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, 1998
---------------------------------
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, 1998
NONE NONE
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
INDEX
Part I. Financial Information Page Number
Balance Sheets, June 30, 1998 (Unaudited) and December 31, 1997 3
Statements of Revenues, Expenses and Patronage Capital, Three Months
Ended June 30, 1998 and 1997 and Six Months Ended June 30, 1998
and 1997 (Unaudited) 5
Statements of Cash Flows, Six Months Ended June 30, 1998 and 1997
(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 12
Signatures 14
2
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CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Assets
<TABLE>
June 30, 1998 December 31, 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Utility plant:
Electric plant in service ................... $613,943,672 $625,365,803
Construction work in progress ............... 22,846,167 24,664,395
------------ ------------
636,789,839 650,030,198
Less accumulated depreciation ............... 223,976,595 232,136,950
------------ ------------
Net utility plant .......... 412,813,244 417,893,248
------------ ------------
Other property and investments, at cost:
Nonutility property ......................... 3,550 3,550
Investments in associated organizations ..... 8,003,723 7,864,271
------------ ------------
8,007,273 7,867,821
------------ ------------
Current assets:
Cash and cash equivalents ................... 10,892,353 5,224,529
Cash - restricted construction funds ........ 415,846 364,778
Special deposits ............................ 91,164 151,703
Accounts receivable, net .................... 14,138,055 23,999,138
Materials and supplies, at average cost ..... 16,034,693 15,619,085
Prepayments ................................. 1,221,629 558,371
Other current assets ........................ 197,372 305,415
------------ ------------
Total current assets ......... 42,991,112 46,223,019
------------ ------------
Deferred charges ................................. 16,890,584 13,583,211
------------ ------------
$480,702,213 $485,567,299
------------ ------------
</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, 1998 December 31, 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Equities and margins:
Memberships ........................................ $ 883,428 $ 861,543
Patronage capital .................................. 111,325,582 104,800,092
Other .............................................. 3,410,323 3,458,062
------------ ------------
115,619,333 109,119,697
------------ ------------
Long-term obligations, excluding current installments:
First mortgage bonds payable ....................... 235,101,000 240,910,000
CoBank bonds payable ............................... 70,959,662 71,096,501
------------ ------------
306,060,662 312,006,501
------------ ------------
Current liabilities:
Current installments of long-term debt and
capital leases .................................. 6,076,817 5,913,512
Accounts payable ................................... 5,068,655 7,038,234
Consumer deposits .................................. 953,229 1,038,241
Accrued interest ................................... 6,759,609 6,904,335
Salaries, wages and benefits ....................... 3,954,857 3,655,101
Fuel ............................................... 4,896,417 6,611,415
Other .............................................. 2,037,153 3,300,310
------------ ------------
Total current liabilities ............ 29,746,737 34,461,148
------------ ------------
Deferred credits ........................................ 29,275,481 29,979,953
------------ ------------
$480,702,213 $485,567,299
------------ ------------
</TABLE>
See accompanying notes to unaudited financial statements.
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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
------------------------------ -----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating revenues ....................... $ 33,581,288 $ 31,111,608 $ 72,605,503 $ 69,621,947
------------- ------------- ------------- -------------
Operating expenses:
Production .......................... 10,834,413 11,205,134 22,679,791 21,048,662
Purchased power ..................... 2,023,671 3,359,048 4,260,866 7,316,740
Transmission ........................ 655,767 824,501 1,276,620 1,754,180
Distribution ........................ 2,329,226 2,184,632 4,491,893 4,148,133
Consumer accounts ................... 1,110,510 1,177,788 2,198,748 2,448,163
Administrative, general and other ... 4,101,796 3,526,867 7,946,433 6,624,607
Depreciation and amortization ....... 5,751,095 5,278,641 11,473,281 10,550,444
------------- ------------- ------------- -------------
Total operating expenses .... 26,806,478 27,556,611 54,327,632 53,890,929
------------- ------------- ------------- -------------
Interest:
On long-term debt ................... 6,301,510 6,164,506 12,680,768 12,500,667
Other ............................... 43,817 261,849 70,264 322,838
Charged to construction - credit .... (175,145) (110,436) (354,909) (282,475)
------------- ------------- ------------- -------------
Net interest expense ........ 6,170,182 6,315,919 12,396,123 12,541,030
------------- ------------- ------------- -------------
Net operating margins ....... 604,628 (2,760,922) 5,881,748 3,189,988
------------- ------------- ------------- -------------
Nonoperating margins:
Interest income ..................... 181,461 189,201 366,806 337,828
Other ............................... 52,624 16,137 351,628 94,736
------------- ------------- ------------- -------------
Total nonoperating margins .. 234,085 205,338 718,434 432,564
------------- ------------- ------------- -------------
Assignable margins .......... 838,713 (2,555,584) 6,600,182 3,622,552
Patronage capital at beginning of
period ................................ 110,529,644 106,786,331 104,800,092 100,685,517
Retirement of capital credits and
estate payments ....................... (42,775) (25,026) (74,692) (102,348)
------------- ------------- ------------- -------------
Patronage capital at end of period ....... $ 111,325,582 $ 104,205,721 $ 111,325,582 $ 104,205,721
------------- ------------- ------------- -------------
</TABLE>
See accompanying notes to unaudited financial statements.
