Repealed or Renumbered

Repealed or Renumbered

The authority shall, to the maximum extent feasible, carry out its powers and duties under this chapter by entering into contracts with appropriate entities in the private sector.

Article 09. GENERAL PROVISIONS

Repealed or Renumbered

Repealed or Renumbered

Article 05. BULK FUEL REVOLVING LOAN FUND

The Southeast energy fund is established as a separate fund. The fund consists of money transferred to it under former Section 42.45.050 . The authority may make grants from the Southeast energy fund to utilities participating in the power transmission intertie between the Swan Lake and Tyee Lake hydroelectric projects for power projects, for repayment of loans, and for payments on bonds.

In Section 42.45.070 - 42.45.099, 'fund' means the power cost equalization endowment fund established in Section 42.45.070 .

Article 03. POWER COST EQUALIZATION AND RURAL ELECTRIC CAPITALIZATION

Two or more public utilities may form a joint action agency for the purpose of participation in the design, construction, operation, and maintenance of a generating or transmission facility and to secure financing for carrying out the design, construction, operation, and maintenance of the facility. A joint action agency may request the Alaska Industrial Development and Export Authority to issue revenue bonds for projects of the agency. A joint action agency has the powers of a public utility under Section 42.05.

(a) Notwithstanding the definition of 'eligible electric utility' in Section 42.45.150 , an electric utility whose primary source of power for sale to customers is one or more of the power projects that were part of the former initial project may not be considered an eligible electric utility.

(b) In this section, 'former initial project' includes the Tyee Lake, Swan Lake, Solomon Gulch, and Terror Lake hydroelectric facilities.

(a) In order to qualify for power cost equalization, each electric utility shall make every reasonable effort to minimize administrative, operating, and overhead costs, including using the best available technology consistent with sound utility management practices. In reviewing applications for power cost equalization, the commission may require the elimination of unnecessary operating expenses. Each eligible electric utility shall cooperate with appropriate state agencies to implement cost-effective energy conservation measures and to plan for and implement feasible alternatives to diesel generation.

(b) In this section, 'energy conservation measures' include weatherization and other insulating methods, utilization of waste heat, appropriate sizing of new generating equipment, and other programs of the state or federal government intended and available for energy conservation.

(a) The power cost equalization endowment fund is established as a separate fund of the authority. The fund consists of

(1) legislative appropriations to the fund that are not designated for annual expenditure for the purpose of power cost equalization;

(2) accumulated earnings of the fund;

(3) gifts, bequests, contributions of money and other assets, and federal money given to the fund that are not designated for annual expenditure for power cost equalization; and

(4) [Repealed, Sec. 13 ch 60 SLA 2000].

(b) Nothing in this section creates a dedicated fund.

(c) [Repealed, Sec. 13 ch 60 SLA 2000].

(a) Seven percent of the amount determined by the commissioner of revenue on July 1 of each year under Section 42.45.080 (c) may be appropriated for the fiscal year beginning the following July 1 for the following purposes:

(1) funding the power cost equalization and rural electric capitalization fund (Section 42.45.100 );

(2) reimbursement to the Department of Revenue for the costs of establishing and managing the fund; and

(3) reimbursement of other costs of administration of the fund.

(b) Nothing in this section creates a dedicated fund.

If the authority receives a petition requesting power cost equalization, signed by at least 25 percent of the customers of an electric utility that is subject to rate regulation under Section 42.05 and that has not applied for power cost equalization under Section 42.45.100 - 42.45.150, the authority shall require the utility to submit a power cost equalization application. Upon a determination of eligibility for power cost equalization, the utility, as a part of its service, shall receive power cost equalization and pass power cost equalization benefits to its customers under Section 42.45.100 - 42.45.150.

(a) The commissioner of revenue is the fiduciary of the fund. In managing the fund, the commissioner shall

(1) have the same powers and duties as are provided in Section 37.10.071 ; and

(2) invest the fund in a manner likely to achieve at least a seven percent nominal return over time.

(b) In managing the fund, the commissioner shall

(1) consider the status of the fund's capital and the income generated on both current and probable future bases;

(2) determine the appropriate investment objectives;

(3) establish investment policies to achieve the objectives; and

(4) act only in regard to the best financial interests of the fund.

(c) On July 1 of each year, the commissioner shall determine the monthly average market value of the fund for the previous three fiscal years.

In this chapter, unless the context otherwise requires,

(1) 'authority' means the Alaska Energy Authority.

(2) 'feasibility study'

(A) means a study conducted to establish the economic and environmental practicality of completing a proposed power project;

(B) includes engineering and design work to meet the requirements for submission of a license application for a proposed new project to the Federal Energy Regulatory Commission;

(3) 'power' includes electrical energy generated, distributed, bought, or sold for lighting, heating, power, and every other useful purpose;

(4) 'power project' or 'project' means a plant, works, system, or facility, together with related or necessary facilities and appurtenances, including a divided or undivided interest in or a right to the capacity of a power project or project, that is used or is useful for the purpose of

(A) electrical or thermal energy production other than nuclear energy production;

(B) waste energy utilization and energy conservation; or

(C) transmission, purchase, sale, exchange, and interchange of electrical or thermal energy, including district heating or interties;

(5) 'reconnaissance study' means a study conducted to assess the present and future electrical and thermal energy needs of an area.

