FORM 10-K--ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel. No. 34-31327, eff. 10-21-92)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(x) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 1997
( ) 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
5601 Minnesota Drive, Anchorage, Alaska 99518
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (907) 563-7494
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of
the Act:
(Title of class)
(Title of class)
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. /x/ Yes / / No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. N/A
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of filing. (See
definition of affiliate in Rule 405, 17 CFR 230.405). N/A
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CHUGACH ELECTRIC ASSOCIATION, INC.
1997 Form 10-K Annual Report
Table of Contents
Page
PART I
Item 1 - Business 1
Item 2 - Properties 12
Item 3 - Legal Proceedings 16
Item 4 - Submission of Matters to a Vote of Security Holders 19
PART II
Item 5 - Market for Registrant's Common Equity and Related
Stockholder Matters 19
Item 6 - Selected Financial Data 19
Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 20
Item 8 - Financial Statements and Supplementary Data 34
Item 9 - Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 57
PART III
Item 10 - Directors and Executive Officers of the Registrant 57
Item 11 - Executive Compensation 59
Item 12 - Security Ownership of Certain Beneficial Owners and
Management 62
Item 13 - Certain Relationships and Related Transactions 62
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports
on Form 8-K 62
SIGNATURES 72
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PART I
Item 1 - Business
GENERAL
Chugach Electric Association, Inc. (Chugach or Association) is the largest
electric utility in Alaska. Chugach was organized as an Alaska not-for-profit
electric cooperative in 1948 and is engaged in the generation, transmission and
distribution of electricity to approximately 68,000 metered locations in the
Anchorage and upper Kenai Peninsula areas. Through an interconnected regional
electrical system, Chugach's power flows throughout Alaska's Railbelt, a
400-mile-long area stretching from the coastline of the southern Kenai Peninsula
to the interior of the state, including Alaska's largest cities, Anchorage and
Fairbanks. On a regular basis, through its direct service to retail customers
and indirectly through its wholesale and economy energy sales, Chugach provides
some or all of the electricity used by approximately two-thirds of Alaska's
electric customers. In addition, on a periodic basis, Chugach provides
electricity to the Anchorage-area customers of Municipal Light & Power (ML&P).
Chugach also supplies much of the power requirements of three wholesale
customers, Matanuska Electric Association (MEA), Homer Electric Association
(Homer) and the City of Seward (Seward). Substantially all of Chugach's
currently-owned generating capacity is fueled by natural gas, which Chugach
purchases under long-term, relatively low-cost gas contracts. The remainder of
Chugach's generating resources are hydroelectric facilities. The Chugach system
includes 501.4 megawatts (MW) of installed generating capacity that is provided
by 15 generating units, 11.7 MW of generating capacity from two hydroelectric
units that are owned jointly with MEA and ML&P, 1,571 miles of distribution
lines and 402 miles of transmission lines. During 1997, Chugach sold 2.27
billion kilowatt hours (kWh) of power.
In general, cooperatives are business organizations that are owned by their
members. Cooperatives are designed to give groups of individuals or entities the
opportunity to serve their own needs in a particular area of business activity
and to solve their own problems in that area more effectively than when acting
independently. In addition, as not-for-profit organizations, cooperatives are
intended to provide services to their members at the lowest possible cost, in
part by eliminating the need to produce profits or a return on equity. Today,
cooperatives operate throughout the United States in such diverse areas as
utilities, agriculture, irrigation, insurance and credit. All cooperatives are
based upon similar principles and legal foundations. Since members' equity is
not considered an investment, a cooperative's objectives and policies are
oriented to serving member interests, rather than maximizing return on
investment.
Chugach's members are the consumers of the electricity sold by Chugach. As of
December 31, 1997, Chugach had approximately 55,000 retail members receiving
service at approximately 68,000 metered locations. The business and affairs of
Chugach are managed by the General Manager and are overseen by its seven-member
Board of Directors. Directors are elected at
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large by the membership and serve three-year staggered terms. Each member is
entitled to one vote. In addition to voting for directors, members have voting
rights with respect to the sale, lease, or other disposition, except by mortgage
or deed of trust, of all or a substantial portion of Chugach's property.
Chugach customers are billed per a tariff rate, on a monthly basis for
electrical energy consumed during the preceding month. Billing rates are
approved by the Alaska Public Utilities Commission (APUC). Such rates have been
adjusted quarterly or semi-annually pursuant to a simplified rate filing
procedure (see Rate Regulation and Rates).
Rates (derived from the historic cost of service basis) may generate revenues in
excess of current period costs (net operating margins and nonoperating margins)
in any year and are designated on Chugach's Statements of Revenues, Expenses and
Patronage Capital as "assignable margins." Retained assignable margins are
designated on Chugach's balance sheet as "patronage capital" that is assigned
to each member on the basis of patronage.
In furtherance of Chugach's operations as a cooperative, Chugach credits to its
members, or patrons, all amounts received from the patrons for the furnishing of
electricity in excess of Chugach's operating costs, expenses and provision for
reasonable reserves. Such excess amounts (i.e., assignable margins) are
considered capital furnished by the patrons, and are credited to their accounts
and held by Chugach until such future time as they are retired and returned
without interest. Chugach's Bylaws provide that such capital credits are to be
retired (i) upon Chugach's dissolution or liquidation after payment of all of
Chugach's outstanding indebtedness or (ii) at any earlier time if the Board of
Directors determines that Chugach's financial condition will not be thereby
impaired. At December 31, 1997, Chugach has a policy of retiring patronage
capital on a general 20-year cycle for retail customers (i.e., patronage capital
provided by the retail customer in 1975 is retired in 1995). In recent years,
this rotation has been accelerated to a 14-year rotation cycle. In 1997, the
Board of Directors approved a retirement of retail capital credits whereby the
remaining retail margins earned in 1983 were returned to retail customers.
Wholesale capital credits have been retired on a 10-year cycle pursuant to the
Equity Management Plan Settlement Agreement despite its expiration in 1995. A
new Settlement Agreement (different than the aforementioned agreement) has been
negotiated with Alaska Electric Generation & Transmission Cooperative, Inc.,
(AEG&T)/MEA/Homer and has been approved by the APUC. Under this agreement,
wholesale capital credits will continue to be rotated on a 10-year cycle until
1998. After 1998, wholesale capital credits are expected to be rotated using the
retail schedule in place at that time. In 1997, The Board of Directors
authorized retirement of 1987 wholesale capital credits in the amount of
$1,205,510. A special wholesale capital credit retirement of $88,818 (wholesale
margins from 1985) was also authorized in 1997. Approval of actual capital
credit retirements is at the discretion of the Association's Board of Directors.
As an electric cooperative, Chugach is exempt from federal income taxation under
Section 501(c)(12) of the Internal Revenue Code (Code). Alaska electric
cooperatives must pay to the State of Alaska, in lieu of state and local ad
valorem, income and excise taxes, a tax at the rate
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of $0.0005 per kWh of electricity sold in the retail market during the preceding
year. In addition, Chugach collects a regulatory cost charge of $.000297 per kWh
of retail electricity sold. This charge is assessed to fund the operations of
the APUC. It is a pass-through and thus does not impact Chugach margins.
Beginning January 1, 1998, the regulatory cost charge was reduced to $.000280
per kWh of retail electricity sold.
Chugach's workforce consists of approximately 356 full-time employees.
Approximately two-thirds of Chugach's employees are members of the International
Brotherhood of Electrical Workers (IBEW). Chugach has three collective
bargaining agreements with the IBEW that are currently open for negotiation.
Although each of the contracts has an expiration date of January 31, 1998, the
parties have agreed that the contracts shall continue in effect until new
contracts are put in place. If the parties cannot agree on the terms of new
agreements, all outstanding issues will be decided through interest arbitration.
The Union cannot strike and Chugach cannot lockout under the continuing
agreement.
Characteristics of the Service Areas of Chugach and its Largest Customers
As indicated in the foregoing, the service areas of Chugach and its wholesale
and economy energy customers are often described collectively as the Railbelt
Region of Alaska because the three geographic regions, from Fairbanks in central
Alaska, through Anchorage, and south to the Kenai Peninsula (Seward), are linked
by the Alaska Railroad.
Anchorage is the trade, service and financial center for most of Alaska and
serves as a major center for many state governmental functions. Other
significant contributing factors to the Anchorage economy include a large
federal government and military presence, tourism, air and rail transportation
facilities and headquarters support for the petroleum, mining and other basic
industries located elsewhere in the state.
The Matanuska-Susitna Borough is immediately northeast of Anchorage, centered
around the communities of Palmer and Wasilla. Although agriculture, tourism,
mining and forestry are factors in the economy of the Matanuska-Susitna Borough,
the economic well-being of the area is closely tied to that of Anchorage.
The Kenai Peninsula is south of Anchorage with an economy substantially
independent of the Anchorage area. The most significant basic industry on the
Kenai Peninsula is the production and processing of petroleum products from the
Cook Inlet region. Other important basic industries include tourism and fish
harvesting and processing. Principal communities on the Kenai Peninsula are
Homer, Seward, Kenai and Soldotna.
Fairbanks is the center of economic activity for the central part of the state.
Fairbanks (250 air miles north of Anchorage and about 400 air miles south of
Alaska's northern border) is Alaska's second largest city. Basic economic
activities in the Fairbanks region include federal and state government and
military operations, the University of Alaska, tourism and support of natural
resource development in the interior and northern parts of the state. Recently a
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major gold mine has commenced operation near Fairbanks. The Trans-Alaska
Pipeline System (crude oil) passes near Fairbanks on its route from Prudhoe Bay
to Valdez.
Competition
Consistent with developments in other states, Alaska is contemplating the
effects of retail competition in the sale of electric power. Chugach considers
that the primary market in which competition will develop is the interconnected
electrical system which stretches from the Kenai Peninsula to Fairbanks.
Participants in this market consist of rural electric cooperatives and
municipally-owned utilities as well as cogeneration providers and load
aggregators. Chugach anticipates that principal methods of competition will
emphasize price, service and range of service offerings.
Chugach has been very active in the effort to promote customer choice in the
retail market in Anchorage because it believes it will benefit customers and
will put Chugach in a better competitive position as customer choice develops.
After several retail customers in a neighboring utility's service area formally
asked Chugach to provide their electric power, Chugach requested access over the
other utility's distribution and transmission system and asked the APUC to
enforce the request. At this time, the APUC has not ruled on this request and it
is not possible to predict their decision.
Chugach has also been active at the State legislative level in support of the
customer's right to choose their electric power supplier. Virtually all Alaskan
utilities have opposed Chugach's efforts to develop competition and are active
in attempting to create exclusive service territories. At this time, however, no
bill relating to customer choice has moved out of committee. Thus, it is not
possible to predict the outcome of this legislative process.
Several Chugach customers are investigating self-generation or cogeneration
using various technologies, including fuel cells, and may choose to generate
their own power. It is not possible to predict the impact this type of project
will have on Chugach's revenues.
At least one electric power load aggregator is active in the Anchorage market.
The outcome of Chugach's efforts to open access over the neighboring utility's
system will impact the success and number of load aggregators operating on the
interconnected system. At this time, it is not possible to predict the impact
that load aggregators will have on Chugach's revenue.
To meet these competitive challenges, Chugach has formed a Marketing Department,
continues to operate its Key Account program for larger customers and continues
to develop new services to enhance existing customer's satisfaction.
Rate Regulation and Rates
Chugach is subject to rate regulation by the APUC. In January 1987, the APUC
adopted a simplified rate filing (SRF) procedure for use solely by electric
cooperatives. Under the SRF
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procedure, electric cooperatives may submit proposed base demand and energy rate
changes to the APUC for approval (either on a quarterly or semi-annual basis)
without the necessity of undergoing a formal hearing process. The proposed rates
must be approved by the Board of Directors of the electric cooperative before
they will be accepted by the APUC for consideration. Chugach has been a
participant in this process since 1989.
In August 1996, the Chugach Board of Directors approved a petition to the APUC
to withdraw from the SRF process. The petition was submitted as part of Docket
U-96-37, that was opened to resolve rate disputes with Chugach's wholesale
customers. Interim-refundable rates for wholesale customers were ordered pending
resolution of the docket. In February 1997, the APUC approved a Settlement
Agreement between Chugach and AEG&T/MEA/Homer that resolved issues in the docket
and established permanent rates. As part of the Settlement Agreement, the
wholesale customers agreed not to oppose Chugach's withdrawal from SRF. The APUC
orders have not addressed Chugach's withdrawal from SRF but Chugach anticipates
approval of its petition. As part of the Order, the Association was required to
file Cost of Service and Revenue Requirement Studies. Chugach filed these
studies in March 1997.
If Chugach's petition to withdraw from the SRF process is approved, future
demand and energy rate changes will be sought through general rate case and
other normal APUC procedures. While the formal ratemaking process typically
takes nine months to one year, it is within the APUC's authority to authorize,
after a notice period, rate changes on an interim-refundable basis. In addition,
the APUC has been willing to open limited dockets to resolve specific issues
from which expeditious decisions can often be generated.
For 1997, Chugach management and its Board of Directors committed that retail
and wholesale base rates would remain unchanged. As part of the Settlement
Agreement with AEG&T/MEA/Homer, Chugach has committed that demand and energy
rate levels to be established on a 1995 test year in Docket U-96-37 will remain
at no higher than those levels through 1999 and may be reduced if existing rates
provide returns higher than specified in the agreement. The Association will
continue to recover changes in its fuel and purchased power expense levels
through routine fuel surcharge filings with the APUC. See the Fuel Surcharge
section of Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The Indenture of Trust, Series A, First Mortgage bonds (Indenture) dated
September 15, 1991 requires Chugach to set rates designed to yield margins for
interest (a TIER-like statistic) equal to at least 1.20 times total interest
expense. The authorized rate-setting TIER level of 1.35 has allowed Chugach to
achieve greater than the 1.20 margins for interest. In 1997, Chugach's achieved
TIER was 1.30.
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Sales to Customers
The following table shows the energy sales to and electric revenues from
Chugach's retail, wholesale, and economy energy customers for the year ended
December 31, 1997:
Energy Loads and Revenues by Class of Customer
Percent of Total
MWh 1997 Revenues 1997 Revenues
--- ------------- --------------
Direct retail sales:
Residential 484,679 $ 48,718,433 34.0%
Commercial 540,572 42,020,343 29.2
--------- ----------- ------
Total 1,025,250 90,738,776 63.2
--------- ----------- ------
Wholesale sales:
MEA 490,670 24,793,315 17.3
Homer 416,980 17,851,001 12.4
Seward 53,593 2,362,915 1.6
--------- ----------- ------
Total 961,243 45,007,231 31.3
--------- ----------- ------
Economy Energy Sales:
GVEA 282,805 7,930,126 5.5
Other 155 4,650 0.0
--------- ----------- ------
282,960 7,934,776 5.5
--------- ----------- ------
Total sales to customers 2,269,453 $ 143,680,783 100.00%
--------- ----------- ------
Retail Customers
Service Territory. Chugach's retail service area covers the populated areas of
Anchorage as well as remote mountain areas and villages. The service area ranges
from the northern Kenai Peninsula on the South, to Tyonek on the West, to
Whittier on the East and to Fort Richardson on the North.
Customers. Chugach directly serves approximately 68,000 meters. There are
approximately 55,000 members of Chugach. Some members are served by more than
one meter, like, for example, service to high density multiple family dwellings.
In many ways, Chugach's retail customer base does not conform to the traditional
rural electric cooperative customer base in that Chugach's customers are
primarily urban and suburban rather than rural. The urban nature of Chugach's
customer base means that Chugach has a higher customer density per line mile
than is typical for rural electric cooperatives. Higher customer density means
that fixed costs can be spread over a greater number of customers. As a result
of lower average costs attributable to each customer, Chugach may benefit from a
greater level of stability in revenue, as compared to a less dense distribution
system in which each individual customer would have a more significant impact on
operating results. For the past five years no retail customer accounted for more
than 5% of Chugach's revenues.
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Wholesale Customers
Chugach is the principal supplier of power under wholesale power contracts with
MEA, Seward and Homer. Chugach's wholesale power contracts represented $45.0
million in revenues and 42.4% of Chugach's total MWh sales to customers in 1997.
MEA and Homer. Chugach's contract with AEG&T (a generation and transmission
cooperative of which MEA and Homer are the only full members; ML&P is an
associate member) for the benefit of MEA obligates MEA to purchase all of its
electric power requirements from Chugach. Contractually, MEA has the right,
subject to APUC approval, to convert to a net requirements purchaser of power
from Chugach, under which MEA would be obligated to buy its needed power from
Chugach, net of its power needs satisfied from any of its own or AEG&T's
resources (including from the 39 MW Soldotna 1 gas-fired generating station
owned by AEG&T).
After conversion to net requirements under the contract, MEA cannot reduce the
amount of power it purchases from Chugach below a certain minimum amount. MEA
also has the right, on seven years advance notice and subject to APUC approval,
to convert to a take-or-pay purchaser of a fixed amount of power. If MEA
converts to net requirements service, MEA will be required to pay demand charges
based upon the highest post-1985 historical coincident peak on the MEA system.
Therefore, Chugach will continue to recover fixed costs if MEA converts to
net-requirements service. Also, Chugach's revenues from energy sales to MEA
would decline in proportion to the reduction in the energy sold, but this
decline would be largely offset by savings in the variable costs associated with
energy production. The MEA contract is in effect through December 31, 2014. This
contract does not protect against loss of load resulting from retail competition
in MEA's distribution service territory. It is not possible at this time to
estimate the potential impact on Chugach's revenues resulting from such
competition.
Chugach's contract with AEG&T for the benefit of Homer obligates Homer to
take-or-pay for 73 MW of capacity (demand), and not less than 350,000 MWh
(energy) per year. The Homer contract includes certain limitations on the costs
that may be included in the rates charged to Homer by Chugach. The Homer
contract expires on January 1, 2014. Homer's remaining resource requirements are
provided by AEG&T's Soldotna unit and AEG&T shares attributable to Homer from
the Bradley Lake hydroelectric project. Chugach and AEG&T have signed a dispatch
agreement whereby Chugach has access to all of the Soldotna unit output except
that which is required to supply Homer's load in excess of 73 MW. The term is
for 40,000 operating hours or 10 years, whichever is first, although the term
will be extended by three years if Chugach makes significant use of the unit
during the last three years of the original contract term. AEG&T receives
payment for variable operating and maintenance costs plus a margin for energy
produced by the unit. Chugach obtained use of the unit output while AEG&T
retained ownership costs and responsibility. In 1997, Chugach used 163,000 MWh
from the Soldotna unit.
Seward. Chugach currently provides all the firm power needs of Seward. A new
contract with Seward, with an interruptible provision, is awaiting approval by
the APUC. In 1997, sales to Seward amounted to 2.4% of Chugach's MWh sales to
customers.
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Economy Customers
Golden Valley Electric Association. Under the terms of Chugach's agreement with
Golden Valley Electric Association (GVEA), GVEA is obligated, under certain
circumstances, to purchase, if available from Chugach, its non-firm energy needs
until 2008. Sales under this agreement accounted for 12.5% of Chugach's 1997 MWh
sales. Chugach and GVEA have entered into a tentative pooling agreement whereby
the resources of both utilities would be dispatched on a common basis to reduce
constraints on when non-firm energy would be available to GVEA. Construction of
a coal-fired generation facility at Healy (Healy II) is underway with 50% of the
construction costs funded from a United States Department of Energy grant under
the Clean Coal Technology III Demonstration Program. This facility is projected
to be operational in mid-1998 and is expected to produce up to 50 MW of
coal-fired power. When Healy II becomes operational, GVEA will reduce its
purchases of non-firm energy from Chugach by taking firm power from Healy II.
Chugach's management does not believe that such a reduction will have a material
adverse effect on Chugach. The Ft. Knox gold mine, near Fairbanks, with an
anticipated load of 30-35 MW began operation during the last quarter of 1996.
FUEL SUPPLY
In 1997, 90% of Chugach's power was generated from gas, and 89% of that
gas-fired generation took place at Beluga.
Chugach's three sources of natural gas are (1) the Beluga River Field producers
[ARCO Alaska, Inc. (ARCO), Municipal Light & Power (ML&P) (old Shell) and
Chevron USA Inc. (Chevron)], (2) Marathon Oil Company (Marathon) and (3) ENSTAR
Natural Gas Company (ENSTAR). ARCO, ML&P and Chevron each own one-third of the
gas produced from the Beluga River Field and in 1997 provided approximately
equal shares of the Beluga gas. Chugach has approximately 447 billion cubic feet
(BCF) of gas committed to it from the Beluga River Field producers and Marathon.
Chugach currently uses about 20 BCF of natural gas per year for firm service.
Chugach believes that this usage will remain fairly constant and estimates that
its current contract gas will last 16 to 20 years. In 1996, Shell sold its
interests in the Beluga River Field to ML&P and ML&P assumed Shell's contractual
obligations to sell natural gas to Chugach. Chugach believes that this transfer
will have no material effect on the delivery of Beluga gas to Chugach.
The delivered price for Chugach's fuel supply is lower than that available to
other generators in the interconnected Railbelt. ML&P burns natural gas
purchased from the Beluga River Field producers and transported by ENSTAR.
Chugach has a transportation contract with ENSTAR to transport Chugach gas
purchased from Marathon or the Beluga River Producers to the Soldotna (AEG&T)
and/or International Power plants (International). The rate for firm
transportation is $0.63 per MCF and the rate for interruptible transportation is
$0.30 per MCF. There is a minimum monthly bill of $2,600. The primary reasons
that Chugach's fuel supply has a lower delivered price than that available to
other generators are (i) Chugach purchases
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its gas directly from producers rather than from gas utilities and (ii)
Chugach's power plants are located in close proximity to gas fields so that
there are insignificant transportation costs included in the price of the fuel.
ML&P currently depends on ENSTAR to transport all of the gas it uses. The ENSTAR
tariff rate is $105,000 per month plus $0.28 per MCF.
GVEA uses both coal-fired and oil-fired generators. Because of the high cost of
fuel oil, GVEA is normally an importer of lower cost power from the south.
Beluga River Field Producers
Chugach has similar requirements contracts with each of ARCO, ML&P (old Shell)
and Chevron that were executed in April 1989, superseding contracts that had
been in place since 1973. Each of the contracts with the Beluga River Field
producers provides for delivery of gas on different terms in three different
periods. Period 1 related to the delivery of gas previously committed by the
respective producer under the 1973 contracts terminated in June 1996. The
maximum deliverability under the Beluga and Marathon contracts is in excess of
the peak winter demand requirements of the Beluga plant and allows for increased
deliverability should Chugach's combined-cycle plant be out of service.
During Period 2, which began in June 1996 and continues until the earlier of the
delivery of 180 BCF of natural gas or December 31, 2013, Chugach is entitled to
take delivery of up to 180 BCF of natural gas (60 BCF per Beluga River Field
producer). During this period, Chugach is required to take 60% of its total fuel
requirements at Beluga from the three Beluga River Field producers, exclusive of
gas purchased at Beluga under the Marathon contract for use in making sales to
GVEA or certain other wholesale purchasers. The price for gas during this period
under the ARCO and ML&P (old Shell) contracts is approximately 88% (or $1.51 per
MCF on December 31, 1997) of the price of gas under the Marathon contract
(described below), plus taxes. The price during this period under the Chevron
contract is approximately 110% (or $1.88 per MCF on December 31, 1997) of the
price of gas under the Marathon contract (described below), plus taxes.
During Period 3 under the Beluga River Field producers' contracts, which begins
at the earlier of December 31, 2013 or the end of Period 2, Chugach may become
entitled to take delivery of up to 120 BCF of natural gas (40 BCF per producer).
Whether any gas will be taken in Period 3, and the price and take requirements
with respect thereto, are to be determined in the future based upon then-current
market conditions.
Chugach also has supplemental, annually renewable contracts with the Beluga
River Field producers to supply supplemental gas (for peak periods of energy
usage) if they have it available in excess of the amounts guaranteed in the
basic contracts. The supplemental gas contracts raise the daily deliverability
of gas to an aggregate of 85,200 MCF per day from the Beluga River Field
producers. The base price of the gas under these contracts is the same as the
base price under the Marathon contract described below, plus taxes.
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Marathon
Chugach entered into a requirements contract with Marathon in September 1988 for
an initial commitment of 215 BCF. The contract expires December 31, 2015 or, if
earlier, the date on which Marathon has delivered to Chugach a volume of gas in
total which equals or exceeds the total volume of gas that Marathon is required
to sell and deliver to Chugach under the agreement. The base price for gas under
the Marathon contract is $1.35 per MCF, adjusted quarterly to reflect the
percentage change between the preceding twelve-month period and a base period in
the average prices of West Texas Intermediate Crude Oil (a benchmark of the
Light Sweet Crude Oil Futures Index), the Producer Price Index for natural gas,
and the Consumer Price Index for heating fuel oil. The price on December 31,
1997, exclusive of taxes was $1.71 per MCF.
Under the terms of the Marathon contract, Marathon generally provides the
primary supply of gas required for sales to GVEA, all of Chugach's requirements
at Bernice Lake and 40% of the requirements at Beluga. Marathon also has a right
of first refusal to provide additional gas under any sales agreements that
Chugach may enter into with electric utilities that Chugach does not currently
serve.
ENSTAR Natural Gas Company
Chugach and ENSTAR signed a transportation agreement in December 1992 that was
approved by the APUC in January 1993, whereby ENSTAR would transport Chugach's
gas purchased from the Beluga producers or Marathon on a firm basis to both
Chugach's International Power Plant and AEG&T's Soldotna Power Plant at a
transportation rate of $0.63 per MCF. In addition, ENSTAR agreed to transport
gas on an interruptible basis for off-system sales at a rate of $0.30 per MCF.
The agreement contains a minimum monthly bill of $2,600 for firm service.
Chugach holds a reservation to receive its gas requirements at International
Power Plant from ENSTAR under a tariff approved by the APUC in the event that
the transportation agreement is subsequently canceled. Under the currently
suspended tariff, ENSTAR is obligated to supply all of the gas Chugach desires
at a price approved by the APUC. There would be a monthly minimum bill of
$10,465, but no requirement to actually use any gas at International. The
current delivered price under the tariff is $2.53 per MCF.
COMPLIANCE WITH ENVIRONMENTAL STANDARDS
Chugach's operations are subject to certain Federal, State and local
environmental laws which Chugach monitors to ensure compliance. The costs
associated with environmental compliance are included as a component of both the
operating and capital budget processes. Chugach accrues for costs associated
with environmental remediation obligations when such costs are probable and
reasonably estimable.
10
<PAGE>
REFINANCINGS
On September 19, 1991, Chugach issued $314,000,000 of First Mortgage Bonds, 1991
Series A, for purposes of repaying existing debt to the Federal Financing Bank
(FFB) and the Rural Electrification Administration (REA), (now Rural Utilities
Services (RUS)). Pursuant to Section 311 of the Rural Electrification Act,
Chugach was permitted to prepay the REA debt at a discounted rate of
approximately 9%, resulting in a discount of approximately $45,000,000. The gain
on prepayment of the REA debt has been deferred and Chugach has obtained
permission from the APUC to flow through the benefit to consumers through lower
rates in the future.
The original issuance consisted of bonds in the amount of $52,000,000 due in
2002 bearing interest at 8.08% (Series A 2002 Bonds) and bonds in the amount of
$262,000,000 due in 2022 and bearing interest at 9.14% (Series A 2022 Bonds).
Interest is payable semiannually on March 15 and September 15. The Series A 2002
Bonds are subject to annual sinking fund redemption at 100% of the principal
amount thereof that commenced March 15, 1993. The Series A 2022 Bonds are
subject to annual sinking fund redemption at 100% of the principal amount
thereof commencing March 15, 2003. The Series A 2002 Bonds are not subject to
optional redemption. The Series A 2022 Bonds are redeemable at the option of
Chugach on any interest payment date at an initial redemption price of 109.14%
of the principal amount thereof declining ratably to par on March 15, 2012. The
Indenture prohibits outstanding short-term indebtedness (other than trade
payables) in excess of 15% of Chugach's net utility plant and limits certain
cash investments to specific securities. Chugach has reacquired $44,295,000 of
the Series A 2022 bonds since December 1995 leaving a remaining balance of
$217,705,000 at December 31, 1997.
Chugach has negotiated a supplemental indenture (Third Supplemental Indenture of
Trust) with CoBank which previously allowed up to $80 million in future bond
financing. Recently Chugach finalized an amendment to the Third Supplemental
Indenture of Trust (Seventh Supplemental Indenture of Trust) that eliminates the
maximum aggregate amount of bonds the company may issue under the agreement. At
December 31, 1997, Chugach had bonds in the amount of $71.4 million outstanding
under this financing arrangement. The balance is comprised of a $1.4 million
bond (CoBank 1) that 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 National Rural Utilities Cooperative Finance Corporation (NRUCFC)
for $80 million. At December 31, 1997 there were no amounts outstanding under
this financing arrangement.
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Item 2 - Properties
SYSTEM ASSETS
General
Chugach has 501.4 MW of installed capacity consisting of 15 generating units at
four power plants. These include 365.6 MW of operating capacity at Beluga on the
west side of Cook Inlet; 70.0 MW of power at Bernice Lake on the Kenai
Peninsula; 48.6 MW of power at International Station in Anchorage; and 17.2 MW
at Cooper Lake, which is also on the Kenai Peninsula. Chugach also has 11.7 MW
of capacity from the two Eklutna hydroelectric plant generating units owned
jointly with MEA and ML&P. In addition to its own generation, Chugach purchases
power from the 90 MW Bradley Lake hydroelectric project owned by the Alaska
Energy Authority (AEA) through Alaska Industrial Development and Export
Authority (AIDEA). Bradley Lake is operated by Homer and dispatched by Chugach.
The Beluga, Bernice Lake and International facilities are all fueled by natural
gas. Chugach owns its offices and headquarters, located adjacent to its
International Station in Anchorage, in fee simple. Warehouse space for some
generation, transmission and distribution inventory (including a small amount of
office space) is leased from an independent party not directly affiliated with
Chugach.
Generation Assets
Chugach owns the land and improvements comprising its generating facilities at
Beluga and International. It also owns all improvements comprising its
generating plant at Bernice Lake, that is located on land originally leased from
Chevron Oil Company now owned by Homer, and its generating plant at Cooper Lake,
that is located on federal land pursuant to a major project license (Federal
License) granted to Chugach by the Federal Power Commission in 1957. The Bernice
Lake ground lease expires in 2011 and the Federal License for the Cooper Lake
facility expires in 2007. The management of Chugach has no reason to believe
that it will not be able to renew the Federal License or the Bernice Lake ground
lease if desirable.
In 1997, Chugach acquired a partial interest in the Eklutna Hydroelectric
Project. The plant is located on federal land pursuant to a United States Bureau
of Land Management (BLM) right-of-way grant issued October in 1997.
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The following table lists specifics of the generating facilities of Chugach:
Commercial
Facility Type of Fuel Rated Capacity (1) Operation Date
-------- ------------ ------------------ ---------------
Beluga Power Plant:
Unit 1 Natural Gas 15.7 1968
Unit 2 Natural Gas 15.7 1968
Unit 3 Natural Gas 64.7 1972
Unit 5 Natural Gas 66.5 1975
Unit 6 Natural Gas 74.0 1975
Unit 7 Natural Gas 74.0 1978
Unit 8 Steam (2) 55.0 1981
-----
365.6
Bernice Lake Power
Plant:
Unit 2 Natural Gas 19.0 1968
Unit 3 Natural Gas 25.5 1978
Unit 4 Natural Gas 25.5 1981
-----
70.0
International
Generating Station:
Unit 1 Natural Gas 15.0 1964
Unit 2 Natural Gas 15.1 1965
Unit 3 Natural Gas 18.5 1969
-----
48.6
Cooper Lake
Hydroelectric Plant:
Unit 1 Hydroelectric 8.6 1960
Unit 2 Hydroelectric 8.6 1960
-----
Eklutna Hydroelectric 17.2
Plant (4):
Unit 1 Hydroelectric 5.8 1955
Unit 2 Hydroelectric 5.9 1955
----
11.7
Total units 17 513.1
-- -----
(1) Capacity rating in MW at 30 degrees Fahrenheit.
(2) Steam turbine-powered generator with heat provided by exhaust from
natural-gas fueled Units 6 and 7 (combined-cycle).
(3) Beluga Unit 4 and Bernice Lake Unit 1 were retired during 1994.
(4) The Eklutna Hydroelectric Plant is jointly owned by Chugach, MEA and ML&P.
The capacity shown is Chugach's 30% share of the plant's maximum output.
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Transmission and Distribution Assets
As of December 31, 1997, Chugach's transmission and distribution assets included
40 substations and 402 miles of transmission lines, 931 miles of overhead
distribution lines and 640 miles of underground distribution line. Chugach owns
the land on which 21 of its substations are located and a portion of the
right-of-way connecting its Beluga plant to Anchorage. In the 1997 Eklutna
acquisition, Chugach also acquired a partial interest in two substations and
additional transmission facilities.