5
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CHUGACH ELECTRIC ASSOCIATION, INC.
Statement of Cash Flows
<TABLE>
Six months ended June 30
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Assignable margins ............................................................. $ 6,600,182 $ 3,622,552
------------ ------------
Adjustments to reconcile assignable margins to net cash used in operating
activities:
Depreciation and amortization .............................................. 11,473,281 10,550,444
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable ...................................................... 9,861,083 2,595,783
Prepayments .............................................................. (663,258) (529,275)
Materials and supplies ................................................... (415,608) 150,915
Deferred charges ......................................................... (3,307,373) (376,008)
Other .................................................................... 117,515 1,839,486
Increase (decrease) in liabilities:
Accounts payable ......................................................... (1,969,579) (2,114,066)
Consumer deposits ........................................................ (85,012) (18,307)
Accrued interest ......................................................... (144,726) (197,846)
Deferred credits ......................................................... (704,476) (1,702,283)
Other .................................................................... (2,678,398) (3,601,441)
------------ ------------
Total adjustments .................................................. 11,483,449 6,597,402
------------ ------------
Net cash provided by operating
activities ........................................................ 18,083,631 10,219,954
Cash flows from investing activities:
Extension and replacement of plant ............................................. (6,393,276) (6,982,248)
Investments in associated organizations ........................................ (139,452) 20,913
------------ ------------
Net cash used in investing activities .............................. (6,532,728) (6,961,335)
------------ ------------
Cash flows from financing activities:
Short-term borrowings, net ..................................................... -- 5,250,000
Repayments of long-term debt ................................................... (5,782,534) (10,829,721)
Retirement of patronage capital ................................................ (74,692) (102,348)
Other .......................................................................... (25,853) (60,512)
------------ ------------
Net cash used by financing activities .............................. (5,883,079) (5,742,581)
------------ ------------
Net increase (decrease) in cash and
cash equivalents ................................................. 5,667,824 (2,483,962)
Cash and cash equivalents at beginning of period .................................. 5,224,529 5,419,819
------------ ------------
Cash and cash equivalents at end of period ........................................ $ 10,892,353 $ 2,935,857
------------ ------------
</TABLE>
See accompanying notes to unaudited financial statements.
6
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CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
June 30, 1998
(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.
2. Lines of Credit
Chugach maintains a line of credit of $35 million with National Bank for
Cooperatives (CoBank). The CoBank line of credit expires August 1, 1999 but
carries an annual automatic renewal clause. At June 30, 1998, there were no
amounts outstanding. 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, 1998, there was no outstanding
balance on this line of credit. The NRUCFC line of credit expires October
14, 2002.
3. Change in Accounting Policy
Effective January 1998, Chugach changed its accounting policy for
depreciation of general plant (excluding buildings, leasehold improvements
and vehicles). Under the new vintage group method the assets are amortized
over their service lives and retired as a group at the end of the
amortization period. The amortization periods were developed as part of the
recent depreciation study update. At January 1, 1998, the affected asset
group made up 2.8% of Electric Plant in Service. In conjunction with
adoption of the new depreciation methodology, Chugach wrote off
approximately $19 million of plant considered to be fully depreciated.
Depreciation expense for the affected asset groups is estimated to be
$700,000 lower annually. Buildings, leasehold improvements and vehicles
will continue to be depreciated over their estimated useful lives based on
rates developed in periodic depreciation studies.
