read: 20 Sec. 37.05.520. Railbelt energy fund. There is established in the general fund 21 the Railbelt energy fund. The fund consists of money appropriated to it by the 22 legislature and interest received on money in the fund . The department of revenue 23 shall manage the fund. [INTEREST RECEIVED ON MONEY IN THE FUND SHALL 24 BE ACCOUNTED FOR SEPARATELY AND MAY BE APPROPRIATED INTO 25 THE FUND ANNUALLY.] The legislature may appropriate money from the fund for 26 programs, projects, and other expenditures to assist in meeting Railbelt energy needs, 27 including projects for retrofitting state-owned buildings and facilities for energy 28 conservation. 29 * Sec. 3. AS 42.05.431(c) is amended to read: 30 (c) Notwithstanding (b) of this section, 31 (1) a wholesale agreement for the sale of power from a project licensed
01 by the Federal Energy Regulatory Commission on or before January 1, 1987, and 02 related contracts for the wheeling, storage, regeneration, or wholesale repurchase of 03 power purchased under the agreement, entered into between the Alaska Energy 04 Authority and one or more other public utilities or among the utilities after October 31, 05 1987, and before January 1, 1988, and amendments to the wholesale agreement or 06 related contract, and the wholesale agreement or related contract assigned by the 07 Alaska Energy Authority to a joint action agency formed under AS 42.45.310 that 08 purchases the project from the Alaska Energy Authority, are not subject to review 09 or approval by the commission until all long-term debt incurred for the project is 10 retired , or, for a wholesale agreement or related contract assigned to a joint action 11 agency formed under AS 42.45.310, until all long-term debt incurred to pay the 12 purchase price to the Alaska Energy Authority is retired ; and 13 (2) a wholesale agreement or related contract described in (1) of this 14 subsection may contain a covenant for the public utility to establish, charge, and 15 collect rates sufficient to meet its obligations under the contract; the rate covenant is 16 valid and enforceable. 17 * Sec. 4. AS 42.45.040 is amended to read: 18 Sec. 42.45.040. Southeast energy fund. The Southeast energy fund is 19 established as a separate fund. The fund consists of money transferred to it under 20 former AS 42.45.050. The authority may make grants from the Southeast energy fund 21 to utilities participating in the power transmission intertie between the Swan Lake and 22 Tyee Lake hydroelectric projects for power projects, for repayment of loans, and for 23 payments on bonds. 24 * Sec. 5. AS 42.45 is amended by adding new sections to read: 25 Article 1A. Power Cost Equalization Endowment Fund. 26 Sec. 42.45.070. Power cost equalization endowment fund established. (a) 27 The power cost equalization endowment fund is established as a separate fund of the 28 authority. The fund consists of 29 (1) legislative appropriations to the fund that are not designated for 30 annual expenditure for the purpose of power cost equalization; 31 (2) accumulated earnings of the fund;
01 (3) gifts, bequests, contributions of money and other assets, and federal 02 money given to the fund that are not designated for annual expenditure for power cost 03 equalization; and 04 (4) payments received after June 30, 2001, for the sale of power made 05 to the state by the purchasing utilities under the memorandum of understanding dated 06 April 11, 2000, between the Alaska Energy Authority and the purchasing utilities. 07 (b) Nothing in this section creates a dedicated fund. 08 (c) In this section, "memorandum of understanding" means the memorandum 09 of understanding dated April 11, 2000, between the Alaska Energy Authority and the 10 purchasing utilities, consisting of Copper Valley Electric Association, Inc., City of 11 Ketchikan, Kodiak Electric Association, Inc., City of Petersburg, and City of Wrangell, 12 for the purchase and sale of the four dam pool hydroelectric project and any 13 amendment to that agreement that substitutes appropriations of $20,000,000 from the 14 state constitutional budget reserve fund established under art. IX, sec. 17, Constitution 15 of the State of Alaska, for appropriations from the power project fund (AS 42.45.010). 16 Sec. 42.45.080. Powers and duties of the commissioner of revenue. (a) The 17 commissioner of revenue is the fiduciary of the fund. In managing the fund, the 18 commissioner shall 19 (1) have the same powers and duties as are provided in AS 37.10.071; 20 and 21 (2) invest the fund in a manner likely to achieve at least a seven 22 percent nominal return over time. 23 (b) In managing the fund, the commissioner shall 24 (1) consider the status of the fund's capital and the income generated 25 on both current and probable future bases; 26 (2) determine the appropriate investment objectives; 27 (3) establish investment policies to achieve the objectives; and 28 (4) act only in regard to the best financial interests of the fund. 29 (c) On July 1 of each year, the commissioner shall determine the monthly 30 average market value of the fund for the previous three fiscal years. 31 Sec. 42.45.085. Use of the power cost equalization endowment fund. (a)