Many substations and a substantial number of Chugach's transmission and
distribution rights-of-way are the subject of federal or state permits and
licenses. Under the Federal License and a permit from the United States Forest
Service, Chugach operates its Quartz Creek transmission substation, substations
at Hope, Summit Lake and Daves Creek, and transmission lines over all federal
lands between Cooper Lake on the Kenai Peninsula and Anchorage. Long-term
permits from the Alaska Division of Lands and the Alaska Railroad Corporation
govern much of the rest of Chugach's transmission system outside the Anchorage
area. Within the Anchorage area, Chugach operates its University Substation and
several major transmission lines pursuant to long-term rights-of-way grants from
the BLM, and transmission and distribution lines have been constructed across
privately-owned lands pursuant to easements across public rights-of-way and
waterways pursuant to authority granted by the appropriate governmental entity.
Title
Substantially all of the properties and assets of Chugach, including generation,
transmission and distribution properties, but excluding all excepted property,
are pledged to secure repayment of the Series A Bonds and all other bonds that
may be issued under the Indenture. The Indenture defines excepted property to
include, among other things, cash on hand, instruments and certain securities
(other than those required to be deposited with the Trustee under the terms of
the Indenture), patents and transportation equipment (including vehicles,
vessels and barges), leases for an original term of less than five years,
certain non-assignable permits, licenses and contractual rights, property
located outside the State of Alaska and not used in connection with Chugach's
generation, transmission and distribution system and other property in which a
security interest cannot legally be perfected. The lien of the Indenture is
subject to certain permitted encumbrances that the Indenture defines to include
certain identified restrictions, exceptions, reservations, conditions and
limitations existing on the date of the Indenture, reservations in U.S. patents,
nondelinquent or contested tax liens, local easements, leases and reservations
and liens for nondelinquent rent or wages. The lien of the Indenture is also
subject to the lien in favor of the Trustee to recover amounts owing to the
Trustee under the Indenture.
In addition to the Indenture, many of Chugach's properties are burdened by
easements, plat restrictions, mineral reservation, water rights and similar
title exceptions common to the area or customarily reserved in conveyances from
federal or state governmental entities, and to
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<PAGE>
additional minor title encumbrances and defects. In the opinion of Chugach's
general counsel, none of these title defects will materially impair the use of
its properties in the operation of its business.
In addition, a lawsuit was filed against the State of Alaska in which the
plaintiffs allege that the manner in which the State administered and disposed
of certain lands violates the Alaska Mental Health Enabling Act. One of
Chugach's substations and its right-of-way across State lands may be subject to
the plaintiffs' claims. Chugach's management believes that such claims will not
materially affect Chugach's financial position, results of operations or cash
flows.
Chugach operates its Bernice Lake facility on lands originally leased from
Chevron Oil Company (fee interest now owned by Homer) pursuant to a lease that
is scheduled to expire in 2011. Chugach also operates several terminal
connection sites and a substation under long-term or renewable leases from the
State of Alaska and private parties. In addition, as discussed above, a
substantial number of Chugach's transmission and distribution rights-of-way, and
several distribution substations, are the subject of federal or state permits
and easements.
Under the Alaska Cooperative Act, Chugach is given the power of eminent domain
for the purpose and in the manner provided by Alaska condemnation laws for
acquiring private property for public use.
Other Assets
Bradley Lake. Chugach is a participant in the Bradley Lake Hydroelectric Project
(Bradley Lake), which is a 90 MW hydroelectric facility near Homer on the
southern end of the Kenai Peninsula that was placed into service in September
1991. The project was financed and built by AEA through grants from the State of
Alaska and the issuance of $166 million principal amount of revenue bonds
supported by power sales agreements with six electric utilities that will share
the output from the facility (Chugach, ML&P, Homer and MEA (through AEG&T), GVEA
and Seward). Effective August 12, 1993, AEA became part of the Alaska Industrial
Development and Export Authority (AIDEA). Chugach and the other participating
utilities have entered into take-or-pay power sales agreements under which AEA
has sold percentage shares of the project capacity and the utilities have agreed
to pay a like percentage of annual costs of the project (including ownership,
operation and maintenance costs, debt-service costs and amounts required to
maintain established reserves). Under these take-or-pay power sales agreements,
the purchasing utilities have agreed to pay all project costs from the date of
commercial operation even if no energy is produced.
Chugach has a 27.4 MW or 30.4% share in Bradley Lake, and takes Seward's and
MEA's shares which it net bills to them, for a total of 45% of the project's
capacity.
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<PAGE>
The length of the agreement is fifty years from the date of commercialization or
when the revenue bond principal is repaid, whichever is the longer. Chugach
believes that, under a worst-case scenario, it could be faced with annual
expenditures of approximately $4.6 million as a result of its Bradley Lake
take-or-pay obligations. Chugach believes that this expense would be recoverable
through the fuel surcharge ratemaking process. The share of debt service for
which the Association is responsible is approximately $47,000,000 plus interest.
In December 1997, $59,485,000 of the Power Revenue Bonds, Third Series and
$47,710,000 of the Power Revenue Bonds, Fourth Series were refinanced under a
forward refunding arrangement. The true interest cost of the new bonds decreased
to 5.611% for the Third Series bonds and 6.06% for the Fourth Series bonds from
7.295% and 7.235%, respectively. This refunding produced a net present value
saving to the participating utilities of approximately $8,500,000. The
Association's share of these savings will be approximately $1,600,000.
Chugach also provides transmission and related services as a wheeling agent (one
who dispatches and transmits power of third parties over its own system) for all
of the participants in the project. Upon the default of a participant, and
subject to certain other conditions, AEA is entitled to increase each
participant's share of costs pro rata, to the extent necessary to compensate for
the failure of another participant to pay its share, provided that no
participant's percentage share is increased by more than 25%.
Chugach and AEG&T have also negotiated a Bradley Lake Scheduling Agreement
whereby Chugach schedules AEG&T/Homer's share of the Bradley Lake project for
the benefit of the Chugach system. AEG&T continues to pay its Bradley Lake costs
and receives credit for the Bradley Lake energy generated for Homer. Chugach
pays a fixed annual fee of $112,000 to AEG&T for these scheduling rights. This
agreement allows Chugach to improve the efficiency of its generating resources
through better hydrothermal coordination.
Eklutna. Chugach purchased a 30% undivided interest in the Eklutna Hydroelectric
Project from the United States. MEA purchased a 17% undivided interest in the
Eklutna Project. The power MEA purchases from Eklutna is pooled with Chugach's
purchases and sold back to MEA to be used in meeting MEA's overall power
requirements. ML&P purchased the remaining 53% undivided interest in the Eklutna
Project. Transfer of ownership occurred on October 2, 1997 in accordance with
the Transition Plan. Chugach believes that the cost of power from the Eklutna
Project will be less than it would have been under continued Federal ownership.
Item 3 - Legal Proceedings
LITIGATION
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
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<PAGE>
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 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,
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<PAGE>
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 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 all Past Costs and Future Costs. This settlement
preserves Chugach's potential claim for natural resource damages and is
anticipated to result in Chugach paying no more that $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.
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<PAGE>
Item 4 - Submission of Matters to a Vote of Security Holders
Not Applicable
PART II
Item 5 - Market for Registrant's
Common Equity and Related Stockholder Matters
Not Applicable
Item 6 - Selected Financial Data
The following tables present selected historical information relating to
financial condition and results of operations over the past five years:
<TABLE>
<S> <C> <C> <C> <C> <C>
Balance Sheet Data ....... 1997 1996 1995 1994 1993
------------ ------------ ------------ ------------- ------------
Plant net:
In service ............ $393,228,853 $400,052,837 $391,200,269 $ 390,969,561 $382,804,772
Construction work in
progress ............ 24,664,395 19,826,957 27,068,964 22,795,657 27,698,289
------------ ------------ ------------ ------------- ------------
Electric plant, net 417,893,248 419,879,794 418,269,233 413,765,218 410,503,061
Other assets .......... 67,674,051 62,608,636 66,521,090 65,559,620 65,816,373
------------ ------------ ------------ ------------- ------------
Total assets ....... $485,567,299 $482,488,430 $484,790,323 $ 479,324,838 $476,319,434
------------ ------------ ------------ ------------- ------------
Capitalization:
Long-term debt ........ 312,006,501 307,905,847 305,641,703 303,675,870 308,869,343
Capital leases ........ -- -- -- 131,582 261,991
Equities and margins .. 109,119,697 104,477,942 99,230,550 94,579,059 84,089,720
------------ ------------ ------------ ------------- ------------
Total capitalization $421,126,198 $412,383,789 $404,872,253 $ 398,386,511 $393,221,054
------------ ------------ ------------ ------------- ------------
Summary Operations Data
Operating revenues ....... 143,947,730 134,876,668 129,379,308 130,912,171 122,159,761
Operating expenses ....... 113,070,990 100,913,804 95,920,361 90,151,993 90,346,001
Interest expense ......... 26,661,510 27,052,186 27,207,648 27,508,928 27,544,280
Amortization of gain on
refinancing ............ 1,577,149 1,703,136 2,150,476 1,926,212 1,948,394
------------ ------------ ------------ ------------- ------------
Net operating margins 5,792,379 8,613,814 8,401,775 15,177,462 6,217,874
Nonoperating margins ..... 1,762,018 1,217,557 604,418 (249,028) 795,378
------------ ------------ ------------ ------------- ------------
Assignable margins .. $ 7,554,397 $ 9,831,371 $ 9,006,193 $ 14,928,434 $ 7,013,252
------------ ------------ ------------ ------------- ------------
</TABLE>
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Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of Operations
The statements in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that relate to future plans, events or performance,
including statements relating to collection of fuel surcharges, natural gas
prices and development of the competitive marketplace, are forward-looking
statements which involve risk and uncertainties including, but not limited to,
actions of the APUC, competitive pressures, factors that affect natural gas
prices and other risks identified in the Chugach Securities and Exchange
Commission filings. Actual results, events or performance may differ materially.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Association undertakes
no obligation to publicly release any revisions to these forward-looking
statements that may be needed to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
Chugach operates on a not-for-profit basis and, accordingly, seeks only to
generate revenues sufficient to pay operating and maintenance costs, the cost of
purchased power, capital expenditures, depreciation and principal and interest
on all indebtedness of Chugach and to provide for the establishment of
reasonable margins and reserves. Revenues in excess of current period costs (net
operating margins and nonoperating margins) in any year are designated on
Chugach's Statements of Revenues, Expenses and Patronage Capital as assignable
margins. Retained assignable margins are designated on Chugach's balance sheet
as patronage capital, which is assigned to each member on the basis of
patronage. This patronage capital constitutes the principal equity of Chugach.
Revenues
Operating revenues include sales of electric energy to retail, wholesale and
economy energy customers and other miscellaneous revenues. In 1997, operating
revenues were approximately 6.7% higher than 1996. This increase was largely
attributable to higher sales to retail and two of the wholesale customer
classes. Higher fuel costs also contributed to the increase since fuel and
purchased power costs are passed directly to customers through a fuel and
purchased power adjustment factor. See further discussion under Fuel Surcharge.
Retail demand and energy rates did not change in 1997 while demand and energy
rates charged to MEA decreased slightly. Demand and energy rates to Homer and
Seward did not change. In 1996 operating revenues were approximately 4.2% higher
than 1995. This increase was largely attributable to higher sales to all three
customer classes. Demand and energy rate increases (on an interim-refundable
basis) to both of the wholesale customer classes contributed to the rise in
revenues. Retail demand and energy rates did not change in 1996. Higher fuel
costs also contributed to the increase. Revenues and power sold were as follows
for the years ended December 31:
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<PAGE>
Year MWh sold Operating revenues
1997 2,269,453 $143,947,730
1996 2,215,842 134,876,668
1995 2,136,599 129,379,308
Chugach makes economy sales primarily to GVEA. These sales commenced in 1988 and
have contributed to Chugach's growth in operating revenues. Chugach does not
take such economy sales into consideration in its long-range resource planning
process because these sales are non-firm sales that depend on GVEA's need for
additional power and Chugach's available generating capacity at the time. In
1997, economy sales to GVEA constituted approximately 5.5% of Chugach's sales
revenues.
The impact of inflation on Chugach's revenues falls into two rate categories as
follows:
Fuel Surcharge
Fuel and purchased power costs are passed directly to Chugach's wholesale
and retail customers through a fuel and purchased power adjustment factor
(fuel surcharge). Changes in these costs due to inflation or other market
conditions are passed directly to Chugach's retail and wholesale customers,
which results in either a direct increase or decrease to Chugach's system
revenues. The fuel adjustment factor is currently approved on a quarterly
basis by the APUC. There are no limitations on surcharge rate changes.
Increases in Chugach's fuel and purchased power costs result in increased
revenues while decreases in costs result in lower revenues. Revenue from
the fuel adjustment charge normally does not impact margins.
In 1997, Chugach experienced higher than anticipated fuel and purchased
power costs that were considered unusual and transitory in nature. In an
effort to maintain overall price stability, Chugach requested and was
granted a waiver by the APUC to leave fuel surcharge rates at the computed
second quarter 1997 level through the fourth quarter 1997. Further, Chugach
elected to forego collection of approximately $3,500,000 of fuel and
purchased power costs (representing the cumulative uncollected fuel
surcharge through May 1997).
Routine quarterly adjustments have resumed and fuel surcharge rates
increased effective January 1998. Undercollected fuel and purchased power
costs for June through December 1997 will be recovered throughout 1998
under a plan approved by the APUC.
In 1988, Chugach began making economy energy sales at a price that
contemplated the future cost of the gas used to generate such energy. The
APUC authorized Chugach to establish a fund whereby 80% of the margins
earned from these sales would be used to mitigate the rate impact when
natural gas prices increased in accordance with the fuel contracts which
occurred in June 1996.
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<PAGE>
The margins in this fund, known as the rate stabilization fund, were
returned to Chugach's ratepayers over a 12-month period in the form of a
credit to the fuel adjustment factor. The process was completed in May
1997.
Chugach suspended accruals to the submarine cable reserve in 1995 pursuant
to an agreement with the wholesale customers. The balance of the reserve
has been returned to ratepayers via a credit to the fuel adjustment factor
over a period of 15 months, ending in March 1997.
Simplified Rate Filing
Since 1989 operating and maintenance costs and other nonfuel and purchased
power costs have been recouped through a Simplified Rate Filing (SRF)
process that enabled Chugach to raise its electric prices up to 8% over a
cumulative twelve-month period or up to 20% over a cumulative thirty-six
month period, subject to APUC approval. Chugach's annual rate changes,
excluding fuel adjustments, for retail and wholesale classes for the years
1995 through 1997 were as follows:
1997 1996 1995
---- ---- ----
Retail 0.00% 0.00% (4.92%)
Wholesale:
Homer 0.00% 5.32% (9.52%)
MEA (0.80%) 2.46% (7.39%)
Seward 0.00% 2.46% (7.37%)
In August 1996, the Board of Directors approved a petition to the Alaska
Public Utilities (APUC) to withdraw from the SRF process. This petition was
submitted to the APUC as part of Docket U-96-37, which was opened to
resolve rate disputes with Chugach's wholesale customers.
Interim-refundable rates for wholesale customers were ordered pending
resolution of the docket. In February 1997, the APUC approved a Settlement
Agreement between Chugach and its wholesale customers resolving issues in
the docket and establishing permanent rates. As part of the APUC order, the
Association was required to file Cost of Service and Revenue Requirement
Studies. These studies were filed in March 1997. As part of the Settlement
Agreement, the wholesale customers agreed not to oppose Chugach's
withdrawal from SRF. The APUC orders have not addressed Chugach's
withdrawal from SRF but Chugach anticipates approval of its petition.
Future rate changes will be applied for through general rate case and other
normal APUC procedures. At December 31, 1997, Docket U-96-37 had not been
closed. A provision for a wholesale rate refund of $980,389 was recorded at
December 31, 1997 to accommodate certain rate adjustment clauses contained
in the Settlement Agreement.
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Expenses
Chugach's operating expenses for the years ended December 31, 1997, 1996 and
1995 were as follows:
Year Operating expenses
1997 $113,070,990
1996 100,913,804
1995 95,920,361
Operating expenses for 1997 were 12.0% higher than 1996. Operating expenses for
1996 were 5.2% higher than 1995. The reasons for the significant operating
expense variances follow:
Year ended December 31, 1997 compared to the year ended December 31, 1996
Production expense increased in 1997 over 1996. Higher fuel prices and
higher fuel consumption (due to the increase in kWh sales) were the major
causes of this increase. As previously reported, Chugach has completed the
transition to Period 2 under the long-term fuel supply contracts and fuel
costs now result from market-based prices (See Fuel Supply in Item 1).
Purchased power expense increased in 1997 over 1996. This was substantially
due to the system operating scenario throughout 1997 wherein Chugach
purchased power from AEG&T's Soldotna 1 plant to ensure system reliability
on the Kenai Peninsula.
Consumer accounts expense decreased in 1997 from 1996. The majority of this
decrease was due to a lower level of common information services costs
being allocated to this function.
Other interest expense decreased in 1997 from 1996. This was caused by a
lower average outstanding balance on the short-term lines of credit
throughout the year.
Year ended December 31, 1996 compared to the year ended December 31, 1995
Chugach experienced a 17.5% increase in production costs in 1996 over 1995.
This rise is due mostly to higher fuel prices and higher fuel consumption
associated with the increase in kWh sales. As previously reported, Chugach
had completed the transition into Period 2 under the long-term fuel supply
contracts (see Fuel Supply in Item 1). Fuel costs result from market-based
prices instead of the lower prices from Period 1 (old Beluga gas) as
outlined in the contracts.
Distribution expense decreased by 12.2% in 1996 from the same period in
1995. This
23
<PAGE>
decrease was caused mostly by lower levels of line maintenance expense
resulting from a decrease in distribution right-of-way clearing activities.
The focus of these clearing activities was on distribution lines in 1995
and transmission lines in 1996.
Depreciation expense again increased in 1996 over 1995. This was the
combined result of a higher plant in service balance as well as the
completion of a depreciation rate phase-in plan approved by the APUC.
Transmission plant depreciation rates for submarine cables were implemented
in 1994, while revised depreciation rates for the remainder of
transmission, distribution and general plant were implemented in 1995.
Implementation of the revised generation plant depreciation rates took
place in January 1996. These rates were obtained from an original
depreciation study that included plant asset account activity through
December 31, 1990. The APUC required that Chugach file an update to the
1990 study. This update, for plant asset account balances as of December
31, 1994 was submitted to the APUC although Chugach did not request a
change in depreciation rates. The study has again been updated for plant
asset account balances at December 31, 1995. Chugach submitted the new
depreciation rates from the latest update to the study to the APUC for
implementation effective January 1, 1998.
Other interest expense was higher during 1996 than in 1995. This was due to
a higher average outstanding balance on the short-term lines of credit. The
line of credit was used to fund the reacquisitions of some of Chugach's
Series A, 2022 bonds during 1996. Several draws were subsequently converted
to long-term bonds under the Third Supplemental Indenture (CoBank 3 and 4).
Interest charged to construction decreased in 1996 due mostly to a lower
construction work in progress balance during the period.
Margins
Chugach's assignable margins for the years ended December 31, 1997, 1996 and
1995 were as follows:
Period Net operating margins Nonoperating margins Assignable margins
1997 $ 5,792,379 $ 1,762,018 $ 7,554,397
1996 $ 8,613,814 $ 1,217,557 $ 9,831,371
1995 $ 8,401,775 $ 604,418 $ 9,006,193
Nonoperating margins increased in 1997 over 1996. This increase was caused
mostly by a gain recorded on the sale of a generator hot gas case that had been
held in inventory.
Nonoperating margins increased in 1996 over 1995 primarily because of the
write-off of a failed submarine cable and other property in 1995. No similar
events took place in 1996. Additionally, more capital credits were received in
1996 than 1995. This increase was due
24
<PAGE>
mostly to the higher level of borrowing from CoBank (capital credits received
are based on patronage).
Patronage Capital (Equity)
Chugach's patronage capital and total equity have shown steady growth, both in
dollars and as a percentage of capitalization. The following table summarizes
Chugach's patronage capital and total equity position since 1995:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
------------ ------------ -----------
Patronage capital at beginning of year . $100,685,517 $ 95,421,358 $91,079,686
Retirement of capital credits and estate
payments ............................ 3,439,822 4,567,212 4,664,521
Assignable margins ..................... 7,554,397 9,831,371 9,006,193
------------ ------------ -----------
Patronage capital at end of year ....... 104,800,092 100,685,517 95,421,358
Other equity ........................... 4,319,605 3,792,425 3,809,192
------------ ------------ -----------
Total equity ........... $109,119,697 $104,477,942 $99,230,550
------------ ------------ -----------
</TABLE>
The Indenture includes a covenant restricting the distribution of patronage
capital to members. Chugach cannot distribute patronage capital to members if 1)
an event of default exists or 2) the aggregate amount of patronage capital
distribution exceeds the sum of $7,000,000 plus 35 percent of the aggregate
assignable margins earned after December 31, 1990.
Times Interest Earned Ratio (TIER)
Alaska electric cooperatives generally set rates on the basis of TIER. TIER is
determined by dividing the sum of assignable margins plus long-term interest
expense (excluding capitalized interest) by long-term interest expense.
Beginning in 1989, Chugach's Board of Directors approved an Equity Management
Plan that established a schedule for building Chugach's equity. Since then
Chugach has managed its business with a view toward achieving a TIER of 1.25 or
greater. Chugach's achieved TIERs for the past five years were as follows:
Period TIER
1997 1.30
1996 1.39
1995 1.34
1994 1.58
1993 1.27
25
<PAGE>
The Indenture requires Chugach to establish rates reasonably expected to yield
margins for interest (MFI) equal to at least 1.20 times total interest expense
(I), where margins for interest are defined as net margins plus interest charges
and accruals for federal income and other taxes imposed on income after
deduction of interest charges for such period, provided that the amount of
nonoperating margins included in assignable margins shall not exceed 50% of
assignable margins. Chugach's achieved MFI/I for the past five years are not
materially different from the TIER calculations shown above.
The Indenture requires that Chugach achieve such a 1.20 ratio for any 12
consecutive month period of the last 18 months before issuing additional Bonds
(other than additional Bonds issued based on deposited cash and, under certain
circumstances, retirement of Bonds).
MATERIAL CHANGES IN FINANCIAL CONDITION
Chugach maintained a stable asset base from 1996 to 1997. Notable changes among
the components include: a decrease in restricted cash (margins from economy
energy sales or rate stabilization fund) caused by the return of these funds to
the ratepayers (through the fuel surcharge mechanism); a decrease in restricted
construction funds due to the reimbursement of general fund cash for
construction expenditures incurred; and an increase in accounts receivable
caused in large part by the remaining uncollected fuel surcharge balance as well
as additional uncollected reimbursements from the Standard Steel matter.
Chugach reacquired an additional $5 million of its Series A 2022 bonds during
1997. Also, a $15 million bond (CoBank 5) was issued under the CoBank
Supplemental Indenture. These activities represent the major change in long-term
obligations during 1997.
Notable changes to other liabilities include: a lower balance outstanding on the
short-term lines of credit due to an adequate liquidity position at year-end; an
increase in accounts payable largely due to the timing of payments to
contractors; a lower balance in other liabilities caused by the return of both
the rate stabilization and submarine cable reserve funds during 1997; and the
decrease in deferred credits resulting from the annual amortization of the
original refinancing gain.
LIQUIDITY AND CAPITAL RESOURCES
Chugach satisfies its operational and capital cash requirements through
internally generated funds, a $50 million line of credit with the NRUCFC and a
$35 million line of credit with CoBank.
At December 31, 1997, no balance was outstanding on the NRUCFC line. The NRUCFC
line of credit expires October 14, 2002. At December 31, 1997, no amount was
outstanding on the CoBank line. The CoBank line of credit expires August 1,
1998, but carries an annual automatic renewal clause.
26
<PAGE>
Chugach's capital improvement requirements are based on long-range plans and
other supporting studies and are executed through a five-year construction work
plan.
Five-year work plans are fully developed and updated every year. Shown below is
an estimate of capital expenditures for the years 1998 through 2002:
1998 $28.0 million
1999 $40.0 million
2000 $48.2 million
2001 $30.1 million
2002 $22.5 million
Following is a five-year summary of anticipated capital credit retirements:
Year ending Wholesale Retail Total
1998 $ 1,533,000 $ 2,146,000 $ 3,679,000
1999 0 1,975,000 1,975,000
2000 0 1,308,000 1,308,000
2001 0 1,497,000 1,497,000
2002 0 1,672,000 1,672,000
27
<PAGE>
Chugach's outstanding long-term obligations and maturity at December 31,
1997 are as follows:
<TABLE>
<S> <C>
First mortgage bonds of 8.08% maturing in 2002 and 9.14% maturing in 2022,
with interest payable semiannually March 15 and September 15:
8.08% $ 28,848,000
9.14% 217,705,000
CoBank 8.95% bond maturing in 2002,
with interest payable monthly .......................................... 1,352,847
CoBank 7.76% bond maturing in 2005,
with interest payable monthly .......................................... 10,000,000
CoBank 6.65% (variable rate, repriced
monthly) bonds maturing 2022, with
interest payable monthly ................................................. 45,000,000
CoBank 6.65% (variable rate repriced
monthly) bonds maturing in 2002, 2007
and 2012 with interest payable monthly ................................... 15,000,000
Capital lease for computer equipment at
an interest rate of 9.10% with monthly
payments of approximately
$1,700 through July 1998 ............................................... 14,166
------------
Total long-term obligations ........................................ 317,920,013
Less current installments ................................................ 5,913,512
Long-term obligations, excluding
current installments ............................................. $312,006,501
------------
</TABLE>
28
<PAGE>
Sinking Fund Principal maturities
requirements
Year ending First CoBank
December 31 mortgage bonds mortgage bonds Capital leases Total
1998 $ 5,643,000 $ 256,346 $14,166 $ 5,913,512
1999 5,809,000 279,802 - 6,088,802
2000 6,067,000 305,405 - 6,372,405
2001 6,097,000 333,350 - 6,430,350
2002 5,232,000 5,177,944 - 10,409,944
Thereafter 217,705,000 65,000,000 - 282,705,000
------------ ---------- --------- -----------
$ 246,553,000 $ 71,352,847 $ 14,166 $ 317,920,013
------------ ---------- ------- -----------
On September 19, 1991, Chugach issued $314 million of First Mortgage Bonds, 1991
Series A Bonds, for purposes of repaying existing debt to the FFB and the REA.
Pursuant to Section 311 of the Rural Electrification Act, Chugach was permitted
to prepay the REA debt at a discounted rate of approximately 9%, resulting in a
discount of approximately $45 million. The gain on prepayment was deferred at
December 31, 1991 because Chugach expected to pass the benefit of the gain
through to ratepayers prospectively in the form of lower rates. In April 1992,
Chugach received formal approval from the APUC to defer the gain and amortize it
into income over the life of the bonds. Annual amortization for 1997 was $1.6
million. Annual amortization for 1996 was $1.7 million and for 1995 was $2.2
million.
Chugach has negotiated a supplemental indenture (Third Supplemental Indenture of
Trust) with CoBank which previously allowed up to $80 million in future bond
financing. Recently Chugach finalized an amendment to the Third Supplemental
Indenture of Trust (Seventh Supplemental Indenture of Trust) that eliminates the
maximum aggregate amount of bonds the company may issue under the agreement. At
December 31, 1997, Chugach had bonds in the amount of $71.4 million outstanding
under this financing arrangement. The balance is comprised of a $1.4 million
bond (CoBank 1) that 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 December 31, 1997 there were no amounts
outstanding under this financing arrangement.
Chugach management expects that cash flows from operations and external funding
sources will be sufficient to cover operational and capital funding requirements
in 1998 and thereafter.
29
<PAGE>
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. Expenditures in 1997 for
the Year 2000 project amounted to approximately $1.7 million and the Association
expects that completion of the project will result in additional expenditures of
approximately $2.9 million.
ENVIRONMENTAL MATTERS
Compliance with Environmental Standards
Chugach's operations are subject to certain Federal, State and local
environmental laws which Chugach monitors to ensure compliance. The costs
associated with environmental compliance are included as a component of both the
operating and capital budget processes. Chugach accrues for costs associated
with environmental remediation obligations when such costs are probable and
reasonably estimable.
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
30
<PAGE>
based on cost estimates contained in the FS report, ranges from $5,231,200 to
$6,619,800. The RD/RA Decree contains a cost estimate, as determined by EPA and
including a 50% cost overrun contingency, of $8,400,000. Chugach's share of
these estimated RD/RA expenses would range from approximately $778,926 to
$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 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 all Past Costs and Future Costs. This settlement
preserves Chugach's potential claim for natural resource damages and is
anticipated to result in Chugach paying no more that $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.
OUTLOOK
Nationwide, the electric utility industry is entering a period of unprecedented
competition. Electric utilities in Alaska will not be immune from these
competitive forces. Chugach has taken several steps to be more effectively
positioned to meet the challenge of a competitive market for electricity.
Chugach participates in national benchmarking projects to improve system
operations. Recent
31
<PAGE>
studies have focused on mailroom operations, remittance processing, new service
connections, system reliability and power production. As a result of these
studies, Chugach has been able to make these processes more efficient which has
led to lower costs. The Association is committed to continue reviewing all areas
of its operations and to serve its customers in a way that maintains high
reliability while containing the cost of electricity.
In addition to participation in benchmarking studies, Chugach has also
implemented strategic alliances in the purchasing and warehousing areas. These
alliances are designed to improve efficiency and thus, contribute to lower
operating costs. In 1997, Chugach was able to lower inventory unit costs,
increase inventory turns and decrease project cost by furnishing materials to
contractors as a direct result of these strategic alliances. Chugach will
continue to explore other areas for strategic alliance opportunities.
During 1997, Chugach adopted a new strategic plan. In this plan, priority issues
were identified that are critical to the company's success. In addition, key
result area targets were developed that will track the most important measures
of Chugach's performance. As the operating environment changes, the strategic
plan will continue to be adapted and further developed to reflect the new market
conditions.
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 formally asked Chugach to provide their electric power,
Chugach requested access over the other utility's distribution and transmission
system and asked the APUC to enforce the request. At this time, the APUC has not
ruled on this request and it is not possible to predict their decision.
Chugach has been active at the State legislative level in support of the
customer's right to choose their electric power supplier. Virtually all Alaskan
utilities have opposed Chugach's efforts to develop competition and are active
in attempting to create exclusive service territories. At this time, however, no
bill relating to customer choice has moved out of committee. Thus, it is not
possible to predict the outcome of this legislative process.
Chugach has also made organizational changes in preparation for competition.
Recognizing that the new marketplace will probably be "unbundled" along the
functional lines of generation, transmission and distribution, and retail
services, Chugach's new organizational structure reflects these functions.
Chugach now operates with three divisions: Finance and Energy Supply,
Transmission and Distribution Network Services and Retail Services. This
structure will better allow Chugach to compete in the rapidly changing electric
utility industry. In addition, Chugach has formed a Marketing Department,
continues to operate its Key Account program for larger customers and continues
to develop new services to enhance existing customer's satisfaction.
Chugach has three collective bargaining agreements with the IBEW that are
currently open for negotiation. Although each of the contracts has an expiration
date of January 31, 1998, the parties have agreed that the contracts shall
continue in effect until new contracts are put in place. If the parties cannot
agree on the terms of new agreements, all outstanding issues will
32
<PAGE>
be decided through interest arbitration. The Union cannot strike and Chugach
cannot lockout under the continuing agreement.
33
<PAGE>
Item 8 - Financial Statements and Supplementary Data
December 31, 1997 and 1996
Independent Auditors' Report
The Board of Directors
Chugach Electric Association, Inc.:
We have audited the accompanying balance sheets of Chugach Electric Association,
Inc. as of December 31, 1997 and 1996, and the related statements of revenues,
expenses and patronage capital and cash flows for each of the years in the
three-year period ended December 31, 1997. These financial statements are the
responsibility of the Association's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Chugach Electric Association,
Inc. as of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1997, in conformity with generally accepted accounting principles.
Anchorage, Alaska /s/ KPMG Peat Marwick LLP
February 20, 1998
34
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
December 31, 1997 and 1996
<TABLE>
<S> <C> <C>
Assets 1997 1996
------------ ------------
Utility plant (notes 2, 13 and 14):
Electric plant in service ................ $625,365,803 $615,464,060
Construction work in progress ............ 24,664,395 19,826,957
------------ ------------
650,030,198 635,291,017
Less accumulated depreciation ............ 232,136,950 215,411,223
------------ ------------
Net utility plant ...... 417,893,248 419,879,794
------------ ------------
Other property and investments, at cost:
Nonutility property ...................... 3,550 3,550
Investments in associated organizations
(note 3) .............................. 7,864,271 7,647,189
Restricted cash - margins from Economy
Energy Sales, all repurchase agreements -- 1,599,239
------------ ------------
7,867,821 9,249,978
------------ ------------
Current assets:
Cash and cash equivalents, including
repurchase agreements of $6,351,291 in
1997 and $6,216,073 in 1996 ........... 5,224,529 5,419,819
Cash - restricted construction funds ..... 364,778 1,371,386
Special deposits ......................... 151,703 89,232
Accounts receivable, less provision for
doubtful accounts of $368,029 in 1997
and $367,085 in 1996 .................. 23,999,138 15,369,883
Materials and supplies, at average cost .. 15,619,085 16,187,592
Prepayments .............................. 558,371 694,257
Other current assets ..................... 305,415 294,380
------------ ------------
Total current assets ..... 46,223,019 39,426,549
------------ ------------
Deferred charges (notes 9 and 15) ............. 13,583,211 13,932,109
------------ ------------
$485,567,299 $482,488,430
------------ ------------
</TABLE>
See accompanying notes to financial statements.
