FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
---------------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-42125
Chugach Electric Association, Inc.
(Exact name of registrant as specified in its charter)
Alaska 92-0014224
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5601 Minnesota Drive Anchorage, Alaska 99518
(Address of principal executive offices) (Zip Code)
(907) 563-7494
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT AUGUST 1, 1997
NONE NONE
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
INDEX
Part I. Financial Information Page Number
Balance Sheets, June 30, 1997 (Unaudited) and December 31, 1996 3
Statements of Revenues, Expenses and Patronage Capital, Three Months
Ended June 30, 1997 and 1996 and Six Months Ended June 30, 1997
and 1996 (Unaudited) 5
Statements of Cash Flows, Six Months Ended June 30, 1997 and 1996
(Unaudited) 6
Notes to Financial Statements (Unaudited) 7
Management's Discussion and Analysis of Results of Operations and
Financial Condition (Unaudited) 8
Part II. Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
2
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CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Assets
<TABLE>
June 30, 1997 December 31, 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Utility plant:
Electric plant in service ............................ $619,525,839 $615,464,060
Construction work in progress ........................ 20,762,842 19,826,957
------------ ------------
640,288,681 635,291,017
Less accumulated depreciation ........................ 223,977,082 215,411,223
------------ ------------
Net utility plant ................... 416,311,599 419,879,794
------------ ------------
Other property and investments, at cost:
Nonutility property .................................. 3,550 3,550
Investments in associated organizations .............. 7,626,275 7,647,189
Restricted cash - margins from economy
energy sales, all repurchase agreements ........... -- 1,599,239
------------ ------------
7,629,825 9,249,978
------------ ------------
Current assets:
Cash and cash equivalents ............................ 2,935,857 5,419,819
Cash - restricted construction funds ................. 1,232,844 1,371,386
Special deposits .................................... 89,232 89,232
Accounts receivable, net ............................. 12,774,100 15,369,883
Materials and supplies, at average cost .............. 16,036,677 16,187,592
Prepayments .......................................... 1,223,532 694,257
Other current assets ................................. 192,675 294,380
------------ ------------
Total current assets .................. 34,484,917 39,426,549
------------ ------------
Deferred charges .......................................... 14,308,117 13,932,109
------------ ------------
$472,734,458 $482,488,430
------------ ------------
</TABLE>
See accompanying notes to unaudited financial statements.
3
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CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Liabilities and Equities
<TABLE>
June 30, 1997 December 31, 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Equities and margins:
Memberships .............................................. $ 834,913 $ 812,748
Patronage capital ........................................ 104,205,721 100,685,517
Other .................................................... 2,896,998 2,979,677
------------ ------------
107,937,632 104,477,942
------------ ------------
Long-term obligations, excluding current installments:
First mortgage bonds payable ............................. 240,910,000 251,553,000
CoBank bonds payable ..................................... 56,227,479 56,352,847
------------ ------------
297,137,479 307,905,847
------------ ------------
Current liabilities:
Notes payable ............................................ 8,000,000 2,750,000
Current installments of long-term debt and
capital leases ........................................ 5,910,399 5,971,752
Accounts payable ......................................... 3,064,095 5,178,161
Consumer deposits ........................................ 1,048,599 1,066,906
Accrued interest ......................................... 6,878,541 7,076,388
Salaries, wages and benefits ............................. 3,682,300 3,583,422
Fuel ..................................................... 4,594,134 6,047,574
Other .................................................... 2,765,315 5,012,191
------------ ------------
Total current liabilities .................. 35,943,383 36,686,394
------------ ------------
Deferred credits .............................................. 31,715,964 33,418,247
------------ ------------
$472,734,458 $482,488,430
------------ ------------
</TABLE>
See accompanying notes to unaudited financial statements.
4
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CHUGACH ELECTRIC ASSOCIATION, INC.
Statements of Revenues, Expenses and Patronage Capital
<TABLE>
Three months ended June 30 Six months ended June 30
1997 1996 1997 1996
------------- ------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating revenues ............................ $ 31,111,608 $ 31,244,744 $ 69,621,947 $ 66,342,456
------------- ------------- ------------- -------------
Operating expenses:
Production ............................... 11,205,134 8,315,461 21,048,662 16,698,051
Purchased power .......................... 3,359,048 2,589,753 7,316,740 4,919,195
Transmission ............................. 824,501 703,488 1,754,180 1,586,694
Distribution ............................. 2,184,632 2,387,555 4,148,133 4,831,435
Consumer accounts ........................ 1,177,788 1,777,840 2,448,163 3,569,237
Administrative, general and other ........ 3,526,867 3,247,813 6,624,607 6,673,278
Depreciation and amortization ............ 5,278,641 5,202,482 10,550,444 10,237,550
------------- ------------- ------------- -------------
Total operating expenses ......... 27,556,611 24,224,392 53,890,929 48,515,440
------------- ------------- ------------- -------------
Interest:
On long-term debt ........................ 6,164,506 5,382,523 12,500,667 12,686,767
Other .................................... 261,849 314,902 322,838 500,835
Charged to construction - credit ......... (110,436) (115,824) (282,475) (238,095)
------------- ------------- ------------- -------------
Net interest expense ............. 6,315,919 5,581,601 12,541,030 12,949,507
------------- ------------- ------------- -------------
Net operating margins ............ (2,760,922) 1,438,751 3,189,988 4,877,509
------------- ------------- ------------- -------------
Nonoperating margins:
Interest income .......................... 189,201 219,982 337,828 391,144
Other .................................... 16,137 37,944 94,736 54,490
------------- ------------- ------------- -------------
Total nonoperating margins ....... 205,338 257,926 432,564 445,634
------------- ------------- ------------- -------------
Assignable margins ............... (2,555,584) 1,696,677 3,622,552 5,323,143
Patronage capital at beginning of period ...... 106,786,331 99,013,147 100,685,517 95,421,358
Retirement of capital credits and
estate payments ............................ (25,026) (49,084) (102,348) (83,761)
------------- ------------- ------------- -------------
Patronage capital at end of period ............ $104,205,721 $ 100,660,740 $ 104,205,721 $ 100,660,740
------------- ------------- ------------- -------------
</TABLE>
See accompanying notes to unaudited financial statements.
5
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Statement of Cash Flows
<TABLE>
Six months ended June 30
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Assignable margins ........................................................... $ 3,622,552 $ 5,323,143
------------ ------------
Adjustments to reconcile assignable margins to net cash used in operating
activities:
Depreciation and amortization ............................................ 10,550,444 10,237,550
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable .................................................... 2,595,783 3,301,815
Prepayments ............................................................ (529,275) (423,181)
Materials and supplies ................................................. 150,915 (1,602,987)
Deferred charges ....................................................... (376,008) 386,420
Other .................................................................. 1,839,486 (2,600)
Increase (decrease) in liabilities:
Accounts payable ....................................................... (2,114,066) (3,384,236)
Consumer deposits ...................................................... (18,307) (46,284)
Accrued interest ....................................................... (197,846) (838,909)
Deferred credits ....................................................... (1,702,283) (8,152,406)
Other .................................................................. (3,601,441) 4,673,332
------------ ------------
Total adjustments ................................................ 6,597,402 4,148,514
------------ ------------
Net cash provided by operating
activities ...................................................... 10,219,954 9,471,657
Cash flows from investing activities:
Extension and replacement of plant ........................................... (6,982,248) (4,518,014)
Investments in associated organizations ...................................... 20,913 79,139
------------ ------------
Net cash used in investing activities ............................ (6,961,335) (4,438,875)
------------ ------------
Cash flows from financing activities:
Short-term borrowings, net ................................................... 5,250,000 14,000,000
Proceeds from long-term debt ................................................. -- 21,500,000
Repayments of long-term debt ................................................. (10,829,721) (41,051,134)
Retirement of patronage capital .............................................. (102,348) (83,761)
Other ........................................................................ (60,512) (42,172)
------------ ------------
Net cash used by financing activities ............................ (5,742,581) (5,677,067)
------------ ------------
Net increase (decrease) in cash and
cash equivalents ............................................... (2,483,962) (644,285)
Cash and cash equivalents at beginning of period ................................ 5,419,819 5,879,483
------------ ------------
Cash and cash equivalents at end of period ...................................... $ 2,935,857 $ 5,235,198
------------ ------------
</TABLE>
See accompanying notes to unaudited financial statements.
6
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CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
June 30, 1997
(Unaudited)
1. Presentation of Financial Information
During interim periods, Chugach Electric Association, Inc. (Chugach)
follows the accounting policies set forth in its audited financial
statements included in Form 10-K filed with the Securities and Exchange
Commission. Users of interim financial information are encouraged to refer
to footnotes contained in Form 10-K when reviewing interim financial
results. Management believes that the accompanying interim financial
statements reflect all adjustments which are necessary for a fair statement
of the results of the interim period presented. All adjustments made in the
accompanying interim financial statements are of a normal recurring nature.
Certain reclassifications have been made to the 1996 financial statements
to conform to the 1997 presentation.
