GRANT ADMINISTRATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into this 30th day
of August, 1994, by and between the ALASKA INDUSTRIAL DEVELOPMENT & EXPORT
AUTHORITY ("AIDEA") GOLDEN VALLEY ELECTRIC ASSOCIATION, INC. ("GVEA"), FAIRBANKS
MUNICIPAL UTILITIES SYSTEM ("FMUS"), ANCHORAGE MUNICIPAL LIGHT AND POWER
("ML&P"), CHUGACH ELECTRIC ASSOCIATION, INC. ("CEA"), ALASKA ELECTRIC GENERATION
AND TRANSMISSION COOPERATIVE, INC. ("AEG&T") on behalf of its members (Matanuska
Electric Association, Inc. and Homer Electric Association, Inc.), and the CITY
OF SEWARD ("Seward") (ML&P, CEA, AEG&T and Seward hereinafter collectively
referred to as the "Southern Participating Utilities"; GVEA and FMUS hereinafter
collectively referred to as the "Northern Participating Utilities"; the Southern
Participating Utilities and the Northern Participating Utilities hereinafter
collectively referred to as the "Participating Utilities").
RECITALS
WHEREAS, pursuant to Section 1 ch. 19, SLA 1993, the Legislature
appropriated $43,200,000 to the Department of Administration ("DOA") for payment
as a grant under AS 37.05.316 to GVEA for the purpose of constructing a power
transmission intertie between Healy and Fairbanks ("Healy-Fairbanks Intertie")
to benefit all utilities participating in the intertie; and
WHEREAS, pursuant to Section 2 of ch. 3.9, SLA 1993 (Sections 1 and 2
of ch.19, SLA 1993 hereinafter referred to as the "Intertie Appropriation"), the
Legislature appropriated $46,800,000 to DOA for payment as a grant under AS
37.05.316 to CEA for the purpose of constructing a power transmission intertie
between Anchorage and the Kenai Peninsula ("Anchorage-Kenai Intertie") to
benefit all utilities participating in the intertie (the two intertie
appropriations are hereinafter collectively referred to as the "Intertie
Grants"); and
WHEREAS, pursuant to Section 1(b) and (C) and Section 2(b) and (c) of
the Intertie Appropriation, DOA, AIDEA, and the Participating Utilities were to
enter into a written agreement satisfying certain statutory conditions precedent
to DOA's transfer of the Intertie Grants; and
WHEREAS, in order to satisfy such requirement, DOA, AIDEA, and the
Participating Utilities have entered into an Intertie Grant Agreement (the
"Intertie Grant Agreement"), which among other things, provides that the
Intertie Grants are to be transferred to AIDEA for the benefit of the
Participating Utilities, and that certain conditions are to be met prior to
AIDEA releasing any of the grant funds to the Participating Utilities; and
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WHEREAS, also as part of the Intertie Grant Agreement, the
Participating Utilities have agreed to form an Intertie Participants Group
("IPG") to, among other things, oversee the construction of the interties and
address grant expenditure matters; and
WHEREAS, pursuant to the Intertie Grant Agreement, DOA and AIDEA have
entered into a Grant Transfer and Delegation Agreement ("Grant Transfer
Agreement") whereby the Intertie Grants were transferred to AIDEA to act as
custodian and administrator of the Intertie Grants; and
WHEREAS, Section 7 of the Intertie Grant Agreement requires that AIDEA
and the Participating Utilities enter into a Grant Administration Agreement
which shall set forth the terms and conditions to be satisfied by the
Participating Utilities in order for there to be a disbursement of the Intertie
Grants, and which shall also provide for AIDEA's obligations with respect to the
Intertie Grants.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals above (which are
hereby incorporated into and shall be deemed part of this Agreement), and of the
covenants and agreements hereinafter set forth, it is agreed by and between the
parties hereto as follows:
Section 1. Custodian and Administrator. The parties acknowledge that
pursuant to the Grant Transfer Agreement, DOA has delegated all its powers arid
duties with respect to the administration of the Intertie Grants to AIDEA and
that the Intertie Grants have been transferred from DOA to AIDEA for the benefit
of the Participating Utilities. The Participating Utilities have requested that
AIDEA serve as custodian and administrator of the Intertie Grants. AIDEA hereby
accepts such appointment and agrees to act as custodian and administrator of the
Intertie Grants for the benefit of the Participating Utilities, subject to the
terms and conditions of, and authority and powers granted by, this Agreement and
applicable law, including but not limited to those statutes and regulations
applicable to the administration of grants to named recipients under AS
37.05.316 by the DOA..