35
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets, Continued
December 31, 1997 and 1996
<TABLE>
<S> <C> <C>
Liabilities 1997 1996
------------ ------------
Equities and margins (note 11):
Memberships .................................$ 861,543 $ 812,748
Patronage capital (note 4) .................. 104,800,092 100,685,517
Other (note 5) .............................. 3,458,062 2,979,677
------------ ------------
109,119,697 104,477,942
------------ ------------
Long-term obligations,
excluding current installments (notes 6, 7 and 11)
First mortgage bonds payable ................ 240,910,000 251,553,000
National Bank for Cooperatives bonds
payable .................................... 71,096,501 56,352,847
------------ ------------
312,006,501 307,905,847
------------ ------------
Current liabilities:
Notes payable (note 6) ...................... -- 2,750,000
Current installments of long-term debt and
capital leases (notes 6, 7 and 11) ....... 5,913,512 5,971,752
Accounts payable ............................ 7,038,234 5,178,161
Consumer deposits ........................... 1,038,241 1,066,906
Accrued interest ............................ 6,904,335 7,076,388
Salaries, wages and benefits ................ 3,655,101 3,583,422
Fuel ........................................ 6,611,415 6,047,574
Other (note 15) ............................. 3,300,310 5,012,191
------------ ------------
Total current liabilities .... 34,461,148 36,686,394
------------ ------------
Deferred credits (note 12) ....................... 29,979,953 33,418,247
------------ ------------
$485,567,299 $482,488,430
------------ ------------
</TABLE>
See accompanying notes to financial statements.
36
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Statements of Revenues, Expenses and Patronage
Capital Years ended December 31, 1997, 1996
and 1995
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
------------- ------------- -------------
Operating revenues ................... $ 143,947,730 $ 134,876,668 $ 129,379,308
------------- ------------- -------------
Operating expenses:
Production ...................... 45,879,337 37,066,444 31,533,567
Purchased power ................. 14,033,282 10,024,483 10,136,623
Transmission .................... 3,378,540 3,667,039 3,460,823
Distribution .................... 8,640,443 8,789,683 10,008,020
Consumer accounts ............... 4,955,838 6,978,856 7,089,847
Administrative, general and other 15,071,966 13,713,690 14,395,125
Depreciation .................... 21,111,584 20,673,609 19,296,356
------------- ------------- -------------
Total operating expenses 113,070,990 100,913,804 95,920,361
------------- ------------- -------------
Interest:
On long-term debt ............... 24,942,281 25,029,257 25,559,725
Charged to construction - credit (629,764) (616,090) (1,114,928)
On short-term debt .............. 771,844 935,883 612,375
------------- ------------- -------------
Net interest ............ 25,084,361 25,349,050 25,057,172
------------- ------------- -------------
Net operating margins ... 5,792,379 8,613,814 8,401,775
Nonoperating margins:
Interest income ................. 632,191 695,699 730,041
Other ........................... 520,414 566,908 351,586
Property gain (loss) ............ 609,413 (45,050) (477,209)
------------- ------------- -------------
Assignable margins ....... 7,554,397 9,831,371 9,006,193
Patronage capital at beginning of year 100,685,517 95,421,358 91,079,686
Retirement of capital credits and
estate payments (note 4) .......... (3,439,822) (4,567,212) (4,664,521)
------------- ------------- -------------
Patronage capital at end of year ..... $ 104,800,092 $ 100,685,517 $ 95,421,358
------------- ------------- -------------
</TABLE>
See accompanying notes to financial statements.
37
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Statements of Cash Flows
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
------------ ------------ ------------
Cash flows from operating activities:
Assignable margins ........................................................ $ 7,554,397 $ 9,831,371 $ 9,006,193
------------ ------------ ------------
Adjustments to reconcile assignable margins to net cash provided by operating
activities:
Depreciation and amortization ............................................. 23,532,263 23,221,162 21,846,611
Capitalized interest ...................................................... (799,999) (809,302) (1,354,273)
Property (gains) losses and obsolete inventory write-off .................. (609,413) 45,050 477,434
Other ..................................................................... (241,317) (265,643) 343,806
Changes in assets and liabilities:
(Increase) decrease in assets:
Special deposits ..................................................... (62,471) 8,557 (44,332)
Accounts receivable .................................................. (8,629,254) 1,738,940 (3,492,435)
Notes receivable ..................................................... -- -- 2,533
Prepayments .......................................................... 135,886 (19,140) 194,790
Materials and supplies, net .......................................... 568,507 2,311,191 1,527,094
Deferred charges ..................................................... (2,299,547) (4,581,795) (2,222,963)
Other ................................................................ (11,035) 117,829 (14,740)
Increase (decrease) in liabilities:
Accounts payable ..................................................... 1,860,074 (1,481,316) 3,125,594
Accrued interest ..................................................... (172,052) (976,398) (136,434)
Deferred credits ..................................................... (755,366) (8,023,874) (3,274,768)
Consumer deposits, net ............................................... (28,665) (52,150) (73,789)
Other ................................................................ (1,076,365) 5,956,463 389,099
------------ ------------ ------------
Total adjustments ............................................... 11,411,246 17,189,574 17,293,227
------------ ------------ ------------
Net cash provided by operating
activities .................................................... 18,965,643 27,020,945 26,299,420
------------ ------------ ------------
Cash flows from investing activities:
Extension and replacement of plant ........................................ (17,487,859) (20,605,093) (22,058,887)
Decrease in investments in associated organizations ....................... 24,235 132,261 267,393
------------ ------------ ------------
Net cash (used) in investing activities ......................... (17,463,624) (20,472,832) (21,791,494)
------------ ------------ ------------
Cash flows from financing activities:
Transfer of restricted construction funds ................................. 1,006,608 (1,371,386) --
Net increase (decrease) in notes payable .................................. (2,750,000) (5,250,000) 500,000
Proceeds from long-term debt .............................................. 15,000,000 45,000,000 10,000,000
Repayments of long-term debt .............................................. (10,957,586) (42,429,853) (8,312,527)
Memberships and donations received (refunded) ............................. 527,179 (16,768) 309,821
Retirement of patronage capital ........................................... (3,439,822) (4,567,212) (4,664,521)
Increase in (refunds) and transfers of consumer advances
for construction ........................................................ (1,083,688) 1,627,442 (1,309,828)
------------ ------------ ------------
Net cash used by financing
activities ................................................... (1,697,309) (7,007,777) (3,477,055)
------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents .................................................. (195,290) (459,664) 1,030,871
Cash and cash equivalents at beginning of year ................................. 5,419,819 5,879,483 4,848,612
------------ ------------ ------------
Cash and cash equivalents at end of year ....................................... $ 5,224,529 $ 5,419,819 $ 5,879,483
------------ ------------ ------------
Supplemental disclosure of cash flow information - ............................. $ 25,256,413 $ 26,325,449 $ 25,193,606
------------ ------------ ------------
interest expense paid, net of amounts capitalized
</TABLE>
See accompanying notes to financial statements.
38
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
December 31, 1997 and 1996
(1) Description of Business and Summary of Significant Accounting Policies
Description of Business
Chugach Electric Association, Inc. (Association or Chugach) is the
largest electric utility in Alaska. The Association is engaged in the
generation, transmission and distribution of electricity to directly
served retail customers in the Anchorage and upper Kenai Peninsula areas.
Through an interconnected regional electrical system, Chugach's power
flows throughout Alaska's Railbelt, a 400-mile-long area stretching from
the coastline of the southern Kenai Peninsula to the interior of the
state, including Alaska's largest cities, Anchorage and Fairbanks.
Chugach also supplies much of the power requirements of three wholesale
customers, Matanuska Electric Association (MEA), Homer Electric
Association (Homer) and the City of Seward (Seward).
The Association operates on a not-for-profit basis and, accordingly,
seeks only to generate revenues sufficient to pay operating and
maintenance costs, the cost of purchased power, capital expenditures,
depreciation, and principal and interest on all indebtedness and to
provide for the establishment of reasonable margins and reserves. The
Association is subject to the regulatory authority of the Alaska Public
Utilities Commission (APUC).
Management Estimates
In preparing the financial statements, management of the Association is
required to make estimates and assumptions relating to the reporting of
assets and liabilities and the disclosure of contingent assets and
liabilities as of the date of the balance sheet and revenues and expenses
for the reporting period. Actual results could differ from those
estimates.
Summary of Significant Accounting Policies
Regulation
The accounting records of the Association conform to the Uniform System
of Accounts as prescribed by the Federal Energy Regulatory Commission.
The Association meets the criteria, and accordingly, follows the
accounting and reporting requirements of Statement of Financial
Accounting Standards No. 71, Accounting for the Effects of Certain Types
of Regulation (SFAS 71). Revenues in excess of current period costs (net
operating margins and nonoperating margins) in any year are designated on
the Association's statement of revenues and expenses as assignable
margins. Retained assignable margins are designated on the Association's
balance sheet as patronage capital, which is assigned
39
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
to each member on the basis of patronage. This patronage capital
constitutes the principal equity of the Association.
In July 1997, the Financial Accounting Standards Board (FASB) Emerging
Issues Task Force (EITF) reached a consensus on EITF 97-4 "Deregulation
of the Pricing of Electricity - Issues Related to the Application of FASB
Statements No. 71 and No 101." This issue discusses when an enterprise
should stop applying FAS No. 71 to the separable portion of its business
whose product or service pricing is being deregulated and how a company
should account for its stranded costs after it has discontinued the
application of FAS No. 71. It also provides guidance with respect to the
evaluation of regulatory assets and liabilities and concluded that these
items should be determined on the basis of where in the business the
regulated cash flows to realize and settle them will be derived. The
Association's current method of accounting is consistent with the EITF.
The Association performs an annual evaluation of the requirements of SFAS
71 and related exposures.
Reclassifications
Certain reclassifications have been made to the 1995 and 1996 financial
statements to conform to the 1997 presentation.
Plant Additions and Retirements
Additions to electric plant in service are recorded at original cost of
contracted services, direct labor and materials, and indirect overhead
charges. For property replaced or retired, the average unit cost of the
property unit, plus removal cost, less salvage, is charged to accumulated
provision for depreciation. The cost of replacement is added to electric
plant.
The Association implemented Statement of Financial Accounting Standards
No.121, Accounting for the Impairment of Long Lived Assets and Long Lived
Assets to be Disposed Of in 1996. There was no material impact on the
financial statements.
In 1994 the Association completed a feasibility study concerning the
desirability of implementing Smaller Retirement Unit accounting. The
Association implemented Smaller Retirement Unit accounting in 1995.
Smaller Retirement Unit accounting allows for the capitalization of
generation major component costs which would have been expensed as
maintenance under the previous capitalization methodology.
40
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
Operating Revenues
Operating revenues are based on billing rates authorized by the APUC
which are applied to customers' usage of electricity. Included in
operating revenue are billings rendered to customers adjusted for
differences in meter read dates from year to year. The Association's
tariffs include provisions for the flow through of gas cost increases
pursuant to existing gas supply contracts.
During 1988 the Association commenced some sales of energy at a price
which contemplates the future replacement cost of the gas used to
generate such energy, referred to as Economy Energy Sales. Pursuant to an
order by the APUC, 80% of the margins from Economy Energy Sales is
deferred to mitigate future gas price increases. Return of these deferred
margins, plus accrued interest earnings, to ratepayers began in June
1996, when the transition from lower priced natural gas to higher priced
natural gas occurred. These margins were returned, over a twelve month
period, in the form of a credit to the Fuel Cost Recovery Adjustment
(FCRA) factor.
In 1997, Chugach experienced higher than anticipated fuel and purchased
power costs that were considered unusual and transitory in nature. In an
effort to maintain overall price stability, Chugach requested and was
granted a waiver by the APUC to leave fuel surcharge rates at the
computed second quarter 1997 level through the fourth quarter 1997.
Further, Chugach elected to forego collection of approximately $3,500,000
of fuel and purchased power costs (representing cumulative uncollected
fuel surcharge through May 1997).
Routine quarterly adjustments have resumed and fuel surcharge rates
increased effective January 1998. June through December 1997
undercollected fuel and purchased power costs will be recovered
throughout 1998 under a plan approved by the APUC.
In August 1996, the Board of Directors approved a petition to the Alaska
Public Utilities Commission (APUC) to withdraw from the Simplified Rate
Filing (SRF) process. This petition was submitted to the APUC as part of
Docket U-96-37, which was opened to resolve rate disputes with Chugach's
wholesale customers. Interim-refundable rates for wholesale customers
were ordered pending resolution of the docket. In February 1997, the APUC
approved a Settlement Agreement between Chugach and its wholesale
customers resolving issues in the docket and establishing permanent
rates. As part of the APUC order, the Association was required to file
Cost of Service and Revenue Requirement Studies. These studies were filed
in March 1997. As part of the Settlement Agreement, the wholesale
customers agreed not to oppose Chugach's withdrawal from SRF. The APUC
orders have not addressed Chugach's withdrawal from SRF but Chugach
anticipates approval of its petition. Future rate changes will be applied
for through general rate case and other normal APUC procedures. At
December 31, 1997,
41
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
Docket U-96-37 had not been closed. A provision for a wholesale rate
refund of $980,389 was recorded at December 31, 1997 to accommodate
certain rate adjustment clauses contained in the Settlement Agreement.
Investments in Associated Organizations
Investments in associated organizations represent capital requirements as
part of financing arrangements.
The Association has the intent and ability to hold these investments to
maturity, and accordingly has elected to account for them at cost under
SFAS 115.
Deferred Charges and Credits
Deferred charges, representing regulatory assets, are amortized to
operating expense over the period allowed for rate-making purposes,
generally five years.
Nonrefundable contributions in aid of construction are credited to the
associated cost of construction of property units. Refundable
contributions in aid of construction are held in deferred credits pending
their return or other disposition.
Depreciation and Amortization
Depreciation and amortization rates have been applied on a straight-line
basis and at December 31, 1997 are as follows:
Rate (%)
Steam production plant 2.68 - 2.95
Hydraulic production plant 1.33 - 2.24
Other production plant 3.46 - 7.07
Transmission plant 1.85 - 5.00
Distribution plant 2.10 - 6.67
General plant 2.22 - 25.00
Other 1.88 - 2.75
In 1994, the first phase of a three part phase-in of new depreciation
rates occurred as APUC approved rates for submarine cables (Transmission
plant) were implemented. The impact of utilization of these new
depreciation rates on the financial statements was not material. In 1995,
the balance of Transmission plant, all of Distribution plant and
42
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
General plant rates were implemented. In 1996, new Generation plant
depreciation rates were implemented.
In 1997 an update of the Depreciation Study was completed utilizing
Electric Plant in Service balances as of December 31, 1995. Depreciation
rates developed in that Study will be implemented in January, 1998. No
phase-in of rates is required by the APUC.
Capitalized Interest
Allowance for funds used during construction and interest charged to
construction - credit are the estimated costs during the period of
construction of equity and borrowed funds used for construction purposes.
The Association capitalized such funds at the average rate (adjusted
monthly) of 8.3% during 1997, 8.6% during 1996 and 8.2% during 1995.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Association considers
all highly liquid debt instruments with a maturity of three months or
less upon acquisition by the Association (excluding restricted cash and
investments) to be cash equivalents.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards 107, Disclosures About the
Fair Value of Financial Instruments, requires disclosure of the fair
value of certain on and off balance sheet financial instruments for which
it is practicable to estimate that value. The following methods are used
to estimate the fair value of financial instruments:
Cash and cash equivalents and restricted cash - the carrying amount
approximates fair value because of the short maturity of those
instruments.
Investments in associated organizations - the carrying amount
approximates fair value because of limited marketability and
current market interest rates which approximate interest rates on
the investments.
Consumer deposits - the carrying amount approximates fair value
because of the short refunding term.
Notes payable - the carrying amount approximates fair value because
of the short maturity of the notes.
Long-term obligations - the fair value is estimated based on the
quoted market price for same or similar issues (note 7).
43
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
Environmental Remediation Costs
The Association accrues for losses associated with environmental
remediation obligations when such losses are probable and reasonably
estimable. Such accruals are adjusted as further information develops or
circumstances change. Estimates of future costs for environmental
remediation obligations are not discounted to their present value.
2) Utility Plant Summary
Major classes of electric plant as of December 31 are as follows:
<TABLE>
<S> <C> <C>
1997 1996
------------ ------------
Electric plant in service:
Steam production plant ................ $ 60,392,869 $ 60,392,869
Hydraulic production plant ............ 8,798,695 8,798,695
Other production plant ................ 108,067,665 107,278,076
Transmission plant .................... 191,960,788 189,961,660
Distribution plant .................... 151,076,058 144,939,571
General plant ......................... 62,575,576 61,174,312
Unclassified electric plant in service 35,941,017 37,533,642
Equipment under capital lease ......... 56,323 674,323
Other ................................. 6,496,812 4,710,912
------------ ------------
Total electric plant in service ... 625,365,803 615,464,060
Construction work in progress ............ 24,664,395 19,826,957
------------ ------------
Total electric plant in service and
construction work in progress ... $650,030,198 $635,291,017
------------ ------------
</TABLE>
Depreciation of unclassified electric plant in service has been included
in functional plant depreciation accounts in accordance with the
anticipated eventual classification of the plant investment.
44
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
(3) Investments in Associated Organizations
Investments in associated organizations include the following at December
31:
1997 1996
---- ----
National Rural Utilities Cooperative Finance
Corporation (NRUCFC) $ 6,095,980 $ 6,095,980
National Bank for Cooperatives (CoBank) 1,565,097 1,352,010
NRUCFC capital term certificates 32,300 29,120
Other 170,894 170,079
--------- ---------
$ 7,864,271 $ 7,647,189
--------- ---------
The Farm Credit Administration, CoBank's federal regulators, requires
minimum capital adequacy standards for all Farm Credit System
institutions. CoBank's loan agreements require, as a condition of the
extension of credit, that an equity ownership position be established by
all borrowers. The Association's investment in NRUCFC similarly was
required by its financing arrangements with NRUCFC. The investments in
NRUCFC and CoBank mature at various dates through 2020 and bear interest
at rates ranging from 3% to 5%.
(4) Patronage Capital
The Association has approved an Equity Management Plan which established
in general, a ten-year (for wholesale customers) and twenty-year (for
retail customers) capital credit retirement of patronage capital, based
on the members' proportionate contribution to Association assignable
margins. At December 31, 1997, out of the total of $104,800,092 patronage
capital, the Association had assigned $97,245,695 of such patronage
capital (net of capital credit retirements). Approval of actual capital
credit retirements is at the discretion of the Association's Board of
Directors. In November 1996, the Board of Directors approved the
retirement of $1,868,785 of retail capital credits representing 50
percent of the 1983 retail patronage. In December 1996, the Board of
Directors authorized the retirement of $2,135,078 of wholesale capital
credits from 1986 resulting in an authorized 1996 distribution of
$4,003,863. A special return of wholesale capital credits in the amount
of $392,136 was authorized by the Board of Directors under the terms of
APUC Docket U-92-10. In December 1997, the Board of Directors authorized
the retirement of $1,859,730 of retail capital credits representing the
remaining 1983 patronage capital. The Board of Directors also authorized
the retirement of 1987 wholesale capital credits in the amount of
$1,205,510 in December 1997. A special
45
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
wholesale capital credit retirement of $88,818, representing wholesale
margins from 1985, was authorized in December 1997.
Following is a five-year summary of anticipated capital credit
retirements:
Year ending Wholesale Retail Total
1998 $ 1,533,000 $ 2,146,000 $ 3,679,000
1999 0 1,975,000 1,975,000
2000 0 1,308,000 1,308,000
2001 0 1,497,000 1,497,000
2002 0 1,672,000 1,672,000
(5) Other Equities
A summary of other equities at December 31 follows:
1997 1996
---- ----
Nonoperating margins, prior to 1967 $ 23,625 $ 23,625
Donated capital 186,199 183,580
Unredeemed capital credit retirement 3,248,238 2,772,472
---------- ----------
$ 3,458,062 $ 2,979,677
---------- ----------
46
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
(6) Long-term Obligations
Long-term obligations at December 31 are as follows:
<TABLE>
<S> <C> <C>
1997 1996
------------ ------------
First mortgage bonds of 8.08% maturing in 2002 and 9.14% maturing in 2022,
with interest payable semiannually March 15 and September 15:
8.08% $ 28,848,000 $ 34,554,000
9.14% 217,705,000 222,705,000
CoBank 8.95% bond maturing in 2002,
with interest payable monthly .......................................... 1,352,847 1,587,703
CoBank 7.76% bond maturing in 2005,
with interest payable monthly .......................................... 10,000,000 10,000,000
CoBank 6.65% (variable rate, repriced
monthly) bonds maturing 2022, with
interest payable monthly ................................................. 45,000,000 45,000,000
CoBank 6.65% (variable rate repriced
monthly) bonds maturing in 2002, 2007
and 2012 with interest payable monthly ................................... 15,000,000 --
Capital lease for computer equipment at
an interest rate of 9.10% with monthly
payments of approximately
$1,700 through July 1998 ............................................... 14,166 30,896
------------ ------------
Total long-term obligations ........................................ 317,920,013 313,877,599
Less current installments ................................................ 5,913,512 5,971,752
------------ ------------
Long-term obligations, excluding
current installments ............................................. $312,006,501 $307,905,847
------------ ------------
</TABLE>
Substantially all assets are pledged as collateral for the long-term
obligations.
Under provisions of its financing arrangements with CoBank (Third
Supplemental Indenture of Trust, as amended by the Seventh Supplemental
Indenture of Trust), there is no limit on the maximum aggregate amount of
bonds which may be issued. Chugach has also negotiated a supplemental
indenture with NRUCFC (Fifth Supplemental Indenture of Trust) for $80
million, with no amounts outstanding at December 31, 1997.
47
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
Maturities of Long-term Obligations
Long-term obligations at December 31, 1997 mature as follows:
Sinking Fund Principal maturities
requirements
Year ending First CoBank
December 31 mortgage bonds mortgage bonds Capital leases Total
1998 $ 5,643,000 $ 256,346 $14,166 $ 5,913,512
1999 5,809,000 279,802 - 6,088,802
2000 6,067,000 305,405 - 6,372,405
2001 6,097,000 333,350 - 6,430,350
2002 5,232,000 5,177,944 - 10,409,944
Thereafter 217,705,000 65,000,000 - 282,705,000
------------ ---------- --------- -----------
$ 246,553,000 $ 71,352,847 $ 14,166 $ 317,920,013
------------ ---------- ------- -----------
Lines of Credit
The Association had an annual line of credit of $35,000,000 in 1997 and
1996 available with CoBank. The CoBank line of credit expires August 1,
1998 but carries an annual automatic renewal clause. At December 31, 1997
and 1996, there was no outstanding balance on this line of credit. In
addition, the Association had an annual line of credit of $50,000,000
available at December 31, 1997 and 1996 with NRUCFC. At December 31, 1997
there was no outstanding balance on this line of credit. At December 31,
1996, $2,750,000 was outstanding at an interest rate of 6.35%. The NRUCFC
line of credit expires October 14, 2002.
Refinancing
On September 19, 1991, Chugach issued $314,000,000 of First Mortgage
Bonds, 1991 Series A (Bonds), for purposes of repaying existing debt to
the Federal Financing Bank and the Rural Electrification Administration
(now Rural Utilities Services). Pursuant to Section 311 of the Rural
Electrification Act, Chugach was permitted to prepay the REA debt at a
discounted rate of approximately 9%, resulting in a discount of
approximately $45,000,000 (note 12).
48
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
The bonds maturing in 2002 (Series A 2002 Bonds) are subject to annual
sinking fund redemption at 100% of the principal amount thereof which
commenced March 15, 1993. The bonds maturing in 2022 (Series A 2022
Bonds) are subject to annual sinking fund redemption at 100% of the
principal amount thereof commencing March 15, 2003. The Series A 2002
Bonds are not subject to optional redemption. The Series A 2022 Bonds are
redeemable at the option of Chugach on any interest payment date at an
initial redemption price commencing in 2002 of 109.140% of the principal
amount thereof declining ratably to par on March 15, 2012. The Bonds are
secured by a first lien on substantially all of Chugach's assets. The
Indenture prohibits outstanding short-term indebtedness (other than trade
payables) in excess of 15% of Chugach's net utility plant and limits
certain cash investments to specific securities.
In December 1995, Chugach reacquired $2,500,000 of the Series A 2022
Bonds at a premium of 116.8795. Total transaction cost, including accrued
interest and premium, was $2,982,286.
In February 1996, Chugach reacquired $2,445,000 of the Series A 2022
Bonds at a premium of 117.5000. Total transaction cost, including accrued
interest and premium, was $2,970,334.
In March 1996, Chugach reacquired $13,150,000 of the Series A 2022 Bonds
at a premium of 115.3750. Total transaction cost, including accrued
interest and premium, was $15,762,752.
In June 1996, Chugach reacquired $20,000,000 of the Series A 2022 Bonds
at a premium of 109.3750. Total transaction costs, including accrued
interest and premium was $22,347,233.
In September 1996, Chugach reacquired $1,200,000 of the Series A 2022
Bonds at a premium of 108.5280. Total transaction cost, including accrued
interest and premium, was $1,356,567.
In April 1997, Chugach reacquired $5,000,000 of the Series A 2022 Bonds
at a premium of 109.7500. Total transaction cost, including accrued
interest and premium, was $5,510,350.
49
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
(7) Fair Value of Financial Instruments
The estimated fair values (in thousands) of the long-term obligations
included in the financial statements at December 31 are as follows:
1997 1996
---- ----
Carrying Fair Carrying Fair
Value Value Value Value
Long-term obligations
(including current installments) $317,920 $352,755 $313,878 $348,273
Fair value estimates are dependent upon subjective assumptions and
involve significant uncertainties resulting in variability in estimates
with changes in assumptions.
(8) Employee Benefits
Pension benefits for substantially all employees are provided through the
Alaska Electrical Trust and Alaska Hotel, Restaurant and Camp Employees
Health and Welfare Trust Funds (union employees) and the National Rural
Electric Cooperative Association (NRECA) Retirement and Security Program
(nonunion employees). The Association makes annual contributions to the
plans equal to the amounts accrued for pension expense. For the union
plans, the Association pays a contractual hourly amount per union
employee which is based on total plan costs for all employees of all
employers participating in the plan. In these master, multiple-employer
plans, the accumulated benefits and plan assets are not determined or
allocated separately to the individual employer. Pension costs for union
plans were approximately $1,810,000 in 1997, $1,889,000 in 1996 and
$1,860,000 in 1995. For several years, NRECA did not require
contributions to the plan; consequently, no pension cost was incurred. In
1995 the moratorium was in effect from May through December. From January
through April 1995, a total of $484,000 was contributed to the NRECA
plan. In 1996 the moratorium was in effect from January through
September. From October through December 1996, $266,000 was contributed
to the NRECA plan. In 1997 approximately $601,000 was contributed to the
NRECA plan as the moratorium was not in effect.
50
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
(9) Deferred Charges
Deferred charges consisted of the following at December 31:
1997 1996
---- ----
Debt issuance and reacquisition costs $ 4,006,295 $ 4,220,403
Refurbishment of transmission equipment 280,864 290,123
Computer software and conversion 5,596,222 4,702,932
Studies 1,162,416 1,021,820
Fuel supply negotiations 415,042 437,758
Major overhaul of steam generating unit 837,517 1,042,624
Other (note 15) 1,284,855 2,216,449
---------- ----------
$ 13,583,211 $ 13,932,109
---------- ----------
(10) Income Taxes
The Association is exempt from federal income taxes under the provisions
of Section 501(c)(12) of the Internal Revenue Code.
(11) Return of Capital
Under provisions of its long-term debt agreements, the Association is not
directly or indirectly permitted to declare or pay any dividend or make
any payments, distributions or retirements of patronage capital to
members if an event of default exists with respect to its bonds (event of
default), if payment of such distribution would result in an event of
default, or if the aggregate amount expended for all distributions on and
after September 26, 1991 exceeds the sum of $7,000,000 plus 35% of the
aggregate assignable margins (whether or not such assignable margins have
since been allocated to members) of the Association earned after December
31, 1990 (or, in the case such aggregate shall be a deficit, minus 100%
of such deficit). The Association may declare and make distributions at
any time if, after giving effect thereto, the Association's aggregate
margins and equities as of the end of the most recent fiscal quarter
would be not less than 45% of the Association's total liabilities and
equities as of the date of the distribution. The Association does not
anticipate that this provision will limit the anticipated capital credit
retirements described in note 4.
51
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
(12) Deferred Credits
Deferred credits at December 31 consisted of the following:
1997 1996
---- ----
Regulatory liability - unamortized gain on
reacquired debt $ 27,477,114 $ 29,726,201
Refundable consumer advances for
construction 1,821,002 2,904,690
Estimated initial installation costs for
transformers and meters 364,941 470,460
Post retirement benefit obligation 255,700 255,700
Other 61,196 61,196
----------- -----------
$ 29,979,953 $ 33,418,247
----------- -----------
In conjunction with the refinancing described in note 6, the Association
recognized a gain of approximately $45,000,000. The APUC permitted the
Association to flow through the gain to consumers in the form of reduced
rates over a period equal to the life of the bonds using the effective
interest method; consequently, the gain has been deferred for financial
reporting purposes as required by SFAS 71. Amortization of the deferred
gain of approximately $1,700,000 was recorded in 1997. Approximately,
$2,000,000 of the deferred gain was amortized annually in 1996 and 1995.
(13) Bradley Lake Hydroelectric Project
The Association is a participant in the Bradley Lake Hydroelectric
Project (Bradley Lake). Bradley Lake was built and financed by the Alaska
Energy Authority (AEA) through State of Alaska grants and $166,000,000 of
revenue bonds. The Association and other participating utilities have
entered into take-or-pay power sales agreements under which shares of the
project capacity have been purchased and the participants have agreed to
pay a like percentage of annual costs of the project (including
ownership, operation and maintenance costs, debt service costs and
amounts required to maintain established reserves). Under these
take-or-pay power sales agreements, the participants have agreed to pay
all project costs from the date of commercial operation even if no energy
is produced. The Association has a 30.4% share of the project's capacity.
The share of debt service exclusive of interest, for which the
Association is responsible is approximately $47,000,000. Under a worst
case scenario, the Association could be faced with annual expenditures of
approximately $4.6 million as a result of its Bradley Lake
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CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
take-or-pay obligations. Management believes that such expenditures, if
any, would be recoverable through the fuel surcharge ratemaking process.
Upon the default of a Bradley Lake participant, and subject to certain
other conditions, AEA, through Alaska Industrial Development and Export
Authority, is entitled to increase each participant's share of costs pro
rata, to the extent necessary to compensate for the failure of another
participant to pay its share, provided that no participant's percentage
share is increased by more than 25%.
In December 1997, $59,485,000 of the Power Revenue Bonds, Third Series
and $47,710,000 of the Power Revenue Bonds, Fourth Series were refinanced
under a forward refunding arrangement. The true interest cost of the new
bonds decreased to 5.611% for the Third Series bonds and 6.06% for the
Fourth Series bonds from 7.295% and 7.235%, respectively. This refunding
produced a Net Present Value saving to the participating utilities of
approximately $8,500,000. The Association's share of these savings will
be approximately $1,600,000.
The following represents information with respect to Bradley Lake at June
30, 1997 (the most recent date for which information is available). The
Association's share of expenses were $3,981,624 in 1997, $3,957,930 in
1996 and $4,100,154 in 1995 and are included in purchased power in the
accompanying financial statements.
Other electric plant in service of $6,496,812 represents the
Association's share of a Bradley Lake transmission line financed
internally and the Association's share of the Eklutna Hydroelectric
Project, purchased in 1997.
Proportionate
Total share
Plant in service $ 306,792,274 $ 93,264,851
Accumulated depreciation (39,645,544) (12,052,245)
Interest expense 11,107,824 3,337,779
(14) Eklutna Hydroelectric Project
During October 1997, the ownership of the Eklutna Hydroelectric Project
formally transferred from the Alaska Power Administration to the
participating utilities. This group consists of the Association along
with Matanuska Electric Association (MEA) and Municipal Light and Power
(ML&P).
