SCS CSHB 446(FIN) AM S: "An Act relating to utility ownership and funding; relating to sales, leases, and dispositions of certain telephone cooperative property; 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) am S 01 "An Act relating to utility ownership and funding; relating to sales, leases, and 02 dispositions of certain telephone cooperative property; establishing and relating to 03 the power cost equalization endowment fund; relating to the power cost 04 equalization and rural electric capitalization fund; relating to the Railbelt energy 05 fund; authorizing and relating to the sale of the four dam pool hydroelectric 06 project; establishing and relating to joint action agencies created to purchase 07 power projects; and providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. The uncodified law of the State of Alaska is amended by adding a new 10 section to read: 11 FINDINGS. The legislature finds that 12 (1) adequate and reliable electric service at affordable rates is a necessary 13 ingredient of a modern society and a prosperous developing economy; 14 (2) at the current stage of social and economic development in the state, direct
01 participation by the state is necessary to assist in keeping rates in high-cost service areas to 02 affordable levels; 03 (3) providing a long-term, stable financing source for power cost equalization 04 will permit and encourage the electric utility industry and its lenders to develop plans, make 05 investments, and take other actions that are necessary or prudent to provide adequate and 06 reliable electric service at affordable rates and to meet the health and safety needs of residents 07 of the state; 08 (4) revenue that was anticipated to be generated from the state-owned four dam 09 pool hydroelectric project under the existing power sales agreement and that the legislature 10 intended to provide a long-term source of financing for power cost equalization will no longer 11 be available upon the sale of the four dam pool project; 12 (5) the proposed sale under the memorandum of understanding dated April 11, 13 2000, provides the state with fair value for the four dam pool hydroelectric project, relieves 14 the state of the significant financial risks and obligations with respect to the project, and 15 provides a long-term, stable financing source for power cost equalization; and 16 (6) establishment of joint action agencies under this Act and the sale of the 17 four dam pool hydroelectric project to the joint action agency to be formed by the four dam 18 pool local public utilities ensure local control of power generation resources necessary for a 19 healthy economy and benefit the communities and their ratepayers by providing for stable 20 energy rates. 21 * Sec. 2. AS 10.25.400 is amended by adding a new subsection to read: 22 (e) The requirements of (b) of this section do not apply to the lease, sale, or 23 disposition of the property of a telephone cooperative that has annual gross revenue 24 over $25,000,000 unless a resolution passed by the board of directors of the 25 cooperative provides that the requirements of (b) of this section will apply to the lease, 26 sale, or disposition. 27 * Sec. 3. AS 37.05.520 is amended to read: 28 Sec. 37.05.520. Railbelt energy fund. There is established in the general fund 29 the Railbelt energy fund. The fund consists of money appropriated to it by the 30 legislature and interest received on money in the fund . The department of revenue 31 shall manage the fund. [INTEREST RECEIVED ON MONEY IN THE FUND SHALL
01 BE ACCOUNTED FOR SEPARATELY AND MAY BE APPROPRIATED INTO 02 THE FUND ANNUALLY.] The legislature may appropriate money from the fund for 03 programs, projects, and other expenditures to assist in meeting Railbelt energy needs, 04 including projects for retrofitting state-owned buildings and facilities for energy 05 conservation. 06 * Sec. 4. AS 42.05.431(c) is amended to read: 07 (c) Notwithstanding (b) of this section, 08 (1) a wholesale agreement for the sale of power from a project licensed 09 by the Federal Energy Regulatory Commission on or before January 1, 1987, and 10 related contracts for the wheeling, storage, regeneration, or wholesale repurchase of 11 power purchased under the agreement, entered into between the Alaska Energy 12 Authority and one or more other public utilities or among the utilities after October 31, 13 1987, and before January 1, 1988, and amendments to the wholesale agreement or 14 related contract, and the wholesale agreement or related contract assigned by the 15 Alaska Energy Authority to a joint action agency formed under AS 42.45.310 that 16 purchases the project from the Alaska Energy Authority, are not subject to review 17 or approval by the commission until all long-term debt incurred for the project is 18 retired , or, for a wholesale agreement or related contract assigned to a joint action 19 agency formed under AS 42.45.310, until all long-term debt incurred to pay the 20 purchase price to the Alaska Energy Authority is retired ; and 21 (2) a wholesale agreement or related contract described in (1) of this 22 subsection may contain a covenant for the public utility to establish, charge, and 23 collect rates sufficient to meet its obligations under the contract; the rate covenant is 24 valid and enforceable. 25 * Sec. 5. AS 42.45.040 is amended to read: 26 Sec. 42.45.040. Southeast energy fund. The Southeast energy fund is 27 established as a separate fund. The fund consists of money transferred to it under 28 former AS 42.45.050. The authority may make grants from the Southeast energy fund 29 to utilities participating in the power transmission intertie between the Swan Lake and 30 Tyee Lake hydroelectric projects for power projects, for repayment of loans, and for 31 payments on bonds.