01 Seven percent of the amount determined by the commissioner of revenue on July 1 of 02 each year under AS 42.45.080(c) may be appropriated for the fiscal year beginning the 03 following July 1 for the following purposes: 04 (1) funding the power cost equalization and rural electric capitalization 05 fund (AS 42.45.100); 06 (2) reimbursement to the Department of Revenue for the costs of 07 establishing and managing the fund; and 08 (3) reimbursement of other costs of administration of the fund. 09 (b) Nothing in this section creates a dedicated fund. 10 Sec. 42.45.099. Definition. In AS 42.45.070 - 42.45.099, "fund" means the 11 power cost equalization endowment fund established in AS 42.45.070. 12 * Sec. 6. AS 42.45.070(a) is amended to read: 13 (a) The power cost equalization endowment fund is established as a separate 14 fund of the authority. The fund consists of 15 (1) legislative appropriations to the fund that are not designated for 16 annual expenditure for the purpose of power cost equalization; 17 (2) accumulated earnings of the fund; 18 (3) gifts, bequests, contributions of money and other assets, and federal 19 money given to the fund that are not designated for annual expenditure for power cost 20 equalization; and 21 (4) repayments of principal and income that would have been 22 deposited in the former four dam pool transfer fund under former AS 42.45.050 23 [PAYMENTS RECEIVED AFTER JUNE 30, 2001, FOR THE SALE OF POWER 24 MADE TO THE STATE BY THE PURCHASING UTILITIES UNDER THE 25 MEMORANDUM OF UNDERSTANDING DATED APRIL 11, 2000, BETWEEN 26 THE ALASKA ENERGY AUTHORITY AND THE PURCHASING UTILITIES]. 27 * Sec. 7. AS 42.45.100(b) is amended to read: 28 (b) The fund shall be administered by the authority as a fund distinct from the 29 other funds of the authority. The fund is composed of 30 (1) money appropriated to provide power cost equalization to eligible 31 electric utilities and to provide grants for utility improvements;
01 (2) money appropriated from the National Petroleum Reserve - Alaska 02 special revenue fund under AS 37.05.530(g); 03 (3) money appropriated from the power cost equalization 04 endowment fund (AS 42.45.070) under AS 42.45.085(a); 05 (4) gifts, bequests, [AND] contributions from other sources , and 06 federal money ; and 07 (5) [(4)] interest earned on the fund balance. 08 * Sec. 8. AS 42.45 is amended by adding a new section to read: 09 Sec. 42.45.115. Exclusion from eligibility. (a) Notwithstanding the definition 10 of "eligible electric utility" in AS 42.45.150, an electric utility whose primary source 11 of power for sale to customers is one or more of the power projects that were part of 12 the former initial project may not be considered an eligible electric utility. 13 (b) In this section, "former initial project" includes the Tyee Lake, Swan Lake, 14 Solomon Gulch, and Terror Lake hydroelectric facilities. 15 * Sec. 9. AS 42.45 is amended by adding a new section to article 5 to read: 16 Sec. 42.45.310. Acquisition of power project. (a) Two or more public 17 utilities that purchase power from a power project acquired or constructed as part of 18 the former energy program for Alaska and owned by the Alaska Energy Authority 19 under AS 44.83.396 may form a joint action agency under AS 42.45.300 and under 20 this section to purchase the power project from the Alaska Energy Authority if the 21 purchase and sale of project has first been authorized by law. 22 (b) The agency may 23 (1) acquire, own, operate, and manage one or more power projects or 24 generating or transmission facilities; and 25 (2) participate in the design, development, construction, operation, and 26 maintenance of a generating or transmission facility. 27 (c) The agency is an instrumentality of the public utilities that form the 28 agency, but has a separate and independent legal existence from the public utilities. 29 In addition to the powers authorized under AS 42.45.300, the agency has the power 30 (1) to adopt bylaws of the agency; 31 (2) to sue and be sued;