7
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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, increased by 7.9%
for the quarter ended June 30, 1998 over the same quarter in 1997. The increase
in revenues is largely attributable to higher kWh sales to retail and two of the
three wholesales customer classes. A higher level of revenue recorded through
the fuel surcharge mechanism in 1998 also contributed to the increase in
operating revenue. The reason for this variance is further explained below.
As previously reported, in 1997 Chugach experienced higher than anticipated fuel
and purchased power costs. As a result, in an effort to maintain overall price
stability, some fuel and purchased power costs were written-off and the fuel
surcharge rate was not adjusted to reflect the higher costs. Effective January
1998, routine quarterly adjustments to the fuel surcharge mechanism resumed.
Additionally, the remaining undercollected amounts from 1997 are being recovered
throughout 1998 under a plan approved by the Alaska Public Utilities Commission
(APUC). At June 30, 1998, fuel prices have stabilized and are expected to
decline for the remainder of 1998.
Retail and wholesale demand and energy rates did not change from the second
quarter of 1997 to the same period in 1998.
The factors mentioned above more than offset a decline in revenue from economy
energy sales. This decrease was due to Golden Valley Electric Association's
(GVEA) Healy coal plant coming on-line in the second quarter of 1998. This
resulted in a reduction of non-firm purchases by GVEA which explains the
decrease in revenues.
Pursuant to a Settlement Agreement with AEG&T/MEA/Homer, 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). A provision for wholesale rate refund of
approximately $1 million (for the 12 months of 1997) was still recorded at June
30, 1998 to accommodate certain rate adjustment clauses contained in the
Settlement Agreement. Additional wholesale refunds are expected for 1998
purchases. Determination of the wholesale refund amounts still awaits a final
APUC order in Docket U-96-37. It is not possible to predict when the APUC will
issue this order.
Chugach's fuel and purchased power cost adjustment factors, which are adjusted
on a quarterly basis, may be adjusted retroactively by the APUC resulting in
refunds on a retroactive basis, due to concerns expressed by one of Chugach's
wholesale customers. It is Chugach's position that retroactive refunds of
quarterly surcharge revenues would violate the rule against retroactive
ratemaking. The amount of any additional refunds associated with this issue is
also dependent upon a final APUC order in Docket U-96-37.
8
<PAGE>
Purchased power expense was lower for the quarter ended June 30, 1998 compared
to the same period in 1997. 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 the forecasted levels due to reduced lake levels. This system
operating scenario did not exist during the second quarter of 1998 which
explains the decrease. Transmission expense was also lower for the quarter ended
June 30, 1998 from the same period in 1997. The majority of this decrease was
caused by station equipment maintenance activities being focused on transmission
substations in 1997 versus distribution substations in 1998. Transmission line
clearing expense was higher in 1997 than the current period which further
contributed to the overall decrease. Administrative, general and other expenses
increased for the quarter ended June 30, 1998. The majority of this increase was
due to a higher level of common information services costs being allocated to
this function.
Other interest expense decreased in the current period due to a lower average
outstanding balance on the short-term lines of credit.
Current Year to Date Versus Prior Year to Date
Operating revenues for the six-month period ended June 30, 1998 increased
relative to the same period in 1997. These higher revenues were essentially due
to the same reasons outlined in the quarter-to-date comparison section.
Purchased power and transmission expense decreased and administrative, general
and other expenses increased for the six-month period ended June 30, 1998 for
essentially the same reasons outlined in the quarter-to-date comparison section.
Consumer accounts expense decreased during the period due mostly to a lower
level of common information services costs being allocated to this function.
This decrease was offset somewhat by the addition of sales expense to the
consumer accounts expense category partially reflecting the addition of
Chugach's newly formed Marketing Department.
Other interest expense decreased for the six-months ended June 30, 1998 for the
same reason outlined above in the analysis of the quarter-to-quarter variance.
Financial Condition
Total assets declined by 1.0% from December 31, 1997 to June 30, 1998. The
decrease is due primarily to lower balances in the electric plant accounts. A
decrease in accounts receivable also contributed to the overall decrease. The
lower balances in the electric plant accounts were caused by the adoption of a
new method of accounting for the general plant asset class. Beginning in January
of 1998, general plant assets were amortized by account classification instead
of being depreciated on an individual asset basis. Adoption of this method
resulted in the write-off (to accumulated depreciation) of general plant assets
that were acquired prior to the beginning of the amortization periods. The
decline in accounts receivable was primarily caused by paydowns received on the
undercollected fuel surcharge balance and reimbursements received related to the
Standard Steel matter. These decreases were offset somewhat by a higher deferred
debit balance caused in large part by project costs related to the Year 2000
9
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information systems conversion project. Notable changes to total liabilities
include the decrease in first mortgage bonds payable resulting from the March
bond payment and the lower balance in accounts payable due largely to the timing
of payments to contractors.