Other electric plant in service includes $1,785,900 representing the
Association's share of the Eklutna Hydroelectric Plant. This balance will
be amortized over the estimated life
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CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
of the facility. During the transition phase and after the transfer of
ownership, Chugach, MEA and ML&P have jointly operated the facility. Each
participant contributes their proportionate share for operations and
maintenance costs. Under net billing arrangements, Chugach then
reimburses MEA for their share of the costs. Prior to the transfer of
ownership, these costs were recorded as purchased power expenses; after
the transfer these costs were recorded as power production expenses.
(15) Commitments and Contingencies
Construction
The Association is engaged in a continuous construction program.
Management estimates that approximately $28,000,000 will be spent on the
construction program in 1998, including approximately $4,100,000 due to
use of Smaller Retirement Unit accounting methodology for generation unit
major overhauls.
Contingencies
The Association is a participant in various legal actions, claims and
unasserted claims, both for and against its interests. Management
believes that the outcome of any such matters will not materially impact
the Association.
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
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CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
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 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 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
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<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
will pay the majority of Chugach's costs relating to the Site, including
all Past Costs and Future Costs. This settlement preserves Chugach's
potential claim for natural resource damages and is anticipated to result
in Chugach paying no more that $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.
Regulatory Cost Charge
In 1992 the State of Alaska Legislature passed legislation authorizing
the Department of Revenue to collect a regulatory cost charge from
utilities in order to fund the APUC. The tax is assessed on all retail
consumers and is based on kilowatt hour (kWh) consumption. The Regulatory
Cost Charge has decreased since its inception (November 1992) from an
initial rate of $.000626 per kWh to the current rate of $.000280,
effective January 1, 1998.
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Item 9 - Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
None
PART III
Item 10 - Directors and Executive Officers of the Registrant
MANAGEMENT
Executives
Chugach operates under the direction of a Board of Directors that is elected at
large by its membership. Day-to-day business and affairs are administered by the
General Manager. Chugach's seven-member Board of Directors sets policy and
provides direction to the General Manager. The following table sets forth
certain information with respect to the executive management of Chugach:
Name Age Position held
Eugene N. Bjornstad 60 General Manager
Lee D. Thibert 42 Executive Manager, Transmission &
Distribution Network Services
Evan J. Griffith, Jr. 56 Executive Manager, Finance &
Energy Supply
William R. Stewart 51 Executive Manager, Retail Services
Eugene N. Bjornstad was appointed General Manager of Chugach June 22, 1994.
Prior to that he served as Acting General Manager from March 28, 1994 until his
permanent appointment. He joined Chugach in 1983 and served as Executive
Manager, Operating Divisions from 1988 to 1994.
Lee D. Thibert, in a reorganization on June 1, 1997, was appointed Executive
Manager, Transmission and Distribution Network Services. Prior to that he was
Executive Manager, Operating Divisions from June of 1994. Before moving up to
the Executive Manager position, he served as Director of Operations from June
1987.
Evan J. Griffith, Jr. was Executive Manager, Finance and Planning of Chugach
from August 1989 to June 1997. In the June 1, 1997 reorganization he assumed the
position of Executive Manager, Finance and Energy Supply. Prior to coming to
Chugach, he was Budget/Program Analyst for the Anchorage Municipal Assembly from
August 1984 to August 1989.
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William R. Stewart was Executive Manager, Administration of Chugach from July
1987 to June 1, 1997 when he assumed the duty as Executive Manager, Retail
Services in a reorganization of functions. He was Division Director of
Administration of Chugach from January 1984 to July 1987 and Staff Assistant to
the General Manager of Chugach from November 1982 to January 1984. He has been
employed at Chugach since 1969.
Board of Directors
Pat Jasper - President. Pat Jasper, 68, is a small business owner and has been a
computer programmer and systems analyst. She was originally elected to the Board
in April 1995 to fill a one-year term, and served as Secretary to April 1996.
She was re-elected in April 1996 and served as Vice President until April 1997
when she became President.
Ed Granger - Vice President. Ed Granger, 63, is a retired professional engineer
working in real estate. He was elected to the board in 1991. He resigned in
March 1994, one month before his first term expired. He was reappointed to the
Board to fill the remaining term of another resigned director in June 1995 and
was re-elected in April 1996. He became Vice President in April 1997.
Christopher Birch - Secretary. Chris Birch, 47, is a professional engineer
employed by the Alaska Department of Transportation and Public Facilities. He
was appointed to the Board to fill a vacated seat in October 1996 and was
elected to that seat in April 1997.
Mary Minder - Treasurer. Mary Minder, 58, was elected to the Board in April 1995
and served as Treasurer until April 1996 when she became Secretary. In April
1997, she was again elected Treasurer. Ms. Minder is a realtor and associate
real estate broker.
Elizabeth Page "Pat" Kennedy - Director. Pat Kennedy, 59, was President of
Chugach from April 1994 to April 1995. Ms. Kennedy has served on the board since
1993 and was Secretary from April 1993 to April 1994. She is an attorney who has
been licensed to practice law since 1976 and has been in private practice since
1990.
Raymond A. "Ray" Kreig - President. Ray Kreig, 51, is president of R.A. Kreig &
Associates, a consulting firm specializing in land and site assessment. He is a
professional civil engineer and geologist. Mr. Kreig was elected to the board in
April 1994 and was President from April 1995 to April 1997.
Bruce Davison - Director. Bruce Davison, 49, was appointed to the Association's
Board of Directors in June of 1997. Prior to his appointment, Mr. Davison served
two years on the Chugach Electric Association Bylaws Committee. Mr. Davison is a
25-year Alaska resident and a partner in the law firm of Davison & Davison, Inc.
Kathleen A. Weeks - Treasurer. Kathleen Weeks, 51, is an attorney in private
practice. Her specialty is divorce, real estate and probate law. She was elected
to the Board in April 1995,
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served as Vice President from that time to April 1996 when she became Treasurer.
Ms. Weeks was removed from the Board in June 1997 after the adoption of a bylaw
requiring board members to physically reside - not just receive service in -
Chugach's traditional service area.
Item 11 - Executive Compensation
CASH COMPENSATION
The following table sets forth all remuneration paid by Chugach for the calendar
years ended December 31, 1997, 1996 and 1995 with respect to each of the four
executive officers of Chugach, all of whose total cash and cash equivalent
compensation exceeded $100,000, and for all such executive officers as a group:
Name Principal position Year Salary
Eugene N. Bjornstad General Manager 1997 $ 164,482
1996 167,296
1995 164,924
Lee D. Thibert Executive Manager, 1997 125,626
Transmission & Distribution
Network Services 1996 118,562
1995 119,312
Evan J. Griffith, Jr. Executive Manager, Finance & 1997 126,866
Energy Supply
1996 137,434
1995 126,378
William R. Stewart Executive Manager, Retail 1997 142,213
Services
1996 134,393
1995 129,738
Directors of Chugach are compensated for their services in the amount of $100
per board meeting attended (including committee meetings) up to a maximum of
seventy meetings per year for a director and eighty-five meetings per year for
the President. Upon termination, Mr. Bjornstad's employment agreement provides
that he may receive an amount equal to his salary for the remaining term of his
employment agreement (which number shall not be less than six months) plus any
accrued annual leave or other compensation then due as of the effective date of
the notice of termination.
COMPENSATION PURSUANT TO PLANS
Chugach has elected to participate in the National Rural Electric Cooperative
Association
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Retirement and Security Program (Plan), a multiple employer defined benefit
master pension plan maintained and administered by the National Rural Electric
Cooperative Association for the benefit of its members and their employees. The
Plan is intended to be a qualified pension plan under Section 401(a) of the
Code. All employees of Chugach not covered by a union agreement become
participants in the Plan on the first day of the month following completion of
one year of eligibility service. An employee is credited with one year of
eligibility service if he completes 1,000 hours of service either in his first
twelve consecutive months of employment or in any calendar year for Chugach or
certain other employers in rural electrification (related employers). Pension
benefits vest at the rate of 10% for each of the first four years of vesting
service and become fully vested and nonforfeitable on the earlier of the date a
participant has five years of vesting service or the date the participant
attains age fifty-five while employed by Chugach or a related employer. A
participant is credited with one year of vesting service for each calendar year
in which he performs at least one hour of service for Chugach or a related
employer. Pension benefits are generally paid upon the participant's retirement
or death. A participant may also elect to receive pension benefits while still
employed by Chugach if he has reached his normal retirement date by completing
thirty years of benefit service (as hereinafter defined) or, if earlier, by
attaining age sixty-two. A participant may elect to receive actuarially reduced
early retirement pension benefits before his normal retirement date provided he
has attained age fifty-five.
Pension benefits paid in normal form are paid monthly for the remaining lifetime
of the participant. Unless an actuarially equivalent optional form of benefit
payment to the participant is elected, upon the death of a participant the
participant's surviving spouse will receive pension benefits for life equal to
50% of the participant's benefit. The annual amount of a participant's pension
benefit and the resulting monthly payments the participant receives under the
normal form of payment are based on the number of his years of participation in
the Plan (benefit service) and the highest five-year average of the annual rate
of his base salary during the last ten years of his participation in the Plan
(final average salary). Annual compensation in excess of $200,000, as adjusted
by the Internal Revenue Service for cost of living increases, is disregarded
after January 1, 1989. The participant's annual pension benefit at his normal
retirement date is equal to the product of his years of benefit service (up to
thirty) times final average salary times 2%.
The following table sets forth the estimated annual pension benefit payable at
normal retirement date for participants in the specified final average salary
and years of benefit service categories:
Final Years of benefit service
Average
Salary
15 20 25 30 35
-- -- -- -- --
$ 125,000 $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 75,000
150,000 45,000 60,000 75,000 90,000 90,000
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The annual pension benefits indicated above are the joint and surviving spouse
life annuity amounts payable by the Plan, and they are not subject to any
deduction for Social Security or other offset amounts.
Benefit service as of December 31, 1997 taken into account under the Plan for
the executive officers is shown below. Base salary for 1997 taken into account
under the Plan for purposes of determining final average salary is also
included.
Benefit Covered
Name Principal Position Service Compensation
Eugene N. Bjornstad General Manager 13.7 $ 156,021
Lee D. Thibert Executive Manager, T&D 9.7 122,242
Network Services
Evan J. Griffith, Jr. Executive Manager, 7.4 123,968
Finance & Energy Supply
William R. Stewart Executive Manager, Retail 27.9 123,968
Services
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Item 12 - Security Ownership of
Certain Beneficial Owners and Management
Not Applicable
Item 13 - Certain Relationships and Related Transactions
Not Applicable
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
Page
Financial Statements
Included in Part IV of this Report:
Independent Auditors' Report 34
Balance Sheets, December 31, 1997 and 1996 35
Statements of Revenues, Expenses and Patronage Capital,
Years ended December 31, 1997, 1996 and 1995 37
Statements of Cash Flows,
Years ended December 31, 1997, 1996 and 1995 38
Notes to Financial Statements 39-56
Financial Statement Schedules
Included in Part IV of this Report:
Independent Auditors' Report 63
Schedule II - Valuation and Qualifying Accounts,
Years ended December 31, 1997, 1996 and 1995 64
Other schedules are omitted as they are not required or are not applicable, or
the required information is shown in the applicable financial statements or
notes thereto.
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Independent Auditors' Report
The Board of Directors
Chugach Electric Association, Inc.:
Under the date of February 20, 1998, we reported on the balance sheets of
Chugach Electric Association, Inc. as of December 31, 1997 and 1996 and the
related statements of revenues, expenses and patronage capital and cash flows
for each of the years in the three-year period ended December 31, 1997 which are
included in Part II of the Company's Annual Report on Form 10-K. In connection
with our audits of the aforementioned financial statements, we also audited the
related financial statement schedule listed in the index to Item 14 of the
Company's 1997 Annual Report on Form 10-K. This financial statement schedule is
the responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement schedule based on our audits.
In our opinion such schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
Anchorage, Alaska /s/ KPMG Peat Marwick LLP
February 20, 1998
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Schedule II
CHUGACH ELECTRIC ASSOCIATION, INC.
Valuation and Qualifying Accounts
Balance at Charged Balance
beginning to costs at end
of year and expenses Deductions of year
Allowance for doubtful accounts:
Activity for year ended:
December 31, 1997 $(367,085) $(618,379) $617,435 $(368,029)
December 31, 1996 (436,083) (566,844) 635,842 $(367,085)
December 31, 1995 (569,769) (534,646) 668,332 (436,083)
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EXHIBITS
Listed below are the exhibits which are filed as part of this Report:
Exhibit Description Page
Number
*3.1 Articles of Incorporation of the Registrant
**3.2 Bylaws of the Registrant (as amended April 30, 1997)
*4.1 Trust Indenture, dated as of September 15, 1991,
between the Registrant and Security Pacific Bank
Washington, N.A., Trustee (Including forms of
bonds)
*4.2 First Supplemental Indenture of Trust by and among
Chugach Electric Association, Inc. and Seattle-
First National Bank dated March 17, 1993
*4.3 Second Supplemental Indenture of Trust by and among
Chugach Electric Association, Inc. and Seattle-
First National Bank dated May 19, 1994
*4.4 Third Supplemental Indenture of Trust by and among
Chugach Electric Association, Inc. and Seattle-
First National Bank
*4.4.1 Closing Documents dated November 30, 1994, First
Mortgage Bond, CoBank Series (CoBank-1), Due March
15, 2002 pursuant to the Third Supplemental
Indenture of Trust dated June 29, 1994
*4.4.2 Closing documents dated August 31, 1995 First
Mortgage Bond, CoBank Series (CoBank-2), due
August 31, 2005 pursuant to the Third
Supplemental Indenture of Trust
*4.4.3 Closing documents dated April 30, 1996 First
Mortgage Bond, CoBank Series (CoBank-3), due
March 15, 2022 pursuant to the Third
Supplemental Indenture of Trust
*4.4.4 Closing documents dated September 30, 1996 First
Mortgage Bond, CoBank Series (CoBank-4), Due
June 15, 2022 pursuant to the Third Supplemental
Indenture of Trust
4.4.5 Closing documents dated November 26, 1997 First
Mortgage Bond, CoBank Series (CoBank-5), Due
June 15, 2012 pursuant to the Third Supplemental
Indenture of Trust 77
Exhibit
number Description Page
*4.5 Fourth Supplemental Indenture of Trust by and among
Chugach Electric Association, Inc. and Seattle-
First National Bank dated March 1, 1995
*4.6 Fifth Supplemental Indenture of Trust by and among
Chugach Electric Association, Inc. and Seattle-
First National Bank dated September 6, 1995
*4.7 Sixth Supplemental Indenture of Trust by and among
Chugach Electric Association, Inc. and Seattle-
First National Bank dated April 3, 1996
***4.8 Seventh Supplemental Indenture of Trust by and
among Chugach Electric Association, Inc. and
Seattle-First National Bank dated June 1, 1997
*10.1 Joint Use Agreement between the City of Seward and
the Registrant
*10.2 Wholesale Power Agreement between the City of
Seward and the Registrant
*10.3 Agreement for Sale of Electric Power and Energy
between Homer Electric Association, Inc., Alaska
Electric Generation and Transmission Association,
Inc. and the Registrant
*10.4 Modified Agreement for the Sale and Purchase of
Electric Power and Energy between Matanuska
Electric Association, Inc., Alaska Electric
Generation and Transmission Association, Inc.
and the Registrant
*10.4.1 First Amendment to Modified Agreement for the Sale
and Purchase of Electric Power and Energy dated
April 5, 1989 by and among Chugach Electric
Association, Inc., Matanuska Electric Association,
Inc. and Alaska Electric Generation & Trans-
mission Cooperative, Inc.
*10.5 Agreement for the Sale and Purchase of Natural Gas
between the Registrant and ARCO Alaska, Inc.
*10.6 Amendment No. 1 to Agreement for the Sale and
Purchase of Natural Gas between the Registrant
and ARCO Alaska, Inc.
*10.7 Agreement for the Sale and Purchase of Natural Gas
between the Registrant and Marathon Oil Company
65
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Exhibit
number Description Page
*10.8 Amendatory Agreement No. 1 to Agreement for the
Sale and Purchase of Natural Gas between the
Registrant and Marathon Oil Company
*10.9 Amendatory Agreement No. 2 to Agreement for the
Sale and Purchase of Natural Gas between the
Registrant and Marathon Oil Company
*10.10 Amendatory Agreement No. 3 to Agreement for the
Sale and Purchase of Natural Gas between the
Registrant and Marathon Oil Company
*10.11 Letter of Understanding between the Registrant and
Marathon Oil Company
*10.12 Agreement for the Sale and Purchase of Natural Gas
between the Registrant and Shell Western E&P Inc.
*10.13 Amendatory Agreement No. 1 to the Agreement for the
Sale of Natural Gas between the Registrant and
Shell Western E&P Inc.
*10.14 Amendment No. 2 to the Agreement for the Sale of
Natural Gas between the Registrant and Shell
Western E&P Inc.
*10.14.1 Amendment No. 3 to the Agreement for the Sale of
Natural Gas between the Registrant and Shell
Western E&P Inc.
*10.15 Agreement for the Sale and Purchase of Natural Gas
between the Registrant and Chevron USA Inc.
*10.16 Letter of Understanding to the Agreement for the
Sale and Purchase of Natural Gas between the
Registrant and Chevron USA Inc.
*10.17 Amendment No. 2 to Agreement for the Sale and
Purchase of Natural Gas between the Registrant
and Chevron USA Inc.
*10.18 Nonfirm Energy Agreement between the Registrant and
Golden Valley Electric Association, Inc.
*10.19 Alaska Intertie Agreement between Alaska Power
Authority, Municipality of Anchorage, the
Registrant, City of Fairbanks, Alaska Municipal
Utilities System, Golden Valley Electric
Association, Inc. and Alaska Electric Generation
and Transmission Cooperative, Inc.
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Exhibit
number Description Page
*10.20 Memorandum of Understanding Regarding Intertie
Upgrades among Alaska Energy Authority, the
Registrant, Golden Valley Electric Association,
Inc., Homer Electric Association, Inc., Matanuska
Electric Association, Inc., Municipality of
Anchorage dba Municipal Light and Power, and
the City of Seward d/b/a Seward Electric System
*10.21 Addendum No. 1 to the Alaska Intertie Agreement--
Reserve Capacity and Operating Reserve
Responsibility
*10.22 Bradley Lake Agreement for the Sale and Purchase of
Electric Power between the Alaska Power Authority,
Golden Valley Electric Association, Inc., the
Municipality of Anchorage, the City of Seward,
the Alaska Electric Generation & Transmission
Cooperative, Inc., Homer Electric Association,
Inc., Matanuska Electric Association Inc. and the
Registrant
*10.23 Agreement for the Wheeling of Electric Power and for
Related Services by and among the Registrant,
Homer Electric Association, Inc., Golden Valley
Electric Association, Inc., Matanuska Electric
Association, Inc., the Municipality of Anchorage,
Inc. dba Municipal Light & Power, the City of
Seward dba Seward Electric System and Alaska
Electric Generation and Transmission Cooperative,
Inc.
*10.24 Transmission Sharing Agreement by and among Homer
Electric Association, Inc., the Registrant, Golden
Valley Electric Association, Inc., and the
Municipality of Anchorage d/b/a Municipal Light
and Power
*10.25 Amendment to Agreement for Sale of Transmission
Capability among Homer Electric Association, Inc.,
Alaska Electric Generation and Transmission
Cooperative, Inc., the Registrant, Golden Valley
Electric Association, Inc. and the Municipality of
Anchorage d/b/a Municipal Light and Power
*10.26 Net Billing Agreement among the Registrant,
Matanuska Electric Association, Inc. and Alaska
Electric Generation and Transmission Cooperative,
Inc.
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Exhibit
number Description Page
*10.27 Interconnection Agreement between the Registrant and
Municipality of Anchorage Municipal Light and
Power
*10.28 Interconnection Agreement between the Registrant and
Municipality of Anchorage Municipal Light and
Power Addendum No. 1
*10.29 Amendment No. 1 to Interconnection Agreement
between the Registrant and Municipality of
Anchorage Municipal Light and Power
*10.30 Agreement between the Registrant and Chevron USA,
Inc. for the Sale and Purchase of Supplemental
Natural Gas
*10.31 Agreement between the Registrant and Shell Western
E&P Inc. for the Sale and Purchase of
Supplemental Natural Gas
*10.32 Agreement between the Registrant and ARCO Alaska,
Inc. for the Sale and Purchase of Supplemental
Natural Gas
*10.33 Eklutna Purchase Agreement among the Registrant,
Matanuska Electric Association, Inc., Municipality
of Anchorage d/b/a Municipal Light and Power and
Alaska Power Administration
*10.33.1 Amendment No. 1 to Eklutna Purchase Agreement
among the Registrant, Matanuska Electric
Association, Inc., Municipality of Anchorage d/b/a
Municipal Light and Power and Alaska Power
Administration
*10.33.2 Eklutna Purchase Agreement Amendment No. 2
effective June 14, 1993 between Chugach, MEA,
ML&P and the Alaska Power Administration
*10.33.3 Eklutna Hydroelectric Project Transition Plan, by
and among the Registrant; The United States of
America d/b/a Alaska Power Administration, a unit
of the Department of Energy; the Municipality of
Anchorage d/b/a Municipal Light & Power; and
Matanuska Electric Association, Inc.
*10.34 University Substation 1991 Improvements Contract
between the Registrant and Alcan Electrical and
Engineering, Inc.
Exhibit
number Description Page
*10.35 Camp Facilities Replacement Contract between the
Registrant and Baugh Construction and
Engineering Company
*10.36 Lease Amendment between Standard Oil Company of
California and the Registrant
*10.37 Lease Amendment between Chevron USA, Inc. and the
Registrant
*10.38 Settlement Agreement among the Registrant, Homer
Electric Association, Inc., Matanuska Electric
Association, Inc., the City of Seward and Alaska
Electric Generation and Transmission Cooperative,
Inc. resolving G&T TIER Level, Equity Level,
Capital Credits, Equity Management Plan, and
Loan Covenant Disputes
*10.38.1 First Amendment to "Settlement Agreement Resolving
G&T TIER Level, Equity Level, Capital Credits,
Equity Management Plan and Loan Covenant Disputes"
in APUC Docket U-92-10 between Chugach and MEA,
Homer and AEG&T dated March 1993
*10.39 Loan Agreement between the National Bank for
Cooperatives (formerly Spokane Bank for
Cooperatives) and the Registrant, as amended
*10.40 Amendment dated September 13, 1991 to Loan
Agreement between the National Bank for
Cooperatives and the Registrant
*10.41 Form of Commitment Letter to be entered into between
the National Bank for Cooperatives and Registrant
*10.42 Agreement between the Municipality of Anchorage
d/b/a Anchorage Municipal Light and Power,
Chugach Electric Association, Inc., Matanuska
Electric Association, Inc., U.S. Fish and Wildlife
Service, National Marine Fisheries Service, Alaska
Energy Authority, and the State of Alaska Relative
to the Eklutna and Snettisham Hydroelectric
Projects
*10.43 Bradley Lake Hydroelectric Agreement for the
Dispatch of Electric Power and for Related
Services by and among Chugach Electric
Association, Inc. and the Alaska Energy Authority
68
<PAGE>
Exhibit
number Description Page
*10.44 Net Billing Agreement among Chugach Electric
Association, Inc. and the City of Seward
*10.45 Soldotna One System Use and Dispatch Agreement by
and among Alaska Electric Generation and
Transmission Cooperative, Inc. and Chugach
Electric Association, Inc.
*10.46 Agreement for Bradley Lake Resource Scheduling
between Chugach, Homer Electric Association, Inc.
and the Alaska Electric Generation and
Transmission Cooperative, Inc. dated September
29, 1992
*10.47 Gas Transportation Agreement between Chugach,
Alaska Pipeline Company and ENSTAR Natural
Gas Company dated December 7, 1992
*10.48 Daves Creek Substation Agreement between Chugach
and the Alaska Energy Authority dated March 13,
1992
*10.49 Memorandum of Agreement between Chugach and
AEG&T dated April 27, 1993 regarding Interest
Expense Allocator
*10.50 Settlement Agreement between Chugach and
Intervenor Wholesale Customers in APUC Docket
U-93-15 dated September 1993 regarding
depreciation of submarine cables
*10.52 Twenty Five Million Dollar Line of Credit Agreement
and Promissory Note between Chugach and
National Bank for Cooperatives
*10.52.1 Amendment to Line of Credit Agreement between
Chugach and National Bank for Cooperatives dated
March 11, 1994
*10.52.2 Amendment to Line of Credit Agreement between
Chugach and National Bank for Cooperatives and
amended and restated Promissory Note (thirty-five
million dollars) dated April 18, 1994
*10.52.3 Amendment to Line of Credit Agreement between
Chugach and National Bank for Cooperatives
(thirty-five million dollars) dated May 1, 1995
*10.52.4 Amendment to Line of Credit Agreement between
Chugach and National Bank for Cooperatives
(thirty-five million dollars) dated May 15, 1995
69
<PAGE>
Exhibit
number Description Page
*10.53 Bill of Sale between Chugach and Cook Inlet Tug &
Barge Co. for the barge SUSITNA dated March 1,
1993
*10.54 Intertie Grant Agreement between Chugach and GVEA,
FMUS, ML&P, AEG&T, MEA, Homer, Seward, the State
of Alaska, Department of Administration, and AIDEA
dated October 26,
1993
*10.55 Grant Transfer and Delegation Agreement between
Chugach and GVEA, FMUS, ML&P, AEG&T, MEA, Homer,
Seward, the State of Alaska, Department of
Administration, and AIDEA dated November 5, 1993
*10.56 Letter of Understanding between Chugach and IBEW
dated January 6, 1993 regarding the Outside Plant
Personnel Agreement
*10.57 Letter of Understanding between Chugach and IBEW
dated January 6, 1993 regarding the Office and
Engineering Agreement
*10.58 Letter of Understanding between Chugach and IBEW
dated January 6, 1993 regarding the Generation
Plant Personnel Agreement
*10.59 Eklutna Power Sales Contract No. 85-79AP10004
between Chugach and Alaska Power
Administration dated October 13, 1979
*10.59.1 Contract Modification No. 1 to Contract No
85-79AP10004 between Chugach and the Alaska
Power Administration dated October 19, 1988
extending the Eklutna Power Sales Agreement
*10.59.2 Amendment to Exhibit E of Modification No. 1 to
Contract No. 85-79AP10004 between Chugach and
Alaska Power Administration dated October 29,
1993 regarding the Eklutna Power Sales Agreement
*10.59.3 Contract Modification No. 2 to Contract No.
85-79AP10004 between Chugach and the Alaska
Power Administration dated November 9, 1993
extending the Eklutna Power Sales Agreement
*10.60 Employment Agreement by and among Chugach
Electric Association, Inc. and Eugene N. Bjornstad
dated July 6, 1994
Exhibit
number Description Page
*10.61 United States Department of Energy, Alaska Power
Administration, Eklutna Project, Contract No.
DE-SC85-95AP10042 for Electric Service to
Chugach Electric Association, Inc., Matanuska
Electric Association, Inc. and Municipality of
Anchorage dba Municipal Light & Power dated
December 29, 1994
*10.62 Hotel Employees & Restaurant Employees Union
agreement covering terms and conditions of
employment - Beluga Power Plant Culinary Employees
dated the 2nd day of March, 1995
***10.63 National Bank for Cooperatives (CoBank) Credit
Agreement dated June 22, 1994
***10.63.1 Amendment No. 1 to National Bank for Cooperatives
(CoBank) Credit Agreement dated June 1, 1997
10.64 Eklutna Hydroelectric Project Closing Documents
dated October 2, 1997 96
10.65 Fifty Million Dollar Line of Credit Agreement between
Chugach and the National Rural Utilities Cooperative
Finance Corporation executed October 22, 1997 215
12.1 N/A
*19.0 Administrative Order on Consent for Remedial
Investigation/Feasibility Study between Chugach
and the United States Environmental Protection
Agency dated September 23, 1992
*19.1 Proposed Partial Consent Decree in Standard Steel
Superfund Site matter
*19.2 Partial Consent Decree in Standard Steel Superfund
Site matter
27 Financial Data Schedule (filed electronically)
* Previously referred to in the Registrant's Annual Report on Form 10-K
dated December 31, 1996.
** Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q dated June 30, 1997.
*** Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q dated September 30, 1997.
REPORTS ON FORM 8-K
The Company was not required to file any report on Form 8-K for the year ended
December 31, 1997.
70
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on March 30, 1998.
CHUGACH ELECTRIC ASSOCIATION, INC.
By: /s/ Eugene N. Bjornstad
Eugene N. Bjornstad, General Manager
Date: March 30, 1998
71
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated March 30, 1998:
/s/ Eugene N. Bjornstad
- -----------------------------------
Eugene N. Bjornstad General Manager
/s/ Lee D. Thibert
- -----------------------------------
Lee D. Thibert Executive Manager, T&D Network Services
/s/ Evan J. Griffith, Jr.
- -----------------------------------
Evan J. Griffith, Jr. Executive Manager, Finance & Energy Supply
/s/ William R. Stewart (principal financial officer)
- -----------------------------------
William R. Stewart Executive Manager, Retail Services
/s/ Michael R. Cunningham
- -----------------------------------
Michael R. Cunningham Controller
/s/ Patricia Jasper (principal accounting officer)
- -----------------------------------
Patricia Jasper President and Director
/s/ Ed Granger (principal executive officer)
- -----------------------------------
Ed Granger Vice President and Director
/s/ Christopher Birch
- -----------------------------------
Christopher Birch Secretary and Director
/s/ Mary Minder
- -----------------------------------
Mary Minder Treasurer and Director
/s/ Raymond A. Kreig
- -----------------------------------
Raymond A. Kreig Director
/s/ Bruce Davison
- -----------------------------------
Bruce Davison Director
/s/ Elizabeth P. Kennedy
- -----------------------------------
Elizabeth P. Kennedy Director
72
<PAGE>
Supplemental information to be furnished with reports filed pursuant to Section
15(d) of the Act by registrants which have not registered securities pursuant to
Section 12, of the Act:
Chugach has not made an Annual Report to securities holders for 1997 and will
not make such a report after the filing of this Form 10-K. As a consequence, no
copies of any such report will be furnished to the Securities and Exchange
Commission.
73
<PAGE>
November 24, 1997
Mr. Michael Jones, CCTS
Assistant Vice President
First Trust National Association
601 Union Street, Suite 2120
Seattle, WA 98101
Subject: Request for Execution and Delivery of CoBank-5 Bond
Dear Mr. Jones:
Enclosed are the following original documents, including attachments, in
connection with the CoBank-5 bond in the amount of $15,000,000:
Opinion of Counsel,
Board Resolution,
First Mortgage Bond,
Certificate as to Bondable Additions No. 5,
Available Margins Certificate, and
Officers Certificate.
I have also enclosed a set of these documents for your files. Please execute the
bond and deliver it to the attention of John McFarlane at CoBank, P.O. Box 5110,
Denver, Colorado 80217. Would you also please provide Chugach a copy of the
executed bond for our files.
Thank you for your assistance in this transaction.
Sincerely,
/s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Executive Manager, Finance & Planning
Enclosures Bond/letter
<PAGE>
First Trust National Association, as Trustee
November 24, 1997
Page 1
November 24, 1997
First Trust National Association, as Trustee
601 Union Street, Suite 2120
Seattle, Washington 98101
Attention: Michael Jones, Trust Officer
Re: Opinion of Counsel and Title Evidence in connection
with issuance of First Mortgage Bond, CoBank Series
Ladies and Gentlemen:
This letter constitutes the opinion of General Counsel for Chugach Electric
Association, Inc. ("Chugach") pursuant to Sections 5.01C, 5.01E, 5.02(5),
5.02(6), 5.02(7) and 5.03D of the Indenture of Trust dated as of September 15,
1991 between Chugach and First Trust National Association, successor-in-interest
to Security Pacific Bank Washington, N.A., as Trustee (the "Trustee") (as
amended by the First, Second, Third, Fourth, Fifth, Sixth and Seventh
Supplemental Indentures thereto, dated March 17, 1993, May 19, 1994, June 29,
1994, March 1, 1995, September 6, 1995, April 3, 1996, and June 1, 1997,
respectively, the "Indenture of Trust") and the terms used in this opinion shall
have the meanings established therein. I have based my opinion on my review of
the following records and documents associated with the issuance of a First
Mortgage Bond, CoBank Series in the original principal amount of $15,000,000
Dollars (the "Bond") pursuant to the Third Supplemental Indenture of Trust dated
June 29, 1994 as amended by the Seventh Supplemental Indenture of Trust dated as
of June 1, 1997 (the "CoBank Supplemental Indenture"), which review is in my
opinion sufficient to enable me to express an informed opinion on the matters
discussed in this letter:
The Bond;
Indenture of Trust;
Credit Agreement between Chugach and National Bank for Cooperatives
(predecessor to CoBank, ACB)("CoBank") dated June 22, 1994 as amended
by Amendment No. 1 to National Bank for Cooperatives Credit Agreement
dated June 1, 1997;
<PAGE>
First Trust National Association, as Trustee
November 24, 1997
Page 2
Board Resolution dated November 19, 1997, authorizing the issuance of a
First Mortgage Bond to CoBank pursuant to the CoBank Supplemental
Indenture;
Officers' Certificate dated November 19, 1997, signed by the General
Manager and the Executive Manager, Finance and Planning;
Available Margins Certificate dated November 19, 1997;
Certificate as to Bondable Additions No. 5 dated November 19, 1997;
The articles of incorporation of Chugach (including all amendments
thereto); and
The bylaws of Chugach as in effect on the date hereof.