(a) The authority shall provide technical assistance to rural utilities including catastrophe prevention programs and other training programs for utility projects. The authority shall provide rural utilities with the technical assistance and training that the utilities need to improve the efficiency, safety, and reliability of their power systems and to prevent emergency situations from developing. At a minimum, the assistance and training must include information on

(1) reducing distribution line losses;

(2) installation of generators that are more fuel efficient;

(3) preventative maintenance programs;

(4) safety inspections;

(5) installing and maintaining waste heat systems;

(6) improved metering systems;

(7) improved management and administration; and

(8) coordinating regional activities, including circuit rider maintenance programs.

(b) In providing rural utilities with technical assistance and training, the authority shall give priority to contracting with the private sector for these services.

(c) This section does not create a duty in tort, and may not be the basis for an action against the state, the authority, or the officers, employees, agents, or contractors of either for damages, injury, or death.

If an electric utility receives power cost equalization under Section 42.45.100 - 42.45.150, the utility shall either give to its electric service customers eligible under this program, for each period for which the payment is received,

(1) the following notice:

NOTICE TO CUSTOMER

For the most recent monthly reporting period under the State of

Alaska's power cost equalization program, this utility's actual fuel

efficiency for your community was kilowatt-hours a gallon. The         

applicable fuel efficiency standard set out in regulations for the

 power cost equalization program is kilowatt-hours a gallon.           

For the current billing period, the utility will be paid under the

State of Alaska's power cost equalization program (Section 42.45.100 ) to

assist the utility and its customers in reducing the high cost of      

generation of electric energy.                                         

Your total electrical service cost                            $ .......

Less state equalization                                       $ .......

Your charge                                               $ .......; or

(2) a notice approved by the authority that provides electric

service customers the same information provided by the notice in (1)

 of this section.                                                      

(a) The power cost equalization and rural electric capitalization fund is established as a separate fund for the purpose of

(1) equalizing power cost per kilowatt-hour statewide at a cost close to or equal to the mean of the cost per kilowatt-hour in Anchorage, Fairbanks, and Juneau by paying money from the fund to eligible electric utilities in the state; and

(2) making grants to eligible utilities under Section 42.45.180 to improve the performance of the utility.

(b) The fund shall be administered by the authority as a fund distinct from the other funds of the authority. The fund is composed of

(1) money appropriated to provide power cost equalization to eligible electric utilities and to provide grants for utility improvements;

(2) money appropriated from the National Petroleum Reserve - Alaska special revenue fund under Section 37.05.530 (g);

(3) money appropriated from the power cost equalization endowment fund (Section 42.45.070 ) under Section 42.45.085 (a);

(4) gifts, bequests, contributions from other sources, and federal money; and

(5) interest earned on the fund balance.

(c) The fund is not a dedicated fund.

(a) A protected person is not individually liable for conduct performed within the scope of the person's duties for the agency. However, the protected person may be held individually liable for conduct if it was not reasonable for the person to believe that the conduct was in, or not contrary to, the best interests of the agency.

(b) Unless prohibited by the agency agreement, the agency shall indemnify a protected person who is or may be made a party to a contested matter arising out of acts or omissions within the scope of the person's duties for the agency against expenses actually and reasonably incurred in connection with the contested matter. However, the agency may not indemnify the protected person if the person did not reasonably believe the conduct to be in, or not opposed to, the best interests of the agency. With respect to a criminal action or proceeding, the agency shall indemnify a protected person unless the person had reasonable cause to believe that the conduct was unlawful.

(c) An agency may purchase and maintain insurance on behalf of a protected person against liability asserted against the protected person and incurred in an official capacity or arising out of the person's status.

(d) In this section,

(1) 'agency' means a joint action agency formed under Section 42.45.310 ;

(2) 'conduct' includes action, inaction, and omission;

(3) 'contested matter' means a proposed, pending, or completed action or proceeding, whether civil, criminal, administrative, or investigative;

(4) 'expenses' include attorney fees, judgments, fines, and amounts paid in settlement;

(5) 'protected person' means a director, officer, employee, or agent of an agency.

Article 07. WATER-POWER DEVELOPMENT PROJECTS

(a) Subject to appropriations for the purpose, during each fiscal year, the authority shall allocate to each entity listed in (b) of this section an amount to reimburse the cost paid by the entity during the immediately preceding fiscal year for the principal and interest on outstanding debt for the project listed. An allocation may be made to an entity only if

(1) the debt was incurred before July 1, 2005; and

(2) the power project financed with the debt proceeds is owned and operated by the entity.

(b) The authority may make an allocation to an entity under (a) of this section only for reimbursement of costs incurred for construction and renovation of the following power projects and only for reimbursement of total project costs incurred up to the following amounts:

PROJECT                                                                

Kodiak Electric Association, Inc. (Nyman Combined     $   6,000,000    

Cycle Cogeneration Plant)                                              

Cordova Electric Cooperative (Power Creek Hydropower     12,000,000    

Station)                                                               

Golden Valley Electric Association (Rock Creek line         700,000    

extension)                                                             

Copper Valley Electric Association, Inc., Valdez         10,000,000    

(cogeneration projects)                                                

The Four Dam Pool Power Agency (Southeast Intertie,      20,000,000    

Swan Lake to Tyee Lake)                                                

Metlakatla Power and Light (utility plant and capital                 

additions)                                                3,000,000    

Article 02. POWER COST EQUALIZATION ENDOWMENT FUND

(a) The authority may make a grant from the fund for an eligible utility for a small power project that will reduce the cost of generating or transmitting power to the customers of the utility. The amount of the grant may not exceed 75 percent of the cost of the project. The authority may not make a grant under this section unless the eligible utility has secured financing for 25 percent of the cost of the project from a source other than the power cost equalization and rural electric capitalization fund, as provided under (c) of this section.