2. Lines of Credit
Chugach maintains a line of credit of $35 million with CoBank. The CoBank
line of credit expires August 1, 1998 but contains an annual automatic
renewal clause. At June 30, 1997, $8.0 million was outstanding at an
interest rate of 6.70%. In addition, the Association has an annual line of
credit of $50 million available at the National Rural Utilities Cooperative
Finance Corporation (NRUCFC). At June 30, 1997, there was no outstanding
balance. The NRUCFC line of credit expires October 1, 1997 but is expected
to be renewed.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
RESULTS OF OPERATIONS
Current Year Quarter Versus Prior Year Quarter
Operating revenues, which include sales of electric energy to retail,
wholesale and economy energy customers and other miscellaneous revenues,
decreased by .4% for the quarter ended June 30, 1997 from the same quarter in
1996. The decrease in revenues is largely attributable to Chugach's decision to
request a waiver from passing through increases under its fuel surcharge
mechanism. This desision was made in an effort to maintain overall price
stability. Chugach believes that the increases indicated for rates effective in
the third quarter of 1997 are the result of transitory and unusual occurrences
which have resulted in higher fuel prices and fuel consumption. Chugach further
believes that its natural gas prices are stabilizing and will decline from
current levels in 1998. Subsequent to Chugach's waiver request, AEG&T/MEA/Homer
filed comments with the APUC. AEG&T/MEA/Homer did not object to Chugach's
request for waiver from the standard rate adjustments under the fuel surcharge
methodology, however, their non-objection was subject to certain conditions not
acceptable to Chugach. Chugach is currently formulating its response for
submission to the APUC. It is not known at this time how the APUC will rule in
this proceeding. Based on the uncertainty with respect to recovery of these
amounts, Chugach has fully reserved the amount recorded in the fuel surcharge
balancing account and has not recorded the fuel surcharge adjustments as a
component of revenue. Chugach continues to evaluate the amount and timing of
recovery of these uncollected fuel surcharge amounts and may recover a portion
of such amounts in future periods. The effect that the decision regarding fuel
surcharges had on revenues more than offset higher kWh sales to retail,
wholesale and economy energy customers.
Retail demand and energy rates did not change from the second quarter of 1996 to
the same period in 1997. As previously reported, demand and energy rates charged
to the two wholesale customer classes were increased, effective in May 1996, on
an interim-refundable basis. These increases were slightly offset by refunds
granted pursuant to a Settlement Agreement between Chugach and AEG&T/MEA/Homer.
This agreement was approved by the APUC in February 1997. The refunds of amounts
collected under the interim-refundable rates were not material to Chugach's
financial position or results of operations.
Effective in February 1997, the wholesale rate classes were split into three
classes as opposed to the previous two. The classes are now MEA, Seward and
Homer (previously Seward was combined with MEA). Wholesale demand and energy
rates charged to MEA were decreased slightly effective February 1997. Demand and
energy rates to Homer and Seward did not change.
Pursuant to the aforementioned Settlement Agreement, Chugach may be required to
grant a refund to AEG&T/MEA/Homer retroactive to January 1, 1997 (based on the
1996 test year filing). The amount of this potential refund is not known at this
time.
8
<PAGE>
Higher fuel prices were the major cause for the increase in production expense
for the quarter ended June 30, 1997 compared to same period in 1996. As
previously reported, Chugach has completed the transition into Period 2 under
the long-term fuel supply contracts. Fuel costs now result from market-based
prices. Purchased power expense was higher for the quarter ended June 30, 1997
compared to the same period in 1996. This variance was substantially due to the
system operating scenario that existed during the second quarter of 1997.
Chugach purchased power from AEG&T's Soldotna 1 plant to ensure reliability on
the Kenai Peninsula. Additionally, all hydroelectric plant outputs were
significantly lower than forecasted levels due to reduced lake levels.
Transmission expense was also higher for the quarter ended June 30, 1997 from
the same period in 1996. The majority of this increase was caused by station
equipment maintenance activities being focused on distribution substations in
1996 versus transmission substations in 1997. Consumer accounts expense
decreased for the quarter ended June 30, 1997. The majority of this decrease was
due to a lower level of common information services costs being allocated to
this function.
Interest on long-term debt was higher for the quarter ended June 30, 1997 from
the same period in 1996. This was primarily caused by the reacquisition of
Chugach's Series A 2022 bonds. As previously reported, Chugach reacquired
approximately $36.0 million of the Series A 2022 bonds during the first and
second quarters of 1996. The net cost of these transactions was originally
charged to expense. Subsequently, Chugach determined that these costs were
recoverable through rates and established a regulatory asset that is being
amortized to expense over the life of the replacement debt. Other interest
expense decreased in the current period due to a lower average outstanding
balance on the short-term line of credit.
Current Year to Date Versus Prior Year to Date
Operating revenues for the six-month period ended June 30, 1997 increased
relative to the same period in 1996. These higher revenues were due mostly to
higher kWh sales. Rate impacts are outlined in the quarter-to-date comparison
section.
Production, purchased power, transmission and consumer accounts expense
increased for the six-month period ended June 30, 1997 for essentially the same
reasons outlined in the quarter-to-date comparison section. Distribution expense
decreased during the period due mostly to lower meter expenses caused by the
transfer of a portion of the connect/disconnect activities to another
department. The aforementioned focus on distribution station equipment
maintenance in 1996 versus transmission maintenance in 1997 also contributed to
the lower overall distribution expense for the six-month period ended June 30,
1997.
Other interest expense decreased for the six-months ended June 30, 1997 for the
same reason outlined above in the analysis of the quarter-to-quarter variance.
Financial Condition
Total assets declined by 2.0% from December 31, 1996 to June 30, 1997. The
decrease is due primarily to the lower balance in net utility plant. This lower
balance was caused by the higher accumulated depreciation reserve resulting from
the implementation of higher depreciation rates (the phase-in of updated
depreciation rates was completed in 1996). Restricted cash from economy energy
margins was returned to customers as an offset to the fuel surcharge
9
<PAGE>
mechanism, and the seasonal decline in accounts receivable also contributed
to the overall decrease in total assets. Notable changes to total liabilities
include the decrease in First Mortgage bonds payable resulting from the March
bond payment and the reacquisition of an additional $5.0 million of the Series A
2022 bonds during the second quarter of 1997. Other liabilities decreased due to
the return of the remaining portions of both the rate stabilization fund and the
submarine cable reserve to customers. As previously reported, Chugach made a
larger than normal draw on the CoBank line of credit due to logistics
considerations surrounding the payment of the March semi-annual bond payment.
This, combined with the $5.0 million reacquisition mentioned above, explains the
increase in the notes payable balance at June 30, 1997. This increase was more
than offset by the decreases in liabilities noted above.
Liquidity and Capital Resources
Chugach has satisfied its operational and capital cash requirements primarily
through internally generated funds, an annual $50 million line of credit from
National Rural Utilities Cooperative Finance Corporation (NRUCFC) and a $35
million line of credit with CoBank. At June 30, 1997, Chugach had $8.0 million
outstanding with CoBank which carried an interest rate of 6.70%. There were no
amounts outstanding on the NRUCFC line at June 30, 1997.
Capital construction in 1997 is estimated at $19.8 million. At June 30, 1997
approximately $7.0 million has been expended. Capital improvement expenditures
are expected to increase in the third quarter as the construction season began
in April and extends into October.
Chugach has negotiated a supplemental indenture (Third Supplemental Indenture of
Trust) with CoBank for up to $80 million in future bond financing. Chugach is in
the process of finalizing an amendment to the Third Supplemental Indenture of
Trust (Seventh Supplemental Indenture of Trust) that will eliminate the maximum
aggregate amount of bonds the company may issue. At June 30, 1997, Chugach had
bonds in the amount of $56.5 million outstanding under this financing
arrangement. The balance is comprised of a $1.5 million bond (CoBank 1) which
carries an interest rate of 8.95% maturing in 2002, a $10 million bond (CoBank
2) priced at 7.76% due in 2005, a $21.5 million bond (CoBank 3), currently
priced at 6.70% (repriced monthly), and a $23.5 million bond (CoBank 4)
currently priced at 6.70% (also repriced monthly). Principal payments on the
CoBank 3 and 4 bonds commence in 2003 and continue through 2022. Additionally,
Chugach has a similar supplemental indenture (Fifth Supplemental Indenture of
Trust) in place with NRUCFC also for $80 million. At June 30, 1997 there were no
amounts outstanding under this financing arrangement.
As previously reported, Chugach has reacquired $44.3 million of its Series A
2022 bonds. This strategy has been in response to the favorable long-term
interest rate environment. Chugach will continue to explore similar
reacquisition transactions if market conditions warrant such action. Except for
any further reacquisitions of its bonds (and any similar future refinancings),
Chugach does not anticipate issuance of additional long-term debt in 1997.
Chugach management continues to expect that cash flows from operations and
external funding sources will be sufficient to cover operational and capital
funding requirements in 1997 and
10
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thereafter.
Chugach's current ratios (total current assets divided by current liabilities)
at December 31, 1996 and June 30, 1997 were as follows:
Current Ratio
December 31, 1996 1.07
June 30, 1997 .96
Outlook
The competitive marketplace for the electric utility industry continues to
evolve. In recognition of this, Chugach is involved in national benchmarking
studies to improve system operations, has implemented strategic alliances with
key suppliers and has made significant progress in completing its new strategic
plan.
The latest step in the ongoing process to be ready for competition took place
recently when Chugach restructured its organization. Recognizing that the new
marketplace will probably be "unbundled" along the functional lines of
generation, transmission and distribution, and retail services, Chugach's new
organizational structure reflects these functions. Chugach now operates with
three divisions: Finance and Energy Supply, Transmission and Distribution
Network Services and Retail Services. This structure will better allow Chugach
to compete in the rapidly changing electric utility industry.