Based on my review of the above records and my knowledge of Chugach as General
Counsel, I am of the opinion that:
(1) no tax, recording or filing law requirements apply to the issuance of
the Bond;
(2) no authorization, approval or consent by any Federal, state or other
governmental regulatory agency is required for the issuance of the Bond;
(3) all conditions precedent provided for in the Indenture of Trust
relating to the authentication and delivery of the Bond to CoBank have been
complied with;
(4) the Bond, when executed by Chugach and authenticated and delivered by
the Trustee and when issued by Chugach will be the legal, valid and binding
obligation of Chugach enforceable in accordance with its terms and the terms of
the Indenture of Trust (subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles) and entitled to
the benefits of and secured by the lien of the Indenture of Trust equally and
ratably with all other Outstanding Secured Bonds;
(5) none of the Trust Estate is subject to any Prior Lien other than Prior
Liens permitted by Section 14.06 of the Indenture of Trust;
(6) no instruments, other than the Indenture of Trust, are necessary to
vest in the Trustee as a part of the Trust Estate all right, title and interest
of Chugach in and to all Property Additions to which the Certificate as to
Bondable Additions refers;
<PAGE>
First Trust National Association, as Trustee
November 24, 1997
Page 3
(7) with respect to all Property Additions to which the Certificate as to
Bondable Additions refers that are located or constructed on, over or under
public highways, rivers, waters or other public property, Chugach has the lawful
right under permits or franchises granted by a governmental body having
jurisdiction in the premises or by law to maintain and operate such Property
Additions for an unlimited, indeterminate or indefinite period of time or for
the period, if any, specified in such permit, franchise or law, and to remove
such property at the expiration of the period covered by such permit, franchise
or law, or the terms of such permit, franchise or law require any public
authority having the right to take over such property to pay fair consideration
therefor.
(8) Chugach has corporate power to own and operate all Property Additions
to which the Certificate as to Bondable Additions refers;
(9) the Indenture of Trust is a lien upon all Property Additions described
in the Certificate as to Bondable Additions (except such as have been Retired)
free and clear of any Prior Liens except to the extent otherwise provided in
Section 6.02D(2) of the Indenture of Trust;
(10) the documents which have been or are herewith delivered to the Trustee
conform to the requirements of the Indenture of Trust for an Application for the
authentication and delivery of the Bond and, upon the basis of the Application,
all conditions precedent provided for in the Indenture of Trust relating to
authentication and delivery of the Bond have been complied with; and
(11) Chugach has title to the Property Additions described in the
Certificate as to Bondable Additions (except as have been Retired), free and
clear of any Prior Liens (except to the extent otherwise permitted by the
proviso to Section 6.02D(2) of the Indenture of Trust and except for Permitted
Encumbrances), and Chugach has duly obtained any easements or rights-of-way
which are described in the Certificate as to Bondable Additions, subject only to
Permitted Encumbrances.
Pursuant to the definition of "Title Evidence" contained in Section 1.01 of the
Indenture of Trust, each of the foregoing opinions to the effect that Chugach
has title to any portion of the Trust Estate shall be deemed to be an opinion
only that Chugach has such title as in my opinion is satisfactory for the use
thereof in connection with its operations and is qualified by and subject to any
irregularity or deficiency in the record evidence of title which, in my opinion,
can be cured by proceedings within the power of Chugach or does not
substantially impair the usefulness of such property for the purposes of
Chugach.
This opinion is limited to the federal laws of the United States of America and
the laws of the State of Alaska, and I disclaim any opinion as to the laws of
any other jurisdiction.
This opinion is rendered to you in connection with the issuance of the Bond and
is solely for your benefit. This opinion may not be relied upon by any other
person, firm, corporation or other entity
<PAGE>
First Trust National Association, as Trustee
November 24, 1997
Page 4
without my prior written consent. I disclaim any obligation to advise you of any
change of law that occurs, or any facts of which I become aware, after the date
of this opinion.
Sincerely,
CHUGACH ELECTRIC ASSOCIATION, INC.
/s/ Donald W. Edwards
Donald W. Edwards
General Counsel
I:\COBNK15M.LTR
Chugach Electric Association, Inc.
Anchorage, Alaska
RESOLUTION
WHEREAS, the Board of Directors has previously approved and Chugach
Electric Association, Inc. ("Chugach") has entered into a Third Supplemental
Indenture of Trust dated as of June 29, 1994 between Chugach and Seattle-First
National Bank ("Third Supplemental Indenture") amending and supplementing that
Indenture of Trust dated as of September 15, 1991 (as heretofore amended, the
"Indenture") and establishing a new series of bonds to be designated First
Mortgage Bonds, CoBank Series, to be issued to Cobank, ACB (successor by merger
to National Bank for Cooperatives ("CoBank") pursuant to a Credit Agreement
dated June 22, 1994 from time to time to secure advances made by CoBank;
WHEREAS, it is in the best interest of Chugach for the Board of
Directors to authorize the issuance of a bond to CoBank under the Third
Supplemental Indenture for the purpose of securing indebtedness for
$15,000,000.00.
NOW THEREFORE BE IT RESOLVED, that the Board of Directors hereby
requests the authentication and delivery of a First Mortgage Bond, CoBank Series
(designated CoBank- 5), in the principal amount of $15,000,000.00, under
Sections 5.02 and 5.03 of the Indenture;
BE IT FURTHER RESOLVED, that the President, Vice President, Treasurer,
Secretary, General Manager and Executive Managers of Chugach, or any of them
(the "Officers and Managers") are and each of them hereby is, authorized,
empowered and directed, for and on behalf of Chugach, to execute and deliver, 1)
the First Mortgage Bond, CoBank Series, in the amount of $15,000,000.00, to bear
interest at the CoBank Fixed Rate Option in substantially the form attached
hereto, and 2) any Company Request, Application, Company Order or other document
or instrument that such person deems necessary or desirable in connection with
the issuance of such bond;
BE IT FURTHER RESOLVED, that the execution by such Officers and
Managers of the said Bond, instrument or other document and the doing by them of
any act in connection with the foregoing matters shall conclusively establish
their authority therefor from Chugach.
CERTIFICATION
I, Chris Birch, do hereby certify that I am Secretary of Chugach
Electric Association, Inc., an electric non-profit cooperative membership
corporation organized and existing under the laws of the State of Alaska; that
the foregoing is a complete and correct copy of a resolution adopted at a
meeting of the Board of Directors of this corporation, duly and properly called
and held on the 19th day of November, 1997, that a quorum was present at the
meeting; that the resolution is set forth in the minutes of the meeting and has
not been rescinded or modified.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of this corporation this 19th day of November, 1997.
(SEAL) /s/ Chris Birch
Secretary
<PAGE>
THIS FIRST MORTGAGE BOND, CoBANK SERIES, HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION
UNDER SUCH ACT OR IN RELIANCE UPON AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
Chugach Electric Association, Inc.
First Mortgage Bond, CoBank Series, Due 6/15/2012
No. CoBank-5 $15,000,000.00
Chugach Electric Association, Inc., an Alaska electric cooperative
(herein called the "Company", which term includes any successor corporation
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to CoBank (the "Lender"), or registered assigns, (1) the
principal sum of $15,000,000.00 Dollars, (2) interest (computed on the basis of
a 360 day year) thereon, from the date of issuance, at the rate or rates
hereafter provided for, which interest shall be payable on each Regular Interest
Payment Date with respect to the principal balance Outstanding from time to time
during the calendar month most recently ended prior to such Regular Interest
Payment Date, and (3) a Redemption Premium in the amounts (if any) hereinafter
provided. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture described on the
reverse hereof, be paid to the Person in whose name this Bond (or one or more
predecessor Bonds) is registered at the close of business on the Regular Record
Date (as defined below) for such interest. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may be paid to the Person in whose name this Bond
(or one or more Predecessor Bonds) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Bonds of this series
not less than 10 days prior to such Special Record Date.
Payments of the principal of (and premium, if any) and interest on this
Bond shall be made to the Holder hereof by wire transfer of immediately
available funds. Wire transfers will be made to ABA #307088754 for advice to and
credit of CoBank (or to such other account as the Holder hereof may designate by
notice) and shall be in time to be received prior to 1:00 p.m., Alaska time, on
the date each payment is due.
This Bond will mature on the dates stated above. Interest only shall be
due until the first Principal Payment Date. The principal amount of this Bond
shall be repaid in accordance with the following amortization schedule:
Date 06/15/2002 Principal Amount Due $5,000,000
Date 06/15/2007 Principal Amount Due $5,000,000
Date 06/15/2012 Principal Amount Due $5,000,000
Reference is hereby made to the further provisions of this Bond set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Bond
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Bond to be duly
executed.
Dated: November 19, 1997 CHUGACH ELECTRIC ASSOCIATION, INC.
-------------------------------------
Attest: /s/ Chris Birch By: /s/ Eugene N. Bjornstad
Secretary Authorized Officer
<PAGE>
This Bond is one of a duly authorized issue of Bonds of the Company
designated as its "First Mortgage Bonds" (herein called the "Bonds"), issued and
to be issued in one or more series under, all equally and ratably secured by, an
Indenture of Trust, dated as of September 15, 1991, (herein together with the
First Supplemental Indenture of Trust, dated as of March 17, 1993, the Second
Supplemental Indenture of Trust dated as of May 19, 1994, the Third Supplemental
Indenture of Trust dated as of June 29, 1994, the Fourth Supplemental Indenture
of Trust dated as of March 1, 1995, the Fifth Supplemental Indenture of Trust
dated as of September 6, 1995, the Sixth Supplemental Indenture of Trust dated
as of April 3, 1996, and the Seventh Supplemental Indenture of Trust dated as of
June 1, 1997, called the "Indenture"), between the Company and First Trust
National Association (successor-in-interest to Security Pacific Bank Washington,
N.A.), as trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture reference is hereby
made for a statement of the description of the properties thereby mortgaged,
pledged and assigned, the nature and extent of the security and the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Bonds and of the terms upon which the Bonds
are, and are to be, authenticated and delivered. This Bond is one of the series
and maturity designated on the face hereof, limited in aggregate principal
amount to the Maximum Amount (as defined below) at any one time outstanding.
This Bond is subject to redemption at any time, upon at least twenty
(20) Business Days (as hereinafter defined) notice to the Holder hereof, as a
whole or in part in multiples of $1,000, at the election of the Company, at a
Redemption Price equal to 100% of the principal amount being redeemed plus the
Redemption Premium (as defined below), if any, with respect to the principal
amount hereof being redeemed, together with accrued interest to the Redemption
Date on the principal amount being redeemed, but interest installments whose
Stated Maturity is on or prior to such Redemption Date will be payable to the
Holder of this Bond, or one or more Predecessor Bonds, of record at the close of
business on the relevant Record Dates.
The Company has selected the Fixed Rate Option set forth in (B) below
for an initial period of 30 days at an interest rate of 6.65 % per annum:
(A) Variable Rate Option. Except as provided below, the unpaid
principal balance of this CoBank Bond shall bear interest at a rate per annum
equal at all times to the National Variable Rate (as hereinafter defined) plus
25 basis points. For purposes hereof, the National Variable Rate shall mean the
rate of interest established by CoBank from time to time as its National
Variable Rate. The National Variable Rate is intended by CoBank to be a
reference rate, and CoBank may charge other borrowers rates at, above, or below
that rate. Any change in the National Variable Rate shall take effect on the
date established by CoBank as the effective date of such change, and CoBank
agrees to notify the Company promptly after any change in the rate.
(B) Fixed Rate Option. From time to time at the request of the
Company, the rate of interest charged on this CoBank Bond may be fixed at a rate
to be quoted by CoBank in its sole and absolute discretion. Under this option,
individual amounts may be fixed for periods ranging from thirty (30) days to the
life of the CoBank Bond, and the minimum aggregate principal amount of CoBank
Bonds on which the interest rate may be fixed at any one time shall be $100,000.
However, rates may only be fixed for periods which expire on a Business Day, and
shall take into account repayments of principal in accordance with the
amortization schedule. Upon the expiration of any fixed rate period, interest
shall automatically accrue at the rate set forth in (A) above, unless the amount
fixed is repaid or the Company fixes the rate for an additional period.
Until the principal hereof is completely repaid whether by reason of
maturity or redemption, interest on this Bond not theretofore paid shall be
payable, in arrears, on each Interest Payment Date with respect to the principal
balance outstanding from time to time during the Interest Period to which such
Interest Payment date relates. Interest shall be calculated on the actual number
of days this Bond is outstanding on the basis of a year consisting of 360 days.
In calculating interest, the first day of each period for which interest is
calculated shall be included and the day on which interest is paid shall be
excluded.
If prior to maturity of this Bond the Company fails to make any payment
required to be made hereunder or under the terms of the Credit Agreement, then
at the Holder's option in each instance, such payment shall bear interest from
the date due to the date such amount is paid in full at the Default Rate (as
hereafter defined). After maturity, whether by reason of acceleration or
otherwise, the entire indebtedness under this Bond shall automatically bear
interest at the Default Rate. All interest provided for in this provision shall
be payable on demand.
If an Event of Default with respect to the Bonds shall occur and be
continuing, the principal of the Bonds may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of Bonds under the Indenture at any time
by the Company with the consent of the Holders of a majority in aggregate
principal amount of Bonds of all series at the time outstanding affected by such
modification. The Indenture also contains provisions permitting the Holders of a
majority in principal amount of Bonds at the time Outstanding, on behalf of the
Holders of all Bonds to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Bond shall be
conclusive and binding upon such Holder and upon all future Holders of this Bond
and of any bond issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Bond.
No reference herein to the Indenture and no provisions of this Bond or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Bond at the times, places and rates, and in the coin or
currency, herein provided.
Pursuant to Section 34.20.160 of the Alaska Statutes, notice is hereby
given that the Company is personally obligated and fully liable for the amount
due under this Bond and the Holder of this Bond has the right to sue on this
Bond and obtain a personal judgment against the Company for satisfaction of the
amount due hereunder either before or after a judicial foreclosure of the lien
of the Indenture under Sections 09.45.170 through 09.45.220 of Alaska Statutes.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Bond is registrable in the Bond Register. Upon
surrender of this Bond for registration of transfer at the office or agency of
the company in Anchorage, Alaska, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Bond
Registrar duly executed by the Holder hereof or the Holder's attorney duly
authorized in writing, one or more new Bonds of this series, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Bonds of this series are issuable only in registered form without
coupons in denomination of $1,000 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations therein set forth, Bonds of
this series are exchangeable for a like aggregate principal amount of Bonds of
this series of a different authorized denomination, but of the same maturity and
interest rate or interest rate formula, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Bond for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Bond is registered as the owner hereof for all
purposes, whether or not this Bond is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
As used herein, the term:
"Business Day" means any day on which CoBank and the Trustee are open
for business.
"CoBank" means CoBank, ACB (as successor to National Bank for
Cooperatives by virtue of merger).
"CoBank Bond" means a First Mortgage Bond, CoBank Series.
"Credit Agreement" means that Credit Agreement secured hereby dated as
of June 22, 1994, between CoBank and the Company, as the same may be amended
from time to time, or such other Credit Agreement as may hereafter exist between
CoBank and the Company relating to the issuance of CoBank Bonds.
"Default Rate" means 4% per annum in excess of the rate or rates that
would otherwise be in effect.
"Interest Payment Date" with respect to any CoBank Bond means a Regular
Interest Payment Date with respect to such Bond.
"Interest Period" means a calendar month.
"Maturity Date" with respect to this CoBank Bond means the due date set
forth on the face hereof.
"Maximum Amount" of CoBank Bonds means Eighty Million Dollars
($80,000,000).
"National Variable Rate" shall mean the rate of interest established by
CoBank from time to time as its National Variable Rate. The National Variable
Rate is intended by CoBank to be a reference rate, and CoBank may charge other
borrowers rates at, above, or below that rate.
"Principal Payment Date" with respect to this CoBank Bond means each
date on which a payment of principal is required to be made on this CoBank Bond
pursuant to the amortization schedule set forth on the face hereof.
"Redemption Premium" with respect to this CoBank Bond means the premium
due upon the redemption or repricing of any portion of this CoBank Bond then
subject to a fixed rate of interest calculated by CoBank in accordance with its
methodology and equal to the present value of the difference between: (A) the
amount of interest which would have accrued on such portion during the remainder
of the applicable fixed rate period; less (B) the amount of interest that CoBank
would earn if such portion were reinvested for the remaining fixed rate period
in U.S. Treasury obligations having a weighted average life approximately equal
to the remaining fixed rate period. For the purpose of calculating present
value, the discount rate will be the rate of interest accruing on the U.S.
Treasury obligations selected in (B) above.
"Regular Interest Payment Date" with respect to this CoBank Bond means
the 20th day of each calendar month.
"Regular Record Date" for the payment of interest on this CoBank Bond
payable, and punctually paid or duly provided for, on any Interest Payment Date
means the last day (whether or not a Business Day) of the calendar month next
preceding such Interest Payment Date.
All other capitalized terms used in this Bond shall have the meanings
assigned to them in the Indenture.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
FOR CoBANK BONDS
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture.
FIRST TRUST NATIONAL ASSOCIATION;
a national banking association, as Trustee
By: /s/ Dyan M. Huhta
Authorized Signatory
<PAGE>
CERTIFICATE AS TO BONDABLE ADDITIONS NO. 5
(Re Application for Authentication and Delivery of Bond CoBank-5)
Pursuant to Section 5.02 of the Indenture of Trust dated as of
September 15, 1991 from Chugach Electric Association, Inc. (the "Company") to
Security Pacific Bank Washington, N.A., as trustee, as modified and supplemented
by Supplemental Indentures No. 1, 2, 3, 4, 5, 6 and 7 thereto dated March 17,
1993, May 19, 1994, June 29, 1994, March 1, 1995, September 6, 1995, April 3,
1996 and June 1, 1997, respectively (the "Indenture"), and in connection with
the Company's request for authentication and delivery of an additional Bond No.
CoBank-5, the undersigned hereby make this Certificate of Bondable Additions.
Capitalized terms not otherwise defined herein have the meanings assigned to
them in the Indenture.
(a) The balance of Bondable Additions stated in item 9 of the most recent
(September 30, 1996) Summary of Certificate as to Bondable Additions
heretofore filed with the Trustee as the balance of Bondable Additions
to remain after the action then applied for, is $58,522,920 (item 1 in
the Summary of Certificate as to Bondable Additions set forth below
(the "Summary")).
(b) The Amount (item 2 in the Summary) of Property Additions, not described
in any previous Certificate as to Bondable Additions, acquired during
the period from August 1, 1996 through September 30, 1997, is
$20,802,947. Such Property Additions are described in reasonable detail
on Attachment 1
hereto, and:
i) have not been included in any previous Certificate as
to Bondable Additions;
ii) do not include Acquired Facilities or assets acquired and paid
for in whole or in part through the transfer or delivery of
securities or other property; and
iii) are listed in Attachment 1 at Cost, which in the opinion of
the undersigned is equal to their Fair Value to the Company.
(c) The aggregate amount (item 3 in the Summary) of all Retirements during
the period from August 1, 1996, through September 30, 1997, is
$8,913,282.
(d) There are no credits (item 4 of the Summary) against Retirements.
(e) The excess (item 6 in the Summary) of the Amount of Property Additions
shown in (b) above (item 2 of the Summary) over the net amount of
Retirements (item 5 of the Summary) is $11,889,665, which is the amount
of the net Bondable Additions now being certified.
(f) The sum (item 7 of the Summary) of the amount shown pursuant to clause
(a) above (item 1) and the net amount of Bondable
<PAGE>
Additions now being certified shown in clause (e) (item 6)
above is $70,412,585.
(g) The total amount (item 8 in the Summary) of Bondable Additions being
used in connection with authentication and delivery of the additional
Bond whose authentication and delivery are now being applied for under
Section 5.02 of the Indenture is calculated as the bonds currently
being applied for less the bonds repurchased in April, 1997 times 110%
or ($15,000,000 - 5,000,000) x 110% = $11,000,000.
(h) The balance (item 9 in the Summary) of the Bondable Additions that will
remain after the granting of the Application now being made is
$59,412,585.
(i) With respect to the Property Additions described in this Certificate:
i) such Property Additions are desirable in the conduct of
the business of the Company;
ii) the allocation of the Cost to the Company of such Property
Additions to each account is, in the opinion of the
undersigned, proper; and
iii) the balance of the Bondable Additions to remain after the
action applied for plus the Cost to the Company or the Fair
Value to the Company, whichever is less, of uncertified
Property Additions is at least equal to the aggregate amount
of uncertified Retirements.
(j) The allowances or charges (if any) for interest, taxes,
engineering, legal expenses, superintendence, insurance,
casualties and other items during construction (or in
connection with the acquisition of Property Additions) which
are included in the Cost to the Company of such of the
Property Additions described in this Certificate as were
constructed or acquired by or for the Company have been
charged and are properly chargeable to fixed plant accounts
in accordance with Accounting Requirements and are, in the
opinion of the signers, proper in respect of the Property
Additions specified;
(k) No portion of the Cost to the Company of the Property Additions
described in this Certificate should properly have been charged to
maintenance or repairs and no expenditures are included in this
Certificate which under Accounting Requirements are not properly
chargeable to fixed plant accounts.
(l) The terms used in this Certificate which are defined in the Indenture
are used as defined in the Indenture.
<PAGE>
Summary of Certificate as to Bondable Additions No. 5
The undersigned certify the following to be a true summary of this
Certificate:
Start with:
1. The balance of Bondable Additions
remaining after the action applied for
in the previous Certificate (Certificate
No. 4).................................. $58,522,920
Then take the new gross Property Additions as
shown in item 2 below:
2. Amount of additional Property Additions now certified, being the Amount
of all or some Property Additions in the period from August 1, 1996
through September 30, 1997 (none of which has been certified in any
previous
Certificate as to Bondable Additions)... $20,802,947
Then determine the deductions for Retirements by deducting item 4 below from
item 3 below to produce item 5:
3. The aggregate amount of all Retirements $ 8,913,282
4. The sum of the credits against
Retirements............................ $ 0
5. The net amount of Retirements to be
deducted............................... $ 8,913,282
Then determine the net Bondable Additions now
being certified by deducting item 5 from item
2 to produce item 6:
6. Net Bondable Additions now being
certified............................. $11,889,665
Then add item 1 and item 6 to produce item 7:
7. Total Bondable additions available for
the action applied for................ $70,412,585
Deduct item 8 from item 7 to produce item 9:
8. Bondable Additions now being used...... $11,000,000
9. Balance of Bondable Additions to remain
after the action applied for........... $59,412,585
<PAGE>
Dated November 19, 1997
/s/ Michael R. Cunningham
Michael R. Cunningham
Title: Principal Accounting Officer
(Accountant)
/s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Title: Principal Financial Officer
/s/ Eugene N.Bjornstad
Eugene N. Bjornstad
Title: General Manager
(Engineer)
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
ATTACHMENT 1 TO CERTIFICATE AS TO BONDABLE ADDITIONS NO. 5
NET CHANGES TO ELECTRIC PLANT
FOR THE PERIOD AUGUST, 1996 THROUGH SEPTEMBER, 1997
<TABLE>
8/1/96 8/1/96
BALANCE 9/30/97 9/30/97 BALANCE
ACCOUNT DESCRIPTION 8/1/96 ADDITIONS RETIREMENTS 9/30/97
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRODUCTION PLANT
31100 626 00 2101 STM - STRC & IMPR/BELUGA./OTHR/G&A. 7,349,213 0 0 7,349,213
31200 626 00 2101 STM - BLR PLT EQP/BELUGA./OTHR/G&A. 24,850,704 0 0 24,850,704
31400 626 00 2101 STM - TURBOGENR../BELUGA./OTHR/G&A. 20,716,146 0 0 20,716,146
31500 626 00 2101 STM - ACC ELEC EQ/BELUGA./OTHR/G&A. 6,932,778 0 0 6,932,778
31600 626 00 2101 STM -MISC PWR PLT/BELUGA./OTHR/G&A. 544,029 0 0 544,029
33100 621 00 2101 HYD - STRC & IMPR/GENERAL/OTHR/G&A. 690,040 0 0 690,040
33200 621 00 2101 HYD - RESV-DM-WW./GENERAL/OTHR/G&A. 5,666,600 48,652 (16,718) 5,698,534
33300 621 00 2101 HYD - WTWL-TR-GN./GENERAL/OTHR/G&A. 1,047,402 0 0 1,047,402
33400 621 00 2101 HYD - ACC ELEC EQ/GENERAL/OTHR/G&A. 371,914 0 0 371,914
33500 621 00 2101 HYD - MISC PW PLT/GENERAL/OTHR/G&A. 97,706 0 0 97,706
33600 621 00 2101 HYD - RESV-DM-WW./GENERAL/OTHR/G&A. 893,099 0 0 893,099
34000 626 00 2101 OTH - LAND&RIGHTS/BELUGA./OTHR/G&A. 422,664 0 0 422,664
34100 622 00 2101 OTH - STRC & IMPR/INTNATL/OTHR/G&A. 343,898 2,147 0 346,045
34100 624 00 2101 OTH - STRC & IMPR/BERNLKE/OTHR/G&A. 1,778,752 0 0 1,778,752
34100 626 00 2101 OTH - STRC & IMPR/BELUGA./OTHR/G&A. 20,862,174 0 0 20,862,174
34200 622 00 2101 OTH - FL HLDR-PRS/INTNATL/OTHR/G&A. 152,868 0 0 152,868
34200 624 00 2101 OTH - FL HLDR-PRS/BERNLKE/OTHR/G&A. 471,850 0 0 471,850
34200 626 00 2101 OTH - FL HLDR-PRS/BELUGA./OTHR/G&A. 3,040,258 0 0 3,040,258
34300 622 00 2101 OTH - PRIME MOVER/INTNATL/OTHR/G&A. 3,642,964 4,295 0 3,647,259
34300 624 00 2101 OTH - PRIME MOVER/BERNLKE/OTHR/G&A. 8,862,659 0 0 8,862,659
34300 626 00 2101 OTH - PRIME MOVER/BELUGA./OTHR/G&A. 48,519,882 8,262,202 (7,473,421) 49,308,663
34400 622 00 2101 OTH - GENERATORS./INTNATL/OTHR/G&A. 779,742 0 0 779,742
34400 624 00 2101 OTH - GENERATORS./BERNLKE/OTHR/G&A. 2,643,899 0 0 2,643,899
34400 626 00 2101 OTH - GENERATORS./BELUGA./OTHR/G&A. 8,941,743 0 0 8,941,743
34500 622 00 2101 OTH - ACC ELEC EQ/INTNATL/OTHR/G&A. 479,560 0 0 479,560
34500 624 00 2101 OTH - ACC ELEC EQ/BERNLKE/OTHR/G&A. 784,574 0 0 784,574
34500 626 00 2101 OTH - ACC ELEC EQ/BELUGA./OTHR/G&A. 3,660,329 808 0 3,661,137
34600 622 00 2101 OTH -MISC PWR PLT/INTNATL/OTHR/G&A. 19,465 0 0 19,465
34600 624 00 2101 OTH -MISC PWR PLT/BERNLKE/OTHR/G&A. 1,539 0 0 1,539
34600 626 00 2101 OTH -MISC PWR PLT/BELUGA./OTHR/G&A. 1,862,815 0 0 1,862,815
=============================================================
TOTAL PRODUCTION PLANT 176,431,266 8,318,104 (7,490,139) 177,259,231
=============================================================
TRANSMISSION PLANT
35000 000 00 2101 TRN - LD & LDRITS/GENERAL/OTHR/G&A. 316,165 0 138,818 454,983
35000 327 00 2101 TRN - LD & LDRITS/SUBTRANS/OTHR/G&A. 138,818 0 (138,818) 0
35200 000 00 2101 TRN - STRC & IMPR/GENERAL/OTHR/G&A. 692,856 154,775 0 847,631
35200 626 00 2101 TRN - STRC & IMPR/BELUGA./OTHR/G&A. 428,664 0 0 428,664
35300 000 00 2101 TRN - STATION EQP/GENERAL/OTHR/G&A. 31,499,053 0 15,065 31,514,118
35300 304 00 2101 TRN - STATION EQP/LDSRVMT/OTHR/G&A. 196,977 0 0 196,977
35300 626 00 2101 TRN - STATION EQP/BELUGA./OTHR/G&A. 38,649,029 0 0 38,649,029
35400 000 00 2101 TRN - TWR & FXTRS/GENERAL/OTHR/G&A. 5,378,824 0 0 5,378,824
35400 626 00 2101 TRN - TWR & FXTRS/BELUGA./OTHR/G&A. 26,890,112 0 0 26,890,112
35500 000 00 2101 TRN - POLES & FIX/GENERAL/OTHR/G&A. 8,929,826 4,217 19,008 8,953,051
35500 327 00 2101 TRN - POLES & FIX/SUBTRANS/OTHR/G&A. 32,060 0 (32,060) 0
35500 626 00 2101 TRN - POLES & FIX/BELUGA./OTHR/G&A. 1,074,661 0 0 1,074,661
35600 000 00 2101 TRN -OH CND & DVS/GENERAL/OTHR/G&A. 6,465,140 574 11,472 6,477,186
35600 327 00 2101 TRN -OH CND & DVS/SUBTRANS/OTHR/G&A. 15,750 0 (15,750) 0
35600 626 00 2101 TRN -OH CND & DVS/BELUGA./OTHR/G&A. 7,836,678 0 0 7,836,678
35700 000 00 2101 TRN - UG CONDUIT./GENERAL/OTHR/G&A. 562,221 755,117 834,897 2,152,235
35700 327 00 2101 TRN - UG CONDUIT./SUBTRANS/OTHR/G&A. 834,898 0 (834,898) 0
35700 626 00 2101 TRN - UG CONDUIT./BELUGA./OTHR/G&A. 0 0 0 0
35800 000 00 2101 TRN - UG CND & DV/GENERAL/OTHR/G&A. 3,553,187 1,435,280 1,104,802 6,093,269
35800 327 00 2101 TRN - UG CND & DV/SUBTRANS/OTHR/G&A. 1,464,557 0 (1,464,557) 0
35800 328 00 2101 TRN - UG CND & DV/NSUBCBL/OTHR/G&A. 0 0 40,700,570 40,700,570
35800 329 00 2101 TRN - UG CND & DV/SSUBCBL/OTHR/G&A. 0 0 14,295,122 14,295,122
35800 626 00 2101 TRN - UG CND & DV/BELUGA./OTHR/G&A. 54,995,692 0 (54,995,692) 0
35900 626 00 2101 TRN-RDS & TRL-BLG/BELUGA./OTHR/G&A. 4,000 0 0 4,000
=============================================================
TOTAL TRANSMISSION PLANT 189,959,168 2,349,963 (362,021) 191,947,110
=============================================================
DISTRIBUTION PLANT
36000 000 00 2101 DIS - LD & LDRITS/GENERAL/OTHR/G&A. 805,759 0 0 805,759
36100 000 00 2101 DIS - STRUC & IMP/GENERAL/OTHR/G&A. 1,817,354 0 0 1,817,354
36200 000 00 2101 DIS - STATION EQP/GENERAL/OTHR/G&A. 18,995,342 0 0 18,995,342
36400 000 00 2101 DIS - POLES-TW&FX/GENERAL/OTHR/G&A. 15,171,597 805,579 (148,850) 15,828,326
36500 000 00 2101 DIS - OH CND & DV/GENERAL/OTHR/G&A. 9,221,293 502,648 (130,761) 9,593,180
36600 000 00 2101 DIS - UG CONDUIT./GENERAL/OTHR/G&A. 7,447,667 1,756,403 (9,895) 9,194,175
36700 000 00 2101 DIS - UG CND & DV/GENERAL/OTHR/G&A. 34,517,852 1,679,753 (235,335) 35,962,270
36800 000 00 2101 DIS - LINE TRNSFR/GENERAL/OTHR/G&A. 19,024,526 1,157,648 (117,086) 20,065,088
36900 000 00 2101 DIS - SERVICES.../GENERAL/OTHR/G&A. 19,281,935 1,069,648 (69,981) 20,281,602
37000 000 00 2101 DIS - METERS...../GENERAL/OTHR/G&A. 6,727,794 369,826 (239,332) 6,858,288
37100 000 00 2101 DIS-INSTL CUS PRM/GENERAL/OTHR/G&A. 331,356 0 0 331,356
37300 000 00 2101 DIS-ST LTS & SIGN/GENERAL/OTHR/G&A. 8,030,769 64,985 (37,303) 8,058,451
=============================================================
TOTAL DISTRIBUTION PLANT 141,373,244 7,406,490 (988,543) 147,791,191
=============================================================
GENERAL PLANT
38900 000 00 2101 GEN - LD & LDRITS/GENERAL/OTHR/G&A. 122,063 5,000 0 127,063
38910 000 00 2101 GEN - LD IMPROVMT/GENERAL/OTHR/G&A. 65,097 0 0 65,097
39000 000 00 2101 GEN - STRC & IMPR/GENERAL/OTHR/G&A. 19,182,835 49,081 0 19,231,916
39000 310 00 2101 GEN - STRC & IMPR/LSHLDIM/OTHR/G&A. 198,601 0 0 198,601
39000 311 00 2101 GEN - STRC & IMPR/S&VSTRU/OTHR/G&A. 96,438 0 (6,833) 89,605
39100 000 00 2101 GEN-OFC FURN & EQ/GENERAL/OTHR/G&A. 1,869,987 101,389 (7,230) 1,964,146
39100 321 00 2101 GEN-OFC FURN & EQ/DPEQUIP/OTHR/G&A. 4,014,023 1,128,128 0 5,142,151
39200 000 00 2101 GEN - TRANSP EQMT/GENERAL/OTHR/G&A. 5,008,506 176,912 (221,097) 4,964,321
39300 000 00 2101 GEN - STORES EQMT/GENERAL/OTHR/G&A. 1,198,844 5,510 0 1,204,354
39400 000 00 2101 GEN -TL-SHP & GAR/GENERAL/OTHR/G&A. 1,307,643 44,883 0 1,352,526
39500 000 00 2101 GEN - LAB EQUIPMT/GENERAL/OTHR/G&A. 2,016,936 172,673 (52,329) 2,137,280
39600 000 00 2101 GEN - PWR OP EQMT/GENERAL/OTHR/G&A. 1,254,793 0 (2,500) 1,252,293
39600 323 00 2101 GEN - PWR OP EQMT/GENTRAN/OTHR/G&A. 804,423 0 0 804,423
39800 000 00 2101 GEN - MISC EQUIPT/GENERAL/OTHR/G&A. 1,142,215 53,265 0 1,195,480
39800 340 00 2101 GEN - MISC EQUIPT/BARGE../OTHR/G&A. 0 0 0 0
=============================================================
TOTAL GENERAL PLANT 38,282,404 1,736,841 (289,989) 39,729,256
=============================================================
COMMUNICATION PLANT
39700 000 00 2101 GEN - COMM EQUIPT/GENERAL/OTHR/G&A. 2,737,641 82,159 (1,187) 2,818,613
39700 330 00 2101 GEN - COMM EQUIPT/MICROWV/OTHR/G&A. 6,540,561 0 (5,000) 6,535,561
39700 331 00 2101 GEN - COMM EQUIPT/SCADA../OTHR/G&A. 3,012,280 8,949 0 3,021,229
39700 333 00 2101 GEN - COMM EQUIPT/TELESYS/OTHR/G&A. 311,706 1,130,618 0 1,442,324
39700 338 00 2101 GEN - COMM EQUIPT/ORSCADA/OTHR/G&A. 8,875,262 0 0 8,875,262
=============================================================
TOTAL COMMUNICATION PLANT 21,477,450 1,221,726 (6,187) 22,692,989
=============================================================
--------------- ---------------
TOTAL PLANT 567,523,532 21,033,124 (9,136,879) 579,419,777
=============================================================
LESS EXCLUDABLE PLANT
39200 000 00 2101 GEN - TRANSP EQMT/GENERAL/OTHR/G&A. 5,008,506 176,912 (221,097) 4,964,321
39600 000 00 2101 GEN - PWR OP EQMT/GENERAL/OTHR/G&A. 1,254,793 0 (2,500) 1,252,293
39600 323 00 2101 GEN - PWR OP EQMT/GENTRAN/OTHR/G&A. 804,423 0 0 804,423
39800 000 00 2101 GEN - MISC EQUIPT/GENERAL/OTHR/G&A. 1,142,215 53,265 0 1,195,480
39800 340 00 2101 GEN - MISC EQUIPT/BARGE../OTHR/G&A. 0 0 0 0
=============================================================
TOTAL EXCLUDABLE PLANT 8,209,937 230,177 (223,597) 8,216,517
=============================================================
TOTAL INCLUDABLE PLANT 559,313,595 20,802,947 (8,913,282) 571,203,260
=============================================================
</TABLE>
Chugach Electric Association, Inc.