Section 2. Custody/Investment of Grant Funds.
2.01. Appropriation Accounts. AIDEA shall establish two appropriation
accounts to account for and to disburse the Intertie Grants. One account shall
be designated the "Healy-Fairbanks Intertie Account" which shall be comprised of
the $43,200,000 appropriation made by Section 1 of the Intertie Appropriation
and all interest arid other income to be earned thereon. The other account shall
be designated the "Anchorage-Kenai Intertie Account" which shall be comprised of
the $46,800,000 appropriation made by Section 2 of the Intertie Appropriation
and all interest and other income to be earned thereon (the monies collectively
comprising the Healy-Fairbanks Intertie Account and the Anchorage-Kenai Intertie
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Account hereinafter referred to as the "Intertie Funds"). AIDEA shall have the
authority to create and designate subaccounts for these two accounts as it deems
necessary from time to time.
2.02. Institutional Custodian. In order to carry out its custodial
duties under this Agreement, AIDEA may designate and hire one or more
institutional trustees to act as custodian for all or any portion of the
Intertie Funds and any securities which such funds may be invested in. Such
institutional custodian shall hold the Intertie Funds and any securities subject
to the terms and conditions of this Agreement and applicable law. AIDEA shall
ensure that any institutional custodian provide the appropriate procedures to
separately account for the monies, and interest and other income earned thereon,
in each of the intertie accounts established pursuant to Section 2.01.
2.03. Investment of Intertie Funds.
(a) Generally. AIDEA shall develop and implement an investment
strategy (the "Investment Strategy") in cooperation with GVEA and CEA for the
investment of the Intertie Funds. In developing the Investment Strategy, AIDEA
may also consult with and hire the services of professional investment advisers.
AIDEA is hereby authorized, on behalf of the Participating Utilities, to make,
execute, acknowledge and deliver any and all documents or instruments that may
be necessary or appropriate, to exercise all other rights and powers, and to
take all appropriate actions which it deems necessary, to implement the
Investment Strategy.
(b) Limitations. The Investment Strategy shall be consistent
with the principles set out in AS 37.10.071. Investment of the Intertie Funds
shall be limited to United States Treasury debt obligations, or obligations
insured by or guaranteed by the United States or agencies or instrumentalities
of the United States. The Investment Strategy shall take into consideration the
cash flow needs of the Participating Utilities. The IPG shall submit to AIDEA a
schedule for the use of grant funds, and any amendments or changes thereto as
necessary from time to time, to assist AIDEA in developing the Investment
Strategy.
(c) Institutional Investor. In order to implement the
Investment Strategy, AIDEA may designate and hire either the institutional
custodian hired pursuant to Section 2.02 or another institutional entity to
invest the Intertie Funds pursuant to the Investment Strategy, the terms and
conditions of this Agreement and applicable law. AIDEA shall provide the
necessary direction to provide for the investment of the Intertie Funds.
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Section 3. Use of Intertie Funds.
3.01. Healy-Fairbanks Intertie Account. Monies in the Healy-Fairbanks
Intertie Account and any designated subaccounts of such account shall only be
used for the following purposes:
(a) all costs reasonably related to the design, permitting,
and construction of the Healy-Fairbanks Intertie;
(b) to pay the costs associated with any institutional
custodian and/or investor hired pursuant to Sections 2.02 and 2.03(c); and
(c) to pay the costs associated with any professional
investment adviser hired pursuant to Section 2.03(a).
3.02. Anchorage-Kenai Intertie Account. Monies in the Anchorage-Kenai
Intertie Account and any designated subaccounts of such account shall only be
used for the following purposes:
(a) all costs reasonably related to the design, permitting,
arid construction of the Anchorage-Kenai Intertie;
(b) to pay the costs associated with any institutional
custodian and/or investor hired pursuant to Sections 2.02 and 2.03(c); and
(c) to pay the costs associated with any professional
investment adviser hired pursuant to Section 2.03(a).
3.03. Unexpended Funds.
(a) Project Completion. Any monies remaining in either the
Healy-Fairbanks Intertie Account or the Anchorage-Kenai Intertie Account at the
completion of the respective intertie project and payment of all outstanding
obligations for the applicable project shall be returned to DOA and deposited in
the State General Fund.
(b) No Construction of Project. As required by Section 7 of
the Intertie Grant Agreement, in the event the IPG notifies AIDEA that one or
both of the intertie projects will not be constructed, the monies in the account
associated with the respective intertie, after the payment of all outstanding
obligations, shall be returned to DOA and deposited in the State General Fund.
