CSSSSB 181(CRA): "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."
00CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 181(CRA) 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 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 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 26 31, 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 42.45.040 is amended to read: 08 Sec. 42.45.040. Southeast energy fund. The Southeast energy fund is 09 established as a separate fund. The fund consists of money transferred to it under 10 former AS 42.45.050. The authority may make grants from the Southeast energy fund 11 to utilities participating in the power transmission intertie between the Swan Lake and 12 Tyee Lake hydroelectric projects for power projects, for repayment of loans, and for 13 payments on bonds. 14 * Sec. 4. AS 42.45 is amended by adding new sections to read: 15 Article 1A. Power Cost Equalization Endowment Fund. 16 Sec. 42.45.070. Power cost equalization endowment fund established. (a) 17 The power cost equalization endowment fund is established as a separate fund of the 18 authority. The fund consists of 19 (1) the endowment account; and 20 (2) the equalization account. 21 (b) The endowment account is established as a separate account of the fund 22 in the authority. The endowment account of the fund consists of 23 (1) legislative appropriations to the fund that are not designated for 24 expenditure for the purpose of power cost equalization; 25 (2) accumulated earnings of the fund; 26 (3) gifts, bequests, and contributions of money and other assets given 27 to the fund that are not designated for the equalization account; and 28 (4) payments received after June 30, 2001, for the sale of power made 29 to the state by the purchasing utilities under the memorandum of understanding dated 30 April 11, 2000, between the Alaska Energy Authority and the purchasing utilities. 31 (c) The equalization account is established as a separate account of the fund
01 in the authority. The equalization account of the fund consists of 02 (1) the annual transfer to the equalization account from the endowment 03 account provided for in (d) of this section; 04 (2) legislative appropriations to the fund that are designated for 05 expenditure for the purpose of power cost equalization; and 06 (3) gifts, bequests, and contributions of money and other assets given 07 to the fund that are designated for the equalization account. 08 (d) On February 1 of each year, the commissioner of revenue shall transfer to 09 the equalization account seven percent of the market value of the endowment account 10 as of that date. 11 (e) Nothing in this section creates a dedicated fund. 12 Sec. 42.45.080. Powers and duties of the commissioner of revenue. (a) The 13 commissioner of revenue is the fiduciary of the fund. In managing the fund, the 14 commissioner shall 15 (1) have the same powers and duties as are provided in AS 37.10.071; 16 and 17 (2) invest the endowment account of the fund in a manner likely to 18 achieve at least a seven percent nominal return over time. 19 (b) In managing the fund, the commissioner shall 20 (1) consider the status of the fund's capital and the income generated 21 on both current and probable future bases; 22 (2) determine the appropriate investment objectives; 23 (3) establish investment policies to achieve the objectives; and 24 (4) act only in regard to the best financial interests of the fund. 25 Sec. 42.45.085. Use of the equalization account of the fund. (a) Money in 26 the equalization account of the fund may be appropriated for the following purposes: 27 (1) funding the power cost equalization and rural electric capitalization 28 fund (AS 42.45.100); 29 (2) reimbursement to the Department of Revenue for the costs of 30 establishing and managing the fund; and 31 (3) reimbursement of other costs of administration of the fund.