01 * Sec. 6. AS 42.45 is amended by adding new sections to read: 02 Article 1A. Power Cost Equalization Endowment Fund. 03 Sec. 42.45.070. Power cost equalization endowment fund established. (a) 04 The power cost equalization endowment fund is established as a separate fund of the 05 authority. The fund consists of 06 (1) legislative appropriations to the fund that are not designated for 07 annual expenditure for the purpose of power cost equalization; 08 (2) accumulated earnings of the fund; 09 (3) gifts, bequests, contributions of money and other assets, and federal 10 money given to the fund that are not designated for annual expenditure for power cost 11 equalization; and 12 (4) payments received after June 30, 2001, for the sale of power made 13 to the state by the purchasing utilities under the memorandum of understanding dated 14 April 11, 2000, between the Alaska Energy Authority and the purchasing utilities. 15 (b) Nothing in this section creates a dedicated fund. 16 (c) In this section, "memorandum of understanding" means the memorandum 17 of understanding dated April 11, 2000, between the Alaska Energy Authority and the 18 purchasing utilities, consisting of Copper Valley Electric Association, Inc., City of 19 Ketchikan, Kodiak Electric Association, Inc., City of Petersburg, and City of Wrangell, 20 for the purchase and sale of the four dam pool hydroelectric project and any 21 amendment to that agreement that substitutes appropriations of $20,000,000 from the 22 state constitutional budget reserve fund established under art. IX, sec. 17, Constitution 23 of the State of Alaska, for appropriations from the power project fund (AS 42.45.010). 24 Sec. 42.45.080. Powers and duties of the commissioner of revenue. (a) The 25 commissioner of revenue is the fiduciary of the fund. In managing the fund, the 26 commissioner shall 27 (1) have the same powers and duties as are provided in AS 37.10.071; 28 and 29 (2) invest the fund in a manner likely to achieve at least a seven 30 percent nominal return over time. 31 (b) In managing the fund, the commissioner shall
01 (1) consider the status of the fund's capital and the income generated 02 on both current and probable future bases; 03 (2) determine the appropriate investment objectives; 04 (3) establish investment policies to achieve the objectives; and 05 (4) act only in regard to the best financial interests of the fund. 06 (c) On July 1 of each year, the commissioner shall determine the monthly 07 average market value of the fund for the previous three fiscal years. 08 Sec. 42.45.085. Use of the power cost equalization endowment fund. (a) 09 Seven percent of the amount determined by the commissioner of revenue on July 1 of 10 each year under AS 42.45.080(c) may be appropriated for the fiscal year beginning the 11 following July 1 for the following purposes: 12 (1) funding the power cost equalization and rural electric capitalization 13 fund (AS 42.45.100); 14 (2) reimbursement to the Department of Revenue for the costs of 15 establishing and managing the fund; and 16 (3) reimbursement of other costs of administration of the fund. 17 (b) Nothing in this section creates a dedicated fund. 18 Sec. 42.45.099. Definition. In AS 42.45.070 - 42.45.099, "fund" means the 19 power cost equalization endowment fund established in AS 42.45.070. 20 * Sec. 7. AS 42.45.070(a) is amended to read: 21 (a) The power cost equalization endowment fund is established as a separate 22 fund of the authority. The fund consists of 23 (1) legislative appropriations to the fund that are not designated for 24 annual expenditure for the purpose of power cost equalization; 25 (2) accumulated earnings of the fund; 26 (3) gifts, bequests, contributions of money and other assets, and federal 27 money given to the fund that are not designated for annual expenditure for power cost 28 equalization; and 29 (4) repayments of principal and income that would have been 30 deposited in the former four dam pool transfer fund under former AS 42.45.050 31 [PAYMENTS RECEIVED AFTER JUNE 30, 2001, FOR THE SALE OF POWER