(b) The authority may not allocate more than three percent of the balance in the fund to grants under this section in a fiscal year.

(c) In determining whether an eligible utility has secured financing for 25 percent of the cost of the project from a source other than the power cost equalization and rural electric capitalization fund, the authority shall accept solicited and unsolicited proposals for third party financing or for a joint venture between the utility and an entity from the private sector provided that the private sector participant has

(1) a valid state business license;

(2) a resolution or letter of agreement executed by the eligible utility agreeing to participation by the private sector participant;

(3) a business plan that illustrates how the proposed project will reduce the cost of generating or transmitting power to the customers of the utility.

(d) In this section,

(1) 'eligible utility' has the meaning given in Section 42.45.150 ;

(2) 'project' includes

(A) power generation systems;

(B) transmission systems;

(C) distribution systems;

(D) metering systems;

(E) energy store systems;

(F) energy conservation programs; and

(G) bulk fuel storage facilities;

(3) 'small power project' means a new or modified project that will either generate, store, or conserve no more than 1.5 megawatts of power or provide a metering system, transmission system, distribution system, or bulk fuel storage facility that has an estimated cost of less than $3,000,000.

(a) The commission may adjust the power cost equalization per kilowatt-hour, determined under Section 42.45.100 - 42.45.150, payable to an electric utility that is subject to rate regulation under Section 42.05 if the

(1) commission has approved a fuel cost rate adjustment caused by an increase or decrease in the electric utility's cost of fuel;

(2) commission has approved a permanent or interim rate increase or decrease that establishes a higher or lower power cost;

(3) authority has discovered, in reviewing the monthly data submitted by the electric utility, discrepancies that require adjustment of the power cost equalization; or

(4) authority determines that appropriations are insufficient to finance full payments to eligible electric utilities.

(b) An electric utility that is eligible to receive power cost equalization under this section and that receives power cost equalization per kilowatt-hour approved by the commission shall report monthly to the authority within the time and in the form the authority requires. An electric utility shall report

(1) the power cost equalization per kilowatt-hour approved by the commission;

(2) the total kilowatt-hours sold to each class of customer during the preceding month;

(3) the total kilowatt-hours eligible for power cost equalization under this section sold to each class of customer during the preceding month;

(4) the total kilowatt-hours generated during the preceding month, if available;

(5) any commission approved amendments to the schedule of rates in effect during the preceding month; and

(6) an increase or decrease in the current unit price of fuel from the base price used by the commission in determining power costs if the change is expected to result in a subsequent power cost equalization adjustment.

(c) The provisions of Section 42.45.100 - 42.45.150 relating to the determination of the amount of power cost equalization and payment of the equalization assistance apply to equalization assistance under this section.

(1) 'community facility' means a water and sewer facility, public outdoor lighting, charitable educational facility, or community building whose operations are not paid for by the state, the federal government, or private commercial interests;

(2) 'eligible electric utility' or 'electric utility' means a public, cooperative, or other corporation, company, individual, or association of individuals, and includes the lessees, trustees, or receivers appointed by a court, that

(A) owns, operates, manages, or controls a plant or system for the furnishing, by generation, transmission, or distribution, of electric service to the public for compensation;

(B) during calendar year 1983, had a residential consumption level of power eligible for power cost equalization under former Section 44.83 of less than 7,500 megawatt hours or had a residential consumption level of power eligible for power cost equalization under former Section 44.83 of less than 15,000 megawatt hours if the utility served two or more municipalities or unincorporated communities; and

(C) during calendar year 1984, used diesel fired generators to produce more than 75 percent of the electrical consumption of the utility; an electric utility that is a subsidiary of another electric utility is an 'eligible electric utility' if the operations of the subsidiary, considered separately, meet the eligibility requirements of Section 42.45.100 - 42.45.150; if an electric utility did not receive power cost assistance in 1983 but is otherwise eligible for power cost equalization under Section 42.45.100 - 42.45.150, the utility is an 'eligible electric utility';

(3) 'power costs' means costs used in determining power cost equalization under Section 42.45.110 (a) and (c).

(a) The bulk fuel revolving loan fund is established in the authority to assist communities, utilities providing power in communities, and fuel retailers in communities in purchasing bulk fuel to generate power or supply the public with fuel for use in communities. A community, or a person generating power or selling fuel in a community who has written endorsement from the governing body of each community for which a loan from the fund is sought, is eligible for a loan from the bulk fuel revolving loan fund for a purchase of an emergency supply or a semiannual or annual supply of bulk fuel to be used in the community.

(b) Money in the fund may be used by the legislature to make appropriations for costs of administering this section.

(c) The foreclosure expense account is established as a special account within the bulk fuel revolving loan fund. This account is established as a reserve from fund equity.

(d) The authority may spend money credited to the foreclosure expense account when necessary to protect the state's security interest in collateral on loans made under this section or to defray expenses incurred during foreclosure proceedings after a default by an obligor.

(e) Loans made from the bulk fuel revolving loan fund to one borrower in any fiscal year

(1) may not exceed $300,000;

(2) shall be repaid in one year or less; and

(3) may not exceed 90 percent of the wholesale price of the fuel purchased.