01 (b) The balance remaining in the equalization account that, at the end of the 02 fiscal year, has not been appropriated or that has been appropriated but not expended 03 shall be invested until appropriated or expended. 04 Sec. 42.45.099. Definitions. In AS 42.45.070 - 42.45.099, 05 (1) "endowment account" means the account established in 06 AS 42.45.070(b); 07 (2) "equalization account" means the account established in 08 AS 42.45.070(c); 09 (3) "fund" means the power cost equalization endowment fund 10 established in AS 42.45.070. 11 * Sec. 5. AS 42.45.070(b) is amended to read: 12 (b) The endowment account is established as a separate account of the fund 13 in the authority. The endowment account of the fund consists of 14 (1) legislative appropriations to the fund that are not designated for 15 expenditure for the purpose of power cost equalization; 16 (2) accumulated earnings of the fund; 17 (3) gifts, bequests, and contributions of money and other assets given 18 to the fund that are not designated for the equalization account; and 19 (4) repayments of principal and income that would have been 20 deposited in the former four dam pool transfer fund under former AS 42.45.050 21 [PAYMENTS RECEIVED AFTER JUNE 30, 2001, FOR THE SALE OF POWER 22 MADE TO THE STATE BY THE PURCHASING UTILITIES UNDER THE 23 MEMORANDUM OF UNDERSTANDING DATED APRIL 11, 2000, BETWEEN 24 THE ALASKA ENERGY AUTHORITY AND THE PURCHASING UTILITIES]. 25 * Sec. 6. AS 42.45.100(b) is amended to read: 26 (b) The fund shall be administered by the authority as a fund distinct from the 27 other funds of the authority. The fund is composed of 28 (1) money appropriated to provide power cost equalization to eligible 29 electric utilities and to provide grants for utility improvements; 30 (2) money appropriated from the National Petroleum Reserve - Alaska 31 special revenue fund under AS 37.05.530(g);
01 (3) money appropriated from the equalization account 02 (AS 42.45.070(c)) of the power cost equalization endowment fund 03 (AS 42.45.070(a)) under AS 42.45.085(a); 04 (4) gifts, bequests, and contributions from other sources; and 05 (5) [(4)] interest earned on the fund balance. 06 * Sec. 7. AS 42.45.100 is amended by adding a new subsection to read: 07 (d) If the amount available to the fund under (b) of this section is less than 08 $15,700,000 for a fiscal year, subject to appropriation, an amount necessary to cover 09 the shortfall shall be deposited into the fund from the dividend made available under 10 AS 44.88.088 by the board of directors of the Alaska Industrial Development and 11 Export Authority. 12 * Sec. 8. AS 42.45.100(d) is amended to read: 13 (d) If the amount available to the fund under (b) of this section is less than 14 $15,700,000 for a fiscal year, subject to appropriation, an amount necessary to cover 15 the shortfall , up to the sum of $9,000,000 for the fiscal year, shall be deposited into 16 the fund from the dividend made available under AS 44.88.088 by the board of 17 directors of the Alaska Industrial Development and Export Authority. 18 * Sec. 9. AS 42.45 is amended by adding a new section to article 5 to read: 19 Sec. 42.45.310. Acquisition of power project. (a) Two or more public 20 utilities that purchase power from a power project acquired or constructed as part of 21 the former energy program for Alaska and owned by the Alaska Energy Authority 22 under AS 44.83.396 may form a joint action agency under AS 42.45.300 and under 23 this section to purchase the power project from the Alaska Energy Authority if the 24 purchase and sale of project has first been authorized by law. 25 (b) The agency may 26 (1) acquire, own, operate, and manage one or more power projects; and 27 (2) participate in the design, development, construction, operation, and 28 maintenance of a generating or transmission facility. 29 (c) The agency is an instrumentality of the public utilities that form the 30 agency, but has a separate and independent legal existence from the public utilities. 31 In addition to the powers authorized under AS 42.45.300, the agency has the power