Environmental Matters
Refer to Part II, Item 1 for an update on the status of the Standard Steel
Salvage Yard Site litigation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Standard Steel Salvage Yard Site
As previously reported in the 10-Q for the period ending March 31, 1997, a cost
recovery action was filed in Federal District Court on December 27, 1991 by the
United States against Chugach and six other Potentially Responsible Parties
(PRPs) seeking reimbursement of removal and response action costs (Past Response
Costs) incurred by US EPA at the Standard Steel and Metals Salvage Yard
Superfund Site in Anchorage, Alaska (Site). The six other PRPs named in the
action are the Alaska Railroad, Westinghouse Electric Corporation, Sears,
Roebuck and Co., Montgomery Ward & Co., J.C. Penney Company, Inc. and
Bridgestone/ Firestone, Inc. In December, 1996, Chugach, the other named PRPs
and certain federal agency PRPs (Federal PRPs) entered into a Partial Consent
Decree. Under the Partial Consent Decree, Chugach and the other parties settled
claims for Past Response Costs as well as investigation and other costs incurred
with respect to the Site through December 1996. The Partial Consent
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Decree, however, did not settle Chugach's liability for future costs of
designing and performing the cleanup at the Site (Future Costs).
Although the Partial Consent Decree does not settle Chugach's or the other
private PRPs' liability for Future Costs, the Partial Consent Decree does bind
the Federal PRPs and the Alaska Railroad to pay an aggregate share of 64% of
Future Costs. Chugach and the five other private PRPs have reached a separate
settlement to divide the remaining 36% of Future Costs among themselves. Under
that settlement, Chugach's percentage share of liability for Future Costs will
equal 14.89%. The private PRPs' agreement to perform remedial design and
remedial action (RD/RA) at the Site will be memorialized in a new Consent Decree
(RD/RA Decree) that is being negotiated between the private PRPs and the United
States. The RD/RA Decree contains the scope of work for the RD/RA as well as
settlement terms, including EPA's covenant not to sue Chugach and the other
private PRPs for Future Costs once the RD/RA is completed.
The estimate of Future Costs of RD/RA at the Site, as determined by Chugach's
consultants based on cost estimates contained in the FS report, ranges from
$5,231,200 to $6,619,800. The RD/RA Decree contains a cost estimate, as
determined by EPA and including a 50% cost overrun contingency, of $8,400,000.
Chugach's share of these estimated RD/RA expenses would range from approximately
$778,926 to $985,688. These amounts are only estimates, however, and the actual,
full scope of the S/S cleanup at the Site will not be known, and the projected
costs associated with the remedy cannot be refined, until EPA approves remedial
design documents.
Under the RD/RA Decree, Chugach and the other PRPs will be required to reimburse
the United States for EPA oversight costs and DOJ enforcement costs relating to
the RD/RA. Those costs have been estimated by the United States to equal
approximately $676,000. Chugach's share of these estimated oversight and
enforcement costs would equal $100,656. In addition, one of the private PRPs,
Montgomery Ward, recently filed for bankruptcy protection and likely will not be
executing the RD/RA Consent Decree. As a result, Chugach will be paying an
additional sum equal to Chugach's percentage share of Montgomery Ward's share of
Future Costs. This additional sum is estimated to be approximately $12,600 given
current estimates of Future Costs, EPA oversight costs and DOJ enforcement
costs.
Based on the above estimates, the total amount that may be paid by Chugach under
the RD/RA Decree ranges from approximately $892,182 to $1,098,944. These
amounts, particularly the projected EPA oversight costs, are only estimates and
are subject to change. In addition, the RD/RA Decree contains reservation of
rights allowing EPA to seek further response actions and payments from the PRPs
under certain circumstances, including for costs associated with alleged natural
resource damages. At this time, no claims have been made pertaining to alleged
natural resource damages and no prediction can be made whether EPA will request
activities through its reservation of rights under the RD/RA Decree. Finally, it
is uncertain whether Chugach and the other PRPs will enter into the RD/RA Decree
with EPA until negotiations are completed.
Four of Chugach's insurance carriers have agreed under a reservation of rights
to pay, and currently are paying, Chugach's costs of defense for the Site. The
carriers have reserved their rights regarding indemnification of Chugach for
response costs. Management believes that all
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past and future costs incurred for response, removal, investigation and cleanup
of the Site would be fully recoverable in rates or covered by insurance and
therefore would have no impact on Chugach's financial condition or results of
operations.
Items 2, 3, 4 and 5
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Bylaws of the Registrant (as amended April 30, 1997).
Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended June 30, 1997.
13
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHUGACH ELECTRIC ASSOCIATION, INC.
By: /s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Date: August 14, 1997
By: /s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Executive Manager, Finance &
Energy Supply
Date: August 14, 1997
14
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EXHIBITS
Listed below are the exhibits which are filed as part of this Report:
Exhibit
number Description Page **
3.2 Bylaws of the Registrant (as amended April 30, 1997). 16
27 Financial Data Schedule **
** Filed Electronically
15
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Chugach Electric Association, Inc. is a cooperative, owned by its more than
54,300 members. These bylaws are the framework of the organization.
As a member, you are entitled to vote for the directors who oversee Chugach.
Directors are elected each spring in conjunction with the cooperative's annual
meeting. At the same time members vote on any proposed
changes to these bylaws.
Proposed bylaw amendments may be submitted to:
Bylaws Committee
c/o Chugach General Counsel
P. O. Box 196300
5601 Minnesota Drive
Anchorage, Alaska 99519-6300
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
BYLAWS
(As Amended April 30, 1997)
<PAGE>
TABLE OF CONTENTS
ARTICLE I MEMBERSHIP Page
Section 1 Requirements for Membership.......................1
Section 2 Membership Certificates...........................1
Section 3 Joint Membership..................................1
Section 4 Conversion of Membership..........................2
Section 5 Membership and Service Connection Fees............2
Section 6 Purchase of Electric Energy.......................2
Section 7 Termination of Membership.........................3
ARTICLE II RIGHTS AND LIABILITIES OF
MEMBERS
Section 1 Property Interest of Members......................3
Section 2 Non-liability for Debts of the Association........4
ARTICLE III MEMBERS, MEETINGS AND
ELECTIONS
Section 1 Annual Meeting....................................4
Section 2 Special Meetings..................................4
Section 3 Notice of Members' Meetings.......................4
Section 4 Waiver of Notice..................................5
Section 5 Quorum............................................5
Section 6 Voting............................................5
Section 7 Order of Business.................................6
Section 8 Elections and Election Committee..................6
ARTICLE IV DIRECTORS
Section 1 General Powers................................... 9
Section 2 Election and Tenure of Office.....................9
Section 3 Qualifications...................................10
Section 4 Nominations..................................... 11
Section 5 General Manager and Financial Advisor............12
Section 6 Policy, Rules and Regulations....................12
Section 7 Removal of Directors by Members..................12
Section 8 Vacancies........................................12
Section 9 Compensation.....................................13
ARTICLE V MEETINGS OF DIRECTORS
Section 1 Regular Meeting .................................13
Section 2 Special Meetings ................................14
Section 3 Quorum ..........................................14
Section 4 Director Attendance .............................14
Section 5 Membership Attendance ...........................15
Section 6 Minutes .........................................15
Section 7 Telephonic Board Meetings........................15
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ARTICLE VI OFFICERS
Section 1 Number ..........................................16
Section 2 Election and Term of Office .....................16
Section 3 Removal of Officers and Agents by
Directors....................................16
Section 4 President........................................17
Section 5 Vice-President ..................................17
Section 6 Secretary .......................................17
Section 7 Treasurer .......................................18
Section 8 Delegation of Duties ............................18
Section 9 Bonds of Officers................................18
Section 10 Budget ..........................................18
Section 11 Reports..........................................19
ARTICLE VII PATRONAGE CAPITAL
Section 1 Patronage Capital ...............................19
ARTICLE VIII FISCAL MANAGEMENT AND
ACCOUNTING
Section 1 Revenues and Expenditures .......................20
Section 2 Accounting System and Reports ...................20
Section 3 Disclosure ......................................21
ARTICLE IX DISPOSITION OF PROPERTY
Section 1 Disposition of Property .........................21
ARTICLE X SEAL ............................................21
ARTICLE XI FINANCIAL TRANSACTIONS
Section 1 Contracts .......................................21
Section 2 Checks, Drafts, etc. ............................22
Section 3 Deposits ........................................22
Section 4 Fiscal Year .....................................22
Section 5 Full and Open Competitive Bidding................22
ARTICLE XII MISCELLANEOUS
Section 1 Membership in Other Organizations................22
Section 2 Waiver of Notice.................................23
Section 3 Interpretation...................................23
<PAGE>
ARTICLE XIII AMENDMENTS
Section 1 Notice...........................................23
Section 2 Bylaws Committee.................................23
ARTICLE XIV ADVISORY COUNCIL
Section 1 Member Advisory Council..........................24
Section 2 General Duties...................................24
ARTICLE XV STANDING AND AD HOC
COMMITTEES
Section 1 General..........................................24
Section 2 Compensation.....................................24
Section 3 Terms............................................24
Section 4 Membership.......................................24
Section 5 Vacancy..........................................25
ARTICLE XVI INDEMNIFICATION .................................25
ARTICLE XVII MEMBER ACCESS TO INFORMATION
Section 1 Access Rights....................................25
Section 2 Charges..........................................26
Section 3 Policies and Procedures..........................26
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
BYLAWS
ARTICLE I
MEMBERSHIP
SECTION 1. Requirements for Membership. Any
person, firm, association, corporation, or body politic, or
subdivision thereof, shall become a member of CHUGACH
ELECTRIC ASSOCIATION, INC. by:
(a) Making a written application for membership therein;
(b) Agreeing to purchase from the Association electric
energy as hereinafter specified;
(c) Agreeing to comply with, and be bound by, the
articles of incorporation and bylaws of the
Association, and any rules and regulations adopted by
its board of directors; and
(d) Paying the membership fee hereinafter specified.