01 MADE TO THE STATE BY THE PURCHASING UTILITIES UNDER THE 02 MEMORANDUM OF UNDERSTANDING DATED APRIL 11, 2000, BETWEEN 03 THE ALASKA ENERGY AUTHORITY AND THE PURCHASING UTILITIES]. 04 * Sec. 8. AS 42.45.100(b) is amended to read: 05 (b) The fund shall be administered by the authority as a fund distinct from the 06 other funds of the authority. The fund is composed of 07 (1) money appropriated to provide power cost equalization to eligible 08 electric utilities and to provide grants for utility improvements; 09 (2) money appropriated from the National Petroleum Reserve - Alaska 10 special revenue fund under AS 37.05.530(g); 11 (3) money appropriated from the power cost equalization 12 endowment fund (AS 42.45.070) under AS 42.45.085(a); 13 (4) gifts, bequests, [AND] contributions from other sources , and 14 federal money ; and 15 (5) [(4)] interest earned on the fund balance. 16 * Sec. 9. AS 42.45 is amended by adding a new section to read: 17 Sec. 42.45.115. Exclusion from eligibility. (a) Notwithstanding the definition 18 of "eligible electric utility" in AS 42.45.150, an electric utility whose primary source 19 of power for sale to customers is one or more of the power projects that were part of 20 the former initial project may not be considered an eligible electric utility. 21 (b) In this section, "former initial project" includes the Tyee Lake, Swan Lake, 22 Solomon Gulch, and Terror Lake hydroelectric facilities. 23 * Sec. 10. AS 42.45 is amended by adding a new section to article 5 to read: 24 Sec. 42.45.310. Acquisition of power project. (a) Two or more public 25 utilities that purchase power from a power project acquired or constructed as part of 26 the former energy program for Alaska and owned by the Alaska Energy Authority 27 under AS 44.83.396 may form a joint action agency under AS 42.45.300 and under 28 this section to purchase the power project from the Alaska Energy Authority if the 29 purchase and sale of project has first been authorized by law. 30 (b) The agency may 31 (1) acquire, own, operate, and manage one or more power projects or
01 generating or transmission facilities; and 02 (2) participate in the design, development, construction, operation, and 03 maintenance of a generating or transmission facility. 04 (c) The agency is an instrumentality of the public utilities that form the 05 agency, but has a separate and independent legal existence from the public utilities. 06 In addition to the powers authorized under AS 42.45.300, the agency has the power 07 (1) to adopt bylaws of the agency; 08 (2) to sue and be sued; 09 (3) to carry out the authorized purposes of the agency; and 10 (4) subject to (e) of this section, to issue revenue bonds and secure 11 financing that are not obligations of either the state or the public utilities that formed 12 the agency to provide financing to carry out the authorized purposes of the agency. 13 (d) The agency is created by a written agreement among the public utilities 14 forming the agency. Each public utility forming the agency shall adopt the terms of 15 the agreement by ordinance or resolution. Subject to (c) of this section, the agreement 16 establishing the agency may define the powers, functions, and activities of the agency 17 and specify the means by which they shall be performed. The agreement may 18 establish the rights and responsibilities of the public utilities that form the agency. If 19 applicable, the agreement shall provide for 20 (1) apportionment between the public utilities forming the agreement 21 of responsibility for providing finances to the expenses incurred in the performance of 22 the functions or activities; 23 (2) apportionment of fees or other revenue derived from the functions 24 or activities and the manner in which the revenue shall be accounted for; 25 (3) the transfer of personnel and the preservation of employment 26 benefits; and 27 (4) the rights of the public utilities forming the agency to terminate the 28 agreement, subject to (e) of this section, including resolving disputes if the public 29 utilities are unable, upon termination of the agreement, to agree on the transfer of 30 personnel or the division of assets and liabilities between the parties to the agreement. 31 (e) The public utilities forming the agency shall pledge and agree with the