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
NRUCFC and a $35 million line of credit with CoBank. At June 30, 1998, Chugach
had no amounts outstanding with CoBank. Additionally, there were no amounts
outstanding on the NRUCFC line at June 30, 1998.
Capital construction in 1998 is estimated at $28 million. At June 30, 1998
approximately $6.4 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 that previously allowed up to $80 million in future bond
financing. Chugach amended the Third Supplemental Indenture of Trust (with the
Seventh Supplemental Indenture of Trust) that eliminated the maximum aggregate
amount of bonds the company may issue under the agreement. At June 30, 1998,
Chugach had bonds in the amount of $71.2 million outstanding under this
financing arrangement. The balance is comprised of a $1.2 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 6.65% (repriced periodically), a $23.5 million bond (CoBank
4) currently priced at 6.65% (also repriced periodically) and a $15 million bond
(CoBank 5) currently priced at 6.65% (also repriced periodically) due in 2002,
2007 and 2012. Principal payments on the CoBank 3 and 4 bonds commence in 2003
and continue through 2022. Additionally, Chugach has negotiated a similar
supplemental indenture (Fifth Supplemental Indenture of Trust) with NRUCFC for
$80 million. At June 30, 1998 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 1998.
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 1998 and thereafter.
Year 2000
Chugach has considered the impact of Year 2000 issues on its computer systems
and applications and developed a remediation plan. Chugach's consideration
included not only financial information systems but applications in operational
areas and the impact of interaction with suppliers, customers and vendors where
appropriate. Conversion activities are in process and the Association expects
conversion and testing to be completed by April 1999. Chugach expects that
completion of the project will result in additional expenditures of
approximately $2.0 million.
Outlook Update
As previously reported, Chugach has been extensively involved in the effort to
introduce customer choice for electric service in Anchorage. After several
customers in a neighboring utility's service area asked Chugach to provide their
power, Chugach requested access over the other utility's distribution and
transmission system and asked the APUC to enforce this request.
10
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The APUC recently denied Chugach's request to gain access over the other
utility's system. Chugach is currently reviewing its options including the
possibility of an appeal.
Chugach has also been active at the State legislative level in support of the
customer's right to choose their electric power supplier. While no legislation
was passed during this year's legislative session, a joint committee was formed
to study the issue and report when the new session convenes in early January
1999. The public hearing and testimony process is currently underway. It is
still not possible, however, to predict the outcome of this process.
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
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 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 did not settle Chugach's or the other
private PRPs' liability for Future Costs, the Partial Consent Decree binds 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 is memorialized in a new Consent Decree
(RD/RA Decree) that was entered by the Federal District Court in January 1998.
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
11
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overrun contingency, of $8,400,000. Chugach's share of these estimated RD/RA
expenses would range from approximately $778,926 to $1,250,760. Based on recent
bid documents for the remedial action, it seems unlikely that the RD/RA will
cost as much as EPA's high-end estimate. These amounts are only estimates,
however, and cannot be definitively known until the RD/RA work at the Site is
completed in late 1998 or 1999.
Under the RD/RA Decree, Chugach and the other PRPs are 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 did not execute
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 owed by Chugach under
the RD/RA Decree ranges from approximately $892,182 to $1,364,016. These
amounts, particularly the projected EPA oversight costs, are only estimates and
are subject to change, although, in light of recent bid documents, Chugach does
not anticipate that the costs will reach the high-end estimate. 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.
Four of Chugach's insurance carriers have been paying, under a reservation of
rights, Chugach's costs of defense for the Site. The carriers reserved their
rights regarding indemnification of Chugach for response costs. In February
1998, Chugach reached an agreement in principle with these four insurance
carriers pursuant to which the carriers will pay the majority of Chugach's costs
relating to the Site, including Past Costs, Future Costs, and attorney's fees.
This settlement preserves Chugach's potential claim for natural resource damages
and is anticipated to result in Chugach paying no more than $500,000 for all
Site costs. Management believes that the latter amount would be fully
recoverable in rates 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:
Articles of Incorporation of the Registrant (as amended April 30,
1998).