01 (1) to adopt bylaws of the agency; 02 (2) to sue and be sued; 03 (3) to carry out the authorized purposes of the agency; and 04 (4) subject to (e) of this section, to issue revenue bonds and secure 05 financing that are not obligations of either the state or the public utilities that formed 06 the agency to provide financing to carry out the authorized purposes of the agency. 07 (d) The agency is created by a written agreement among the public utilities 08 forming the agency. Each public utility forming the agency shall adopt the terms of 09 the agreement by ordinance or resolution. Subject to (c) of this section, the agreement 10 establishing the agency may define the powers, functions, and activities of the agency 11 and specify the means by which they shall be performed. The agreement may 12 establish the rights and responsibilities of the public utilities that form the agency. If 13 applicable, the agreement shall provide for 14 (1) apportionment between the public utilities forming the agreement 15 of responsibility for providing finances to the expenses incurred in the performance of 16 the functions or activities; 17 (2) apportionment of fees or other revenue derived from the functions 18 or activities and the manner in which the revenue shall be accounted for; 19 (3) the transfer of personnel and the preservation of employment 20 benefits; and 21 (4) the rights of the public utilities forming the agency to terminate the 22 agreement, subject to (e) of this section, including resolving disputes if the public 23 utilities are unable, upon termination of the agreement, to agree on the transfer of 24 personnel or the division of assets and liabilities between the parties to the agreement. 25 (e) The public utilities forming the agency shall pledge and agree with the 26 holders of revenue bonds or other financing secured under this section, including with 27 a state entity that provides financing, that the public utilities and the agency will not 28 terminate the agency or take any other action that would limit or alter the rights and 29 powers vested in the agency by this section to fulfill the terms of a contract made by 30 the agency with the holders and that the public utilities and the agency will not in any 31 way impair the rights and remedies of the holders until the bonds, together with the
01 interest on them with interest on unpaid installments of interest, and all costs and 02 expenses in connection with an action or proceeding by or on behalf of the holders are 03 fully met and discharged. The agency may include this pledge and agreement of the 04 public utilities and the agency, insofar as it refers to holders of bonds of the agency, 05 in a contract with the holders and, insofar as it relates to a state entity, in a contract 06 with the state entity. 07 (f) Only to the extent any of the public utilities forming the agency is subject 08 to the particular tax is the agency subject to state and local ad valorem, income, or 09 excise taxes that may be assessed or levied against property, assets, income, and 10 receipts of the agency or to the electric cooperative tax (AS 10.25.540 - 10.25.570). 11 (g) A loan, investment, or other financial aid provided to the agency by the 12 state or any political subdivision of the state does not constitute a violation of 13 AS 37.10.085. 14 (h) 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 44.83.525 is amended to read: 27 Sec. 44.83.525. Rate reopeners. A power sales agreement for the sale of 28 power from the initial project [, AS DESCRIBED IN AS 44.83.398(a),] financed with 29 a loan under AS 44.83.510 may include among its provisions an agreed schedule of 30 wholesale power rates [NOTWITHSTANDING THE PROVISIONS OF AS 44.83.398], 31 but must include a provision for a rate reopener at least every 15 years. For purposes
01 of this section, Tyee Lake, Swan Lake, Solomon Gulch, and Terror Lake 02 hydroelectric facilities are considered to be one power project, and this power 03 project is referred to as the initial project. 04 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 LEGISLATIVE AUTHORIZATION TO CONVEY. (a) Notwithstanding 07 AS 44.83.396, the joint action agency to be formed by the purchasing utilities may purchase, 08 and the Alaska Energy Authority may sell, the four dam pool hydroelectric project under the 09 memorandum of understanding. 10 (b) The Alaska Industrial Development and Export Authority may issue bonds or 11 otherwise extend financing to the joint action agency to be formed by the purchasing utilities, 12 for the purposes and upon the terms set out in the memorandum of understanding. The total 13 principal amount of the bonds and other financing provided by the Alaska Industrial 14 Development and Export Authority under this subsection may not exceed $110,000,000. 