No person may hold more than one membership in the Association, and no
membership in the Association shall be transferable, except as provided in these
bylaws.
SECTION 2. Membership Certificates. Membership in the Association shall be
evidenced by a membership certificate, which shall be in such form and shall
contain such provisions as shall be determined by the board of directors. No
membership certificate shall be issued for less than the membership fee fixed in
these bylaws, nor until such membership fee has been paid. In case a certificate
is lost, destroyed or mutilated, a new certificate may be issued therefore upon
such uniform terms and indemnity to the Association as the board of directors
may prescribe.
SECTION 3. Joint Membership. A husband and wife may apply for a joint
membership and, subject to the compliance with the requirements set forth in
Section 1 of this Article, may be accepted for such membership. The term
"member" as used in these bylaws shall be deemed to include a husband and wife
holding a joint membership, and any provisions relating to the rights and
liabilities of membership shall apply equally with respect to the holders of a
joint membership. Without limiting the generality of the foregoing,
the effect of the hereinafter specified actions by, or in respect to, the
holders of a joint membership shall be as follows:
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(a) The presence at a meeting of either or both shall be regarded as the
presence of one member and shall have the effect of constituting a
joint waiver of notice of the meeting;
(b) The vote of either separately, or both jointly, shall
constitute one joint vote;
(c) A waiver of notice signed by either or both shall
constitute a joint waiver;
(d) Notice to either shall constitute notice to both;
(e) Expulsion of either shall terminate the joint
membership;
(f) Withdrawal of either shall terminate the joint
membership;
(g) Either, but not both, may be elected or appointed as an officer or
director, provided that both meet the qualifications for such office.
SECTION 4.Conversion of Membership. (a) A membership may be converted to a
joint membership upon the written request of the holder thereof, and the
agreement by such holder to comply with the articles of incorporation, bylaws,
and rules and regulations adopted by the board of directors. The membership
certificate shall be reissued by the Association in such manner as shall
indicate the changed membership status.
(b) Upon the death of a married member the surviving spouse shall succeed
to the membership. The membership certificate shall be reissued in such manner
as shall indicate the changed membership status; provided, however, that the
estate of the deceased shall not be released from any debts due the Association.
SECTION 5. Membership and Service Connection Fees. The non-refundable
membership fee shall be five dollars. Payment of the membership fee and
completion of a membership application are conditions of service. The board of
directors may also, as a condition of service, require the payment of a consumer
deposit or the furnishing of other acceptable security.
SECTION 6. Purchase of Electric Energy. Each member shall, as soon as
electric energy shall be available, purchase from the Association all electric
energy purchased for use on the premises specified in his application for
membership, unless the member is an electric public utility purchasing electric
energy for resale. Each member shall pay monthly at rates which shall from time
to time be fixed by the board of directors.
<PAGE>
The board of directors may limit the amount of electric energy which the
Association shall be required to furnish to its member(s). Each member shall pay
to the Association such minimum amount per month, regardless of the electric
energy consumed, as shall be fixed by the board of directors from time to time.
Each member shall also pay all amounts owed by him to the Association as and
when the same shall become due and payable. Production or use of electric energy
on such premises, regardless of the source thereof, by means of facilities which
shall be interconnected with the Association's facilities, shall be subject to
appropriate regulations as shall be fixed from time to time by the Association.
SECTION 7. Termination of Membership. (a) Any member of the Association may
withdraw from membership with written notice. Additionally, the board, by at
least a two-thirds vote of all members of the board, may expel any member who
fails to comply with Association regulations. Members subject to expulsion will
be contacted in writing by the Association and will have ten (10) days to comply
with Association regulations. An expelled member may be reinstated by a majority
vote of the board or by a vote of the members at any annual or special meeting.
The board may also cancel membership if the member:
1) has not purchased electric energy for six (6) months;
2) has had a disconnect order active for thirty (30) days
without signing a reconnect order; or
3) has been disconnected because of nonpayment of electric energy debts to
the Association provided that this delinquency has continued for at
least thirty (30) days after termination of service.
(b) Upon the withdrawal, death, cessation of existence or expulsion of a
member, the membership of such member shall thereupon terminate, except as
provided in Article 1, Section 4. Termination of membership in any manner shall
not release a member or his estate from any debts due the Association.
ARTICLE II
RIGHTS AND LIABILITIES OF MEMBERS
SECTION 1. Property Interest of Members. Upon dissolution, after paying, or
discharging, or adequately providing for the payment or discharge of all its
debts, obligations and liabilities, other than those to patrons arising by
reason of their patronage, the Association shall distribute any remaining sums,
first to patrons for the pro rata return of all amounts standing to
<PAGE>
their credit by reason of their patronage, and second, to members for the pro
rata repayment of membership fees. Any sums then remaining shall be distributed
among its members and former members in proportion to their patronage, except as
participation in such distribution may have been legally waived. In the event of
the lawful liquidation, through transfer or sale of all the property and assets
of the Association, the proceeds of such liquidation, transfer or sale shall be
distributed in the same manner as hereinabove provided for in the case of
dissolution.
SECTION 2. Non-liability for Debts of the Association. The private property
of the members shall be exempt from execution or other liability for the debts
of the Association, and no members shall be liable or responsible for any debts
or liabilities of the Association.
ARTICLE III
MEMBERS, MEETINGS AND ELECTIONS
SECTION 1. Annual Meeting. The annual meeting of the members shall be held
on such convenient date, on or after the 1st day of April, and on or before the
1st day of May of each year, at such place or building in the Municipality of
Anchorage, State of Alaska, as shall be designated by the board of directors in
the notice of meeting, for the purpose of electing directors, passing upon
reports for the previous fiscal year, and transacting such other business as may
come before the meeting. Failure to hold the annual meeting at the designated
time shall not work a forfeiture or dissolution of the Association.
SECTION 2. Special Meetings. Special meetings of the members may be called
by resolution of the board of directors, or upon a written request signed by any
four directors to the president, or by a written request made to the president
and signed by not less than ten percent (10%) of the members and it shall
thereupon be the duty of the secretary to cause notice of such meeting to be
given as hereinafter provided. Special meetings of the members may be held at
any place within the Municipality of Anchorage specified in the notice of the
special meeting.
SECTION 3. Notice of Members' Meetings. Written notice stating the place,
day and hour and agenda of the annual meeting shall be delivered by mail to each
member not less than thirty (30) or more than sixty (60) days before the date of
the meeting. Notice of a special meeting of the members, including but not
limited to a meeting where a merger or dissolution of the Association, or sale,
transfer or other disposal of all or a substantial portion of the assets of the
Association is to be voted on, shall be delivered, together with notice of the
purpose for
<PAGE>
which the meeting is called, not less than ninety (90) or more than 120 days
before the date of the meeting, with notice of a public hearing on the proposed
action to be held not less than sixty (60) days before the meeting. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the member at his address as it appears on the records of the
Association, with postage thereon prepaid. The failure of any member to receive
notice of an annual or special meeting of the members shall not invalidate any
action which may be taken by the members at any such meeting.
SECTION 4. Waiver of Notice. Repealed April 23,
1986.
SECTION 5. Quorum. Fifty (50) members present in person shall constitute a
quorum for a regular or special meeting of the members. No business shall be
conducted at a regular or special meeting of the members lacking a quorum,
except for counting marked ballots as specified in this Article III, Section
8(d) and announcing the results thereof. If less than a quorum is present at any
meeting of the members, a majority of those present may adjourn the meeting to
another date and time no later than 90 days after the adjourned meeting at a
place within the Municipality of Anchorage, provided that the Secretary shall
notify all members of the date, time and place of such adjourned meeting by
delivering notice thereof no later than ten days in advance of such meeting.
SECTION 6. Voting. (a) Each member shall be entitled to only one vote upon
each matter submitted to a vote at a meeting of the members. All questions shall
be decided by a vote of a majority of the members voting thereon in person,
except as otherwise provided by law, the articles of incorporation, or these
bylaws.
(b) A non-natural member may designate an individual to vote on its behalf,
in accordance with the member's own procedures. The election committee may
require the designated individual to submit satisfactory written proof of his
designation, prior to his voting.
(c) Members may vote by a mailed official ballot on the election of
directors, the amendment of bylaws, the merger or dissolution of the
Association, and the sale, transfer or disposal of all or a substantial portion
of the Association's assets.
(d) A minimum of five hundred valid ballots must be cast by mail or in
person to constitute a valid election of directors (except for filling of
vacancies under Article IV, Section 8) or to approve amendments to the bylaws.
Directors shall be elected by the plurality vote of the members. A minimum of
five hundred ballots must be cast in person to constitute a valid removal of a
director or directors. See Article IV, Sections 7 and 8.
<PAGE>
(e) An affirmative vote by ballot of at least 10 percent of the number of
members as of the date of the notice of the election is required to authorize
disposition of all or a substantial portion of the Association's property to
another cooperative, pursuant to Article IX, Section (1)(b).
(f) A merger of the Association must be approved by a majority of those
members voting, but in no event can the affirmative vote be less than 10 percent
of the number of members, as of the date of notice of the election.