Bylaws of the Registrant (as amended April 30, 1998).
12
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Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended June 30, 1998.
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 13, 1998
By:/s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Executive Manager, Finance & Energy Supply
Date: August 13, 1998
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EXHIBITS
Listed below are the exhibits which are filed as part of this Report:
Exhibit
number Description Page
3.1 Articles of Incorporation of the Registrant (as amended April 30,
1998). 16
3.2 Bylaws of the Registrant (as amended April 30, 1998). 21
27 Financial Data Schedule **
** Filed Electronically
<PAGE>
ARTICLES OF INCORPORATION
of
CHUGACH ELECTRIC ASSOCIATION, INC.
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, being natural persons
of the age of twenty-one years or more and citizens of the United States of
America and residents of the Territory of Alaska, have this day united and
associated ourselves for the purpose of forming a non-profit cooperative
association under and by virtue of Article VII, Chapter XI of the Compiled Laws
of Alaska, 1933, and all laws mandatory, thereof and supplemental thereto, and
we do hereby make, sign and acknowledge, in quadruplicate the following articles
of incorporation:
ARTICLE I
The name of this Corporation shall be:
CHUGACH ELECTRIC ASSOCIATION, INC.
ARTICLE II
The purpose or purposes for which this Corporation is formed are:
(a) To generate, manufacture, purchase, acquire, and accumulate electric energy;
to transmit, distribute, furnish, sell, and dispose of such electric energy; and
to construct, erect, purchase, lease as lessee, and in any manner to acquire,
own, hold, maintain, operate, sell, dispose of, lease as lessor, exchange, and
mortgage plants, buildings, works, machinery, supplies, apparatus, equipment,
and electric transmission and distribution lines or systems necessary,
convenient, or useful for carrying out and accomplishing any or all of the
foregoing purposes;
(b) To carry on the general business of the production transmission,
distribution, and sale of steam or superheated water, or other by-products
created as a result of engaging in any other business activity included in this
Article, for heating, lighting, and power purposes, or any other purpose, and
for the carrying on of all business incident thereto; to acquire, build,
construct, own, maintain and operate, as necessary or convenient, lands,
buildings, structures, dams, machinery, pipes, and other devices; to acquire and
hold water and flowage rights; and to acquire, lease, hold, and occupy lands and
the use thereof, or easements therein, all to the extent that may be necessary
or desirable in carrying out the objects of this provision;
(c) To acquire, own, hold, use, exercise, sell, mortgage, pledge, hypothecate,
and in any manner dispose of franchises, rights, privileges, licenses, rights of
way, and easements necessary, useful, or appropriate to accomplish any or all of
the purposes of the Corporation;
(d) To purchase, receive, lease as lessee, or in any other manner acquire, own,
hold, maintain, use, convey, sell, lease as lessor, exchange, mortgage, pledge,
or otherwise dispose of any and all real and personal property, or any interest,
therein, necessary, useful, or appropriate to enable the Corporation to
accomplish any or all of its purposes;
<PAGE>
(e) To assist its members to wire their premises and install therein electrical
and plumbing appliances, fixtures, machinery, supplies, apparatus, and equipment
of any and all kinds and character (including, without limiting the generality
of the foregoing, such as are applicable to water supply and sewage disposal),
and, in connection therewith and for such purposes, to purchase, acquire, lease,
sell, distribute, install and repair electrical and plumbing appliances,
fixtures, machinery, supplies, apparatus and equipment of any and all kinds and
character, (including, without limiting the generality of the foregoing, such as
are applicable to water supply and sewage disposal), and to receive, acquire,
endorse, pledge, guarantee, hypothecate, transfer, or otherwise dispose of notes
and other evidences of indebtedness and all security therefor;
(f) To borrow money, to make and issue bonds, notes and other evidences of
indebtedness, secured or unsecured, for moneys borrowed, or in payment for
property acquired, or for any of the other objects or purposes of the
Corporation; to secure the payment of such bonds, notes, or other evidences of
indebtedness by mortgage or mortgages, or deed or deeds of trusts upon, or by
the pledge of or other lien upon, any or all of the property, rights,
privileges, and permits of the Corporation, wheresoever situated, acquired or to
be acquired;
(g) To do and perform any and all acts and things, and to have and exercise any
and all powers, as may be necessary or convenient to accomplish any or all of
the foregoing purposes, or as may be permitted by the Act under which the
Corporation is formed.