(c) Unreasonable Delay of Projects. As required by Section
2.4(b) of the Grant Transfer Agreement, in the event that AIDEA determines, in
its reasonable discretion, that development of either intertie project is
unreasonably delayed by the affected Participating Utilities, the unobligated
and unexpended monies in the account associated with the respective intertie
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shall be returned to DOA and deposited in the State General Fund. AIDEA shall
give fifteen (15) days prior notice of such decision to the affected
Participating Utilities.
Section 4. Disbursement of Intertie Funds. Except for the payments of
costs incurred by the Authority under Sections 3.01(b), 3.01(c), 3.02(b), and
3.02(c), any disbursement, release, encumbrance, assignment or pledge
(hereinafter collectively referred to as "disbursement" for purposes of this
Section 4) of the Intertie Funds from the intertie accounts shall be subject to
the procedures, conditions precedent, and limitations/ceilings set forth in this
Section 4.
4.01. Conditions Precedent. The disbursement of Intertie Funds for the
purposes described in Section 3.01(a) and 3.02(a) is not permitted until the
following conditions precedent have been satisfied by the Participating
Utilities:
(a) the Participating Utilities have entered into and executed
a Participation Agreement, in a form satisfactory to AIDEA, as required by and
in accordance with the Intertie Grant Agreement and Section 2.4(c) of the Grant
Transfer Agreement, and transmitted a copy of the signed and executed agreement
to AIDEA; and
(b) the Participating Utilities have determined and agreed
upon which contractual obligations related to the Intertie Grants and Intertie
Funds must be submitted to the Alaska Public Utilities Commission for its review
and approval, and provided written notice to AIDEA of such determination and
agreement.
4.02. Disbursement Schedules. Any disbursement of the Intertie Funds
shall be subject to the limits and ceilings set forth in this Section 4.02.
(a) Project Phases Ceilings. The Schedule A, which is attached
to and hereby incorporated into this Agreement, and has been approved by AIDEA
and the IPG, sets forth certain dollar ceilings for the initial phase of
development for each of the intertie projects. The IPG shall submit to the
Authority, for the Authority's review and approval, a proposed budget for
subsequent phases of development. No disbursement of Intertie Funds for each of
the respective interties which exceeds the established ceilings set forth in
Schedule A shall be permitted. The parties agree that the IPG is authorized to
request amendments to Schedule A, subject to AIDEA's approval, to provide for
upward adjustment only of the ceilings set for the project phases. The IPG shall
submit any requests for amendments to Schedule A to AIDEA in writing. The
submittal shall include appropriate findings and an explanation as to why the
existing ceiling is not sufficient. AIDEA agrees to consider any request for
amendment within fifteen (15) days of the receipt of such request. No amendment
shall be effective until approved by AIDEA.
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(b) Limitation on Phase II Expenditures. Except as may be
approved by the Authority, grant funds will not be applied to reimburse costs
incurred for Phase II activities, as described in Schedule A, until (a) the
Participating utilities have demonstrated, to the satisfaction of AIDEA, the
ability to raise all additional amounts needed to complete construction of the
intertie(s), and (b) final approval, not subject to further judicial appeal, of
matters submitted to the Alaska Public Utilities Commission related to the
financing or use of the intertie(s).
4.03. Disbursement Procedures. Subject to the conditions, imitations,
and ceilings set forth in Sections 4.01 and 4.02, and the terms and conditions
of this Agreement, disbursement of the Intertie Funds shall be subject to the
following procedures:
(a) All invoices shall be initially submitted to the IPG for
its review and approval.
(b) After IPG review and approval, the IPG shall submit, on a
monthly basis all approved invoices to AIDEA for payment. Each invoice shall be
referenced to a particular intertie project and a specific phase for that
project to allow AIDEA to properly charge the invoice against the appropriate
project and to determine if payment is authorized pursuant to the Intertie
Appropriation or the disbursement schedules set forth in Section 4.02. AIDEA may
request further documentation or explanation with respect to any invoice and is
authorized to withhold payment until documentation, acceptable to AIDEA, is
submitted.
(c) If payment of an invoice is authorized in accordance with
(b), AIDEA shall pay such invoice within fifteen (15) days of receipt of the
invoice.
Section 5. Audit Requirements.