Available Margins Certificate
Eugene N. Bjornstad, General Manager; Evan J. Griffith, Jr., Executive
Manager, Finance and Planning (Principal Financial Officer); and Michael R.
Cunningham, Controller (Principal Accounting Officer) of Chugach Electric
Association, Inc. each hereby certifies that (1) the Margins for Interest for
any 12 consecutive calendar months during the period of 18 calendar months
immediately preceding the first day of the calendar month in which this
application for authentication and delivery of Additional Bonds under Section
5.02 of the Indenture described below is made are not less than 1.20 times the
Interest Charges during such 12-month period; (2) the sum of (i) Margins for
Interest for any 12 consecutive calendar months during the period of 18 calendar
months immediately preceding the first day of the calendar month in which this
Application for authentication and delivery of additional Bonds under Section
5.02 is made and (ii) Incremental Interest with respect to such 12-month period,
is not less than 1.20 times the sum of Interest Charges during such 12-month
period plus Incremental Interest with respect to such 12-month period; and (3)
the Margins for Interest have been calculated in accordance with the definition
contained in Section 1.01 of that Indenture of Trust dated September 15, 1991
(as heretofore amended by the First, Second, Third, Fourth, Fifth, Sixth and
Seventh Supplemental Indentures, thereto dated March 17, 1993, May 19, 1994,
June 29, 1994 and March 1, 1995, September 6, 1995, April 3, 1996 and June 1,
1997 respectively (the "Indenture") and such calculations are set forth in the
Attachment 1 hereto.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture.
IN WITNESS WHEREOF, we have hereunto signed our names.
Dated: November 19, 1997
/s/ Eugene N. Bjornstad /s/ Michael R. Cunningham
Eugene N. Bjornstad Michael R. Cunningham
Title: General Manager Title: Controller
Principal Accounting Officer
/s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Title: Executive Manager,
Finance and Energy Supply
Principal Financial Officer Page 1 of 1
<PAGE>
Available Margins
CoBank 5
<TABLE>
Plus:
L-T S-T Total CoBank Bond Adjusted Adjusted 12 month
Month Ending Margins Int Exp Int Exp Int Exp at 6.75% per annum Int Exp MFI/ I MFI/ I
- ------------ ------- ------- ------- ------- ------------------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March, 1996 589,008 693,932 124,422 818,354 84,375 902,729 1.6525
April, 1996 2,062,121 3,602,248 171,516 3,773,764 84,375 3,858,139 1.5345
May, 1996 -129,442 2,142,671 66,000 2,208,671 84,375 2,293,046 0.9436
June, 1996 -236,002 2,088,291 77,386 2,165,677 84,375 2,250,052 0.8951
July, 1996 -234,568 2,003,202 119,350 2,122,552 84,375 2,206,927 0.8937
August, 1996 246,318 1,999,501 119,014 2,118,515 84,375 2,202,890 1.1118
September, 1996 -24,261 1,995,770 138,181 2,133,951 84,375 2,218,326 0.9891
October, 1996 857,633 2,116,082 29,184 2,145,266 84,375 2,229,641 1.3847
November, 1996 1,648,710 2,110,203 14,353 2,124,556 84,375 2,208,931 1.7464
December, 1996 2,014,397 2,117,732 14,966 2,132,698 84,375 2,217,073 1.9086
January, 1997 2,722,367 2,120,883 14,353 2,135,236 84,375 2,219,611 2.2265
February, 1997 1,702,030 2,106,810 0 2,106,810 84,375 2,191,185 1.7768 1.4155
March, 1997 1,753,740 2,108,468 46,636 2,155,104 84,375 2,239,479 1.7831 1.4370
April, 1997 1,220,394 2,056,212 96,276 2,152,488 84,375 2,236,863 1.5456 1.4320
May, 1997 504,115 2,057,192 95,625 2,152,817 84,375 2,237,192 1.2253 1.4567
June, 1997 -4,280,093 2,051,102 69,948 2,121,050 84,375 2,205,425 -0.9407 1.3055
July, 1997 -1,354,990 2,059,097 193,733 2,252,830 84,375 2,337,205 0.4203 1.2621
August, 1997 1,001,234 2,059,085 43,905 2,102,990 84,375 2,187,365 1.4577 1.2905
September, 1997 250,242 2,052,511 55,016 2,107,527 84,375 2,191,902 1.1142 1.3011
</TABLE>
Chugach Electric Association, Inc.
Officers' Certificate
Eugene N. Bjornstad, General Manager, and Evan J. Griffith, Jr., Executive
Manager, Finance and Planning of Chugach Electric Association, Inc. ("Chugach")
each hereby certifies that: 1) he has read the conditions and covenants and
definitions related thereto in the Indenture of Trust dated as of September 15,
1991 (as heretofore amended, the "Trust Indenture"); 2) the below opinions are
based on the above review and on his knowledge of Chugach in the above capacity;
3) he has, in his opinion, made such examination or investigation as is
necessary to enable him to express an informed opinion as to the opinions
expressed below; and 4) in accordance with Sections 5.01 B and 5.03 C of the
Trust Indenture:
(i) No Event of Default exists;
(ii) None of the Trust Estate is subject to any Prior Lien other than
Prior Liens permitted by Section 14.06 of the Trust Indenture;
(iii) In his opinion, all conditions precedent provided for in the
Trust Indenture relating to the authentication and delivery of the
First Mortgage Bond, CoBank Series No. CoBank-5 ("CoBank-5 Bond") in
the principal amount of $15,000,000.00, have been complied with;
Capitalized terms not otherwise defined in this Certificate have the meanings
assigned to them in the Trust Indenture.
IN WITNESS WHEREOF, we have hereunto signed our names.
Dated: November 19, 1997
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
Title: General Manager
/s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Title: Executive Manager
Finance and Energy Supply
Page 1 of 1 Principal Financial Officer
<PAGE>
EKLUTNA HYDROELECTRIC PROJECT
Agreement for Extension of
"1996 EKLUTNA HYDROELECTRIC PROJECT TRANSITION PLAN"
by and among
THE MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT & POWER;
CHUGACH ELECTRIC ASSOCIATION, INC.; and
MATANUSKA ELECTRIC ASSOCIATION, INC.
<PAGE>
EKLUTNA HYDROELECTRIC PROJECT
Agreement for Extension of
"1996 EKLUTNA HYDROELECTRIC PROJECT TRANSITION PLAN"
by and among
THE MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT & POWER;
CHUGACH ELECTRIC ASSOCIATION, INC.; and
MATANUSKA ELECTRIC ASSOCIATION, INC.
The parties to this Agreement are the Eklutna Purchasers as defined in the 1996
Eklutna Hydroelectric Project Transition Plan (Transition Plan). The Eklutna
Purchasers recognize that common interests exist regarding the ownership,
operation, and maintenance of the Eklutna Project. The Eklutna Purchasers hereby
extend the Transition Plan as modified by this Agreement.
The Eklutna Purchasers further recognize that obligations of the Eklutna
Purchasers under the terms of the Alaska Power Administration Asset Sale and
Termination Act, as well as obligations of the Alaska Power Administration and
successor agencies, continue beyond the Transaction Date, and that the execution
of this Agreement in no way relieves the Alaska Power Administration nor any
Purchaser of such continuing obligations.
All capitalized terms not defined herein shall have the same meaning given them
in the Transition Plan (including exhibits).
Therefore, the Parties agree to extend the Transition Plan as follows:
THIS Agreement for the Extension of the Transition Plan incorporates by
reference the following documents and all of the rights, obligations,
requirements, and provisions therein:
The 1996 Transition Plan, consisting of thirteen Sections
contained on ten pages; incorporating therein, specifically:
Exhibit A, consisting of 33 pages; Exhibit B, consisting of
5 pages; Exhibit C, consisting of 12 pages; Exhibit D,
consisting of 25 pages; and, Exhibit E, consisting of 9
pages.
Eklutna Transition Plan Extension Agreement Page 1 of 5
<PAGE>
THE Parties further agree to the following modifications with regard to the 1996
Transition Plan by this Agreement:
1. The Transition Plan will not expire upon completion of the tasks
specified therein. However, the arrangements and timetable for transfer
of operations, maintenance, and power marketing, as well as operation,
maintenance, and administration of the Project will no longer require
consultation with APA, nor will office space and access be provided for
an APA real estate person after the Transaction Date. (Reference:
Transition Plan Section 2 and Section 5)
2. The transfer of data and documents to the Eklutna Purchasers after the
Transaction Date shall occur no later than January 1, 1998. (Reference:
Transition Plan Section 7)
3. The effective date of this Agreement shall be the Transaction Date, but
in any event no later than November 28, 1997.
4. The division of responsibilities among the Eklutna Purchasers after the
Transaction Date will be as described in Exhibit E, Paragraph (A)(2).
5. The sixth sentence of Paragraph (A) (3) of Exhibit E is modified to
delete reference to an "Ownership and Operating Agreement," and as so
modified reads as follows: "Decisions of the EOC will be by double
majority (a vote of two of the three Eklutna Purchasers whose shares
total at least 51% of the Eklutna Project shares) unless otherwise agreed
to by the Eklutna Purchasers."
THE parties further agree to the following in regard to the ownership,
operation, and maintenance of the Eklutna Project:
1. An Eklutna Purchaser's interest in the Eklutna Project will not be
modified or changed by any assignment or transfer, except upon consent
of each Eklutna Purchaser. An Eklutna Purchaser's interest may be
transferred or assigned among the Eklutna Purchasers in proportion to
their respective Project interest or by such other allocation as to
which each Eklutna Purchaser agrees. Transfer or assignment of an
Eklutna Purchaser's interest to entities other than an Eklutna
Purchaser will be subject to a first right of refusal by the remaining
Eklutna Purchasers, with such right to be exercised within 180 days of
receipt of written notification. If no remaining Eklutna Purchaser
elects to acquire such interest, the transferring Eklutna Purchaser
shall indemnify the remaining Eklutna Purchasers for all expenditures
which would not otherwise be required, but for which the Eklutna
Project becomes obligated in meeting licensing requirements and
regulations which were exempted for the original Eklutna Purchasers
under the Alaska Power Administration Asset Sale and Termination Act.
2. The terms and conditions of this Agreement will apply to any successor
or assign of an Eklutna Purchaser, whether such succession or
assignment results from security assignment, merger, acquisition, or
any other disposition by the Eklutna Purchaser of its Eklutna Project
share.
Eklutna Transition Plan Extension Agreement Page 2 of 5
<PAGE>
3. Exhibits A through D of the CONTRACT FOR ELECTRIC SERVICE TO THE
CHUGACH ELECTRIC ASSOCIATION, INC.; MATANUSKA ELECTRIC ASSOCIATION,
INC.; AND MUNICIPALITY OF ANCHORAGE, MUNICIPAL LIGHT & POWER, Contract
No. DE-SC85-95AP 1 0042 shall continue in effect until such time as
revised or terminated by action of the EOC. Should any part of these
Exhibits A through D conflict with the Transition Plan as modified by
this Agreement, the Transition Plan shall prevail.
Dated at Anchorage, Alaska this 2nd day of October 1997.
Municipality of Anchorage
/s/ George J. Vakalis for
Larry D. Crawford
Municipal Manager
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
Eklutna Transition Plan Extension Agreement Page 3 of 5
<PAGE>
The APA hereby states its non-objection to the foregoing Agreement for Extension
of "1996 EKLUTNA HYDROELECTRIC PROJECT TRANSITION PLAN"
Alaska Power Administration, a unit of the
U.S. Department of Energy
/s/ Rodney L. Adelman
Rodney L. Adelman
Administrator
Eklutna Transition Plan Extension Agreement Page 4 of 5
<PAGE>
RECOMMENDED: APPROVED AS TO FORM:
Anchorage Municipal Light & Power MUNICIPALITY OF ANCHORAGE
/s/ Hank Nikkels /s/ Mary K. Hughes
Hank Nikkels Mary K. Hughes
Acting General Manager Municipal Attorney
RECOMMENDED:
MUNICIPALITY OF ANCHORAGE
/s/ George J. Vakalis
George J. Vakalis
Operations Manager
Eklutna Transition Plan Extension Agreement Page 5 of 5
<PAGE>
CLOSING AGREEMENT
THIS AGREEMENT is made this 2nd day of October, 1997, by and between
the United States of America, acting through the Alaska Power Administration, a
unit of the United States Department of Energy (hereafter "United States"), and
the Municipality of Anchorage, d/b/a Municipal Light and Power, Chugach Electric
Association, Inc., and Matanuska Electric Association, Inc. (hereafter
collectively "the Purchasers").
Recitals
WHEREAS, the Purchasers executed a Memorandum of Understanding on July
25, 1989, in which Agreement at Paragraph 2 they mutually declared their
respective proportionate shares of their undivided interest in the Eklutna
assets.
WHEREAS, on August 2, 1989, the United States and the Purchasers
entered into that particular contract entitled the Eklutna Purchase Agreement,
by which the United States agreed to sell and the Purchasers agreed to purchase
the Eklutna Hydroelectric Project, and its real property interests, fixtures,
equipment, personalty, contract and water rights, and other interests as
identified in that Agreement (hereafter "Eklutna Project").
WHEREAS, by enactment of the Alaska Power Administration Asset Sale and
Termination Act of 1995 (hereafter "the Sale Act), Public Law 104-58, the
Congress authorized the Secretary of Energy to sell the Eklutna Project to the
Purchasers in accordance with the terms of the Sale Act and the Eklutna Purchase
Agreement.
WHEREAS, on May 28, 1996, the United States and the Purchasers adopted
the 1996 Eklutna Hydroelectric Project Transition Plan in accordance with the
terms of the Eklutna Purchase Agreement for the purpose of facilitating
arrangements for the transfer of ownership of the Eklutna
Closing Agreement
Page 1 of 12
<PAGE>
Project to the Purchasers
WHEREAS, the United States and the Purchasers are prepared at this
time to complete the purchase and sale transaction contemplated by the Eklutna
Purchase Agreement, the Sale Act, and the 1996 Eklutna Hydroelectric Project
Transition Plan, -subject to certain continuing obligations as identified in
this Agreement.
Terms of Agreement
NOW, THEREFORE, the United States and the Purchasers agree as follows:
1. Payment by Purchasers, The United States acknowledges receipt of the
following sums paid by the Purchasers in complete and final satisfaction of
the purchase-price payment requirement as provided by Section 5 of the
Eklutna Purchase Agreement, Amendment No. 3 to that Agreement and Exhibit B
to that Amendment:
Municipality of Anchorage, d/b/a ML&P 16/30 $3,174,933.
Chugach Electric Association, Inc. 9/30 $1,785,900.
Matanuska Electric Association, Inc. 5/30 $ 992,167.
------- ------------
Total Received: 30/30 $5,953,000
2. Instruments Delivered. The parties acknowledge that the United States
delivered on the date of this Agreement, and the Purchasers accepted on
that date, the instruments identified in Appendix A to this Agreement.
3. Remaining Federal Obligations Relating to Transfer of Eklutna Project
Interests to Purchasers. At the time of this Agreement, the United States
is unable to convey to the Purchasers the properties or interests in the
Eklutna Project identified in Appendix B to this Agreement. The United
States, acting through the United States Department of Energy, will
complete conveyance of
Closing Agreement
Page 2 of 12
<PAGE>
the outstanding interests identified in Appendix B no later than June 1,
1998.For a period of 180 days after the date of this Agreement, the parties
reserve the right to further identify, by mutual agreement, instruments and
interests, if any, that should be added to Appendix B after closing and
will cooperate with one another in good faith in so doing.
4. Purchasers' Operational Arrangements. The requirements of Section 10.c of
the Eklutna Purchase Agreement regarding establishment of organizational,
functional and staffing arrangements for operations, maintenance and
Administration of the Eklutna Project are satisfied by that agreement
entitled 1996 Eklutna Hydroelectric Project Transition Plan, as modified by
that agreement entitled Agreement for Extension of 1996 Eklutna
Hydroelectric Project Transition Plan by and among the Municipality of
Anchorage, d/b/a Municipal Light & Power, Chugach Electric Association,
Inc., and Matanuska Electric Association, Inc, dated October 2, 1997, which
agreements are attached hereto as Appendix C.
5. Unresolved Matter. Notwithstanding the closing of the Eklutna Project sale
through this Agreement, the parties acknowledge that they have not resolved
the question of whether the United States is required to provide warranties
of title in real property conveyance and transfer instruments issued to the
Purchasers under the Sale Act and the Eklutna Purchase Agreement. The
United States and the Purchasers presently have differing positions
concerning this question. The warranty question is presently pending before
the Comptroller General, and an opinion from that official was not received
before closing of the Eklutna Project sale. Although the Comptroller
General's opinion will not be binding on the Purchasers, it will provide
guidance to the United States on the-unresolved question relating to
warranty obligations. By entering this Agreement, neither the United States
nor the Purchasers waive any position, right, claim or defense related to
the question of whether the
Closing Agreement
Page 3 of 12
<PAGE>
United States must provide Warranties to the Purchasers in real
property transfer instruments.
6. Federal Obligations in Response to Real Property Title Defects. It is the
intent of the United States to convey to the Purchasers all right, title
and interest the United States has in the Eklutna Project. The parties
believe that the United States is conveying sufficient right, title or
interest to all real property identified in Appendix A in the Eklutna
Project as constructed and used by the United States. However, in the event
that the right, title or interest transferred by the United states was
insufficient, at the time of transfer, the following procedures shall be
employed to cure such insufficiencies:
a. If after the date of this Agreement, a third party initiates any
action (including without limitation an action for damages, to quiet
title, or for injunctive relief) challenging any title, interest,
license or right-of-way in or to real property identified in an
instrument delivered by the United States to the Purchasers pursuant
to the Eklutna Purchase Agreement and the Sale Act, the Purchasers
shall defend, and may settle, the action in good faith, and shall
provide notice of the action to the Secretary of Energy or his
successor.
b. If a court of competent jurisdiction enters a judgment or ruling on
the merits of a case, holding or otherwise establishing that the
title, interest license or right-of-way in or to real property was
insufficient on the date of transfer to provide the Purchasers with
the beneficial use, enjoyment and occupancy of the Eklutna Project as
constructed and transferred by the United States, then the United
States, in accordance with applicable law and subject to a prior
appropriation by Congress for that purpose, shall acquire, for
conveyance to the Eklutna Purchasers, the right, title or interest in
or to real property necessary to provide the Purchasers with
sufficient right, title or interest to allow for the beneficial use,
enjoyment and occupancy of the Eklutna Project. Alternatively, at the
Closing Agreement
Page 4 of 12
<PAGE>
election of the Purchasers, they may acquire the necessary right,
title or interest and the United States,in accordance with applicable
laws and subject to a prior appropriation by Congress for that
purpose, shall reimburse the Purchasers for the costs of acquisition.
c. Before the Purchasers settle an action described in subparagraph a of
this paragraph 6, they shall notify the United States of their intent
to do so and tender the defense of the action to the United States. If
the United States accepts the tender, it shall defend the case to its
conclusion on the merits or settle the action on terms it deems
advisable. If the United States declines the tender, the Purchasers
shall be free to settle the action on whatever terms they deem
appropriate. If the Purchasers settle an action identified in the
preceding paragraph 6.b., then the United States, in compliance with
applicable laws and subject to an appropriation by the Congress for
that purpose, shall reimburse the Purchasers for the payment made in
settlement.
d. The United States, acting through the Department of Energy or its
successor, and the Purchasers may agree at any time that the right,
title, interest, license or right-of-way in or to real property
conveyed by an instrument identified in Appendix A to this Agreement
or conveyed pursuant to paragraph 3 of this Agreement is insufficient,
in which event the United States, in accordance applicable laws and
subject to a prior appropriation by the Congress for that purpose,
shall acquire the necessary interest and transfer it to the Purchasers
or reimburse the Purchasers for the costs of such acquisition.
e. In connection with the request for an appropriation to fund federal
obligations under this paragraph 6, the Purchasers shall petition the
Congress for reimbursement of their costs of acquiring property
interests or settling claims of insufficient interest. Nothing in this
Agreement shall limit the Purchasers' rights to seek an appropriation
for any purpose for which they might otherwise seek
Closing Agreement
Page 5 of 12
<PAGE>
an appropriation. Nothing in this Agreement obligates Congress to make
any appropriations. In the event Congress fails to make an
appropriation, the United States has no duties to perform any work or
fund the cure of any insufficiencies. The Purchasers shall seek any
appropriation from Congress pursuant to this paragraph 6. The parties
reserve the right to seek judicial redress in a court of competent
jurisdiction.
f. In the event a court holds that a conveyance or transfer instrument
was ineffective to convey or transfer to the Purchasers the right to
operate the Eklutna Project, or any part thereof, and that the right,
title or interest purported to have been conveyed or transferred to
the Purchasers by the United States remains vested in the United
States, then the Secretary of Energy or his designee hereby grants to
the Purchasers, without the need for further action, a license to
enable the Purchasers to continue to operate the Eklutna Project. Such
license shall remain in effect until the United States is able to
convey or transfer the right, title or interest, the conveyance or
transfer of which was held to be ineffective pursuant to the original
instrument.
g. The United States' obligation to provide sufficient title extends only
to the Eklutna Project as constructed and transferred by the United
States. In the event that the Purchasers subsequently modify, improve
or otherwise change any portion of the Eklutna Project, the United
States is under no obligation to provide sufficient right, title, or
interest in real property for those modifications, improvements or
changes. Furthermore, in the event any right, title, or interest
becomes insufficient due to a modification, improvement or any other
change made to the Eklutna Project as originally constructed and
transferred, then this paragraph 6 shall become inapplicable.
7. Section 17(b) Easements. Pursuant to Section 10b(3) of the Eklutna Purchase
Agreement, the United States represents to the Purchasers that the
instruments identified in Appendix A to this
Closing Agreement
Page 6 of 12
<PAGE>
Agreement provide the Purchasers with rights in easements reserved to
the United States under Section 17(b) of the Alaska Native Claims
Settlement Act, 43 U.S.C. ss. 1616(b) which are sufficient for continued
operation, repair and replacement of Eklutna facilities.
8. No Merger. The doctrine of merger shall not apply (a) to the rights and
obligations of the parties under this Agreement, and (b) to the rights and
obligations of the parties specifically relating to the sufficiency of the
right, title or interest in real property transferred or to be transferred
in the Eklutna Project.
9. Judicial Remedies. Nothing in this Agreement or in the conveyance or
transfer instruments delivered by the United States to the Purchasers shall
deprive the parties of any judicial remedy to which they may otherwise be
entitled by contract or under law.
10. Correction of Errors, The parties shall cooperate with one another to
correct any typographical or inadvertent errors discovered in documents or
instruments issued under the Eklutna Purchase Agreement. Correction of such
documents may require substitution of a new instrument in a form suitable
for recordation.
11. Environmental Expenditures. Purchase orders E-97-035 E-97-036, E-97-037,
and E-97- 038, issued on March 11, 1997, shall terminate on June 30, 1998,
and no further requests for payment of environmental expenses will be
accepted after that date, subject to the Purchase Agreement and applicable
environmental law. Invoices submitted by the Purchasers before July 1, 1998
will be processed and paid.
12. Generator Rewind Contract, The United States will continue to administer
Contract DE- AC-85-95AP0043 (commonly known as the Generator Rewind
Contract) to a successful conclusion. The Purchasers agree to allow the
United States and the Contractor under the Generator Rewind
Closing Agreement
Page 7 of 12
<PAGE>
Contract access to the facilities so that the United States and the
Contractor may complete work under the Contract.The Purchasers shall
provide an on-site facility to the Contractor and the United States, to
include office space, telephone, furniture, and the usual amenities. When
the Contractor completes performance, the Contractor will issue a warranty
for its work. The United States hereby assigns the Contractor's warranty to
the Purchasers, effective upon the United States' receipt of the warranty.
13. Satisfaction of Conditions Precedent to Closing. All conditions precedent
to transfer of the Eklutna Project to the Purchasers and to closing of the
Eklutna Project sale have been satisfied or are hereby waived.
14. Notice to Parties. Notices under this Agreement or the Eklutna Purchase
Agreement shall be given to the following persons:
For the United States: Administrator, Alaska Power Administration, Juneau
For the Purchasers:
Municipality of Anchorage, d/b/a Municipal Light & Power: General Manager
Chugach Electric Association, Inc.: General Manager
Matanuska Electric Association, Inc.: General Manager
Notices to the Purchasers shall be given to each of the Purchasers.
Closing Agreement
Page 8 of 12
<PAGE>
THE UNITED STATES OF AMERICA
UNITED STATES OF AMERICA
Department of Energy
Alaska Power Administration
Date: October 2, 1997 By: /s/ Rodney L. Adelman
---------------- ----------------------
Rodney L. Adelman
Administrator
THE EKLUTNA PURCHASERS
MUNICIPALITY OF ANCHORAGE
d/b/a Municipal Power & Light
Date: 2 Oct 97 By: /s/ George Vakalis for
--------------------- -------------------
Larry D. Crawford
Municipal Manager
CHUGACH ELECTRIC ASSOCIATION, INC.
Date: Oct 2. 1997 By: /s/ Eugene N. Bjornstad
------------------- ------------------------
Eugene N. Bjornstad
General Manager
MATANUSKA ELECTRIC ASSOCIATION, INC.
Date: Oct 2, 1997 By: /s/ Wayne D. Carmony
------------------ ---------------------
Wayne D. Carmony
General Manager
Closing Agreement
Page 9 of 12
<PAGE>
ACKNOWLEDGMENTS
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
STATE OF ALASKA )
) ss:
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this 2nd day of
October, 1997, by Rodney L. Adelman, Administrator of the Alaska Power
Administration, a unit of the United States Department of Energy.
/s/ Lee Anne Mackay
Notary Public in and for Alaska.
Residing at Anchorage
My commission expires: 5/25/2000
MUNICIPALITY OF ANCHORAGE
d/b/a MUNICIPAL LIGHT & POWER
STATE OF ALASKA )
) ss:
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this 2nd day of
October, 1997, by George J. Vakalis, Acting Municipal Manager of the
Municipality of Anchorage d/b/a Municipal Light & Power.
/s/ Lee Anne Mackay
Notary Public in and for Alaska.
Residing at Anchorage
My commission expires: 5/25/2000
Closing Agreement
Page 10 of 12
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC
STATE OF ALASKA )
) ss:
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this 2nd day of
October, 1997, by Eugene N. Bjornstad, General Manager of Chugach Electric
Association, Inc., an Alaska electric cooperative corporation, on behalf of the
corporation.
/s/ Lee Anne Mackay
Notary Public in and for Alaska.
Residing at Anchorage
My commission expires: 5/25/2000
MATANUSKA ELECTRIC ASSOCIATION, INC
STATE OF ALASKA )
) ss:
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this 2nd day of
October, 1997, by Wayne D. Carmony, General Manager of Matanuska Electric
Association, Inc., an Alaska electric cooperative corporation, on behalf of the
corporation.
/s/ Lee Anne Mackay
Notary Public in and for Alaska.
Residing at Anchorage
My commission expires: 5/25/2000
Closing Agreement
Page 11 of 12
<PAGE>
RECOMMENDED: APPROVED AS TO FORM:
ANCHORAGE MUNICIPAL LIGHT & POWER MUNICIPALITY OF ANCHORAGE
/s/ Hank Nikkels /s/ Mary K. Hughes
Hank Nikkels Mary K. Hughes
Acting General Manager Municipal Attorney
RECOMMENDED:
MUNICIPALITY OF ANCHORAGE
/s/ George J. Vakalis
George J. Vakalis
Operations Manager
Closing Agreement
Page 12 of 12
<PAGE>
CLOSING AGREEMENT
APPENDIX A
INSTRUMENTS DELIVERED
<PAGE>
APPENDIX A
1. Bill of Sale
2. Quitclaim Deed, Palmer Substation
3. Quitclaim Deed, Reed Substation
4. Patent, Anchorage Substation (from BLM)
5. Quitclaim Deed, Anchorage Substation
6. Assignment and Transfer of Easement, Wasilla Radio Relay Site
7. Assignment and Transfer of Easement, Transmission Line (Palmer)
8. Assignment and Transfer of Easement, Transmission Line (Anchorage)
9. Assignment and Transfer of Reserved Easement, Transmission Line
(Palmer 44LD513)
10. Assignment and Transfer of Reserved Easement, Transmission Line
(Anchorage 44LD513)
11. Assignment and Transfer of Easement Use Rights, Transmission Line
12. Assignment and Transfer of Easement Use Rights, Aqueduct
13. Assignment and Transfer of Flowage, Flooding and Reservoir Easement
14. Decision for Assignment of BLM Right-of-Way Grant, Serial Number AA- 70133
(from BLM)
15. Assignment and Transfer of Power Project Facilities
16. Assignment and Transfer of Right-of-Way Licenses
17. Assignment and Transfer of Contract No. 85-80AP10022.000
18. Assignment and Transfer of "Cooperative Land Management Agreement
Between the United States of America Through the Alaska Power
Administration and the Bureau of Land Management and the State of Alaska
Through the Alaska Division of Parks and Outdoor Recreation for the
Management of Certain Lands in the Upper Eklutna Valley"
19. Assignment and Transfer of Agreement for Public Water Supply and
Energy Generation from Eklutna Lake, Alaska, as Supplemented
20. Quitclaim Deed, Federal Reserved-Water Right Under the Eklutna Project
Act of 1950,64 Stat.382, As Amended, Including State of Alaska Water Rights
Certificate of Appropriation (Amended) ADL 44944
21. Assignment and Transfer of the June 3, 1957, Permit Letter; and Revocable
Permit of Use Dated April 9, 1958; Regarding the Knik River Bridge
22. Assignment of Contract No. DE-SC85-95AP10042
<PAGE>
CLOSING AGREEMENT
APPENDIX B
UNCONVEYED INTERESTS
[None at this time.]