(f) Interest may be charged on a loan made from the bulk fuel revolving loan fund. Interest shall be charged on a loan at a rate equal to the percentage of the average weekly yield of municipal bonds for the 12 months preceding the date of the loan, as determined by the authority from municipal bond yield rates reported in the 30-year revenue index of the Weekly Bond Buyer. However, if the authority finds that a community cannot afford to repay a portion of interest on a loan, and makes a determination in writing, the authority may reduce or eliminate the interest rate applicable to the loan.

(g) Repayments of the principal, the interest, and the money chargeable to principal or interest that is collected through liquidation by foreclosure or other process on a loan made under this section shall be paid into the bulk fuel revolving loan fund. The fund is not a dedicated fund.

(h) The authority may contract for the administration of the bulk fuel loan program established in this section.

(i) The authority shall dispose of property acquired through default or foreclosure of a loan made under this section. Disposal shall be made in a manner that serves the best interests of the state, and may include the amortization of payments over a period of years.

(j) The authority may adopt regulations necessary to carry out the provisions of this section, including regulations to establish reasonable fees for services provided and charges for collecting the fees.

(k) The authority may collect the fees and collection charges established under (j) of this section and shall deposit the money in the general fund.

(l) In this section,

(1) 'community' means an organized municipality or an unincorporated village that is a social unit, with a population of less than 2,000 people.

(2) 'person' has the meaning given in Section 01.10.060 and includes a corporation, a cooperative, a joint venture, and a governmental entity.

Article 06. JOINT ACTION AGENCIES

(a) The rural electrification revolving loan fund is established in the authority. The fund consists of

(1) appropriations made to the fund; and

(2) repayments of principal and interest on loans made under this section.

(b) The authority may make loans from the rural electrification revolving loan fund to electric utilities certified under Section 42.05. A loan from the fund may be made only for the purpose of extending new electric service into an area of the state that an electric utility may serve under a certificate of public convenience and necessity issued under Section 42.05. A loan may be made from the fund to an electric utility if the utility invests the money necessary to provide one pole, one span of line, one transformer, and one service drop for each consumer for whom immediate service would be provided by the extension of electric service. However, a loan may not be made from the fund unless the extension of electric service would provide immediate service to at least three consumers.

(c) A loan from the rural electrification revolving loan fund shall bear an annual rate of interest of two percent of the unpaid balance of the loan.

(d) When the authority makes a loan under this section, the electric utility receiving the loan shall,

(1) in addition to the rates that it is authorized to charge, charge the consumers served by the electric service extended with the loan proceeds an amount sufficient to pay the interest costs of the loan;

(2) pay to the authority annually an amount equal to

(A) interest of two percent on the unpaid balance of the loan; and

(B) payments on the unpaid balance of the principal of the loan for each new consumer served by the electric service extended with the loan proceeds; payments on the unpaid balance of the principal of the loan shall be made at a rate equal to the difference between the actual cost of making the service connection to the consumers and the minimum investment per consumer required of the utility before a loan is made under (b) of this section.

(e) The authority shall

(1) adopt regulations necessary to carry out the provisions of this section; and

(2) administer the rural electrification revolving loan fund.

(3) [Repealed, Sec. 19 ch 6 SLA 1998].

(f) Money in the rural electrification revolving loan fund may be used by the legislature to make appropriations for costs of administering the fund.

(g) On June 30 of each fiscal year the unexpended and unobligated cash balance of the fund that is attributable to loans owned by the fund lapses into the general fund.

(h) In this section,

(1) 'consumer' means a person or a governmental agency, if the person or governmental agency requests and offers to pay for electrical service to a facility or part of a facility; the authority shall consider a person who, or a governmental agency that, offers to pay for electrical service to several facilities to be a separate consumer for each facility, if each facility is physically separate from another facility, other than through electric service lines, and if the person or governmental agency requests and offers to pay for electrical service to each facility;

(2) 'facility' means a structure capable of receiving and using electrical energy; and

(3) 'governmental agency' includes, with respect to the state or federal government or a municipal government, a legislative body, board of regents, administrative body, board, commission, committee, subcommittee, authority, council, agency, public corporation, school board, department, division, bureau, or other subordinate unit, whether advisory or otherwise, of the state, federal, or municipal government.

(a) An electric utility that is not subject to rate regulation by the Regulatory Commission of Alaska under Section 42.05 may receive power cost equalization if the utility is otherwise eligible for equalization assistance under Section 42.45.100 - 42.45.150 and if the utility

(1) files with the commission financial data necessary to determine the power cost equalization per kilowatt-hour as prescribed by the commission and that is in compliance with Section 42.45.100 - 42.45.150;

(2) reports monthly to the authority, within the time and in the form required, the information required in (b) of this section;

(3) sets rates

(A) that consider the power cost equalization provided under Section 42.45.100 - 42.45.150 by subtracting from its revenue requirements for electric services the power cost equalization per kilowatt-hour that it is eligible to receive; and

(B) under which the power cost equalization provided in Section 42.45.070 - 42.45.110 is applied as a credit only against the cost of kilowatt-hours eligible for equalization assistance under Section 42.45.100 - 42.45.150 that are consumed by each customer in any month;

(4) allows audits that the commission determines are necessary to ensure compliance with this section; and

(5) furnishes its electric service customers eligible under this program a notice as specified in Section 42.45.120 .