5.01. General. The parties acknowledge that the audit requirements of 2 AAC
45.010 apply to the Intertie Grants, Intertie Funds, and the use of such monies
for the purposes set forth in this Agreement. The Participating Utilities,
through the IPG, agree to have performed annual audits as required by 2 AAC
45.010 on the departments, agencies, or establishments of that entity which
actually received, spent, or otherwise administered the grant funds, and to
submit to the state coordinating agency, as such term is defined in 2 AAC
45.010(o)(4), separate audit reports, as required by and in accordance with 2
AAC 45.010, on an annual basis, for both the Healy-Fairbanks Intertie project
and the Anchorage-Kenai Intertie project. Each audit and the resulting audit
report shall cover the preceding calendar year, and the audit report shall be
submitted no later than April 15 of each year, beginning on April 15, 1995. A
copy of each audit report shall be transmitted to AIDEA at the same time each
audit report is transmitted to the state coordinating agency. The Participating
Utilities shall also submit copies to the state coordinating agency to the
extent required by 2 AAC 45.010(h).
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5.02. Audit Standards and Report Contents. The audits required by
Section 5.01 shall be conducted by an independent auditor in accordance with the
audit standards set forth in 2 AAC 45.010 (c). The audit reports shall address
at a minimum the items set forth in 2 AAC 45. 010 (d) through (g).
5.03. Additional Requirements. The audits and audit reports required by
this Section 5 shall comply fully with all requirements imposed by 2 AAC 45.010,
and any amendments or modifications thereto, regardless of whether such
requirements are specifically set forth in this Agreement. In addition, the
Participating Utilities shall ensure that the requirements of 2 AAC 45.010(j)
are satisfied by any applicable third party recipients.
5.04. Books and Records. In addition to complying with the audit
requirements of Sections 5.01-5.03, the Participating Utilities and the IPC
shall permit AIDEA to have reasonable access upon request to all books and
records (except those protected by law or court rule, such as attorney-client or
work product privilege) related to the (a) design, permitting and construction
of the interties; (b) Intertie Grants; and (c) Intertie Funds.
Section 6. Waiver of Liability/Indemnification.
6.01. Waiver of Liability/Indemnification on Custodial/Investment
Duties. The Participating Utilities, and all their successors and assigns,
hereby waive and release AIDEA, and all its officers, directors and employees,
from any and all claims and liabilities of any nature and kind whatsoever which
are related to or may arise out of AIDEA's obligations and duties as custodian
and investor under this Agreement, except those which may arise from the gross
negligence or willful misconduct of AIDEA. The Participating Utilities agree to
and shall indemnify, defend and hold harmless AIDEA, and all its officers,
directors and employees, from and against, any and all demands, claims, causes
of action, losses, fines, penalties, judgments, damages (including punitive and
consequential damages), or liabilities of any nature and kind whatsoever
(including attorney's fees, and other legal fees and expenses) incurred in
connection with or resulting from or arising out of or in any way related to
AIDEA's obligations and duties as custodian and investor under this Agreement,
except those which may arise from the gross negligence or willful misconduct of
AIDEA.
6.02. Indemnification on Contractor Claims. The Participating Utilities
agree to and shall indemnify, defend and hold harmless AIDEA, and all its
officers, directors and employees, from and against, any and all demands,
claims, causes of action, losses, fines, penalties, judgments, damages
(including punitive and consequential damages), or liabilities of any nature and
kind whatsoever (including attorney's fees, and other legal fees and expenses)
incurred in connection with or resulting from or arising out of or in any way
related to the design and construction of the interties, which may be asserted
against AIDEA, or its officers, directors or employees, by any contractor,
subcontractor, consultant, or third party or entity.
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Section 7. Miscellaneous/General Terms.
7.01. No Third-Party Beneficiaries. Nothing in this Agreement shall be
interpreted or construed as creating any rights or privileges of any kind
whatsoever in persons or entities who are not parties to this Agreement.
7.02. Applicable Law and Venue. This Agreement shall be construed under
the laws of the State of Alaska and any dispute shall be resolved in the
Superior Court for the State of Alaska, Third Judicial District, at Anchorage,
Alaska.
7.03. No Strict Construction. This Agreement was drafted in accordance
with the wishes of all parties and after negotiation and discussion between all
parties, and all, parties have been represented by counsel in such negotiations.
The rule of construction that a contract shall be construed against the party
who drafted it shall not apply to construction of this Agreement.
7.04. Counterparts. This Agreement may be executed in counterparts, in
which case all such counterparts shall constitute one and the same Agreement.
7.05. Successor and Assigns. This Agreement shall be binding upon the
parties and their successors and assigns.
7.06. Modifications/Amendments. This Agreement may not be modified or
amended except by a writing signed by all the parties.
7.07. Captions/Headings. All captions and headings used in this
Agreement are for the convenience of reference only and shall not be construed
as part of the Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first above written.