01 (3) to carry out the authorized purposes of the agency; and 02 (4) subject to (e) of this section, to issue revenue bonds and secure 03 financing that are not obligations of either the state or the public utilities that formed 04 the agency to provide financing to carry out the authorized purposes of the agency. 05 (d) The agency is created by a written agreement among the public utilities 06 forming the agency. Each public utility forming the agency shall adopt the terms of 07 the agreement by ordinance or resolution. Subject to (c) of this section, the agreement 08 establishing the agency may define the powers, functions, and activities of the agency 09 and specify the means by which they shall be performed. The agreement may 10 establish the rights and responsibilities of the public utilities that form the agency. If 11 applicable, the agreement shall provide for 12 (1) apportionment between the public utilities forming the agreement 13 of responsibility for providing finances to the expenses incurred in the performance of 14 the functions or activities; 15 (2) apportionment of fees or other revenue derived from the functions 16 or activities and the manner in which the revenue shall be accounted for; 17 (3) the transfer of personnel and the preservation of employment 18 benefits; and 19 (4) the rights of the public utilities forming the agency to terminate the 20 agreement, subject to (e) of this section, including resolving disputes if the public 21 utilities are unable, upon termination of the agreement, to agree on the transfer of 22 personnel or the division of assets and liabilities between the parties to the agreement. 23 (e) The public utilities forming the agency shall pledge and agree with the 24 holders of revenue bonds or other financing secured under this section, including with 25 a state entity that provides financing, that the public utilities and the agency will not 26 terminate the agency or take any other action that would limit or alter the rights and 27 powers vested in the agency by this section to fulfill the terms of a contract made by 28 the agency with the holders and that the public utilities and the agency will not in any 29 way impair the rights and remedies of the holders until the bonds or other financing 30 secured under this section, together with the interest on them with interest on unpaid 31 installments of interest, and all costs and expenses in connection with an action or
01 proceeding by or on behalf of the holders are fully met and discharged. The agency 02 may include this pledge and agreement of the public utilities and the agency, insofar 03 as it refers to holders of bonds of the agency, in a contract with the holders and, 04 insofar as it relates to a state entity, in a contract with the state entity. 05 (f) Only to the extent any of the public utilities forming the agency is subject 06 to the particular tax is the agency subject to state and local ad valorem, income, or 07 excise taxes that may be assessed or levied against property, assets, income, and 08 receipts of the agency or to the electric cooperative tax (AS 10.25.540 - 10.25.570). 09 (g) A loan, investment, or other financial aid provided to the agency by the 10 state or any political subdivision of the state does not constitute a violation of 11 AS 37.10.085. 12 (h) An agency formed by, and that continues to include, one or more 13 municipal public utilities is a political subdivision only for purposes of AS 38.05.810. 14 (i) In this section, 15 (1) "agency" means a joint action agency formed under this section; 16 (2) "public utility" has the meaning given the term in AS 42.05.990; 17 (3) "state entity" means a state department, authority, or other 18 administrative unit of the executive branch of state government. 19 * Sec. 10. AS 44.83.510(a) is amended to read: 20 (a) Repayment of a loan from the former power development revolving loan 21 fund must be made with the proceeds from the sale of power from projects in the 22 former energy program for Alaska. [EXCEPT AS PROVIDED IN AS 44.83.398(i), 23 THE PAYMENTS REQUIRED TO BE MADE BY THE AUTHORITY ON A LOAN 24 FROM THE FUND CONSTITUTE DEBT SERVICE FOR THE PURPOSE OF 25 CALCULATING THE WHOLESALE POWER RATE IN AS 44.83.398(b)(1).] 26 * Sec. 11. AS 42.45.050 is repealed. 27 * Sec. 12. AS 42.45.070(a)(4), 42.45.070(c), AS 44.83.398, and 44.83.525 are repealed. 28 * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section 29 to read: 30 INTERIM DETERMINATION OF AMOUNTS AVAILABLE FOR 31 APPROPRIATION. (a) Notwithstanding AS 42.45.080(c) and 42.45.085(a), enacted by sec. 5