<PAGE>
CLOSING AGREEMENT
APPENDIX C
1996 EKLUTNA HYDROELECTRIC PROJECT TRANSITION PLAN
and
AGREEMENT FOR EXTENSION OF
1996 EKLUTNA HYDROELECTRIC PROJECT TRANSITION PLAN
<PAGE>
Duplicate Original
UNITED STATES
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
EKLUTNA PROJECT, ALASKA
BILL OF SALE
This BILL OF SALE is made this 2nd day of October, 1997, between the UNITED
STATES OF AMERICA, acting by and through the Department of Energy, Alaska Power
Administration, whose address is, 2770 Sherwood Lane, Juneau, AK 99801-8545,
represented by the officer executing this document, pursuant to the Reclamation
Act of June 17, 1902, 32 Stat. 388, as amended, the Eklutna Project Act of 1950,
64 Stat. 382, as amended, the Energy Organization Act of August 4, 1977, 91
Stat. 565, as amended, and the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, as amended, herein referred to as UNITED STATES,
and the Municipality of Anchorage, doing business as Municipal Light and Power,
the Chugach Electric Association, Inc., and the Matanuska Electric Association,
Inc., collectively referred to herein as EKLUTNA PURCHASERS, whose address is,
Eklutna Project, HC 04, Box 7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, for mutual benefits and other good
and valuable consideration, hereby sells, transfers and delivers to the EKLUTNA
PURCHASERS, their successors or assigns, all right, interest, duty and
obligation of the UNITED STATES in the following:
THE ITEMS DESCRIBED IN EXHIBIT A
<PAGE>
ALL ITEMS ARE SOLD, TRANSFERRED AND DELIVERED AS IS. THE UNITED
STATES MAKES NO WARRANTY OF ANY KIND ON ANY OF THE ITEMS BEING
SOLD TRANSFERRED OR DELIVERED.
<PAGE>
The EKLUTNA PURCHASERS hereby accept all rights, titles, interests, duties and
obligations in the above items. IN WITNESS THEREOF, the parties have executed
this BILL OF SALE as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George J. Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Municipal Attorney
<PAGE>
EXHIBIT A
The Eklutna Project Asset List was filed previously.
The Eklutna Project transmission line and all associated appurtenances,
equipment, and facilities are included in this Bill of Sale.
Warranties, if any, which were issued to APA by third parties are conveyed to
the Eklutna Purchasers.
<PAGE>
Duplicate original
QUITCLAIM DEED
Palmer Substation
This QUITCLAIM DEED is made this 2nd day of October, 1997, between the UNITED
STATES OF AMERICA, acting by and through the Department of Energy, Alaska Power
Administration, whose address is 2770 Sherwood Lane, Juneau, AK 99801-8545,
represented by the officer executing this document, pursuant to the Reclamation
Act of June 17, 1902, 32 Stat. 388, as amended, the Eklutna Project Act of 1950,
64 Stat. 382, as amended, the Energy Organization Act of August 4, 1977, 91
Stat. 565, as amended, and the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, as amended, herein referred to as the UNITED
STATES, and the Municipality of Anchorage, doing business as Municipal Light and
Power, the Chugach Electric Association, Inc., and the Matanuska Electric
Association, Inc., collectively referred to herein as EKLUTNA PURCHASERS, whose
address is, Eklutna Project, HC 04, Box 7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, for mutual benefits and other good and
valuable consideration, hereby RELEASES and QUITCLAIMS to the EKLUTNA
PURCHASERS, their successors or assigns, as tenants in common according to their
fractional interests as more particularly set forth herein, all right, title,
and interest of the UNITED STATES, in a portion of the Southeast Quarter of the
Northwest Quarter of Section 4, Township 17 North, Range 2 East, Seward
Meridian, acquired by a Warranty Deed recorded February 16, 1952, in the
official records of Palmer Recording Precinct, Third Judicial District, State of
Alaska, in Book 14 at page 157, and more particularly described as follows:
Beginning at a point which is situate 42.5 feet North 45000' West of center of
Section 4, Township 17 North, Range 2 East, Seward Principal Meridian; thence
due West for a distance of 170 feet; thence due North for a distance of 170
feet; thence due East for a distance of 169.9 feet; thence South O(degree)13'
East for a distance of 170 feet to the point of ending which is the point of
beginning, said parcel of land to contain 0.66 acres.
<PAGE>
Together with all equipment and associated facilities.
The right, title and interest of the UNITED STATES hereby released and
quitclaimed to the EKLUTNA PURCHASERS vests in the EKLUTNA PURCHASERS as tenants
in common to the full extent of the undivided interests set forth below:
Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
IN WITNESS THEREOF, the UNITED STATES has executed this QUITCLAIM DEED as of the
day and year first written above.
UNITED STATES OF AMERICA
Department of Energy
Alaska Power Administration
/s/ Rodney L. Adelman
Rodney L. Adelman
Administrator
ACKNOWLEDGMENT
STATE OF ALASKA )
)
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy.
Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(Seal) My Commission expires: 5/25/2000
<PAGE>
Duplicate original
QUITCLAIM DEED
Anchorage Substation
This QUITCLAIM DEED is made this 2nd day of October, 1997, between the UNITED
STATES OF AMERICA, acting by and through the Department of Energy, Alaska Power
Administration, whose address is 2770 Sherwood Lane, Juneau, AK 99801-8545,
represented by the officer executing this document, pursuant to the Reclamation
Act of June 17, 1902, 32 Stat. 388, as amended, the Eklutna Project Act of 1950,
64 Stat. 382, as amended, the Energy Organization Act of August 4, 1977, 91
Stat. 565, as amended, and the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, as amended, herein referred to as the UNITED
STATES, and the Municipality of Anchorage, doing business as Municipal Light and
Power, the Chugach Electric Association, Inc., and the Matanuska Electric
Association, Inc., collectively referred to herein as EKLUTNA PURCHASERS, whose
address is, Eklutna Project, HC 04, Box 7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, for mutual benefits and other good and
valuable consideration, hereby RELEASES and QUITCLAIMS to the EKLUTNA
PURCHASERS, their successors or assigns, as tenants in common according to their
fractional interests as more particularly set forth herein, all right, title,
and interest of the UNITED STATES, in the following described lands:
Seward Meridian, Alaska
T. 13 ., R. 3 W.,
Sec. 27, NE1/4NE1/4NW1/4
Together with all equipment and associated facilities.
<PAGE>
The right, title and interest of the UNITED STATES hereby released and
quitclaimed to the EKLUTNA PURCHASERS vests in the EKLUTNA PURCHASERS as tenants
in common to the full extent of the undivided interests set forth below:
Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
IN WITNESS THEREOF, the UNITED STATES has executed this QUITCLAIM DEED as of the
day and year first written above.
UNITED STATES OF AMERICA
Department of Energy
Alaska Power Administration
/s/ Rodney L. Adelman
Rodney L. Adelman
Administrator
ACKNOWLEDGMENT
STATE OF ALASKA )
)
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy.
Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(Seal) My Commission expires: 5/25/2000
<PAGE>
Duplicate original
QUITCLAIM DEED
Reed Substation
This QUITCLAIM DEED is made this 2nd day of October, 1997, between the UNITED
STATES OF AMERICA, acting by and through the Department of Energy, Alaska Power
Administration, whose address is 2770 Sherwood Lane, Juneau, AK 99801-8545,
represented by the officer executing this document, pursuant to the Reclamation
Act of June 17, 1902, 32 Stat. 388, as amended, the Eklutna Project Act of 1950,
64 Stat. 382, as amended, the Energy Organization Act of August 4, 1977, 91
Stat. 565, as amended, and the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, as amended, herein referred to as the UNITED
STATES, and the Municipality of Anchorage, doing business as Municipal Light and
Power, the Chugach Electric Association, Inc., and the Matanuska Electric
Association, Inc., collectively referred to herein as EKLUTNA PURCHASERS, whose
address is, Eklutna Project, HC 04, Box 7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, for mutual benefits and other good and
valuable consideration, hereby RELEASES and QUITCLAIMS to the EKLUTNA
PURCHASERS, their successors or assigns, as tenants in common according to their
fractional interests as more particularly set forth herein, all right, title,
and interest of the UNITED STATES, in the following described property within
Section 19, Township 16 North, Range 1 East, Seward Meridian, Alaska: United
States Survey No. 9789. Together with all equipment and associated facilities.
<PAGE>
The right, title and interest of the UNITED STATES hereby released and
quitclaimed to the EKLUTNA PURCHASERS vests in the EKLUTNA PURCHASERS as tenants
in common to the full extent of the undivided interests set forth below:
Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
IN WITNESS THEREOF, the UNITED STATES has executed this QUITCLAIM DEED as of the
day and year first written above.
UNITED STATES OF AMERICA
Department of Energy
Alaska Power Administration
/s/ Rodney L. Adelman
Rodney L. Adelman
Administrator
ACKNOWLEDGMENT
STATE OF ALASKA )
)
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy.
Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(Seal) My Commission expires: 5/25/2000
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF EASEMENT
Wasilla Radio Relay Site
This ASSIGNMENT AND TRANSFER OF EASEMENT is made this 2nd day of October, 1997,
between the UNITED STATES OF AMERICA, as grantor acting by and through the
Department of Energy, Alaska Power Administration, whose address is 2770
Sherwood Lane, Juneau, AK 99801-8545, represented by the officer executing this
document, pursuant to the Reclamation Act of June 17, 1902, 32 Stat. 388, as
amended, the Eklutna Project Act of 1950, 64 Stat. 382, as amended, the Energy
Organization Act of August 4, 1977, 91 Stat. 565, as amended, and the Alaska
Power Administration Asset Sale and Termination Act, 109 Stat. 557, as amended,
herein referred to as the UNITED STATES, and the Municipality of Anchorage,
doing business as Municipal Light and Power, the Chugach Electric Association,
Inc., and the Matanuska Electric Association, Inc., collectively referred to
herein as EKLUTNA PURCHASERS, GRANTEES, whose address is, Eklutna Project, HC
04, Box 7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, having acquired a communication
site easement, for mutual benefits and other good and valuable consideration,
hereby grants, assigns, transfers, conveys, and sets over without reservation to
the EKLUTNA PURCHASERS, their successors or assigns, as tenants in common
according to their fractional interests as more particularly set forth herein,
all right, title, and interest of the UNITED STATES in the following described
contract and grant of easement, located in the Palmer Recording District
(formerly Wasilla Recording District), Third Judicial District, State of Alaska:
1. Contract and Grant of Easement dated April 7, 1955, from Ila
Senske and W.M. Senske, recorded April 19, 1955, in book 11,
page 252, Wasilla Recording District.
Together with all right, title and interest to the associated radio and
communication facilities.
<PAGE>
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Eugene N. Bjornstad, the General Manager of Chugach Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Wayne D. Carmony, the General Manager of Matanuska Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
ACKNOWLEDGMENT
STATE OF ALASKA )
)
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy. Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by George J. Vakalis, the Acting Municipal Manager of the Municipality of
Anchorage, doing business as Municipal Light and Power, on behalf of said
municipal corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
The right, title and interest in and to all easement rights of the UNITED STATES
hereby granted to the EKLUTNA PURCHASERS vests in the EKLUTNA PURCHASERS as
tenants in common to the full extent of the undivided interests set forth below:
Municipality of Anchorage, d/b/a Municipal Light and Power 16/30 Chugach
Electric Association, Inc. 9/30 Matanuska Electric Association, Inc. 5/30 The
EKLUTNA PURCHASERS hereby accept the ASSIGNMENT AND TRANSFER OF EASEMENT. IN
WITNESS THEREOF, the said parties-have executed this ASSIGNMENT AND TRANSFER OF
EASEMENT as of the day and year first written above.
Acceptance:
Municipality of Anchorage
dba Municipal Light and Power
/s/ George J. Vakalis for
Larry D. Crawford
Municipal Manager
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
United States of America
Department of Energy
Alaska Power Administration
/s/ Rodney L. Adelman
Rodney L. Adelman
Administrator
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF EASEMENT
Eklutna Project Transmission Line (Palmer Recording District)
This ASSIGNMENT AND TRANSFER OF EASEMENT is made this 2nd day of October, 1997,
between the UNITED STATES OF AMERICA, as grantor acting by and through the
Department of Energy, Alaska Power Administration, whose address is 2770
Sherwood Lane, Juneau, AK 99801-8545, represented by the officer executing this
document, pursuant to the Reclamation Act of June 17, 1902, 32 Stat. 388, as
amended, the Eklutna Project Act of 1950, 64 Stat. 382, as amended, the Energy
Organization Act of August 4, 1977, 91 Stat. 565, as amended, and the Alaska
Power Administration Asset Sale and Termination Act, 109 Stat. 557, as amended,
herein referred to as UNITED STATES, and the Municipality of Anchorage, doing
business as Municipal Light and Power, the Chugach Electric Association, Inc.,
and the Matanuska Electric Association, Inc., GRANTEES, collectively referred to
herein as EKLUTNA PURCHASERS, whose address is, Eklutna Project, HC 04, Box
7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, having acquired transmission line easements
from various land owners, for mutual benefits and other good and valuable
consideration, hereby grants, assigns, transfers, conveys, and sets over without
reservation to the EKLUTNA PURCHASERS, their successors or assigns, as tenants
in common according to their fractional interests as more particularly set forth
herein, all right, title, and interest of the UNITED STATES in the following
described contracts and grants of easements, located in the Palmer Recording
District, Third Judicial District, State of Alaska:
100 Foot Right-of-Way
1. Contract and Grant of Easement dated January 29, 1954, from John L.
Cope, et ux., et al., recorded April 14, 1954, in book 17, pg. 201.
(within E1/2SW1/4 Section 4, T 17N, R 2E)
2. Contract and Grant of Easement dated August 6, 1953, from L.C. Stock,
et ux., recorded September 16, 1953, in book 16, pg. 98. (within
W1/2NE1/4 and NE1/4NW1/4 Section 9, T 17N, R 2E)
<PAGE>
3. Contract and Grant of Easement dated April 27, 1953, from Robert
Anderson, et ux., recorded August 4, 1953, in book 16, pg. 9. (within
SE1/4NW1/4 Section 9, T 17N, R 2E)
4. Contract and Grant of Easement dated August 6, 1953, from Carl R.
Rasmussen, et ux., recorded September 16, 1953, in book 16, pg. 96.
(within NW1/4SE1/4 Section 9, T 17N, R 2E)
5. Contract and Grant of Easement dated November 300, 1951, from Clem H.
Watkinson, recorded May 12, 1953, in book 15, pg. 113. (within
NE1/4SW1/4 Section 9, T 17N, R 2E)
6. Contract and Grant of Easement dated October 22,, 1952, from Herbert
Caulkins, et ux., recorded March 16, 1953, in book 14, pg. 235. (within
SE1/4SW1/4 Section 9, T 17N, R 2E)
7. Contract and Grant of Easement dated October 25, 1951, from Ernest H.
Harrington, recorded March 16, 1953, in book 14, pg. 233. (within
SW1/4SE1/4 Section 9; NE1/4NW1/4 and NW1/4NE1/4 Section l6, T 17N, R
2E)
8. Contract and Grant of Easement dated October 29, 1951, from Alba S.
Brooks, et ux., recorded March 16, 1953, in book 14, pg. 231. (within
SW1/4NE1/4 and SE1/4NW1/4 Section 16, T 17N, R 2E)
9. Contract and Grant of Easement dated October 12, 1951, from Chester C.
Liebing, et ux., recorded March 16, 1953, in book 14, pg. 229. (within
NW1/4SE1/4 and NE1/4SW1/4 Section 16, T 17N, R 2E)
10. Contract and Grant of Easement dated March 26, 1953, from Robert
Vanderhoff, recorded September 22, 1953, in book 16, pg. 103. (within
Lot 2, and SW1/4SW1/4 and NE1/4SW1/4 Section 21, T 17N, R 2E)
75 Foot Right-of-Way
11. Contract and Grant of Easement dated April 12, 1995, from Doyle R.
McCombs, et ux., recorded May 2, 1995, in book 0803, pg. 413. (within
Lot 2 and 3 in the S1/2 Section 21, T 17N, R 2E)
12. Contract and Grant of Easement dated March 14, 1996, from James A.
Witt, et ux., recorded May 2, 1996, in book 0846, pg. 473. (within
Tract B of Lot 2 in the SE1/4 Section 21, T 17N, R 2E)
13. Contract and Grant of Easement dated October 9, 1957, from Robert V.
Vanderhoff, recorded March 13, 1958, in book 25, pg. 200. (within Lot 2
and 3 in Section 21, T 17N, R 2E)
14. Contract and Grant of Easement dated October 10, 1957, from Victor G.
Falk, Jr., et ux.,
<PAGE>
recorded January 31, 1958, in book 25, pg. 79. (within NW1/4SW1/4
Section 22; and NE1/4SE1/4 Section 21, T 17N, R 2E)
15. Contract and Grant of Easement dated October 9, 1957, from Victor G.
Falk, et ux., recorded January 31, 1958, in book 25, pg. 73. (within
NW1/4SW1/4 Section 22; and NE1/4SE1/4 Section 21, T 17N, R 2E)
<PAGE>
16. Contract and Grant of Easement dated December 11 1957, from Lauren F.
Smith, et al, recorded December 11, 1957, in book 24, pg. 306. (within
SE1/4SW1/4 Section 22, T 17N, R 2E)
17. Contract and Grant of Easement dated December 11, 1957, from Paul W.
Nelson, et ux., recorded December 12, 1957, in book 24, pg. 317.
(within NW1/4NE1/4 Section 27; and SW1/4SE1/4 Section 22, T 17N, R 2E)
18. Contract and Grant of Easement dated October 9, 1957, from Leonard
Williams, et ux., recorded January 31, 1958, in book 25, pg. 67.
(within NW1/4NE1/4 Section 27; and SW1/4SE1/4 Section 22, T 17N, R 2E)
19. Contract and Grant of Easement dated October 14, 1957, from Ronald J.
Heddles, et ux., recorded January 31, 1958, in book 25, pg. 55. (within
SW1/4NE1/4 Section 27, T 17N, R 2E)
20. Contract and Grant of Easement dated October 9, 1957, from John P.
King, et ux., recorded January 31, 1958, in book 25, pg. 61. (within
W1/2SE1/4 Section 27, T 17N, R 2E)
21. Contract and Grant of Easement dated October 9, 1957, from Paul W.
Nelson, et ux., recorded February 19, 1958, in book 25, pg. 138.
(within NW1/4SE1/4 and SW1/4NE1/4 and NW1/4NE1/4 Section 34, T 17N, R
2E)
22. Contract and Grant of Easement dated October 9, 1957, from Robert L.
Burnham, et ux., recorded January 31, 1958, in book 25, pg. 49. (within
SW1/4SE1/4 Section 34, T 17N, R 2E)
23. Contract and Grant of Easement dated October 10, 1957, from Francis S.
Lee, recorded November 26, 1958, in book 27, pg. 42. (within Lot 1 and
2 in Section 3, T 16N, R 2E)
24. Judgment on Declaration of Taking filed December 5, 1957, from Russell
Dow, et al., recorded December 4, 1959, in book Misc., pg. 112. (within
Lot 2, 7, and 8 in Section 2, T 16N, R 2E)
Together with the transmission line and associated facilities.
30 Foot Wide Access Easements
25. Contract and Grant of Easement dated September 17, 1996, from James A.
Witt, et ux., recorded October 21, 1996, in book 0869, pg. 861. (within
Lot 2, Block 1 Circle View Subdivision, Addition 3 in Section 21, T
17N, R 2E)
26. Contract and Grant of Easement dated January 29, 1997, from Noel W.
Woods and Carr-Gottstein Associates, recorded March 11, 1997, in book
0885, pg. 240. (within
<PAGE>
SW1/4NE1/4 Section 16, T 17N, R 2E)
The right, title and interest in and to all easement rights of the UNITED STATES
hereby granted to the EKLUTNA PURCHASERS vests in the EKLUTNA PURCHASERS as
tenants in common to the full extent of the undivided interests set forth below:
Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
The EKLUTNA PURCHASERS hereby accept the ASSIGNMENT AND TRANSFER OF
EASEMENT.
IN WITNESS THEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
EASEMENT as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of
October, 1997, by Rodney L. Adelman, Administrator, Alaska Power Administration,
United States Department of Energy. Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by George J. Vakalis, the Acting Municipal Manager of the Municipality of
Anchorage, doing business as Municipal Light and Power, on behalf of said
municipal corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Eugene N. Bjornstad, the General Manager of Chugach Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Wayne D. Carmony, the General Manager of Matanuska Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF EASEMENT
Eklutna Project Transmission Line (Anchorage Recording District)
This ASSIGNMENT AND TRANSFER OF EASEMENT is made this 2nd day of
October, 1997, between the UNITED STATES OF AMERICA, as grantor acting by and
through the Department of Energy, Alaska Power Administration, whose address is
2770 Sherwood Lane, Juneau, AK 99801-8545, represented by the officer executing
this document, pursuant to the Reclamation Act of June 17, 1902, 32 Stat. 388,
as amended, the Eklutna Project Act of 1950, 64 Stat. 382, as amended, the
Energy Organization Act of August 4, 1977, 91 Stat. 565, as amended, and the
Alaska Power Administration Asset Sale and Termination Act, 109 Stat. 557, as
amended, herein referred to as UNITED STATES, and the Municipality of Anchorage,
doing business as Municipal Light and Power, the Chugach Electric Association,
Inc., and the Matanuska Electric Association, Inc., GRANTEES, collectively
referred to herein as EKLUTNA PURCHASERS, whose address is, Eklutna Project, HC
04, Box 7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, having acquired transmission line easements
from various land owners, for mutual benefits and other good and valuable
consideration, hereby grants, assigns, transfers, conveys, and sets over without
reservation to the EKLUTNA PURCHASERS, their successors or assigns, as tenants
in common according to their fractional interests as more particularly set forth
herein, all right, title, and interest of the UNITED STATES in the following
described contracts and grants of easements, located in the Anchorage Recording
District, Third Judicial District, State of Alaska:
75 Foot Right-of-Way
1. Contract and Grant of Easement dated April 17, 1952, from B.O. Rhodes, et
al., recorded November 5, 1953, in vol. 98, pg. 161. (within NE1/4 Section
27, T 13N, R 3W)
2. Contract and Grant of Easement dated April 17, 1952, from Paul R. Boniface,
et ux., recorded November 5, 1953, in vol. 98, pg. 171. (within N1/2NW1/4
Section 26, T 13N, R 3W)
<PAGE>
3. Contract and Grant of Easement dated April 24, 1952, from Harold I. Moline,
et al., recorded November 5, 1953, in vol. 98, pg. 166. (within N1/2NE1/4
Section 26, T 13N, R 3W)
4. Contract and Grant of Easement dated April 24, 1952, from Arnold L.
Muldoon, recorded September 30, 1953, in book 97, pg. 9. (within NW1/4
Section 25, T 13N, R 3W)
5. Contract and Grant of Easement dated April 24, 1952, from K.D. Bradley, et
ux., recorded September 9, 1953, in vol. 97, pg. 43. (within NE1/4 Section
25, T 13N, R 3W)
6. Contract and Grant of Easement dated October 7, 1953, from Svend A.
Bragstad, et ux., recorded November 12, 1953, in vol. 98, pg. 246. (within
government lot 4 and 5 in the SE1/4 Section 25; and within government lot 2
in Section 36, T 15N, R 2W)
7. Contract and Grant of Easement dated September 25, 1968, from State of
Alaska, Department of Highways, recorded October 11, 1968, in Misc. Book
166, pg. 318. (within Blocks 3, 4, and 5 of Lake Ridge Terrace Subdivision,
Sections 25 and 36; and Lots 137, 138, 139, 145, 146, and 147, Section 25,
T 15N, R 2W)
8. Contract and Grant of Easement dated September 25, 1968, from State of
Alaska, Department of Highways, recorded October 11, 1968, in Misc. Book
166, pg. 324. (within N1/2 Section 17, T 15N, R 2W)
9. Contract and Grant of Easement dated October 7, 1953, from Russell H.
Oberg, et ux., recorded November 23, 1953, in vol. 99, pg. 71. (within
SW1/4SE1/4 Section 4; and NW1/4NE1/4 Section 9, T 15N, R 1W)
10. Contract and Grant of Easement dated August 24, 1953, from Edward J.
Goettlicher, recorded October 20, 1953, in vol. 98, pg. 57. (within
SW1/4NE1/4 and NW1/4SE1/4 Section 4, T 15N, R 1W)
11. Contract and Grant of Easement dated June 18, 1953, from William E. Ramsey,
et ux., recorded October 20, 1953, in vol. 98, pg. 52. (within government
lot 4 in the NW1/4 Section 3; and within SE1/4NE1/4 and NE1/4SE1/4 Section
4, T 15N, R 1W)
12. Contract and Grant of Easement dated August 9, 1953, from Robert H.
Stewart, et ux., recorded November 12, 1953, in vol. 98, pg. 241. (within
government lot 3 in the NW1/4 Section 3, T 15N, R 1W)
13. Contract and Grant of Easement dated September 24, 1957, from Henry W.
Cuffel, et ux., recorded September 30, 1957, in book E3, pg. 56. (within
U.S. Survey 2491 Section 2, T 16N, R 2E)
<PAGE>
Together with the transmission line and associated facilities.
The right, title and interest in and to all easement rights of the UNITED STATES
hereby granted to the EKLUTNA PURCHASERS vests in the EKLUTNA PURCHASERS as
tenants in common to the full extent of the undivided interests set forth below:
Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
The EKLUTNA PURCHASERS hereby accept the ASSIGNMENT AND TRANSFER OF
EASEMENT.
IN WITNESS THEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
EASEMENT as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy. Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by George J. Vakalis, the Acting Municipal Manager of the Municipality of
Anchorage, doing business as Municipal Light and Power, on behalf of said
municipal corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Eugene N. Bjornstad, the General Manager of Chugach Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Wayne D. Carmony, the General Manager of Matanuska Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF RESERVED EASEMENT
Eklutna Project Transmission Line (Palmer Recording District)
This ASSIGNMENT AND TRANSFER OF EASEMENT is made this 2nd day of October, 1997,
between the UNITED STATES OF AMERICA, as grantor acting by and through the
Department of Energy, Alaska Power Administration, whose address is 2770
Sherwood Lane, Juneau, AK 99801-8545, represented by the officer executing this
document, pursuant to the Reclamation Act of June 17, 1902, 32 Stat. 388, as
amended, the Eklutna Project Act of 1950, 64 Stat. 382, as amended, the Energy
Organization Act of August 4, 1977, 91 Stat. 565, as amended, and the Alaska
Power Administration Asset Sale and Termination Act, 109 Stat. 557, as amended,
herein referred to as UNITED STATES, and the Municipality of Anchorage, doing
business as Municipal Light and Power, the Chugach Electric Association, Inc.,
and the Matanuska Electric Association, Inc., GRANTEES, collectively referred to
herein as EKLUTNA PURCHASERS, whose address is, Eklutna Project, HC 04, Box
7785, Palmer, AK 99645.
WHEREAS, the UNITED STATES has constructed, operated and maintained the
Eklutna Hydroelectric Project ("Eklutna Project") and the Eklutna Project 115-kv
Transmission Line as a part thereof, under the authority of the Eklutna Project
Act of 1950, 64 Stat. 382, as amended, (I) to encourage and promote economic
development; (ii) to foster the establishment of essential industries; and (iii)
to further the self- sufficiency of national defense.
WHEREAS, through the construction and operation of the Eklutna Project
115-kv Transmission Line the UNITED STATES appropriated and reserved rights to
construct, operate, and maintain the transmission line and appurtenant access
routes across and through the lands which were, at the time of construction,
federal lands. The UNITED STATES subsequently conveyed certain of such lands by
patent, subject to valid existing rights. These valid existing rights include
the rights transferred herein.
<PAGE>
WHEREAS, the UNITED STATES' rights to construct, operate and maintain
the Eklutna Project 115-kv transmission line and appurtenant access routes
across the subject lands were reserved and excepted as easements from the patent
conveyances.
WHEREAS, at the inception of the project, Congress intended eventually
to transfer the Eklutna Project to local public control in Alaska, pursuant to
the Eklutna Project Act of 1950, 64 Stat. 382, as amended.
WHEREAS, after transfer to the Eklutna Purchasers, the Eklutna Project
will continue to serve the public purposes for which the UNITED STATES
constructed the project.
WHEREAS, pursuant to the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, the UNITED STATES, acting by and through the
Secretary of Energy, is authorized and directed to transfer its facilities and
easement rights to the EKLUTNA PURCHASERS.
NOW THEREFORE,the UNITED STATES, for mutual benefits and other good and
valuable consideration, hereby assigns, transfers, and sets over without
reservation to the EKLUTNA PURCHASERS, their successors and assigns, as tenants
in common according to their fractional interests as more particularly set forth
herein, all right, title, and interest in and to all easement rights of the
Alaska Power Administration which easement reserved to the UNITED STATES, to
construct, operate, and maintain an electric transmission line, and associated
facilities within a 75 foot wide right-of-way, including the rights necessary to
operate and maintain guy wires and anchors that extend beyond 37.5 feet from the
transmission line centerline, together with associated access routes, across the
following described lands:
Township 16 North, Range 2 East, Seward Meridian, Alaska
Section 2: Lots 3 and 4.
(patent 1198534)
<PAGE>
Township 17 North, Range 2 East, Seward Meridian, Alaska Section 16: That
portion of the S1/2 within the Matanuska River. Section 21: That portion of the
N1/2 within the Matanuska River.
Together with the transmission line and associated facilities. The right, title,
and interest in and to all easement rights of the UNITED STATES hereby granted
to the EKLUTNA PURCHASERS vests in the EKLUTNA PURCHASERS as tenants in common
to the full extent of the undivided interests set forth below:
Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
The EKLUTNA PURCHASERS hereby accept the ASSIGNMENT AND TRANSFER OF
EASEMENT RIGHTS.
IN WITNESS THEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
EASEMENT as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
<PAGE>
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy. Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by George J. Vakalis, the Acting Municipal Manager of the Municipality of
Anchorage, doing business as Municipal Light and Power, on behalf of said
municipal corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Eugene N. Bjornstad, the General Manager of Chugach Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Wayne D. Carmony, the General Manager of Matanuska Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF RESERVED EASEMENT
Eklutna Project Transmission Line (Anchorage Recording District)
This ASSIGNMENT AND TRANSFER OF EASEMENT is made this 2nd day of October, 1997,
between the UNITED STATES OF AMERICA, as grantor acting by and through the
Department of Energy, Alaska Power Administration, whose address is 2770
Sherwood Lane, Juneau, AK 99801-8545, represented by the officer executing this
document, pursuant to the Reclamation Act of June 17, 1902, 32 Stat. 388, as
amended, the Eklutna Project Act of 1950, 64 Stat. 382, as amended, the Energy
Organization Act of August 4, 1977, 91 Stat. 565, as amended, and the Alaska
Power Administration Asset Sale and Termination Act, 109 Stat. 557, as amended,
herein referred to as UNITED STATES, and the Municipality of Anchorage, doing
business as Municipal Light and Power, the Chugach Electric Association, Inc.,
and the Matanuska Electric Association, Inc., GRANTEES, collectively referred to
herein as EKLUTNA PURCHASERS, whose address is, Eklutna Project, HC 04, Box
7785, Palmer, AK 99645.
WHEREAS, the UNITED STATES has constructed, operated and maintained the
Eklutna Hydroelectric Project ("Eklutna Project") and the Eklutna Project 115-kv
Transmission Line as a part thereof, under the authority of the Eklutna Project
Act of 1950, 64 Stat. 382, as amended, (I) to encourage and promote economic
development; (ii) to foster the establishment of essential industries; and (iii)
to further the self- sufficiency of national defense.
WHEREAS, through the construction and operation of the Eklutna Project
115-kv Transmission Line the UNITED STATES appropriated and reserved rights to
construct, operate, and maintain the transmission line and appurtenant access
roads across and through the lands which were, at the time of construction,
federal lands. The UNITED STATES subsequently conveyed certain of such lands by
patent, subject to valid existing rights. These valid existing rights include
the rights transferred herein.