ALASKA INDUSTRIAL DEVELOPMENT &EXPORT AUTHORITY
By: /s/
--------------------------------------------
Its: Executive Director
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GOLDEN VALLEY ELECTRIC ASSOCIATION, INC.
By: /s/
--------------------------------------------
Its: General Manager
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FAIRBANKS MUNICIPAL UTILITIES SYSTEM
By: /s/
--------------------------------------------
Its: City Manager
-------------------------------------------
ANCHORAGE MUNICIPAL LIGHT & POWER
By:
--------------------------------------------
Its: Mayor, Municipality of Anchorage
-------------------------------------------
CHUGACH ELECTRIC ASSOCIATION, INC.
By:
--------------------------------------------
Its: General Manager
-------------------------------------------
ALASKA ELECTRIC GENERATION AND TRANSMISSION
COOPERATIVE, INC. on behalf of its members
(Matanuska Electric Association, Inc. and Homer
Electric Association, Inc.)
By:
--------------------------------------------
Its: Executive Mgr
-------------------------------------------
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CITY OF SEWARD
By:
--------------------------------------------
Its: City Manager
-------------------------------------------
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SCHEDULE A-1
HEALY-FAIRBANKS INTERTIE
1. PHASE DESCRIPTION
Phase I - Design
Phase II - Construction
These phases will be conducted sequentially. However, efficient
performance will dictate some overlapping of phases.
2. PHASE I - DESIGN
a. The Phase I ceiling shall be $6.64 million.
b. Phase I includes the project permitting, engineering, and design
including both project definition and detailed design activities. Specifically,
Phase I shall include:
(1) Environmental Assessment
o DVG Survey System
o Archaeological Investigation
(2) Line - Engineering and Design
o Geotechnical
o Easements and Land Rights
(3) Substation Design
(4) Energy Storage System Design
o System Studies for Scoping
(5) APUC and/or REA Approvals
(6) Develop Finance Plan
(7) Develop and Issue Bid Documents
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(8) Development of the Phase II Ceiling for Submission to
AIDEA for Approval
3. PHASE II - CONSTRUCTION
a. Phase II ceiling shall be $____________).1
b. Phase II shall include the procurement and receipt of equipment and
materials at the job sites and site management for installation, checkout, and
start-up.
c. Specifically, Phase II shall include:
(1) Transmission Line Construction
o Link 1
o Link 2
o Link 3
o Link 4
o Link 5
o Construction Management
o Right-of-Way Clearing
(2) Substation
o Wilson Substation
o Healy Substation
o Construction Management
(3) Energy Storage System Fabrication Installation
- --------
1 To be determined pursuant to 2(b)(8), above.
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SCHEDULE A-2
ANCHORAGE-KENAI INTERTIE
1. PHASE DESCRIPTION - Anchorage-Kenai 138 kV Intertie ($84.1 Million)
Phase I - Route Selection and Preliminary Design
Phase II - Final Design and Construction
These phases will be conducted sequentially. However, efficient
performance will dictate some overlapping of phases.
2. PHASE I - ROUTE SELECTION & PRELIMINARY DESIGN
a. The Phase I ceiling shall be $5.1 million.
b. Phase I includes the following:
(1) Development and Approval of Project Team
(2) Preliminary Environmental Assessment
(3) Preliminary Geotechnical and Archaeological
Investigation
(4) Preliminary Easement Investigation
(5) Identify Corridors, Determine Alternate Route
Alignments
(6) Prepare Route Selection Report
(7) Investigate Design Alternatives
(8) Approval of Line Route End Points and Preliminary
Design
(9) Development of the Phase II Ceiling for Submission to
AIDEA for Approval
3. PHASE II- FINAL DESIGN AND CONSTRUCTION
a. The Phase II ceiling will be $_____.2
b. Phase II includes the completion of the following tasks:
(1) Final Environmental, Geotechnical, and Archaeological
Investigations
- --------
2 To be determined pursuant to 2(b)(9), above.
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(2) Selection of Specific Location of Facilities
(3) Procurement of Easements
(4) Design Modifications to Bernice Lake Substation
(5) Design Submarine Cable Terminal Stations
(6) Design Submarine Cable Crossing Specifications
(7) Preparation of Functional Design, Drawings,
Specifications, and Bid Documents and Award
(8) Preparation of Construction and Material Contracts
(9) Right-of-Way Clearing
(10) Transmission Line Construction
o South Kenai Line
o North Kenai Line
o Anchorage Line
(11) Modification of Bernice Lake Substation
(12) Submarine Cable Terminal Stations
(13) Submarine Cable Crossing
(14) Commissioning and Project Closeout
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