(b) An electric utility that is eligible to receive power cost equalization under this section shall report in accordance with (a)(2) of this section

(1) the power cost equalization per kilowatt-hour approved by the commission;

(2) the total kilowatt-hours sold to each class of customer during the preceding month;

(3) the total kilowatt-hours eligible for power cost equalization under this section sold to each class of customer during the preceding month;

(4) the total kilowatt-hours generated during the preceding month, if available;

(5) any amendments to the schedule of rates in effect during the preceding month; and

(6) an increase or decrease in the current unit price of fuel from the base price used by the commission in determining power costs if the change is expected to result in a subsequent equalization assistance level adjustment.

(c) An electric utility that is eligible to receive power cost equalization under this section may have its power cost equalization per kilowatt-hour determination changed by the commission if the

(1) commission has verified an increase or decrease in the electric utility's cost of fuel;

(2) commission has verified an increase in rates based on an increase in costs;

(3) authority has discovered, in reviewing the monthly data submitted by the electric utility, discrepancies that require adjustment of the power cost equalization; or

(4) authority determines that appropriations are insufficient to finance full payments to eligible electric utilities.

(d) The provisions of Section 42.45.100 - 42.45.150 relating to the determination of the amount of power cost equalization and payment of the equalization assistance apply to equalization assistance under this section.

(e) An application for power cost equalization by an electric utility that is eligible to receive power cost under this section does not extend the jurisdiction of the Regulatory Commission of Alaska beyond that established by Section 42.05.

(a) The Regulatory Commission of Alaska shall adopt regulations to establish a regulatory program for water-power development projects that qualify under this section.

(b) The regulatory program established under this section must

(1) protect the public interest, the purposes listed in (2) of this subsection, and the environment to the same extent provided by the requirements for licensing and regulation by the Federal Energy Regulatory Commission under 16 U.S.C. 792 - 823c and other applicable federal laws, including 16 U.S.C. 1531 et seq. (Endangered Species Act) and 16 U.S.C. 661 et seq. (Fish and Wildlife Coordination Act);

(2) give equal consideration to

(A) energy conservation;

(B) the protection of, mitigation of damage to, and enhancement of, fish and wildlife, including related spawning grounds and habitat;

(C) the protection of recreational opportunities;

(D) the preservation of other aspects of environmental quality;

(E) the interests of resident Alaska Natives;

(F) other beneficial public uses, including irrigation, flood control, water supply, navigation; and

(G) the interest of Alaska residents and landowners; and

(3) require, as a condition of a license for any qualifying project work,

(A) the construction, maintenance, and operation by a licensee at the licensee's own expense of the lights and signals that may be directed by the secretary of the department of the United States government in which the United States Coast Guard is operating and the fishways that are prescribed by the Secretary of the Interior or the Secretary of Commerce, as appropriate;

(B) the operation of any navigation facilities that may be constructed as part of any project to be controlled at all times by the reasonable rules and regulations that are adopted by the Secretary of the Army; and

(C) conditions for the protection of, mitigation of damage to, and enhancement of fish and wildlife based on recommendations received under 16 U.S.C. 661 et seq. (Fish and Wildlife Coordination Act) from the National Marine Fisheries Service, the United States Fish and Wildlife Service, and the state Department of Fish and Game.

(c) For purposes of this section, the term 'qualifying project work' means a project work

(1) that is not part of a project licensed under 16 U.S.C. 792 - 823c or exempted from licensing under 16 U.S.C. 792 - 823c or under 16 U.S.C. 2705 (sec. 405 of the Public Utility Regulatory Policies Act of 1978) before November 9, 2000;

(2) for which a preliminary permit, a license application, or an application for an exemption from licensing has not been accepted for filing by the Federal Energy Regulatory Commission before November 9, 2000, unless the application is withdrawn at the election of the applicant;

(3) that is part of a project that has a power production capacity of 5,000 kilowatts or less;

(4) that is located entirely within the boundaries of the state; and

(5) that is not located in whole or in part on an Indian reservation, a conservation system unit as defined in 16 U.S.C. 3102 (sec. 102, Alaska National Interest Lands Conservation Act), or on a segment of a river designated for study for addition to the National Wild and Scenic Rivers System.

(d) In the case of nonqualifying project work that would be qualifying project work but for the fact that the project has been licensed or exempted from licensing by the Federal Energy Regulatory Commission before November 9, 2000, the licensee of the project may elect to make the project subject to licensing and regulation by the state under this section.

(e) With respect to projects located in whole or in part on a reservation, a conservation system unit, or federal public land, a state license or exemption from licensing is subject to

(1) the approval of the secretary of the federal department having jurisdiction over those lands; and

(2) the conditions that the secretary may prescribe.

(f) The Regulatory Commission of Alaska shall notify the Federal Energy Regulatory Commission not later than 30 days after making any significant modification to its regulatory program under this section.

(g) In this section,

(1) 'federal public land' means the land and interest in land owned by the United States that is subject to private appropriation and disposal under public land laws, but does not include a reservation;

(2) 'licensee' means any person, state, or municipality licensed under the provisions of 16 U.S.C. 797 and any assignee or successor in interest of the licensee thereof;

(3) 'project' means, notwithstanding the definition in Section 42.45.990 , a complete unit of improvement or development, consisting of a power house, all water conduits, all dams and appurtenant works and structures, including navigation structures, that are a part of the unit, and all storage, diverting, or forebay reservoirs directly connected with the unit, the primary line or lines transmitting power from the unit to the point of junction with the distribution system or with the interconnected primary transmission system, all miscellaneous structures used and useful in connection with the unit or any part of the unit, and all water rights, rights-of-way, ditches, dams, reservoirs, land, or interests in land the use and occupancy of which are necessary or appropriate in the maintenance and operation of the unit;

(4) 'project work' means the physical structure of a project;

(5) 'reservation'

(A) means a national forest; tribal land embraced within an Indian reservation; a military reservation; other land and an interest in land owned by the United States and withdrawn, reserved, or withheld from private appropriation and disposal under the public land laws; and land and an interest in land acquired and held for any public purposes;

(B) does not include a national monument or national park.