01 of this Act, the amount that may be appropriated from the power cost equalization endowment 02 fund (AS 42.45.070, enacted by sec. 5 of this Act) shall be determined as follows: 03 (1) for fiscal year 2002, the amount that may be appropriated from the power 04 cost equalization endowment fund (AS 42.45.070, enacted by sec. 5 of this Act) is seven 05 percent of the market value of the fund on February 1, 2001; 06 (2) for fiscal year 2003 through the first fiscal year that begins after the closing 07 date of the sale of the four dam pool hydroelectric project under the memorandum of 08 understanding, the amount that may be appropriated annually from the power cost equalization 09 endowment fund (AS 42.45.070, enacted by sec. 5 of this Act) is seven percent of the market 10 value of the fund on February 1 of the prior fiscal year; 11 (3) for subsequent fiscal years, the commissioner of revenue shall exclude the 12 time period and market value of the power cost equalization endowment fund (AS 42.45.070, 13 enacted by sec. 5 of this Act) before the closing date of the sale of the four dam pool 14 hydroelectric project in making the determination required under AS 42.45.080(c), enacted by 15 sec. 5 of this Act. 16 (b) The definitions contained in sec. 14(d) of this Act apply to the terms used in this 17 section. 18 * Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section 19 to read: 20 LEGISLATIVE AUTHORIZATION TO CONVEY. (a) Notwithstanding 21 AS 44.83.396, the joint action agency to be formed by the purchasing utilities may purchase, 22 and the Alaska Energy Authority may sell, the four dam pool hydroelectric project under the 23 memorandum of understanding, but only if the memorandum of understanding is amended to 24 include a provision consistent with this subsection that prohibits the agency from selling a four 25 dam pool hydroelectric project to any purchaser other than a purchasing utility as defined in 26 this section and that limits the ability of the purchasing utility to subsequently sell the four 27 dam pool hydroelectric project. A purchasing utility that has purchased a four dam pool 28 hydroelectric project may only sell the project to a subsequent purchaser if the legislature 29 approves the terms of the sale in advance of the effective date of the sale. To further the 30 important public benefits and best interests of the state that will result from the sale under the 31 memorandum of understanding, the Department of Natural Resources may transfer, assign, or
01 convey to the joint action agency permits, rights-of-way, leases, and other interests in state 02 land that comprise any part of the four dam pool hydroelectric project. 03 (b) The Alaska Industrial Development and Export Authority may issue bonds or 04 otherwise extend financing to the joint action agency to be formed by the purchasing utilities, 05 for the purposes and upon the terms set out in the memorandum of understanding. The total 06 principal amount of the bonds and other financing provided by the Alaska Industrial 07 Development and Export Authority under this subsection may not exceed $110,000,000. 08 (c) The Department of Community and Economic Development and the Alaska 09 Energy Authority may modify and amend the loan agreement and note to 10 (1) suspend the enforcement of rights and obligations, including payment 11 obligations, under the loan agreement and note; and 12 (2) fully release, extinguish, and retire the debt and all other rights and 13 obligations under the loan agreement and note, and cancel the note, upon completion of the 14 purchase and sale of the four dam pool hydroelectric project under the memorandum of 15 understanding. 16 (d) In this section, 17 (1) "Alaska Energy Authority" means the Alaska Energy Authority created in 18 AS 44.83, successor in interest to the Alaska Power Authority; 19 (2) "Alaska Power Authority" means the former Alaska Power Authority; 20 (3) "authority" means the former Alaska Power Authority; 21 (4) "Copper Valley" means Copper Valley Electric Association, Inc., a 22 cooperatively owned electric utility serving the communities of Valdez, Glennallen, and 23 environs; 24 (5) "Department of Commerce and Economic Development" means the former 25 Department of Commerce and Economic Development; 26 (6) "four dam pool hydroelectric project" means the Tyee Lake, Swan Lake, 27 Solomon Gulch, and Terror Lake hydroelectric facilities owned and administered by the 28 Alaska Energy Authority under AS 44.83.396; 29 (7) "joint action agency" means an agency formed under AS 42.45.310, enacted 30 by sec. 9 of this Act; 31 (8) "Ketchikan" means the City of Ketchikan, doing business as Ketchikan