ARTICLE III
Section 1. The Corporation is not organized for profit and shall not have
authority to issue capital stock.
Section 2. Any person, firm, association, corporation or body politic or
subdivision thereof, may become a member in the Corporation by:
(a) filing a written application for membership therein;
(b) agreeing to purchase from the Corporation electric energy as
hereinafter specified;
(c) agreeing to comply with and be bound by the articles of
incorporation of the Corporation and the bylaws and such rules
and regulations as may from time to time be adopted by the
board of directors; and
(d) paying the membership fee hereinafter specified; provided,
however, that no person, firm, association, corporation or
body politic, or subdivision thereof shall become a member
unless and until he or it has been accepted for membership by
the board of directors or the members.
The by-laws may provide for appeal by an applicant to a meeting of the members.
No person, firm, association, corporation or body politic, of subdivision
thereof, may own more than one (1) membership in the Corporation.
<PAGE>
A husband and wife may jointly become a member and their application for a joint
membership may be accepted in accordance with the foregoing provisions of this
section provided the husband and wife comply jointly with the provisions of the
above subdivisions (a), (b), and (d).
Section 3. The membership fee shall be five dollars ($5.00), but the by-laws may
provide for additional fees to be paid by members requesting more than one
service connection.
Section 4. Each member may, as soon as electric energy shall be available,
purchase from the corporation all electric energy used on the premises referred
to in the application of such members for membership, and shall pay therfor
monthly rates which shall from time to time be fixed by resolution of the board
of directors; provided, however, that the electric energy which the Corporation
shall furnish to any member may be limited to such an amount as the board of
directors shall from time to time determine and that each member shall pay to
the Corporation such minimum amount per month as shall be fixed by the board of
directors from time to time, regardless of the amount of electric energy
consumed. Each member shall also pay all obligations which may from time to time
become due and payable by such member to the Corporation as and when the same
shall become due and payable.
Section 5. The private property of the members of the Corporation shall be
exempt from execution for the debts of the Corporation and no member shall be
individually liable or responsible for any debts or liabilities of the
corporation.
ARTICLE IV
The principal place of business of the Corporation shall be at Anchorage,
Alaska.
ARTICLE V
The Corporation shall have perpetual existence.
ARTICLE VI
The number of directors of this corporation shall be seven (7). The names and
post office addresses of the directors who shall manage the affairs and business
of the corporation for the first year, or until their successors shall have been
elected and shall have qualified, are as follows:
Name Post Office Address
Leo H. Wilder Anchorage, Alaska
Arthur Dawe Anchorage, Alaska
Merrill Chitty Anchorage, Alaska
Clarence D. Smith Anchorage, Alaska
C. P. Plumb Anchorage, Alaska
Burl A. Tudor Anchorage, Alaska
Raymond M. Wilson Anchorage, Alaska
<PAGE>
ARTICLE VII
The names and places of residence of the persons forming this Corporation are as
follows:
Name Place of residence
Leo H. Wilder Anchorage, Alaska
Arthur Dawe Anchorage, Alaska
Merrill Chitty Anchorage, Alaska
Clarence D. Smith Anchorage, Alaska
C. L. Plumb Anchorage, Alaska
Burl A. Tudor Anchorage, Alaska
Raymond M. Wilson Anchorage, Alaska
IN WITNESS WHEREOF, we have hereunto set our hands and seals, in quadruplicate,
this 10th day of February, 1948.
/s/ LEO H. WILDER (SEAL)
/s/ ARTHUR DAWE (SEAL)
/s/ MERRILL CHITTY (SEAL)
/s/ CLARENCE D. SMITH, JR. (SEAL)
/s/ C. L. PLUMB (SEAL)
/s/ BURL A. TUDOR (SEAL)
/s/ RAYMOND M. WILSON (SEAL)
UNITED STATES OF AMERICA )
) ss
TERRITORY OF ALASKA )
I, J. L. MCCARREY, JR. A NOTARY PUBLIC in and for the Territory of Alaska, do
hereby certify that Leo H. Wilder, Arthur Dawe, Merrill Chitty, Clarence D.