(g) An affirmative vote by ballot of not less than the majority of the
number of members as of the date of the notice of the election is required to
authorize the Association to sell, lease, or otherwise dispose of all or a
substantial portion of the Association's property, as provided in Article IX,
Section 1(b).
SECTION 7. Order of Business. (a) The order of
business at the annual meeting of the members and, insofar as
possible, at all other meetings of the members, shall be
essentially as follows:
1) Report on the number of members present in person
in order to determine the existence of a quorum.
2) Reading of the notice of the meeting and proof of the
due publication or mailing thereof.
3) Reading of unapproved minutes of previous meetings of the members,
making technical changes only to the minutes, and approval thereof.
4) Presentation and consideration of reports of officers,
directors and committees.
5) Election of directors.
6) Unfinished business.
7) New business.
8) Adjournment.
(b) Proposed amendments to the bylaws upon which voting is being conducted
by ballot may be discussed at the annual meeting, but shall not be treated as
being before the annual meeting for action, other than passage or defeat of the
proposed amendments. They may not be further amended or tabled by action of the
annual meeting.
SECTION 8. Elections and Election Committee. (a) At
the beginning of each calendar year, and not less than ninety
(90) days prior to the annual meeting, the board of directors
shall appoint an election committee, as provided for in Article
<PAGE>
XV of these bylaws. The committee shall consist of the master election judge,
who shall chair the committee, and not more than twelve election judges. This
committee shall have the responsibility for conducting all voting by secret
ballot during the calendar year. The election committee shall devise such
procedures, and adopt such rules and regulations, subject to the approval of the
board of directors, as may be reasonably necessary or convenient to the
discharge of the election committee's responsibilities. These responsibilities
shall include, but are not limited to (1) the registration of members at the
annual or special meeting, and (2) the obligation of insuring the fairness,
impartiality, confidentiality, and integrity of the voting process. The master
election judge and election judges shall be selected from the Association
membership, with consideration for geographical representation. In case of a
vacancy, the board of directors shall appoint an Association member to complete
the unexpired term of the committee member.
(b) The election committee shall cause the preparation of an official
ballot containing the names of the candidates for the office of director and the
proposed bylaw amendments. The ballot shall be designed with the position of
names of the candidates changed as many times as there are candidates. As nearly
as possible, an equal number of ballots shall be printed after each change. In
making the changes of position, the name of the candidate shall be taken and
placed at the bottom and the column moved up so that the name that before was
second is first after the change. After the ballots are printed, they shall be
placed in separate stacks, one stack for each change of position. The ballots
shall then be gathered by taking one from each stack, the intention being that
every other ballot in the accumulated stack of ballots shall have the names of
the candidates in a different position. The ballot shall also include a brief
description concerning the number of offices to be filled at the election and
the time, place, and method of voting. At least thirty (30) days prior to the
meeting, an official ballot shall be mailed by the secretary to each member with
1) a statement of the number of directors' seats to be filled, 2) the
candidates' names and election statements, 3) an explanation of any other
matters to be voted on by mail, the proposed changes to the bylaws, with the
Bylaws Committee's comments and 4) a report covering the calendar year
immediately preceding the annual meeting prepared by the General Manager setting
forth the attendance record of directors at regular and special board meetings,
together with a summary setting forth the agenda business items voted and the
vote of each director. The candidates' statements:
1) Shall specify whether the candidate was nominated
by the Nominating Committee or by petition.
2) Shall specify whether the candidate is:
<PAGE>
(i) A member, officer, director, or employee of any union local
currently acting as a bargaining agent for Association
employees.
(ii) A person who has within the last two years had a financial
interest in a bid, proposal, project, or contract with
Chugach.
(iii) A spouse, child, brother, sister, parent,
stepparent, stepchild or stepsibling of: a)
any person included in subparagraph (i) or
(ii) above or b) an employee of the
Association.
3) May include a photograph of the candidate, and a
statement not to exceed 200 words.
The election committee shall procure a post office box where all ballots shall
be received.
(c) Mailed ballots, to be valid, must be received in the designated post
office box by 12:00 Noon three (3) calendar days prior to the annual meeting or
special meeting. In lieu of casting a ballot by mail, a member may register a
vote by special ballot at the meeting.
(d) The election committee shall make proper arrangements to secure all
ballots before, during, and following the election. Marked ballots shall be
counted as soon after the close of balloting as may be reasonable under the
circumstances. The results thereof will be announced as soon as the count is
completed. Marked ballots will be retained and secured for a period of ninety
(90) days following the election, after which time they may be destroyed.
(e) The election committee may employ such additional election clerks as
may be required to register members at the annual or special meeting, to assist
in the counting of the ballots and otherwise to ensure the efficient management
of the meeting and balloting. Each candidate for the office of director may have
a representative present during all times that ballots are being counted. The
decision of a majority of the election committee shall be conclusive with
respect to the eligibility of any person to vote and the validity of any ballot
cast.
(f) A recount of votes cast for a director's seat may only be requested by
a candidate in that election. A request for a recount must be made in writing
and received by the Election Committee within 10 days of the close of balloting.
The recount will be done in the same manner as and by the same entity that
performed the original vote count. If the recount indicates that the candidate
requesting the recount has lost the election by more than 1 percent of the total
votes cast, then the cost of the recount shall be borne by the candidate. If the
recount indicates
<PAGE>
that the candidate requesting the recount has either won a seat or lost by a
margin of 1 percent or less, then the cost of the recount shall be borne by the
Association.
A group of 10 or more members who voted in that election may request a
recount of the ballots for a bylaws change or ballot question. A request for a
recount must be made in writing and received by the Election Committee within 10
days of the close of balloting. The same provision for payment of the costs as
provided above shall prevail, with the voters who requested the recount paying
for the recount if the margin is greater than 1 percent, and the Association
bearing the expense if the margin is 1 percent or less.
(g) In the event of a tie for an election of a director, a bylaws change or
a ballot question, a recount of the ballots shall be done. The Association shall
bear the cost of recounts in the event of a tie. If the recount confirms the
existence of a tie, then a run-off election shall be conducted by mail within 60
days of the date the results of the recount are certified. The form and content
of the ballots shall comply with this Article III, Section 8(b). The run-off
election shall be conducted by the Election Committee. The provisions of this
Article III, Section 8(d), (e) and (f) shall apply.
ARTICLE IV
DIRECTORS
SECTION 1. General Powers. The management of the business and the affairs
of the Association shall be vested in a board of seven directors who shall
exercise all of the powers of the Association, except such as are by law, the
articles of incorporation, or by these bylaws conferred upon or reserved to the
members.
SECTION 2. Election and Tenure of Office. The persons named as directors in
the articles of incorporation shall compose the board of directors until their
successors shall have been elected and shall have qualified. Directors shall be
elected by secret ballot either mailed or cast in person at annual or special
meetings of the membership, by and from the members, to serve for a three-year
term, not to exceed three consecutive three year terms, until their successors
shall have been elected and qualify, provided that the directors elected to fill
vacancies as provided in Article IV, Section 8 of these bylaws, shall serve only
for the unexpired portion of the term vacated. Where the terms to be filled are
of different lengths, the longest term shall be given to the director receiving
the most votes. If the size of the board is subsequently increased, the initial
terms of the directors to fill the newly created seat or seats shall be
scheduled so that, as nearly as possible, an equal number of terms expire each
year. At each annual or special meeting, members shall be
<PAGE>
elected to fill the seats on the board which become vacant as contemplated by
Article IV, Section 8 of these bylaws.
SECTION 3. Qualifications. (a) A person shall be
eligible to serve as a director, who:
1) Has been a member and bona fide resident in the area
served by the Association for 12 continuous months
before appointment to the board, or the notice of the
election;
2) Is not in any way employed by a competing enterprise, however, an
employee of the Municipality of Anchorage who is not directly employed
by Municipal Light and Power is eligible to serve if he or she has no
fiduciary duties which in any way pertain to Municipal Light and Power;
3) Does not have a financial interest in a competing
enterprise;
4) Is not a supplier, contractor, consultant, or other
entity which does business with the Association or a
person with more than a 10% ownership interest in
a supplier, contractor, consultant, or other entity
which does business with the Association, except for
providers whose annual business with the
Association does not exceed $25,000;
5) Is not an employee of the Association nor a member,
officer, director, nor employee of any union local
currently acting as a bargaining agent for Association
employees;
6) Is not a person living in the same household with and
financially interdependent upon any person included
in paragraphs 2, 3, 4, and 5, above; and
7) Maintains i) his or her membership, ii) bona fide
residency in the area served by the Association, and
iii) a minimum of 12 continuous months of bona fide
residency in the area served by the Association
throughout his or her term of office.
(b) An individual who is the authorized representative of a non-natural
entity (corporation, association or partnership, for example) which itself is
qualified under subsection (a) may become or remain a director if he is
qualified under subsections (a)(1), (2), (3), (4), (5), (6) and (7). If the
individual or the non-natural member fails to meet the prescribed
qualifications, or if the non-natural member changes its authorized
representative, the individual shall become subject to removal under subsection
<PAGE>
(c), and the director's position shall become vacant, without power of
appointment by the non-natural member.
(c) Upon establishment of the fact that a director is holding office in
violation of any of the foregoing provisions including the disclosure provisions
of Article III, Section 8(b), subsection (2), the board of directors shall
remove such director from office unless the basis for disqualification is
remedied within thirty (30) days of notice of disqualification by the board of
directors.