01 Public Utilities, a municipally owned utility serving Ketchikan and environs; 02 (9) "Kodiak" means the Kodiak Electric Association, Inc., a cooperatively 03 owned electric utility serving the Kodiak Island Borough; 04 (10) "loan agreement" means the loan agreement effective October 28, 1985, 05 between the State of Alaska, Department of Commerce and Economic Development, and the 06 Alaska Power Authority regarding a loan from the power development revolving loan fund 07 to the Alaska Power Authority regarding the four dam pool hydroelectric project; 08 (11) "memorandum of understanding" means the memorandum of 09 understanding dated April 11, 2000, between the Alaska Energy Authority and Copper Valley, 10 Ketchikan, Kodiak, Petersburg, and Wrangell for the purchase and sale of the four dam pool 11 hydroelectric project and 12 (A) an amendment to that agreement consistent with the requirements 13 of (a) of this section concerning legislative approval of a subsequent sale of a 14 hydroelectric facility; and 15 (B) any amendment to that agreement that substitutes appropriations of 16 $20,000,000 from the state constitutional budget reserve fund established under art. IX, 17 sec. 17, Constitution of the State of Alaska, for appropriations from the power project 18 fund (AS 42.45.010). 19 (12) "note" means the promissory note, dated February 13, 1986, which reflects 20 the authority's obligation to pay to the Department of Commerce and Economic Development 21 related to the loan agreement; 22 (13) "Petersburg" means the City of Petersburg, doing business as Petersburg 23 Municipal Power and Light, a municipally owned electric utility serving Petersburg and 24 environs; 25 (14) "purchasing utilities" means Copper Valley, Ketchikan, Kodiak, 26 Petersburg, and Wrangell; 27 (15) "Wrangell" means the City of Wrangell, doing business as Wrangell 28 Municipal Light and Power, a municipally owned electric utility serving Wrangell and 29 environs. 30 * Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section 31 to read:
01 CONDITIONAL EFFECT. (a) Section 6 of this Act takes effect only if the 02 memorandum of understanding between the Alaska Energy Authority and the purchasing 03 utilities dated April 11, 2000, is terminated before the closing date of the sale of the four dam 04 pool hydroelectric project under that memorandum of understanding. 05 (b) The definitions contained in sec. 14(d) of this Act apply to the terms used in this 06 section. 07 * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section 08 to read: 09 CONDITIONAL EFFECT. (a) Sections 10 and 12 of this Act take effect only if the 10 Alaska Energy Authority and the joint action agency to be formed by the purchasing utilities 11 under AS 42.45.310, enacted by sec. 9 of this Act, complete the purchase and sale of the four 12 dam pool hydroelectric project as described in the memorandum of understanding dated 13 April 11, 2000. 14 (b) The definitions contained in sec. 14(d) of this Act apply to the terms used in this 15 section. 16 * Sec. 17. (a) If sec. 6 of this Act takes effect under sec. 15 of this Act, sec. 6 of this Act 17 takes effect on the date of termination of the memorandum of understanding described in 18 sec. 15 of this Act. The executive director of the Alaska Energy Authority shall certify the 19 date of termination of the memorandum of understanding to the lieutenant governor and the 20 revisor of statutes. 21 (b) The definitions contained in sec. 14(d) of this Act apply to the terms used in this 22 section. 23 * Sec. 18. (a) If secs. 10 and 12 of this Act take effect under sec. 16 of this Act, they take 24 effect on the day after the closing date of the sale of the four dam pool hydroelectric project 25 under the memorandum of understanding dated April 11, 2000. The executive director of the 26 Alaska Energy Authority shall certify the closing date of the sale to the lieutenant governor 27 and the revisor of statutes. 28 (b) The definitions contained in sec. 14(d) of this Act apply to the terms used in this 29 section. 30 * Sec. 19. Except as provided in secs. 17 and 18 of this Act, this Act takes effect July 1, 31 2000.