01 holders of revenue bonds or other financing secured under this section, including with 02 a state entity that provides financing, that the public utilities and the agency will not 03 terminate the agency or take any other action that would limit or alter the rights and 04 powers vested in the agency by this section to fulfill the terms of a contract made by 05 the agency with the holders and that the public utilities and the agency will not in any 06 way impair the rights and remedies of the holders until the bonds or other financing 07 secured under this section, together with the interest on them with interest on unpaid 08 installments of interest, and all costs and expenses in connection with an action or 09 proceeding by or on behalf of the holders are fully met and discharged. The agency 10 may include this pledge and agreement of the public utilities and the agency, insofar 11 as it refers to holders of bonds of the agency, in a contract with the holders and, 12 insofar as it relates to a state entity, in a contract with the state entity. 13 (f) Only to the extent any of the public utilities forming the agency is subject 14 to the particular tax is the agency subject to state and local ad valorem, income, or 15 excise taxes that may be assessed or levied against property, assets, income, and 16 receipts of the agency or to the electric cooperative tax (AS 10.25.540 - 10.25.570). 17 (g) A loan, investment, or other financial aid provided to the agency by the 18 state or any political subdivision of the state does not constitute a violation of 19 AS 37.10.085. 20 (h) An agency formed by, and that continues to include, one or more 21 municipal public utilities is a political subdivision only for purposes of AS 38.05.810. 22 (i) In this section, 23 (1) "agency" means a joint action agency formed under this section; 24 (2) "public utility" has the meaning given the term in AS 42.05.990; 25 (3) "state entity" means a state department, authority, or other 26 administrative unit of the executive branch of state government. 27 * Sec. 11. AS 44.83.510(a) is amended to read: 28 (a) Repayment of a loan from the former power development revolving loan 29 fund must be made with the proceeds from the sale of power from projects in the 30 former energy program for Alaska. [EXCEPT AS PROVIDED IN AS 44.83.398(i), 31 THE PAYMENTS REQUIRED TO BE MADE BY THE AUTHORITY ON A LOAN
01 FROM THE FUND CONSTITUTE DEBT SERVICE FOR THE PURPOSE OF 02 CALCULATING THE WHOLESALE POWER RATE IN AS 44.83.398(b)(1).] 03 * Sec. 12. AS 42.45.050 is repealed. 04 * Sec. 13. AS 42.45.070(a)(4), 42.45.070(c), AS 44.83.398, and 44.83.525 are repealed. 05 * Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section 06 to read: 07 INTERIM DETERMINATION OF AMOUNTS AVAILABLE FOR 08 APPROPRIATION. (a) Notwithstanding AS 42.45.080(c) and 42.45.085(a), enacted by sec. 6 09 of this Act, the amount that may be appropriated from the power cost equalization endowment 10 fund (AS 42.45.070, enacted by sec. 6 of this Act) shall be determined as follows: 11 (1) for fiscal year 2002, the amount that may be appropriated from the power 12 cost equalization endowment fund (AS 42.45.070, enacted by sec. 6 of this Act) is seven 13 percent of the market value of the fund on February 1, 2001; 14 (2) for fiscal year 2003 through the first fiscal year that begins after the closing 15 date of the sale of the four dam pool hydroelectric project under the memorandum of 16 understanding, the amount that may be appropriated annually from the power cost equalization 17 endowment fund (AS 42.45.070, enacted by sec. 6 of this Act) is seven percent of the market 18 value of the fund on February 1 of the prior fiscal year; 19 (3) for subsequent fiscal years, the commissioner of revenue shall exclude the 20 time period and market value of the power cost equalization endowment fund (AS 42.45.070, 21 enacted by sec. 6 of this Act) before the closing date of the sale of the four dam pool 22 hydroelectric project in making the determination required under AS 42.45.080(c), enacted by 23 sec. 6 of this Act. 24 (b) The definitions contained in sec. 15(d) of this Act apply to the terms used in this 25 section. 