Smith, C. L. Plumb, Burl A. Tudor and Raymond M. Wilson, who are personally
known to me to be the persons whose names are signed to and who executed the
foregoing articles of incorporation of the Chugach Electric Association, Inc.,
appeared before me this day in person and severally acknowledged to me that they
signed, sealed, executed and delivered the said articles of incorporation, in
quadruplicate, as their free voluntary act for the uses and purposes therein set
forth.
WITNESS my hand and notarial seal, in quadruplicate, at Anchorage, Alaska, in
the Territory of Alaska, this 10th day of February, 1948.
/s/ J. L. MCCARREY JR.
Notary Public in and for Alaska
My commission expires: 4-25-50
<PAGE>
ENDORSED
FILED in the District Court
Territory of Alaska, Third Division
June 18, 1948
M.E.S. BRUNELLE, Clerk
by Virginia Olson, DEPUTY
<PAGE>
Chugach Electric Association, Inc. is a
cooperative owned by its nearly 55,000
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
Visit Chugach Electric's home page on the
Internet at "www.chugachelectric.com"
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
BYLAWS
(As Amended April 30, 1998)
<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.....................................9
Section 4 Nominations...................................... 11
Section 5 General Manager and Financial Advisor.............11
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 .................................13
Section 3 Quorum ...........................................14
Section 4 Director Attendance ..............................14
Section 5 Membership Attendance ............................14
Section 6 Minutes ..........................................15
Section 7 Telephonic Board Meetings.........................15
<PAGE>
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...........................................18
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..................................22
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...........................23
Section 2 General Duties....................................23
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 Associa tion, 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 transfer able, except as provided in
these bylaws.
SECTION 2. Membership Certificates. Repealed April 30, 1998.
SECTION 3. Joint Membership. A husband and wife may apply for a joint
membership and, subject to the compli ance 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:
(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;
<PAGE>
(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 member ship;
(f) Withdrawal of either shall terminate the joint mem bership;
(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
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 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 Associa tion.
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 member ship 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 may, 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. The board of directors may limit the
amount of electric energy which the Association shall be required to furnish to
its mem ber(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
<PAGE>
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 Associa tion 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 member ship 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 their credit
by reason of their patronage, and second, to mem bers 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.
<PAGE>
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 substan tial portion of the assets of the
Association is to be voted on, shall be delivered, together with notice of the
purpose for 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.
<PAGE>
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 who has purchased electric energy or
receives other services from the Association within the six months preceding the
record date of the election 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.
(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.
<PAGE>
(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 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 commit tee's responsibilities. These responsibilities
shall include, but are
<PAGE>
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
descrip tion 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:
(i) A member, officer, director, or employee of any union local
currently acting as a bargaining agent for Association employ
ees.
(ii) A person who has within the last two years had a financial
interest in a bid, proposal, project, or contract with
Chugach.
<PAGE>
(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 arrange ments 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 per formed 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 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
<PAGE>
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 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;
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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 Associa tion 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
(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.
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(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 candi
dates, 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.
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.
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(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 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
<PAGE>
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 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 secre tary to cause notice of such meetings to be given as
hereinafter provided. The president of the directors calling the meeting shall
<PAGE>
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 person ally 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 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
<PAGE>
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 director for the 6-month period beginning May 1 and
the 6- month period beginning November 1. For attendance evalua tion, 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.
<PAGE>
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 immedi ately 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 Associa tion 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 evidence in respect of the charges; and the person or
persons bringing the charges against him shall have the same opportu nity. 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.
<PAGE>
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 Associa tion to all documents, the
execution of which on behalf of the Association under its seal is duly
autho rized in accordance with the provisions of these bylaws;
(d) Keeping a register of the names and post office addresses of all
members;
(e) Keeping on file at all times a complete copy of the articles of
incorporation and bylaws of the Associa tion containing all amendments
thereto, which copy shall always be open to the inspection of any mem
bers, and at the expense of the Association, forward ing 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 responsi bility 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 discre tion,
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.
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
<PAGE>
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 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
<PAGE>
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 pro
vided.
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
coopera tive 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 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
<PAGE>
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 autho rized by the affirmative vote of not less than the
majority of all the members of the cooperative. However, the board of direc tors
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 and deliver any instrument, in the name and
on behalf of the Association, and such authority may be general or confined to
specific instances.
<PAGE>
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 partner, member, shareholder or
holder of any other interest in any entity engaging in any lawful business.
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.
<PAGE>
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 member ship 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.
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.
<PAGE>
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;
(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
<PAGE>
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 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
<PAGE>
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 min utes
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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