(d) Directors are ineligible for employment by the Association for a period
of two (2) years after their term has expired.
(e) "Bona fide resident" is hereby defined to mean: 1) a
person whose primary residence is in the area served by the
Association, and who actually lives at this primary residence
with the intention to remain there permanently or indefinitely
and 2) a non-natural entity who chooses as their authorized
representative a person who is a "bona fide resident" as defined
in 1).
"Primary residence" shall mean the residence that is the chief or main
residence of the person and where the person actually lives for the most
substantial portion of the year. "Intention" shall mean the unequivocal
intention of the person as evidenced by that person's acts and words and by the
circumstances.
Nothing contained in this section shall affect in any manner whatsoever the
validity of any action taken at any meeting of the board of directors.
SECTION 4. Nominations. (a) Nominating Committee. It shall be the duty of
the board of directors to appoint, not less than one hundred and twenty days
before the dates of a meeting of the members at which directors are to be
elected, a committee on nominations, as provided for in Article XV of these
bylaws. The committee shall consist of not less than five nor more than seven
members, who shall be selected from different sections of the service area of
the Association as to insure equitable representation. No member of the board of
directors may serve on such committee. The committee shall seek qualified
candidates, as well as screen potential nominees. Public notice for nominations
shall be given ninety days prior to the meeting. The committee, keeping in mind
the principle of geographical representation, shall approve, prepare and post at
the principal office of the Association, at least seventy days before the
meeting, a list of nominations for directors, which may include a greater number
of candidates than are to be elected.
(b) Petition. Any fifty or more members, acting together, may make other
nominations by petition not less than sixty days prior to the election, and the
secretary shall post such nominations at the same place where the list of
nominations made by the committee is posted.
<PAGE>
SECTION 5. General Manager and Financial
Advisor. The board of directors may appoint the following:
(a) General Manager. The general manager may be but shall not be required
to be a member of the Association. The general manager, together with
such other staff, agents and employees as he may select shall perform
such duties and shall exercise such authority as the board of directors
may from time to time vest in him.
(b) Financial Advisor. The Board, at its sole discretion,
may engage the services of a financial advisor, which
may be used to advise on any and all fiscal matters.
The financial advisor shall report to the board.
SECTION 6. Policy, Rules and Regulations. The board of directors shall have
the power to make, adopt and enforce such policy, rules and regulations, not
inconsistent with law, the articles of incorporation, or these bylaws, as it may
deem advisable for the management of the affairs and business of the
Association, for the protection of its investment, and for the interest and
welfare of the members thereof. Such policy statements, rules and regulations
shall be in writing and shall be made available for review by the members.
SECTION 7. Removal of Directors by Members. Any member may bring charges
against a director and, by filing with the secretary such charges in writing,
together with a petition signed by at least 300 members, request the removal of
such director by reason thereof, provided, however, that the signatures of
members shall be acceptable only when affixed to a sheet on which the petition
therein is fully set forth; and, provided further, that the person who solicited
the signatures affixed to such petition shall acknowledge thereon before a
person authorized to take acknowledgments of deeds that he had read the petition
and the said charges against such director to each of the members prior to the
latter subscribing their names thereto. Such director shall be informed in
writing of the charges at least ten days prior to the meeting of the members at
which the charges are to be considered, and shall have an opportunity at the
meeting to be heard in person, or by counsel, and to present evidence in respect
to the charges; and the person or persons bringing the charges against him shall
have the same opportunity. The question of the removal of such director shall be
considered and voted upon at the meeting of the members. A minimum of five
hundred valid ballots must be cast in person with a majority in favor of removal
for such removal to be effective.
SECTION 8. Vacancies. (a) Vacancies caused by the
removal of directors by the members shall be filled for the
<PAGE>
remainder of the removed director('s) term by vote of the members at such
meeting as removal has occurred without compliance with Article IV, Section 4,
but subject, however, to the provisions of Article IV, Section 2 and 3, except
that the number of valid ballots cast equal to or greater than a quorum as
required by Article III, Section 5, shall be sufficient for such election.
(b) Any other vacancy occurring in the board shall be filled by the
affirmative vote of the majority of the remaining directors, and the member so
elected to the board shall serve until his successor has been elected. At such
election following the existence of such vacancy, the members shall elect one of
their number to serve as director during the unexpired portion of the term
vacated, subject, however to provisions of Article IV, Section 2, 3 and 4 of
these bylaws.
SECTION 9. Compensation. (a) Directors shall not receive any salary for
their services as directors, except that, by resolution of the board of
directors, a fixed fee and expenses of attendance, if any, may be allowed for
attendance at each meeting of the board of directors, or a meeting of a
committee thereof, or when a director is otherwise representing the Association
in an official capacity. No attendance other than regular or special board
meetings shall be reimbursed unless authorized in advance by the majority vote
of the board. The fixed fee shall not exceed $100.00 per meeting, and a director
may not be compensated for more than two regular board meetings per month, and
an additional 12 special board meetings per year. The total compensated meetings
shall not exceed 70 meetings per year for a director, and 85 meetings per year
for the president. The Association may not provide health insurance for
directors or their families, or insurance for risks except those incurred in
their capacity as directors.
(b) Directors' expense reimbursement requests shall be reviewed and
approved by the majority vote of the board. Directors may not receive salaries
for their services as directors, and, except in emergencies, shall not receive
salaries for their services in any other capacity without the approval of the
members.
ARTICLE V
MEETINGS OF DIRECTORS
SECTION 1. Regular Meeting. A regular meeting of the board of directors
shall be held without notice immediately after, and at the same place as, the
annual meeting of the members. A regular meeting of the board of directors shall
also be held monthly at such time and place in the Municipality of Anchorage,
State of Alaska, as the board of directors may provide by resolution. Such
regular monthly meetings may be
<PAGE>
held without notice other than such resolution fixing the time and place thereof
except that the board shall cause notice of the selection of the time and place
of the regular meetings to be given to the members promptly after it is
selected.
SECTION 2. Special Meetings. Special Meetings of the board of directors may
be called by the president, or by any three directors, and it shall thereupon be
the duty of the secretary to cause notice of such meetings to be given as
hereinafter provided. The president of the directors calling the meeting shall
fix the time and place, which shall be in the Municipality of Anchorage, State
of Alaska, for the holding of the meeting.
Written notice of the time, place and purpose of any special meetings of
the board of directors shall be delivered to each director not less than three
days previous thereto, either personally or by mail, by or at the direction of
the secretary, or upon default in duty by the secretary, by the president or the
directors calling the meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the director at
his address as it appears on the records of the Association, with postage
thereon prepaid.
SECTION 3. Quorum. A majority of the board of directors shall constitute a
quorum; provided, that if less than a majority of the directors are present at
said meeting, a majority of the directors present may adjourn the meeting from
time to time; and provided further, that the secretary shall notify any absent
directors of the time and place of such adjourned meeting. The act of the
majority of the directors present at the meeting at which a quorum is present
shall be the act of the board of directors. Each director present shall vote or
abstain on each motion. Each director shall disclose any financial interest of
the director or of a member of the director's immediate family in a matter
before the board.
SECTION 4. Director Attendance. If a director is absent from three
consecutive regular board meetings or four regular board meetings, whether
consecutive or not, or from 25% of all meetings, including regular and special
meetings, board workshops, and committee meetings, in either of the two six
month periods described below, the director shall be deemed to have resigned
from the board of directors, and the vacancy thereby resulting will be filled as
provided in Article IV, Section 8, of these bylaws. For purposes of compliance
with this bylaw, attendance will be evaluated for two separate six month periods
beginning May 1st and November 1st of each year. A director who is absent on
Association business, including reasonable travel time to and from such
business, shall not be counted absent, provided such travel and absence was
approved in advance by the board. For purposes of this Section, an absence shall
not be counted if it is excused by a vote of a majority of the
<PAGE>
members of the board not requesting the excuse at the next regular or special
board meeting. However, no more than two absences per director may be excused by
the board in either 6- month period.
SECTION 5. Membership Attendance. (a) Regular meetings, special meetings
and work sessions shall be open to all Association members. The notice of such
meeting and an agenda shall be posted in a conspicuous place in the public
places of business of the Association not later than three days prior to the
meeting. The board of directors shall adopt a policy establishing additional
means of providing public notice of meetings.
(b) No closed or executive sessions shall be held except to
discuss:
1) Matters the immediate knowledge of which would
clearly have an adverse effect on the Association's
finances;
2) Subjects that tend to prejudice the reputation and
character of a person; however, that person may
request a public discussion;
3) Matters discussed with an attorney for the Association, the immediate
knowledge of which could have an adverse effect on the Association's
legal position.
SECTION 6. Minutes. Minutes will be kept for all regular and special
meetings and shall include each director's vote on each matter voted upon by the
board of directors. Copies of the minutes shall promptly be given to Association
members upon request. The board of directors may prescribe a reasonable fee for
such copies provided such fee shall not exceed the actual labor and material
costs of reproduction. An electronic recording of all regular and special
meetings shall also be made and kept for at least one year; Association members
may request a transcription of the tape upon payment of the cost of
transcription by a court reporter service; members shall also be permitted to
listen to such tapes at the headquarters building.
SECTION 7. Telephonic Board Meetings. For the purpose of the holding of any
regular or special meeting, the Board of Directors can validly conduct such
meeting by communicating with each other by means of conference telephones or
similar communications equipment as allowed by law. Telephonic attendance by
directors shall be permitted without limitation if the director is unable to
attend in person due to Association business provided the absence was approved
in advance by the board as provided under Article V, Section 4. Telephonic
attendance for reasons other than Association business shall be limited to 25%
of the meetings by any one
<PAGE>
director for the 6-month period beginning May 1 and the 6- month period
beginning November 1. For attendance evaluation, a director is deemed absent
from each meeting where the telephonic attendance limit was exceeded.