26 * Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section 27 to read: 28 LEGISLATIVE AUTHORIZATION TO CONVEY. (a) Notwithstanding 29 AS 44.83.396, the joint action agency to be formed by the purchasing utilities may purchase, 30 and the Alaska Energy Authority may sell, the four dam pool hydroelectric project under the 31 memorandum of understanding, but only if the memorandum of understanding is amended to
01 include a provision consistent with this subsection that prohibits the agency from selling a four 02 dam pool hydroelectric project to any purchaser other than a purchasing utility as defined in 03 this section and that limits the ability of the purchasing utility to subsequently sell the four 04 dam pool hydroelectric project. A purchasing utility that has purchased a four dam pool 05 hydroelectric project may only sell the project to a subsequent purchaser if the legislature 06 approves the terms of the sale in advance of the effective date of the sale. To further the 07 important public benefits and best interests of the state that will result from the sale under the 08 memorandum of understanding, the Department of Natural Resources may transfer, assign, or 09 convey to the joint action agency permits, rights-of-way, leases, and other interests in state 10 land that comprise any part of the four dam pool hydroelectric project. 11 (b) The Alaska Industrial Development and Export Authority may issue bonds or 12 otherwise extend financing to the joint action agency to be formed by the purchasing utilities, 13 for the purposes and upon the terms set out in the memorandum of understanding. The total 14 principal amount of the bonds and other financing provided by the Alaska Industrial 15 Development and Export Authority under this subsection may not exceed $110,000,000. 16 (c) The Department of Community and Economic Development and the Alaska 17 Energy Authority may modify and amend the loan agreement and note to 18 (1) suspend the enforcement of rights and obligations, including payment 19 obligations, under the loan agreement and note; and 20 (2) fully release, extinguish, and retire the debt and all other rights and 21 obligations under the loan agreement and note, and cancel the note, upon completion of the 22 purchase and sale of the four dam pool hydroelectric project under the memorandum of 23 understanding. 24 (d) In this section, 25 (1) "Alaska Energy Authority" means the Alaska Energy Authority created in 26 AS 44.83, successor in interest to the Alaska Power Authority; 27 (2) "Alaska Power Authority" means the former Alaska Power Authority; 28 (3) "authority" means the former Alaska Power Authority; 29 (4) "Copper Valley" means Copper Valley Electric Association, Inc., a 30 cooperatively owned electric utility serving the communities of Valdez, Glennallen, and 31 environs;
01 (5) "Department of Commerce and Economic Development" means the former 02 Department of Commerce and Economic Development; 03 (6) "four dam pool hydroelectric project" means the Tyee Lake, Swan Lake, 04 Solomon Gulch, and Terror Lake hydroelectric facilities owned and administered by the 05 Alaska Energy Authority under AS 44.83.396; 06 (7) "joint action agency" means an agency formed under AS 42.45.310, enacted 07 by sec. 10 of this Act; 08 (8) "Ketchikan" means the City of Ketchikan, doing business as Ketchikan 09 Public Utilities, a municipally owned utility serving Ketchikan and environs; 10 (9) "Kodiak" means the Kodiak Electric Association, Inc., a cooperatively 11 owned electric utility