Article 08. MISCELLANEOUS PROVISIONS

(a) The costs used to calculate the amount of power cost equalization for all electric utilities eligible under Section 42.45.100 - 42.45.150 include all allowable costs, except return on equity, used by the Regulatory Commission of Alaska to determine the revenue requirement for electric utilities subject to rate regulation under Section 42.05. The costs used in determining the power cost equalization per kilowatt-hour shall exclude any other type of assistance that reduces the customer's costs of power on a kilowatt-hour basis and that is provided to the electric utility within 60 days before the commission determines the power cost equalization per kilowatt-hour of the electric utility. In calculating power cost equalization, the commission may not consider validated costs or kilowatt-hour sales associated with a United States Department of Defense facility.

(b) An eligible electric utility is entitled to receive power cost equalization

(1) for sales of power to local community facilities, calculated in the aggregate for each community served by the electric utility, for actual consumption of not more than 70 kilowatt-hours per month for each resident of the community; the number of community residents shall be determined under Section 29.60.020 ; and

(2) for actual consumption of not more than 500 kilowatt-hours per month sold to each residential customer.

(c) The amount of power cost equalization provided per kilowatt-hour under subsection (b) of this section may not exceed 95 percent of the power costs, or the average rate per eligible kilowatt-hour sold, whichever is less, as determined by the commission. However,

(1) during the state fiscal year that began July 1, 1999, the power costs for which power cost equalization were paid to an electric utility were limited to minimum power costs of more than 12 cents per kilowatt-hour and less than 52.5 cents per kilowatt-hour;

(2) during each following state fiscal year, the commission shall adjust the power costs for which power cost equalization may be paid to an electric utility based on the weighted average retail residential rate in Anchorage, Fairbanks, and Juneau; however, the commission may not adjust the power costs under this paragraph to reduce the amount below the lower limit set out in (1) of this subsection; and

(3) the power cost equalization per kilowatt-hour may be determined for a utility without historical kilowatt-hour sales data by using kilowatt-hours generated.

(d) An electric utility whose customers receive power cost equalization under Section 42.45.100 - 42.45.150 shall set out in its tariff the rates without the power cost equalization and the amount of power cost equalization per kilowatt-hour sold. The rate charged to the customer shall be the difference between the two amounts. Power cost equalization paid under Section 42.45.100 - 42.45.150 shall be used to reduce the cost of all power sold to local community facilities, in the aggregate, to the extent of 70 kilowatt-hours per month per resident of the community, and to reduce the cost of the first 500 kilowatt-hours per residential customer per month.

(e) The power cost equalization program shall be administered by the authority based on a determination by the commission under (a) and (c) of this section of power cost equalization per kilowatt-hour for each eligible electric utility.

(f) The authority may not deny an eligible electric utility power cost equalization because complete cost information is not available. The commission shall assist an eligible electric utility that is exempt from rate regulation under Section 42.05 to provide the cost information the commission considers necessary to comply with Section 42.45.100 - 42.45.150. Only power costs that are supportable may be considered in calculating power cost equalization. Each electric utility is responsible for keeping records that provide the information necessary to comply with Section 42.45.100 - 42.45.150 including records of monthly kilowatt-hour sales or generation, monthly fuel balances, fuel purchases, and monthly utility fuel consumption.

(g) The commission shall determine the cost of fuel for each eligible electric utility using the procedure for approving fuel cost rate adjustments of electric utilities subject to rate regulation under Section 42.05.

(h) Each electric utility receiving power cost equalization approved by the commission shall

(1) report monthly to the authority within the time and in the form the authority requires; and

(2) use operational equipment designed to meter individual utility customer power consumption and to determine and record the utility's overall fuel consumption.

(i) The authority shall review the report required under (h) of this section. After review and approval of the report, the authority shall, subject to appropriation, pay to each eligible electric utility an amount equal to the power cost equalization per kilowatt-hour determined under (a) and (c) of this section, multiplied by the number of kilowatt-hours eligible for power cost equalization that were sold during the preceding month to all customers of the utility under (b) of this section. Payment shall be made by the authority within 30 days after receipt from the utility of the report required under (h) of this section. If appropriations that have been made for the purpose by July 1 of a fiscal year are insufficient for payment in full, the amount paid to each electric utility shall be reduced on a pro rata basis. In making the pro rata reductions required by this subsection, the authority may not consider any potential supplemental appropriation until the appropriation has been enacted.

(a) The power project fund is established as a separate fund. The fund shall be distinct from any other money or funds of the authority and includes only money appropriated by the legislature and money deposited under (g) of this section.