15 (c) The Department of Community and Economic Development and the Alaska 16 Energy Authority may modify and amend the loan agreement and note to 17 (1) suspend the enforcement of rights and obligations, including payment 18 obligations, under the loan agreement and note; and 19 (2) fully release, extinguish, and retire the debt and all other rights and 20 obligations under the loan agreement and note upon completion of the purchase and sale of 21 the four dam pool hydroelectric project under the memorandum of understanding. 22 (d) In this section, 23 (1) "Alaska Energy Authority" means the Alaska Energy Authority created in 24 AS 44.83, successor in interest to the Alaska Power Authority; 25 (2) "Alaska Power Authority" means the former Alaska Power Authority; 26 (3) "authority" means the former Alaska Power Authority; 27 (4) "Copper Valley" means Copper Valley Electric Association, Inc., a 28 cooperatively owned electric utility serving the communities of Valdez, Glennallen, and 29 environs; 30 (5) "Department of Commerce and Economic Development" means the former 31 Department of Commerce and Economic Development;
01 (6) "four dam pool hydroelectric project" means the Tyee Lake, Swan Lake, 02 Solomon Gulch, and Terror Lake hydroelectric facilities owned and administered by the 03 Alaska Energy Authority under AS 44.83.396; 04 (7) "joint action agency" means an agency formed under AS 42.45.310, enacted 05 by sec. 9 of this Act; 06 (8) "Ketchikan" means the City of Ketchikan, doing business as Ketchikan 07 Public Utilities, a municipally owned utility serving Ketchikan and environs; 08 (9) "Kodiak" means the Kodiak Electric Association, Inc., a cooperatively 09 owned electric utility serving the Kodiak Island Borough; 10 (10) "loan agreement" means the loan agreement effective October 28, 1985, 11 between the State of Alaska, Department of Commerce and Economic Development, and the 12 Alaska Power Authority regarding a loan from the power development revolving loan fund 13 to the Alaska Power Authority regarding the four dam pool hydroelectric project; 14 (11) "memorandum of understanding" means the memorandum of 15 understanding dated April 11, 2000, between the Alaska Energy Authority and Copper Valley, 16 Ketchikan, Kodiak, Petersburg, and Wrangell for the purchase and sale of the four dam pool 17 hydroelectric project; 18 (12) "note" means the promissory note, dated February 13, 1986, which reflects 19 the authority's obligation to pay to the Department of Commerce and Economic Development 20 related to the loan agreement; 21 (13) "Petersburg" means the City of Petersburg, doing business as Petersburg 22 Municipal Power and Light, a municipally owned electric utility serving Petersburg and 23 environs; 24 (14) "purchasing utilities" means Copper Valley, Ketchikan, Kodiak, 25 Petersburg, and Wrangell; 26 (15) "Wrangell" means the City of Wrangell Light Department, a municipally 27 owned electric utility serving Wrangell and environs. 28 * Sec. 13. AS 42.45.050 is repealed. 29 * Sec. 14. AS 42.45.070(b)(4) and AS 44.83.398 are repealed. 30 * Sec. 15. (a) Section 5 of this Act takes effect only if the memorandum of understanding 31 between the Alaska Energy Authority and the purchasing utilities dated April 11, 2000, is
01 terminated before the closing date of the sale of the four dam pool hydroelectric project under 02 that memorandum of understanding. 03 (b) If sec. 5 of this Act takes effect under (a) of this section, sec. 5 of this Act takes 04 effect on the date of termination of the memorandum of understanding described in (a) of this 05 section. The executive director of the Alaska Energy Authority shall certify the date of 06 termination of the memorandum of understanding to the lieutenant governor and the revisor 07 of statutes. 08 * Sec. 16. (a) Sections 10, 11, and 14 of this Act take effect only if the Alaska Energy 09 Authority and the joint action agency to be formed by the purchasing utilities under 10 AS 42.45.310, enacted by sec. 9 of this Act, complete the purchase and sale of the four dam 11 pool hydroelectric project as described in the memorandum of understanding dated April 11, 12 2000. 13 (b) If secs. 10, 11, and 14 of this Act take effect under (a) of this section, they take 14 effect on the day after the closing date of the sale of the four dam pool hydroelectric project 15 under the memorandum of understanding dated April 11, 2000. The executive director of the 16 Alaska Energy Authority shall certify the closing date of the sale to the lieutenant governor 17 and the revisor of statutes. 18 * Sec. 17. Section 8 of this Act takes effect July 1, 2002. 19 * Sec. 18. Section 13 of this Act takes effect July 2, 2000. 20 * Sec. 19. Except as provided in secs. 15 - 18 of this Act, this Act takes effect July 1, 21 2000.