serving the Kodiak Island Borough; 12 (10) "loan agreement" means the loan agreement effective October 28, 1985, 13 between the State of Alaska, Department of Commerce and Economic Development, and the 14 Alaska Power Authority regarding a loan from the power development revolving loan fund 15 to the Alaska Power Authority regarding the four dam pool hydroelectric project; 16 (11) "memorandum of understanding" means the memorandum of 17 understanding dated April 11, 2000, between the Alaska Energy Authority and Copper Valley, 18 Ketchikan, Kodiak, Petersburg, and Wrangell for the purchase and sale of the four dam pool 19 hydroelectric project and 20 (A) an amendment to that agreement consistent with the requirements 21 of (a) of this section concerning legislative approval of a subsequent sale of a 22 hydroelectric facility; and 23 (B) any amendment to that agreement that substitutes appropriations of 24 $20,000,000 from the state constitutional budget reserve fund established under art. IX, 25 sec. 17, Constitution of the State of Alaska, for appropriations from the power project 26 fund (AS 42.45.010). 27 (12) "note" means the promissory note, dated February 13, 1986, which reflects 28 the authority's obligation to pay to the Department of Commerce and Economic Development 29 related to the loan agreement; 30 (13) "Petersburg" means the City of Petersburg, doing business as Petersburg 31 Municipal Power and Light, a municipally owned electric utility serving Petersburg and
01 environs; 02 (14) "purchasing utilities" means Copper Valley, Ketchikan, Kodiak, 03 Petersburg, and Wrangell; 04 (15) "Wrangell" means the City of Wrangell, doing business as Wrangell 05 Municipal Light and Power, a municipally owned electric utility serving Wrangell and 06 environs. 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) Section 7 of this Act takes effect only if the 10 memorandum of understanding between the Alaska Energy Authority and the purchasing 11 utilities dated April 11, 2000, is terminated before the closing date of the sale of the four dam 12 pool hydroelectric project under that memorandum of understanding. 13 (b) The definitions contained in sec. 15(d) of this Act apply to the terms used in this 14 section. 15 * Sec. 17. The uncodified law of the State of Alaska is amended by adding a new section 16 to read: 17 CONDITIONAL EFFECT. (a) Sections 11 and 13 of this Act take effect only if the 18 Alaska Energy Authority and the joint action agency to be formed by the purchasing utilities 19 under AS 42.45.310, enacted by sec. 10 of this Act, complete the purchase and sale of the four 20 dam pool hydroelectric project as described in the memorandum of understanding dated 21 April 11, 2000. 22 (b) The definitions contained in sec. 15(d) of this Act apply to the terms used in this 23 section. 24 * Sec. 18. Section 2 of this Act takes effect immediately under AS 01.10.070(c). 25 * Sec. 19. (a) If sec. 7 of this Act takes effect under sec. 16 of this Act, sec. 7 of this Act 26 takes effect on the date of termination of the memorandum of understanding described in 27 sec. 16 of this Act. The executive director of the Alaska Energy Authority shall certify the 28 date of termination of the memorandum of understanding to the lieutenant governor and the 29 revisor of statutes. 30 (b) The definitions contained in sec. 15(d) of this Act apply to the terms used in this 31 section.
01 * Sec. 20. (a) If secs. 11 and 13 of this Act take effect under sec. 17 of this Act, they take 02 effect on the day after the closing date of the sale of the four dam pool hydroelectric project 03 under the memorandum of understanding dated April 11, 2000. The executive director of the 04 Alaska Energy Authority shall certify the closing date of the sale to the lieutenant governor 05 and the revisor of statutes. 06 (b) The definitions contained in sec. 15(d) of this Act apply to the terms used in this 07 section. 08 * Sec. 21. Except as provided in secs. 18 - 20 of this Act, this Act takes effect July 1, 09 2000.