(b) The authority may make loans from the power project fund

(1) to electric utilities, regional electric authorities, municipalities, regional and village corporations, village councils, independent power producers, and nonprofit marketing cooperatives to pay the costs of

(A) reconnaissance studies, feasibility studies, license and permit applications, preconstruction engineering, and design of power projects;

(B) constructing, equipping, modifying, improving, and expanding small-scale power production facilities that are designed to produce less than 10 megawatts of power, bulk fuel storage facilities, and transmission and distribution facilities, including energy production, transmission and distribution, waste energy, energy conservation, energy efficiency, and alternative energy facilities and equipment; and

(C) reconnaissance studies, preconstruction engineering, design, construction, equipping, modification, and expansion of potable water supply including surface storage and groundwater sources and transmission of water from surface storage to existing distribution systems;

(2) to a borrower for a power project or for bulk fuel, waste energy, energy conservation, energy efficiency, or alternative energy facilities or equipment if

(A) the loan is entered into under a leveraged lease financing arrangement;

(B) the party that will be responsible for the power project is an electric utility, regional electric authority, municipality, regional or village corporation, village council, independent power producer, or nonprofit marketing cooperative; and

(C) the borrower seeking the loan demonstrates to the authority that the financing arrangement for the power project will reduce project financing costs below costs of comparable public power projects.

(b) The authority may make loans from the power project fund

(1) to electric utilities, regional electric authorities, municipalities, regional and village corporations, village councils, independent power producers, and nonprofit marketing cooperatives to pay the costs of

(A) reconnaissance studies, feasibility studies, license and permit applications, preconstruction engineering, and design of power projects;

(B) constructing, equipping, modifying, improving, and expanding small-scale power production facilities that are designed to produce less than 10 megawatts of power, bulk fuel storage facilities, and transmission and distribution facilities, including energy production, transmission and distribution, waste energy, energy conservation, energy efficiency, and alternative energy facilities and equipment; and

(C) reconnaissance studies, preconstruction engineering, design, construction, equipping, modification, and expansion of potable water supply including surface storage and groundwater sources and transmission of water from surface storage to existing distribution systems;

(2) to a borrower for a power project or for bulk fuel, waste energy, energy conservation, energy efficiency, or alternative energy facilities or equipment if

(A) the loan is entered into under a leveraged lease financing arrangement;

(B) the party that will be responsible for the power project is an electric utility, regional electric authority, municipality, regional or village corporation, village council, independent power producer, or nonprofit marketing cooperative; and

(C) the borrower seeking the loan demonstrates to the authority that the financing arrangement for the power project will reduce project financing costs below costs of comparable public power projects.

(c) Before making a loan from the power project fund, the authority shall, by regulation, specify

(1) standards for the eligibility of borrowers and the types of projects to be financed with loans;

(2) standards regarding the technical and economic viability and revenue self-sufficiency of eligible projects;

(3) collateral or other security required for loans;

(4) the terms and conditions of loans;

(5) criteria to establish financial feasibility and to measure the amount of state assistance necessary for particular projects to meet the financial feasibility criteria; and

(6) other relevant criteria, standards, or procedures.

(d) A loan made by the authority shall be made according to the standards, criteria, and procedures established by regulation under this section.

(e) Repayment of the loans shall be secured in any manner that the authority determines is feasible to assure prompt repayment under a loan agreement entered into with the borrower. The authority may make an unsecured loan from the power project fund to a borrower regulated by the Regulatory Commission of Alaska under Section 42.05 if the borrower has a substantial history of repaying long-term loans and the capacity to repay the loan. Under a loan agreement, repayment may be deferred for 10 years or until the project for which the loan is made has achieved earnings from its operations sufficient to pay the loan, whichever is earlier.

(f) Power projects are subject to the following limitations on interest and specific restrictions:

(1) power projects for which loans are outstanding from the former water resources revolving loan fund (former Section 45.86) on July 13, 1978, may receive additional financing from the power project fund; if granted,

(A) the term of the additional financing may not exceed 50 years;

(B) the interest of the additional financing must be at a rate of not less than three or more than five percent a year on the unpaid balance;

(C) the grant of the additional financing must be conditioned on the repayment of loan principal and interest to begin on the earlier of

(i) the date of the start of commercial operation of the project; or

(ii) 10 years from the date the loan is granted;

(2) a loan for a power project

(A) may not be granted for a term that exceeds 50 years; and

(B) shall be granted at an interest rate that is not less than zero percent and that is the lesser of

(i) a rate equal to the percentage that is the average weekly yield of municipal bonds for the 12 months preceding the date of the loan, as determined by the authority from municipal bond yield rates reported in the 30-year revenue index of the Weekly Bond Buyer; or

(ii) a rate determined by the authority that allows the project to meet criteria of financial feasibility established under (c) of this section.

(g) Loan repayments and interest earned by loans from the power project fund shall be deposited in the power project fund unless an appropriation to fund the loan directs otherwise.

(h) The legislature may forgive the repayment of a loan made from the power project fund for a reconnaissance study or a feasibility study when the authority finds that the power project for which the loan was made is not feasible.

(i) Money in the power project fund may be used by the legislature to make appropriations for costs of administering the fund.

(j) The authority may not enter into a loan from the power project fund for a major project unless it has legislative approval of the project and the amount. An appropriation for the loan that names the project constitutes approval required by this subsection. A major project is a project in which the cumulative state monetary involvement, through loans, grants, and bonds, is at least $5,000,000 or a project for which a loan of more than $5,000,000 has been requested.

(a) Two or more public utilities that purchase power from a power project acquired or constructed as part of the former energy program for Alaska and owned by the Alaska Energy Authority under Section 44.83.396 may form a joint action agency under Section 42.45.300 and under this section to purchase the power project from the Alaska Energy Authority if the purchase and sale of the project has first been authorized by law.

