02/22/2006 09:00 AM Senate FINANCE

                                                                                                                                
     CS FOR HOUSE BILL NO. 243(FIN)                                                                                             
     "An Act relating to the financial plan for the intertie                                                                    
     between the Swan Lake and Tyee Lake hydroelectric projects;                                                                
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  that this  bill is sponsored  by the  Rules                                                            
Committee  by Request of  Governor Frank  Murkowski. The bill  would                                                            
provide   "Legislative   approval  to   amend   the  Memorandum   of                                                            
Understanding  (MOU)  authorizing  the  sale of  the Four  Dam  Pool                                                            
hydroelectric  project. The amendment addresses an  escrow agreement                                                            
signed by the  Four Dam Pool Agency and the Alaska  Energy Authority                                                            
(AEA)." Version 24-GH1138\X is before the Committee.                                                                            
                                                                                                                                
9:19:39 AM                                                                                                                    
                                                                                                                                
RON MILLER,  Executive  Director,  Alaska Industrial  Development  &                                                            
Export Authority/Alaska  Energy Authority,  Department of  Commerce,                                                            
Community  and Economic  Development  testified  via teleconference                                                             
from  an offnet  site.  As authorized  by Chapter  60  SLA 2000,  an                                                            
agreement and  MOU for the sale and  purchase of the AEA  owned Four                                                            
Dam Pool hydroelectric  projects to  the Four Dam Pool Power  Agency                                                            
was developed  that included establishing a Power  Cost Equalization                                                            
(PCE) endowment,  authorized Alaska Industrial Development  & Export                                                            
Authority (AIDEA) financing  of the sale, and the incorporation into                                                            
law of the MOU  dated April 11, 2000 between AEA and  the purchasing                                                            
utilities. The  April 2000 MOU and the agreement for  the sale "were                                                            
amended with  the escrow  agreement that AEA  and the Four  Dam Pool                                                            
Power Agency entered into."                                                                                                     
                                                                                                                                
Mr. Miller noted that the  sale price of $73 million was established                                                            
and  a five  million dollar  credit  was authorized  "contingent  on                                                            
certain" conditions.  One of those conditions was  that by April 11,                                                            
2005, the  Four Dam Pool  Power Agency must  have provided  to AIDEA                                                            
"an  approved  financing  plan  that  demonstrated  committed  funds                                                            
sufficient  to complete" the Swan  Lake and Tyee Lake hydroelectric                                                             
projects. The  plan also required the Four Dam Pool  Power Agency to                                                            
provide five million dollars  to the PCE endowment. Those conditions                                                            
were  not  met,  and  the  Four  Dam  Pool  Power  Agency  requested                                                            
additional  time  in  which  to  complete  the  financing  plan.  An                                                            
agreement  was subsequently  made that  provided  the Four Dam  Pool                                                            
Power Agency  additional time in which  to complete their  financing                                                            
provided  they  deposited  five million  dollars  into  an  interest                                                            
bearing escrow account.                                                                                                         
                                                                                                                                
Mr. Miller stated that  this bill would provide Legislative approval                                                            
allowing  that amendment  to apply to the  original purchasing/sale                                                             
agreement in the MOU. Were  sufficient funds to complete the project                                                            
not forthcoming,  the principal and  interest in the escrow  account                                                            
would be  deposited in the  PCE endowment  fund. Were the  financing                                                            
completed, the principal  and interest would be earmarked to provide                                                            
the final funding of the project.                                                                                               
                                                                                                                                
9:22:58 AM                                                                                                                    
                                                                                                                                
DAVID CARLSON, Chief Executive  Officer, Four Dam Pool Power Agency,                                                            
testified via  teleconference from  an offnet site and informed  the                                                            
Committee that  once the Four Dam  Pool Power Agency completes  a 57                                                            
mile  intertie   segment  linking  the  Tyee  Lake   and  Swan  Lake                                                            
hydroelectric   projects,  a  power   transmission  line   would  be                                                            
available  between Southeast  Alaska communities  from Ketchikan  to                                                            
Petersburg.  "It has  been a difficult  project".  As stated  by Mr.                                                            
Miller,  one  of the  provisions  in the  original  MOU  was that  a                                                            
financial plan  should have been presented by April  11, 2005, which                                                            
was five  years after the  original agreement  was signed.  That had                                                            
not occurred.  This  legislation would  extend that  date and  would                                                            
allow the five  million dollars provided by the Four  Dam Pool Power                                                            
Agency to be  applied toward the construction  of the Swan  Lake and                                                            
Tyee Lake  intertie. This  project "is important"  to both  the Four                                                            
Dam Pool Power Agency and Southeast Alaska.                                                                                     
                                                                                                                                
9:24:11 AM                                                                                                                    
                                                                                                                                
Senator  Bunde  moved  to  report  the  bill   from  Committee  with                                                            
individual recommendations and accompanying fiscal note.                                                                        
                                                                                                                                
There  being no  objection, SCS  CS HB  243(FIN)  was REPORTED  from                                                            
Committee with  a new zero fiscal  note dated February 1,  2006 from                                                            
the Department of Commerce, Community and Economic Development.