The amendments to this Bylaw will take effect May 1, 1997.
ARTICLE VI
OFFICERS
SECTION 1. Number. The officers of the Association shall be a president,
vice-president, secretary and treasurer, and such other officers as may be
determined by the board of directors from time to time. The offices of secretary
and treasurer may be held by the same person.
SECTION 2. Election and Term of Office. The officers shall be elected
annually by ballot, by and from the board of directors, at the meeting of the
board of directors held immediately after the annual meeting of the members. If
the election of officers shall not be held at such meeting, such election shall
be held as soon thereafter as conveniently may be. Each officer shall hold
office until the first meeting of the board of directors following the next
succeeding annual meeting of the members, or until his successor shall have been
elected and shall have qualified. A vacancy in any office shall be filled by the
board of directors for the unexpired portion of the term.
SECTION 3. Removal of Officers and Agents by Directors. Any officer or
agent elected or appointed by the board of directors may be removed by the board
of directors whenever in its judgement the best interests of the Association
will be served thereby. In addition, any member of the Association may bring
charges against an officer and, by filing with the secretary such charges in
writing, together with a petition signed by at least a sufficient number of
members to constitute a quorum as defined in Section 5, Article III, may request
the removal of such officer by reason thereof; provided, however, that the
signatures of the members shall be acceptable only when affixed to a sheet on
which petition therein is fully set forth; and provided further, that the person
who solicited the signature affixed to such petition shall acknowledge thereon
before a person authorized to take acknowledgments of deeds that he had read the
petition and the said charges against such officer to each of the members prior
to the latter subscribing their names thereto. The officer against whom such
charges have been brought shall be informed in writing of the charges at least
ten days prior to the board meeting at which the charges are to be considered
and shall have an opportunity at the meeting to be heard in person, or by
counsel, and to present
<PAGE>
evidence in respect of the charges; and the person or persons bringing the
charges against him shall have the same opportunity. In the event the board does
not remove the officer, the question of his removal shall be considered and
voted upon at the next meeting of the members.
SECTION 4. President. The president shall:
(a) Be the principal executive officer of the Association and, unless
otherwise determined by the members or the board of directors, shall
preside at all meetings of the members and the board of directors;
(b) Sign any deeds, mortgages, deeds of trust, notes, bonds, contracts or
other instruments authorized by the board of directors to be executed,
except in cases in which the signing and execution thereof shall be
expressly delegated by the board of directors or these bylaws to some
other officer or agent of the Association, or shall be required by law
to be otherwise signed or executed; and
(c) In general, perform all duties incident to the office of president and
such other duties as may be prescribed by the board of directors from
time to time.
SECTION 5. Vice-President. In the absence of the president, or in the event
of his inability or refusal to act, the vice-president shall perform the duties
of the president, and when so acting, shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice-president shall
also perform such duties as from time to time may be assigned to him by the
board of directors.
SECTION 6. Secretary. The secretary shall be
responsible for:
(a) Keeping the minutes of the meetings of the members
and of the board of directors;
(b) Seeing that all notices are given in accordance with
these bylaws, or as required by law;
(c) The safekeeping of the corporate records and seal of the Association,
and affixing the seal of the Association to all documents, the
execution of which on behalf of the Association under its seal is duly
authorized in accordance with the provisions of these bylaws;
(d) Keeping a register of the names and post office
addresses of all members;
<PAGE>
(e) Keeping on file at all times a complete copy of the articles of
incorporation and bylaws of the Association containing all amendments
thereto, which copy shall always be open to the inspection of any
members, and at the expense of the Association, forwarding a copy of
the bylaws and of all amendments thereto to each member on request; and
(f) In general, performing all duties incident to the office of secretary,
and such other duties as from time to time may be assigned by the board
of directors.
SECTION 7. Treasurer. The treasurer shall be
responsible for:
(a) Custody of all funds and securities of the
Association;
(b) The receipt of, and the issuance of receipts for, all moneys due and
payable to the Association, and for the deposit of all such moneys in
the name of the Association in such bank or banks as shall be selected
in accordance with the provisions of these bylaws; and
(c) In general, performing all the duties incident to the office of
treasurer and such other duties as from time to time may be assigned by
the board of directors.
SECTION 8. Delegation of Duties. In the absence of an officer, or in the
event of his inability or refusal to act, the board of directors will appoint
one of their number to perform the duties of his office; provided that the
offices of president and vice-president may not be combined with any other
office; and, provided further, nothing herein shall limit the right and duty of
the vice-president to perform the duties of the president in the event that the
president is absent, is unable to act, or refuses to act. The board of directors
may provide for the delegation of one or more of the duties of the secretary and
treasurer.
SECTION 9. Bonds of Officers. The treasurer, and any other officer or agent
of the Association charged with responsibility for the custody of any of its
funds or property, shall give bond in such sum, and with such surety, as the
board of directors shall determine. The board of directors, in its discretion,
may also require any other officer, agent or employee of the Association to give
bond in such amount and with such surety as it shall determine.
SECTION 10. Budget. The Board of Directors shall
review, revise and approve an annual operating budget prior to
each fiscal year.
<PAGE>
SECTION 11. Reports. The officers of the Association shall submit, at each
annual meeting of the members, reports covering the business of the Association
for the previous fiscal year. Such reports shall set forth the condition of the
Association at the close of such fiscal year.
ARTICLE VII
PATRONAGE CAPITAL
SECTION 1. Patronage Capital. The Association shall at all times be
operated on a cooperative, nonprofit basis for the mutual benefit of its
patrons. The Association's operations shall be so conducted that all patrons,
members and non-members alike, will through their patronage furnish capital for
the Association, subject to the provisions for sinking funds and reserves as
provided by Article VIII of these bylaws.
In order to induce patronage and to assure that the Association will
operate on a nonprofit basis, the Association is obliged to account on a
patronage basis to all its patrons, members and non-members alike, for all
amounts received from the furnishing of electric energy in excess of operating
costs and expenses properly chargeable against the furnishing of electric
energy. All such amounts in excess of operating costs and expenses are received
with the understanding that they are furnished by the patrons, members and
non-members alike, as capital. The Association is obligated to pay all such
amounts in excess of operating costs and expenses to the patrons by credits to a
capital account for each patron. The books and records of the Association shall
be set up and kept in such a manner that at the end of each fiscal year the
amount of capital, if any, so furnished by each patron, is clearly reflected and
credited in an appropriate record to the capital account of each patron, and the
Association shall within a reasonable time after the close of the fiscal year
notify each patron of the amount of capital so credited to his account. All such
amounts credited to the capital account of any patron shall have the same status
as though they had been paid to the patron in cash in pursuance of a legal
obligation to do so, and the patron had then furnished the Association
corresponding amounts for capital. In the event of dissolution or liquidation of
the Association, after all outstanding indebtedness of the Association shall
have been paid, outstanding capital credits shall be retired without priority on
a pro rata basis before any payments are made on account of property rights of
members. If, at any time prior to dissolution or liquidation, the board of
directors shall determine that the financial condition of the Association will
not be impaired thereby, the capital then credited to patrons' accounts may be
retired in full or in part, according to policies adopted by the board. Capital
credited to the account of each patron shall be assignable only on the books of
the Association pursuant to
<PAGE>
written instructions from the assignor, and only to successors in interest or
successors in occupancy in all or a part of such patron's premises served by the
Association, unless the board of directors, acting under policies of general
application, shall determine otherwise. All other amounts received by the
Association from its operations in excess of costs and expenses shall, insofar
as permitted by law, be:
(a) Used to offset any losses incurred during the current
or any prior fiscal year; and
(b) To the extent not needed for that purpose, allocated to its patrons on
a patronage basis, and any amount so allocated shall be included as
part of the capital credited to the accounts of patrons, as herein
provided.
Notwithstanding any other provisions of these bylaws, the board of
directors, at its discretion, shall have the power at any time, upon the death
of any patron, if the legal representative of his estate shall request in
writing that the capital credited to any such patron be retired prior to the
time such capital would otherwise be retired under the provisions of these
bylaws, to retire capital credited to any such patron immediately upon such
terms and conditions as the board of directors, acting under policies of general
application, and the legal representative of such patron's estate shall agree
upon, provided, however, that the financial condition of the Association will
not be impaired thereby.
ARTICLE VIII
FISCAL MANAGEMENT AND ACCOUNTING
SECTION 1. Revenues and Expenditures. The board of directors shall adopt
and maintain a system of accounting for receipts and expenditures in conformance
with the laws of the United States and of the State of Alaska applicable to
cooperative associations and corporations, which system shall at all times
provide the proper reserves for payments of interest and principal on
outstanding indebtedness, reserves for taxes, insurance, depreciation,
replacement of capital plant and facilities, and such other reserves and
accounts as the board of directors shall deem proper.
SECTION 2. Accounting System and Reports. The accounting system adopted and
maintained by the board of directors shall conform to such rules and regulations
applicable to accounting systems, their establishment and operation, and which
may be established by any applicable laws, rules and regulations of the United
States, the State of Alaska, or any
<PAGE>
regulatory agency thereof of competent jurisdiction. The board of directors
shall also, after the close of each fiscal year, cause to be made a full,
complete and independent audit of the accounts, books, and financial conditions
of the Association as of the end of each fiscal year. A reasonably comprehensive
and easily understood summary of the audit report shall be submitted to the
members prior to each annual meeting.