(b) The agency may

(1) acquire, own, operate, and manage one or more power projects or generating or transmission facilities; and

(2) participate in the design, development, construction, operation, and maintenance of a generating or transmission facility.

(c) The agency is a body corporate and politic and an instrumentality of the public utilities that form the agency, but has a separate and independent legal existence from the public utilities. A debt, obligation, or liability of the agency does not constitute a debt, obligation, or liability of a public utility or the state. A liability incurred by the agency shall be satisfied exclusively from the assets or revenue of the agency, and a creditor of the agency or any other person does not have any right of action or claim against a public utility or the state, because of a debt, obligation, or liability of the agency. The agency has the powers of a public utility under Section 42.05 and the immunities of a public utility. In addition to the powers granted to the agency under Section 42.45.300 and this section, the agency has the power

(1) to adopt bylaws of the agency;

(2) to sue and be sued;

(3) to carry out the authorized purposes of the agency;

(4) subject to (e) of this section, to issue revenue bonds and other obligations that are not obligations of either the state or the public utilities that are parties to the agency agreement to provide financing to carry out the authorized purposes of the agency;

(5) in addition to the powers of eminent domain in Section 42.05.631 , to exercise the powers of eminent domain and a declaration of taking to acquire land or materials within the boundaries of the power project purchased by the agency from the Alaska Energy Authority under the procedures set out in Section 09.55.240 - 09.55.460 to carry out the authorized purposes of a joint action agency; and

(6) to use facilities, projects, and related assets owned, leased, or operated by the joint action agency as security in accordance with applicable law.

(d) The agency is created by a written agreement among the public utilities forming the agency. Each public utility forming the agency shall adopt the terms of the agreement by ordinance or resolution. After the public utilities that are parties to the agency agreement adopt and execute the agreement, the board of directors of the agency shall file the agency agreement with the Department of Commerce, Community, and Economic Development. Subject to (c) of this section, the agency agreement may define the powers, functions, and activities of the agency and specify the means by which they shall be performed. The agency agreement may establish the rights and responsibilities of the public utilities that form the agency. If applicable, the agency agreement must provide for

(1) apportionment between the public utilities that are parties to the agency agreement of responsibility for expenses incurred in the performance of the functions or activities;

(2) apportionment of fees or other revenue derived from the functions or activities and the manner in which the revenue shall be accounted for;

(3) the transfer of personnel and the preservation of employment benefits; and

(4) the rights of the public utilities that are parties to the agency agreement to terminate the agreement, subject to (e) of this section, including resolving disputes if the public utilities are unable, upon termination of the agency agreement, to agree on the transfer of personnel or the division of assets and liabilities between the parties to the agreement.

(e) The public utilities that are parties to the agency agreement shall pledge and agree with the holders of revenue bonds or other obligations issued by the agency, including with a state entity that provides financing to the agency, that the public utilities and the agency will not terminate the agency or take any other action that would limit or alter the rights and powers vested in the agency by this section to fulfill the terms of a contract made by the agency with the holders of the bonds or other obligations and that the public utilities and the agency will not in any way impair the rights and remedies of the holders until the bonds or other obligations, together with the interest on them with interest on unpaid installments of interest, and all costs and expenses in connection with an action or proceeding by or on behalf of the holders of the bonds or other obligations are fully met and discharged. The agency may include this pledge and agreement of the public utilities and the agency, insofar as it refers to holders of bonds and other obligations of the agency, in a contract with the holders and, insofar as it relates to a state entity, in a contract with the state entity.

(f) Bonds and other obligations issued by the agency and all interest and income from them and all fees, charges, funds, revenue, income, and other money pledged or available to pay or secure the payment of the bonds or obligations or interest on them are exempt from taxation. The real and personal property of the agency and the assets, income, and receipts of the agency are exempt from all taxes and special assessments of the state or a political subdivision of the state, except that electricity sold at retail by an agency is subject to the electric cooperative tax (Section 10.25.540 - 10.25.570).

(g) A loan to, investment in, or other financial assistance provided to the agency by the state or any political subdivision of the state does not constitute a violation of Section 37.10.085 .

(h) An agency formed by, and that continues to include, one or more municipal public utilities is a political subdivision for purposes of Section 38.05.810 , and functions as a political subdivision in the acquisition and ownership of the power project under the agreement authorized by this section. Except as provided in this subsection, the agency is not a political subdivision of the state.

(i) The agency may not sell a project owned by the agency to any purchaser without the approval of the legislature in advance of the effective date of the sale, except that a sale made to a public utility that is a party to the agreement does not require legislative approval.

(j) Notwithstanding (i) of this section, the project and related assets may be transferred in connection with a foreclosure or other enforcement of a lien or security interest to a party holding a lien or security interest acquired under (c)(6) of this section or to another party without legislative approval. A party obtaining a property interest under this subsection may transfer that interest without legislative approval.

(k) In this section,

(1) 'agency' means a joint action agency formed under this section;

(2) 'agency agreement' or 'agreement' means the written agreement described in (d) of this section between or among the public utilities creating a joint action agency;

(3) 'parties to the agency agreement' means those public utilities that initially form the agency and,

(A) in the event of a permitted withdrawal of a public utility from the agency in accordance with the terms of the agency agreement, those public utilities that remain parties to the agency agreement; and

(B) if authorized by law, includes an additional public utility that becomes a party to the agency agreement;

(4) 'public utility' has the meaning given the term in Section 42.05.990 ;

(5) 'state entity' means a state department, authority, or other administrative unit of the executive branch of state government.