SECTION 3. Disclosure. Repealed April 25, 1996.
ARTICLE IX
DISPOSITION OF PROPERTY
SECTION 1. Disposition of Property. (a) The board of directors shall have
full power and authority to authorize the execution and delivery of a mortgage
or mortgages, or a deed or deeds of trust, of any and all of the property,
rights, privileges, licenses, franchises and permits of the Association, whether
acquired or to be acquired, and wherever situated, as well as the revenues
therefrom, all upon such terms and conditions as the board of directors shall
determine, to secure any indebtedness of the Association.
(b) The Association may not sell, lease, or otherwise dispose of all or a
substantial portion of the Association's property unless such sale, lease, or
other disposition is authorized by the affirmative vote of not less than the
majority of all the members of the cooperative. However, the board of directors
may sell, lease, or otherwise dispose of all or a substantial portion of its
property to another cooperative, if authorized by a majority of those members of
the Association voting, but in no event can the affirmative vote be less than
10% of the members as of the date of notice of the election.
ARTICLE X
SEAL
The corporate seal of the Association shall be in the form of a circle and
shall have inscribed thereon the name of the Association and the words
"Corporate Seal, State of Alaska."
ARTICLE XI
FINANCIAL TRANSACTIONS
SECTION 1. Contracts. Except as otherwise provided in
these bylaws, the board of directors may authorize any officer
or officers, agent or agents, to enter into any contract, or execute
<PAGE>
and deliver any instrument, in the name and on behalf of the Association, and
such authority may be general or confined to specific instances.
SECTION 2. Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, and all notes, bonds or other evidences of indebtedness issued
in the name of the Association, shall be signed by such officer or officers,
agent or agents, employee or employees of the Association, and in such manner,
as shall from time to time be determined by resolution of the board of
directors.
SECTION 3. Deposits. All funds of the Association shall
be deposited from time to time to the credit of the Association
in such bank or banks as the board of directors may select.
SECTION 4. Fiscal Year. The fiscal year of the
Association shall begin on the first day of January of each year
and shall end on the thirty-first day of December of the same
year.
SECTION 5. Full and Open Competitive Bidding. It is deemed to be in the
best interest of the Association: to encourage and require full and open
competitive bidding of contracts; to take affirmative steps to insure that the
Association selects the lowest responsible bidder for its requirements from
among the broadest range of suppliers qualified by expertise and resources; and
to insure that responsible bidders are not excluded. These requirements shall
not apply in emergency matters, to professional service contracts, or (in the
discretion of the Association) to contracts reasonably expected to be less than
$50,000. The Directors shall require a review of the Association's bidding
procedures and qualifications and shall take such actions as may be in the best
interests of the Association as determined herein.
Within thirty (30) months of the passage of this Section 5, the Board of
Directors shall have fully implemented the provisions of this Section 5.
ARTICLE XII
MISCELLANEOUS
SECTION 1. Membership in Other Organizations.
The Association may, with the approval of the Board of
Directors, become a member or stockholder in non-profit
organizations which promote rural electrification, cooperatives,
civic or professional purposes, and any other corporation for the
purpose of acquiring electric facilities. The Association may
<PAGE>
become a member or stockholder of other organizations upon
approval of the members.
SECTION 2. Waiver of Notice. Any member or director may waive in writing
any notice of a meeting required to be given by these bylaws. The attendance of
a member or director at any meeting shall constitute a waiver of notice of the
meeting, unless the person participates in the meeting solely for the express
purpose of objecting to the transaction of any business on the ground that the
meeting has not been lawfully called or convened.
SECTION 3. Interpretation. Wherever the masculine
gender is used in these bylaws it shall be construed also to refer
to the feminine.
ARTICLE XIII
AMENDMENTS
SECTION 1. Notice. These bylaws may be altered, amended or repealed by the
members at any regular or special meeting, or by ballot as provided for in
Article III, Section 8, provided the notice of such meeting shall have contained
a copy of the proposed alteration, amendment or repeal. Notice to the membership
shall be given ninety days prior to the annual meeting election for submission
of recommended bylaw changes.
SECTION 2. Bylaws Committee. It shall be the duty of the board of directors
to appoint, not later than December 15th of each year, members to a committee on
bylaws, as provided in Article XV of these bylaws. The committee shall consist
of not less than five nor more than seven members, who shall be selected from
different sections of the service area of the Association so as to insure
equitable representation. No member of the board of directors may serve on such
a committee. The committee shall review the bylaws of the Association, consider
any recommendations for revisions thereof which may be made by the board of
directors or any member, and report their recommendations concerning the bylaws
to the annual membership meeting. Nothing herein shall be interpreted to limit
the authority of the board of directors to propose changes in the bylaws, or the
right of the members to call a special meeting for any proper purpose pursuant
to Article III, Section 2, herein.
<PAGE>
ARTICLE XIV
ADVISORY COUNCIL
SECTION 1. Member Advisory Council. The board of
directors shall create and establish a Member Advisory Council
to advise the board.
SECTION 2. General Duties. It shall be the duty of the board of directors
to appoint members to the advisory council, as provided in Article XV. Members
shall be selected from different sections of the service area to the Association
so as to insure equitable representation.
ARTICLE XV
STANDING AND AD HOC COMMITTEES
SECTION 1. General. This section shall apply to standing and ad hoc
committees which may from time to time be appointed by the board. Standing
committees include: the Election Committee, as provided for in Article III,
Section 8; the Nominating Committee, as provided for in Article IV, Section 4;
the Bylaws Committee, as provided for in Article XIII, Section 2; and the Member
Advisory Council, as provided for in Article XIV.
SECTION 2. Compensation. Members of standing and
ad hoc committees shall receive no compensation or gratuity for
their participation in the affairs of the Association.
SECTION 3. Terms. The terms of standing committee members shall be for no
more than three (3) years and be staggered so that, as nearly as possible,
one-third shall expire each year. Members may not serve consecutive terms on the
same committee.
SECTION 4. Membership. In order to be fairly representative of the
Association's diverse membership, it is preferable that standing and ad hoc
committees be comprised of members who reflect that diversity. Toward that end,
the selection process shall include consideration of the member's occupation,
education, experience, geographical area in which service is provided by the
Association, and type of service provided by the Association. A person is
eligible to serve on such committees provided that such person is not:
(a) an employee or director of the Association;
(b) a director, officer or employee of any union local currently
acting as a bargaining agent for Association employees;
<PAGE>
(c) a person employed by a competing enterprise, however, an employee of the
Municipality of Anchorage who is not directly employed by Municipal Light
and Power is eligible to serve if he or she has no fiduciary duties which
in any way pertain to Municipal Light and Power;
(d) a person having a financial interest in a competing
enterprise;
(e) a supplier, contractor, consultant or other entity which does business with
the Association or a person with more than a 20% ownership interest in a
supplier, contractor, consultant or other entity which does business with
the Association except for providers whose actual business with the
Association does not exceed $50,000; or
(f) a person living in the same household with and financially interdependent
upon any of the persons listed in (a) through (e), above.
SECTION 5. Vacancy. In the case of a vacancy, the board of directors shall
appoint an Association member in accordance with the provisions of this Article
to complete the unexpired term of a committee member.
ARTICLE XVI
INDEMNIFICATION
The Association shall indemnify and defend directors, officers, employees
or agents of the Association who are, or are threatened to be made, parties to
civil, criminal or administrative proceedings, for expenses (including
attorneys' fees), judgments, fines and settlements, actually and reasonably
incurred, if the acts complained of were performed within the scope of the
director's, officer's, employee's or agent's duties, and the director, officer,
employee or agent acted in good faith and in a manner he reasonably believed
should be in, or not opposed to, the best interests of the Association, and,
with respect to a criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The Association may purchase and maintain
insurance to provide for such indemnification and defense.
ARTICLE XVII
MEMBER ACCESS TO INFORMATION
SECTION 1. Access Rights. The rights of the members
to examine and make copies of the books and records of the
<PAGE>
Association at a reasonable time and for a proper purpose in accordance with
Alaska Statutes shall not be infringed. The following information is deemed to
be requested for a proper purpose without any showing whatsoever and shall be
made available to members on request of a member.
(a) Names and mailing addresses of Association members
when requested by a candidate running for election to the
Association Board;
(b) Salary, title, job classification and position description, benefits,
leave accrued and cashed-in, and hours worked, but not employee name, for each
employee position in the Association;
(c) Collective bargaining agreements of any kind to which
the Association is a party;
(d) Published information which shall include:
1) Documents provided to any regulatory authority
including, but not limited to Alaska Public Utilities
Commission (APUC), Federal Energy Regulatory
Commission (FERC) and Securities and Exchange
Commission (SEC) filings,
2) Documents provided in open session to the Board of
Directors or Association committees, including but
not limited to budget documents, feasibility studies,
audits or cost effectiveness studies, correspondence
between the Association and third parties and
minutes of Board of Directors or Association
committee meetings.
SECTION 2. Charges. The Association may charge no
more than the actual incremental cost of producing the above
information.
SECTION 3. Policies and Procedures. Nothing in this Article XVII prevents
the Association from allowing for additional disclosure of Association
information or from developing other rules for disclosure and payment therefor
by policy or procedure provided that the policy or procedure shall in no way
restrict the disclosure required in this Article XVII.
<PAGE>
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