<PAGE>
WHEREAS, the UNITED STATES' rights to construct, operate and maintain
the Eklutna Project 115-kv transmission line and appurtenant access routes
across the subject lands were reserved and excepted as easements from the patent
conveyances.
WHEREAS, at the inception of the project, Congress intended eventually
to transfer the Eklutna Project to local public control in Alaska, pursuant to
the Eklutna Project Act of 1950, 64 Stat. 382, as amended.
WHEREAS, after transfer to the Eklutna Purchasers, the Eklutna Project
will continue to serve the public purposes for which the UNITED STATES
constructed the project.
WHEREAS, pursuant to the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, the UNITED STATES, acting by and through the
Secretary of Energy, is authorized and directed to transfer its facilities and
easement rights to the EKLUTNA PURCHASERS.
NOW THEREFORE, the UNITED STATES, for mutual benefits and other good
and valuable consideration, hereby assigns, transfers, and sets over without
reservation to the EKLUTNA PURCHASERS, their successors and assigns, as tenants
in common according to their fractional interests as more particularly set forth
herein, all right, title, and interest in and to all easement rights of the
Alaska Power Administration which easement reserved to the UNITED STATES, to
construct, operate, and maintain an electric transmission line, and associated
facilities within a 75 foot wide right-of-way between the Eklutna Power Plant
and the Anchorage Substation, and a 100 foot right-of-way between the Eklutna
Power Plant and the Knik River, including the rights necessary to operate and
maintain guy wires and anchors that extend beyond 37.5 feet from the
<PAGE>
transmission line centerline, together with associated access routes, across the
following described lands:
75 Foot Right-of -Way
Township 15 North, Range 2 West, Seward Meridian, Alaska
Section 25: Lots 118, 119, 120, 132, 133, 136, 137, 138, 147 and 148. (patents
50-65-0218, 1227812, 1227522, 1226892, 1234769, & 1223808)
Township 15 North, Range 1 West, Seward Meridian, Alaska
Section 30: Lots 44 and 54; E1/2W1/2NW1/4, E1/2NW1/4;
(patent 50-79-0015)
Section 19: S1/2NE1/4, SW1/4SE1/4, N1/2SE1/4;
(patent 50-79-0015)
Section 20: Lot 4; NW1/4NW1/4, W1/2SW1/4NW1/4;
(patent 50-79-0015)
Section 17: N1/2, SW1/4NW1/4SE1/4, N1/2NW1/4SE1/4, N1/2SW1/4SE1/4, N1/4SW1/4;
(patent 50-79-0015)
Township 15 North, Range 1 West, Seward Meridian, Alaska
Section 8: Lot 185 and 216;
(patents 50-79-0015, and 1227503)
Section 9: S1/4SW1/4SW1/4; Lot 38, 39, 53, 54, 60, 72, 73, 85, 86, 95, 106, 107,
113, 114, 123, 124, 128, 129, 140, 142 and 143. (patents 50-79-0015, 1167063,
1228996, 1230948, 1220415, 1222725, 1220905, 1167119, 1206697, 1223819, 1226356,
1226423, 1220899, 1223815, 1227011, and 1219272)
Township 16 North, Range 1 West, Seward Meridian, Alaska
Section 35: N1/2N1/2, S1/2NW1/4;
(patent 50-64-0101)
Section 25: N1/2SE1/4, NE1/4.
(patent 50-74-0164)
Township 16 North, Range 1 East, Seward Meridian, Alaska
Section 30: Lot 2; E1/2W1/2..
(patent 50-74-0164)
Township 16 North, Range 2 East, Seward Meridian, Alaska
Section 2: that portion of the E1/2E1/2 within the Knik River.
<PAGE>
100 Foot Right-of-Way
Township 16 North, Range 2 East, Seward Meridian, Alaska
Section 17: E1/2, excluding patented U.S. Survey 3234 and A-016300; (MHA 059775)
Section 16: All, excluding A-016300, patented U.S. Surveys 3240, 3239, and 3561;
(MHA 059775)
Section 9: All, excluding PLO 1394, patented U.S. Surveys 3234, 3242, 3164,
3235, 2866, 3236, 3160, 3076, 2942, 3070, 3077, 3240, 3239, and 3561, Lots 3, 4,
and 5 and patented Lots 1 and 2 of U.S. Survey 3568, and A-016300; (MHA 059775)
Section 10: All, excluding patented U.S. Surveys 3236, 3238, 3237 and 3363, Lots
4 and 5 of U.S. Survey 3568, A046426, A-054847 and A-058948; (MHA 059775)
Section 11: All, excluding patented U.S. Survey 3363, A-057850 and A-054213;
(MHA 059775)
Section 2: All unsurveyed portion, excluding patented U.S. Survey 2491 and
A054213; (MHA 059775)
Together with the transmission line and associated facilities.
The right, title, and interest in and to all easement rights of the UNITED
STATES hereby granted to the EKLUTNA PURCHASERS vests in the EKLUTNA PURCHASERS
as tenants in common to the full extent of the undivided interests set forth
below:
Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
The EKLUTNA PURCHASERS hereby accept the ASSIGNMENT AND TRANSFER OF
EASEMENT.
<PAGE>
IN WITNESS THEREOF, the UNITED STATES has executed this ASSIGNMENT AND TRANSFER
OF EASEMENT as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
<PAGE>
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy. Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by George J. Vakalis, the Acting Municipal Manager of the Municipality of
Anchorage, doing business as Municipal Light and Power, on behalf of said
municipal corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Eugene N. Bjornstad, the General Manager of Chugach Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Wayne D. Carmony, the General Manager of Matanuska Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
Duplicate original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF EASEMENT USE RIGHTS
Eklutna Project Transmission Line
This ASSIGNMENT AND TRANSFER OF EASEMENT USE RIGHTS is made this 2nd day of
October, 1997, between the UNITED STATES OF AMERICA, as grantor acting by and
through the Department of Energy, Alaska Power Administration, whose address is
2770 Sherwood Lane, Juneau, AK 99801-8545, represented by the officer executing
this document, pursuant to the Reclamation Act of June 17, 1902, 32 Stat. 388,
as amended, the Eklutna Project Act of 1950, 64 Stat. 382, as amended, the
Energy Organization Act of August 4, 1977, 91 Stat. 565, as amended, and the
Alaska Power Administration Asset Sale and Termination Act, 109 Stat. 557, as
amended, herein referred to as UNITED STATES, and the Municipality of Anchorage,
doing business as Municipal Light and Power, the Chugach Electric Association,
Inc., and the Matanuska Electric Association, Inc., GRANTEES, collectively
referred to herein as EKLUTNA PURCHASERS, whose address is, Eklutna Project, HC
04, Box 7785, Palmer, AK 99645.
WHEREAS, the UNITED STATES has constructed, operated and maintained the
Eklutna Hydroelectric Project ("Eklutna Project") and the Eklutna Project 115-kv
Transmission Line as a part thereof, under the authority of the Eklutna Project
Act of 1950, 64 Stat. 382, as amended, (I) to encourage and promote economic
development; (ii) to foster the establishment of essential industries; and (iii)
to further the self- sufficiency of national defense.
WHEREAS, through the construction and operation of the Eklutna Project
115-kv Transmission Line the UNITED STATES appropriated and reserved the rights
to construct, operate, and maintain the transmission line and appurtenant access
routes across and through the lands which were, at the time of construction,
federal lands. The UNITED STATES subsequently conveyed certain of such lands to
Eklutna, Inc. pursuant to the Alaska Native Claims Settlement Act of December
18, 1971 as amended,
<PAGE>
43 U.S.C. ss. 1601 et seq. ("ANCSA"), subject to valid existing rights. These
valid existing rights include the rights transferred herein.
WHEREAS, the UNITED STATES' rights to construct, operate and maintain
the Eklutna Project 115-kv transmission line and appurtenant access routes
across the subject lands were reserved and excepted as easements from the
conveyance to Eklutna, Inc., pursuant to Section 17(b) of ANCSA, 43 U.S.C. ss.
1616(b).
WHEREAS, at the inception of the Eklutna Project, Congress intended
eventually to transfer the Eklutna Project to local public control in Alaska,
pursuant to the Eklutna Project Act of 1950, 64 Stat. 382, as amended.
WHEREAS, after transfer to the Eklutna Purchasers, the Eklutna Project
will continue to serve the public purposes for which the UNITED STATES
constructed the project.
WHEREAS, pursuant to the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, the UNITED STATES, acting by and through the
Secretary of Energy, is authorized and directed to transfer its facilities and
its use rights to the Section 17(b) easements to the EKLUTNA PURCHASERS, such
easements to continue to be administered by the Department of Interior, Bureau
of Land Management in accordance with their terms.
NOW THEREFORE, the UNITED STATES, for mutual benefits and other good
and valuable consideration, hereby assigns, transfers, and sets over without
reservation to the EKLUTNA PURCHASERS, their successors and assigns, as tenants
in common according to their fractional interests as more particularly set forth
herein, all right, title, and interest in and to all easement use rights of the
Alaska Power Administration which use reserved to the UNITED STATES, pursuant to
Section 17(b) of ANCSA, to construct, operate, and maintain an electric
transmission line, and associated facilities within a 75 foot wide right-of-way,
including the rights necessary to operate and maintain guy wires and anchors
that
<PAGE>
extend beyond 37.5 feet from the transmission line centerline, together with
associated access routes, across the following described lands:
Township 14 North, Range 2 West, Seward Meridian, Alaska
Section 2: Lot 2.
(BLM EIN 56 C4, Patent No. 50-79-0657)
Township 15 North, Range 2 West, Seward Meridian, Alaska Tract 40 (within
Sections 35 and 36).
(BLM EIN 56 C4, Patent No. 50-93-0601)
(Township) 15 North. Range 1 West, Seward Meridian, Alaska
Section 19: E1/2SW1/4.
(BLM EIN 56 C4, Patent No. 50-93-0601)
Township 16 North, Range 1 West, Seward Meridian, Alaska
Section 34: SE1/4, SW1/4, NE1/4;
(BLM EIN 56 C4, Patent No. 50-93-0601)
Section 26: Lot 11, S1/2SE1/4;
(BLM EIN 56 C4, Patent No. 50-93-0601)
Section 25: SW1/4.
(BLM EIN 56 C4, Patent No. 50-93-0601)
Township 16 North, Range 1 East, Seward Meridian, Alas-ka
Section 30: N1/2NE1/4;
(BLM EIN 56 C4 and EIN 66 C8, Patent No. 50-86-0356)
Section 19: W1/2SW1/4SE1/4, SE1/4W1/4SE1/4, SW1/4SE1/4SE1/4, E1/2SE1/4SE1/4,
SE1/4NE1/4SE1/4; (BLM EIN 56 C4, EIN 56a C4, EIN 56b C4, EIN 66 C8 and EIN 67
C8, Patent No. 50-86-0356)
Section 19: SW1/4NE1/4SE1/4, SE1/4NW1/4SE1/4, NE1/4SW1/4SE1/4, NW1/4SE1/4SE1/4;
(BLM EIN 56 C4, EIN 56a C4, EIN 56b C4, EIN 66 C8 and EIN 67 C8, Interim
Conveyance No. 1211)
Section 20: S1/2;
(BLM EIN 56 C4 and EIN 66 C8, Patent No. 50-93-0563)
Section 20: S1/2NE1/4;
(BLM EIN 56 C4 and EIN 66 C8, Interim Conveyance No. 1512)
Section 21: S1/2E1/4;
(BLM EIN 56 C4 and EIN 66 C8, Patent No. 50-93-0563)
Section 21: NW1/4, N1/2NE1/4;
(BLM EIN 56 C4 and EIN 66 C8, Interim Conveyance No. 1512)
<PAGE>
Section 22: NE1/4, NE1/4NW1/4;
(BLM EIN 56 C4 and EIN 66 CB, Patent No. 50-93-0563)
Section 22: NW1/4NW1/4;
(BLM EIN 56 C4 and EIN 66 CB, Interim Conveyance No. 1512)
Section 23: N1/2
(BLM EIN 56 C4 and EIN 66 CB, Patent No. 50-93-0563)
Section 24: N1/2;
(BLM EIN 56 C4 and EIN 66 CB, Patent No. 50-93-0563)
Section 13: S1/2S1/2.
(BLM EIN 56 C4 and EIN 66 CB, Patent No. 50-93-0601)
Township 16 North, Range 2 East, Seward Meridian, Alaska
Section 18: Lot 16;
(BLM EIN 56 C4 and EIN 66 CB, Patent No. 50-93-0601)
Section 17: NW1/4, E1/2NW1/4SW1/4, E1/2SW1/4.
(BLM EIN 64 C4, Patent No. 50-86-0636)
Together with the transmission line and associated facilities.
The right, title, and interest in and to all easement use rights of the Alaska
Power Administration, which use was reserved to the UNITED STATES pursuant to
Section 17(b) of ANCSA, is hereby granted to the EKLUTNA PURCHASERS and vests in
the EKLUTNA PURCHASERS as tenants in common to the full extent of the undivided
interests set forth below:
Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
<PAGE>
The EKLUTNA PURCHASERS hereby accept the ASSIGNMENT AND TRANSFER OF EASEMENT USE
RIGHTS.
IN WITNESS WHEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
EASEMENT USE RIGHTS as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
<PAGE>
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy. Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by George J. Vakalis, the Acting Municipal Manager of the Municipality of
Anchorage, doing business as Municipal Light and Power, on behalf of said
municipal corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Eugene N. Bjornstad, the General Manager of Chugach Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Wayne D. Carmony, the General Manager of Matanuska Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF EASEMENT USE RIGHTS Eklutna Lake to Eklutna Power
Plant Aqueduct
This ASSIGNMENT AND TRANSFER OF EASEMENT USE RIGHTS is made this 2nd day of
October, 1997, between the UNITED STATES OF AMERICA, as grantor acting by and
through the Department of Energy, Alaska Power Administration, whose address is
2770 Sherwood Lane, Juneau, AK 99801-8545, represented by the officer executing
this document, pursuant to the Reclamation Act of June 17, 1902, 32 Stat. 388,
as amended, the Eklutna Project Act of 1950, 64 Stat. 382, as amended, the
Energy Organization Act of August 4, 1977, 91 Stat. 565, as amended, and the
Alaska Power Administration Asset Sale and Termination Act, 109 Stat. 557, as
amended, herein referred to as UNITED STATES, and the Municipality of Anchorage,
doing business as Municipal Light and Power, the Chugach Electric Association,
Inc., and the Matanuska Electric Association, Inc., GRANTEES, collectively
referred to herein as EKLUTNA PURCHASERS, whose address is, Eklutna Project, HC
04, Box 7785, Palmer, AK 99645.
WHEREAS, the UNITED STATES has constructed, operated and maintained the
Eklutna Hydroelectric Project ("Eklutna Project") and the Eklutna Lake to
Eklutna Power Plant Aqueduct as a part thereof, under the authority of the
Eklutna Project Act of 1950, 64 Stat. 382, as amended, (I) to encourage and
promote economic development; (ii) to foster the establishment of essential
industries; and (iii) to further the self- sufficiency of national defense.
WHEREAS, through the construction and operation of the Eklutna Lake to
Eklutna Power Plant Aqueduct the UNITED STATES appropriated and reserved the
rights to construct, operate, and maintain the tunnel aqueduct and appurtenant
access routes across and through lands which were, at the time of construction,
withdrawn from entry or disposition under the public land laws. The UNITED
STATES subsequently conveyed certain of such lands to Eklutna, Inc. pursuant to
the Alaska Native Claims Settlement Act of December 18, 1971 as amended, 43
U.S.C. ss. 1601
<PAGE>
et seq. ("ANCSA"), subject to valid existing rights. These valid existing rights
include the rights transferred herein.
WHEREAS, the UNITED STATES' rights to construct, operate and maintain
the tunnel aqueduct and appurtenant access routes across the subject lands were
reserved and excepted as easements from the conveyance to Eklutna, Inc., as 100
foot wide easements pursuant to Section 17(b) of ANCSA, 43 U.S.C. ss. 1616(b).
WHEREAS, at the inception of the Eklutna Project, Congress intended
eventually to transfer the Eklutna Project to local public control in Alaska,
pursuant to the Eklutna Project Act of 1950, 64 Stat. 382, as amended.
WHEREAS, after transfer to the Eklutna Purchasers, the Eklutna Project
will continue to serve the public purposes for which the UNITED STATES
constructed the project.
WHEREAS, pursuant to the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, the UNITED STATES, acting by and through the
Secretary of Energy, is authorized and directed to transfer its facilities and
its use rights to the Section 17(b) easements to the EKLUTNA PURCHASERS, such
easements to continue to be administered by the Department of Interior, Bureau
of Land Management in accordance with their terms.
NOW THEREFORE, the UNITED STATES, for mutual benefits and other good
and valuable consideration, hereby assigns, transfers, and sets over without
reservation to the EKLUTNA PURCHASERS, their successors and assigns, as tenants
in common according to their fractional interests as more particularly set forth
herein, all right, title, and interest in and to all easement use rights of the
Alaska Power Administration which use reserved to the UNITED STATES, pursuant to
Section 17(b) of ANCSA, to construct, operate, and maintain an aqueduct tunnel
and associated
<PAGE>
facilities within a 100 foot wide right-of-way, together with associated access
routes, across the following described lands:
Township 6 North, Range 2 East, Seward Meridian, Alaska
Section 20: W1/2.
(BLM EIN 65 C4, patent No. 50-86-0636)
Township 15 North, Range 2 East, Seward Meridian, Alaska
Section 5: Lot 2; S1/2N1/2, S1/2.
(BLM EIN 65 C4, patent No. 50-86-0636)
Section 8: Lot 12; NW1/4NW1/4.
(BLM EIN 65 C4, patent No. 50-86-0636)
Together with the aqueduct tunnel and associated facilities.
The right, title, and interest in and to all easement use rights of the Alaska
Power Administration, which use was reserved to the UNITED STATES pursuant to
Section 17(b) of ANCSA, is hereby granted to the EKLUTNA PURCHASERS and vests in
the EKLUTNA PURCHASERS as tenants in common to the full extent of the undivided
interests set forth below: Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
The EKLUTNA PURCHASERS hereby accept the ASSIGNMENT AND TRANSFER OF EASEMENT USE
RIGHTS.
<PAGE>
IN WITNESS THEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
EASEMENT USE RIGHTS as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy. Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by George J. Vakalis, the Acting Municipal Manager of the Municipality of
Anchorage, doing business as Municipal Light and Power, on behalf of said
municipal corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Eugene N. Bjornstad, the General Manager of Chugach Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Wayne D. Carmony, the General Manager of Matanuska Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER
OF FLOWAGE, FLOODING, AND RESERVOIR EASEMENT
EKLUTNA HYDROELECTRIC PROJECT
EKLUTNA LAKE, ALASKA
This ASSIGNMENT AND TRANSFER OF FLOWAGE, FLOODING AND RESERVOIR EASEMENT is made
this 2nd day of October, 1997, between the UNITED STATES OF AMERICA, as grantor
acting by and through the Department of Energy, Alaska Power Administration,
whose address is 2770 Sherwood Lane, Juneau, AK 99801-8545, represented by the
officer executing this document, pursuant to the Reclamation Act of June 17,
1902, 32 Stat. 388, as amended, the Eklutna Project Act of 1950, 64 Stat. 382,
as amended, the Energy Organization Act of August 4, 1977, 911 Stat. 565, as
amended, and the Alaska Power Administration Asset Sale and Termination Act, 109
Stat. 557, as amended, herein referred to as UNITED STATES, and the Municipality
of Anchorage, doing business as Municipal Light and Power, the Chugach Electric
Association, Inc., and the Matanuska Electric Association, Inc., GRANTEES,
collectively referred to herein as EKLUTNA PURCHASERS, whose address is, Eklutna
Project, HC 04, Box 7785, Palmer, AK 99645.
WHEREAS, the UNITED STATES has constructed, operated and maintained the
Eklutna Hydroelectric Project ("Eklutna Project") and the Eklutna Project 115-kv
Transmission Line as a part thereof, under the authority of the Eklutna Project
Act of 1950, 64 Stat. 382, as amended, (I) to encourage and promote economic
development; (ii) to foster the establishment of essential industries; and (iii)
to further the self- sufficiency of national defense.
WHEREAS, the UNITED STATES reserved public lands and waters sufficient
to support the Eklutna Project, specifically the Eklutna Project Act of 1950, 64
Stat. 382, as amended, Public Land Order (PLO) 4022 dated May 20, 1966 (for
lands and waters in and adjacent to Eklutna Lake) and Section 24 of the Federal
Power Act (FPA) of June 10, 1928, 41
<PAGE>
Stat. 1075, providing for the rights to operate and maintain a flowage, flooding
and reservoir easement. Portions of the lands upland of the Eklutna Lake mean
high water mark have subsequently been conveyed by the UNITED STATES to Eklutna,
Inc., pursuant to the Alaska Native Claims Settlement Act of December 18, 1971,
as amended, 43 U.S.C. ss. 1601 et seq., subject to valid existing rights. The
UNITED STATES has prior existing valid rights to the existing flowage, flooding
and reservoir easement to ensure the safe operation of the Eklutna Project as
provided in the Eklutna Project Act of 1950, 64 Stat. 382, as amended, PLO 4022
and Section 24 of the FPA.
WHEREAS, at the inception of the Eklutna Project, Congress intended
eventually to transfer the Eklutna Project to local public control in Alaska,
pursuant to the Eklutna Project Act of 1950, 64 Stat. 382, as amended.
WHEREAS, after transfer to the Eklutna Purchasers, the Eklutna Project
will continue to serve the public purposes for which the UNITED STATES
constructed the project.
WHEREAS, pursuant to the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, the UNITED STATES, acting by and through the
Secretary of Energy, is authorized and directed to transfer its facilities and
its real property interests to the EKLUTNA PURCHASERS.
NOW THEREFORE, the UNITED STATES, for mutual benefits and other good and
valuable considerations, hereby assigns, transfers, and sets over without
reservation to the EKLUTNA PURCHASERS, their successors and assigns, as tenants
in common according to their fractional interests as more particularly set forth
herein, all right, title, and interest of the UNITED STATES in an existing
flowage, flooding and reservoir easement. The flowage and flooding easement is
within the following described lands:
T. 15 N., R. 2 E., Seward Meridian, Alaska
Section 8: Portion of Lots 1, 2, 4, 5, 6, 7, 8, 9, 10, 11, and 13. (Patent
50-86-0636; and PLO 589 and 4022)
<PAGE>
Section 9: Portion of Lots 1 through 6, inclusive. (Patent 50-86-0636; Interim
Conveyance 1573)
Section 10: Portion of Lots 1, and 2; (Interim Conveyance 1573)
Section 14: Portion of Lots 1, and 2; (Interim Conveyance 1573)
Section 15: Portion of Lots 1, 2, and 3; (Interim Conveyance 1573)
Section 16: Portion of Lots 1, and 2; (Interim Conveyance 1573)
Section 22: Portion of Lots 1, and 2; (Interim Conveyance 1573)
Section 23: Portion of Lots 1, 2, and 3; (Interim Conveyance 1573)
Section 24: Portion of Lots 1, and 2; (Interim Conveyance 1573)
Section 25: Portion of Lots 1, 2, 3, and 4; (Interim Conveyance 1573)
Section 26: Portion of Lots 1, 2, and 3; (Interim Conveyance 1573)
Section 36: Portion of Lots 1, 2, 3, and 4; (Interim Conveyance 1573)
T. 15 N., R. 3 E., Seward Meridian, Alaska
Section 30: Portion of Lots 1, and 2; (Patent 50-93-0565)
Section 31: Portion of Lots 1, and 2; (Patent 50-93-0565)
T. 14 N., R. 2 E., Seward Meridian. Alaska
Section 1: Portion of N1/2N1/2NE1/4; (Patent 50-93-0565)
Comprising 391.60 acres, more or less.
The reservoir easement is comprised of and underlies that body of water known as
Eklutna Lake.
The right, title, and interest of the UNITED STATES hereby granted to the
EKLUTNA PURCHASERS vests in the EKLUTNA PURCHASERS as tenants in common to the
full extent of the undivided interests set forth below: Municipality of
Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
The EKLUTNA PURCHASERS hereby accept the ASSIGNMENT AND TRANSFER OF FLOWAGE,
FLOODING AND RESERVOIR EASEMENT.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
FLOWAGE, FLOODING AND RESERVOIR EASEMENT as of the day and year first written
above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy. Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by George J. Vakalis, the Acting Municipal Manager of the Municipality of
Anchorage, doing business as Municipal Light and Power, on behalf of said
municipal corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Eugene N. Bjornstad, the General Manager of Chugach Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Wayne D. Carmony, the General Manager of Matanuska Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
Duplicate Original
UNITED STATES OF
AMERICA DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF POWER PROJECT FACILITIES
Eklutna Project
This ASSIGNMENT AND TRANSFER OF POWER PROJECT FACILITIES is made this 2nd day of
October, 1997, between the UNITED STATES OF AMERICA, as grantor acting by and
through the Department of Energy, Alaska Power Administration, whose address is
2770 Sherwood Lane, Juneau, AK 99801- 8545, represented by the officer executing
this document, pursuant to the Reclamation Act of June 17, 1902, 32 Stat. 388,
as amended, the Eklutna Project Act of 1950, 64 Stat. 382, as amended, the
Energy Organization Act of August 4, 1977, 91 Stat. 565, as amended, and the
Alaska Power Administration Asset Sale and Termination Act, 109 Stat. 557, as
amended, herein referred to as UNITED STATES, and the Municipality of Anchorage,
doing business as Municipal Light and Power, the Chugach Electric Association,
Inc., and the Matanuska Electric Association, Inc., GRANTEES, collectively
referred to herein as EKLUTNA PURCHASERS, whose address is, Eklutna Project, HC
04, Box 7785, Palmer, AK 99645.
WHEREAS, the UNITED STATES has constructed, operated and maintained the
Eklutna Hydroelectric Project ("Eklutna Project") and the Eklutna Project 115-kv
Transmission Line as a part thereof, under the authority of the Eklutna Project
Act of 1950, 64 Stat. 382, as amended, (I) to encourage and promote economic
development; (ii) to foster the establishment of essential industries; and (iii)
to further the self- sufficiency of national defense.
WHEREAS, on September 15, 1997, the Bureau of Land Management issued
Right-of-Way Grant, Serial Number AA-70133, to the UNITED STATES to construct,
operate, maintain and terminate a right-of-way for the Eklutna Hydroelectric
Power Project, including: Eklutna Dam and spillway, Eklutna Lake intake; power
facilities above and underground between Eklutna Lake and the Old Glenn Highway:
power tunnel, gate valve, adit, and surge tank; facilities located near the Old
Glenn Highway;
<PAGE>
administrative, maintenance, and support facilities, power house, tailrace,
storage yard, warehouse, garage, and parking area; overhead 115KV electric power
transmission lines to Anchorage and Palmer, including guy wires, anchors, tap
switches, and other power facilities associated with the transmission lines; and
related access roads across lands under the administration of the Bureau of Land
Management.
WHEREAS, it is the intent of the UNITED STATES to assign and transfer
all power facilities and equipment across the lands described in Right-of-Way
Grant, Serial Number AA-70133 to the EKLUTNA PURCHASERS.
NOW THEREFORE, the UNITED STATES, for mutual benefits and other good
and valuable consideration, hereby assigns, transfers, and sets over without
reservation to the EKLUTNA PURCHASERS, their successors and assigns, as tenants
in common according to their fractional interests as more particularly set forth
herein,. all right, title, and interest in the power facilities and equipment
across the lands described in Right-of-Way Grant, Serial Number AA-70133. Said
lands are also described in Exhibit A, attached hereto and made a part hereof.
The right, title, and interest in and to power facilities and equipment of the
Alaska Power Administration is hereby granted to the EKLUTNA PURCHASERS and
vests in the EKLUTNA PURCHASERS as tenants in common to the full extent of the
undivided interests set forth below:
Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
<PAGE>
The EKLUTNA PURCHASERS hereby accept the ASSIGNMENT AND TRANSFER OF POWER
PROJECT FACILITIES.
IN WITNESS WHEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
POWER PROJECT FACILITIES as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
<PAGE>
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy. Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by George J. Vakalis, the Acting Municipal Manager of the Municipality of
Anchorage, doing business as Municipal Light and Power, on behalf of said
municipal corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Eugene N. Bjornstad, the General Manager of Chugach Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
CORPORATE ACKNOWLEDGMENT
State of Alaska )
) ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Wayne D. Carmony, the General Manager of Matanuska Electric
Association, Inc., on behalf of said corporation.
/s/ Lee Anne Mackay
Notary Public
(SEAL) My Commission expires: 5/25/2000
<PAGE>
EXHIBIT A
Legal Description for Right-of-Way AA-70133
The Eklutna transmission lines and access road are shown on the as-built survey
of the Eklutna Transmission Line, Alaska Power Administration Drawing No.
783-908-449, certified by Mark E. Davis on November 14, 1996. This survey is
referred to below as "the as-built survey". Distances and acreage shown below
are approximate and are based on estimated distances within each section on the
as-built survey. The centerline of the right-of-way follows the transmission
line. It is 75 feet wide except for guy wires and anchors at transmission line
angle points that extend beyond 37.5 feet from the centerline and 30 foot wide
access roads that extend beyond 37.5 feet from the centerline. The power plant
and dam sites are not linear.
Seward Meridian, Alaska
T. 15 N., R. 2 E.. (surveyed)
Sec. 7, E1/2SE1/4NE1/4, E1/2NE1/4SE1/4 (40 acres);
Sec. 8, Lot 1 (31.91 acres);
Lot 2 (32.47 acres);
Lot 4 (39.79 acres);
Lot 5 (14.99 acres);
Lot 7 (10.92 acres);
Lot 8 (39.99 acres);
Lot 13 (19.99 acres);
Containing approximately 230.06 acres.
T. 16 N., R. 2 E.. (surveyed)
Sec. 11, Lot 1. that portion occupied by 1,200 feet of the transmission line
within the NW 1/4NE1/4, NE1/4NW1/4 as shown on sheet 15 of 36 of the as-built
survey (containing approximately 2.80 acres);
Sec. 16, Lot 1, that portion within State Selection Community Grant Application
AA-56321 occupied by 1,750 feet of the transmission line and 1,750 feet of
access road as shown on sheets 14 and 15 of 36 of the as-built survey
(containing approximately 4.20 acres);
Sec. 17, W1/2W1/2SW1/4, E1/2SW1/4SW1/4 (60.0 acres);
Sec. 18, Lot 9 (3.09 acres); Lot 11 (36.47 acres); Lot 18 (19.46 acres);
SE1/4SW1/4, NE1/4SE1/4, S1/2SE1/4 (160.0 acres);
Sec. 19, Lot 3.(7.70 acres); W1/2NW1/4NE1/4NE1/4NE1/4 (1.25 acres);
N1/2NW1/4NE1/4NE1/4(5.0 acres); N1/2S1/2NW1/4NE1/4NE1/4 (2.5 acres);
1
<PAGE>
E1/2NE1/4NE1/4NW1/4NE1/4 (1.25 acres); N1/2NW1/4NW1/4NE1/4 (5.0 acres);
Sec. 29. E1/2NW1/4 (80.0 acres); E1/2E1/2SW1/4. (40.0 acres); E1/2W1/2E1/2SW1/4
(20.0 acres); W1/2W1/2W1/2SE1/4(20.0 acres);
Sec. 32, W1/2,W1/2NE1/4 (40.0 acres); E1/2E1/2NW1/4 (40.0 acres); W1/2SE1/4(80.0
acres).
Containing approximately 628.72 acres.
T. 13 N., R. 2 W., (partially surveyed)
Sec. 4, NW1/4NW1/4NW1/4, those portions occupied by 350 feet of transmission
line and 100 feet of access road as shown on sheet 5 of 36 of the as-built
survey (containing approximately 0.67 acre);
Sec. 5, those portions occupied by 6,850 feet of transmission line and 6,100
feet of access road as shown on sheet 5 of 36 of the as-built survey (containing
approximately 15.99 acres);
Sec. 7, those portions occupied by 6,300 feet of transmission line and 500 feet
of access road as shown on sheets 4 and 5 of 36 of the as-built survey
(containing approximately 11.22 acres);
Sec. 8, NW1/4NW1/4NW1/4, those portions occupied by 850 feet of transmission
line and 200 feet of access road as shown on sheet 5 of 36 of the as-built
survey (containing approximately 1.60 acres);
Sec. 18, those portions occupied by 5,300 feet of transmission line and 750 feet
of access road as shown on sheet 4 of 36 of the as-built survey (containing
approximately 9.65 acres);
Sec. 19 (unsurveyed section), those portions occupied by 5,700 feet of
transmission line and 1,500 feet of access road as shown on sheet 4 of 36 of the
as-built survey (containing approximately 10.59 acres);
Sec. 30 (unsurveyed section), N1/2N1/2N1/2NW1/4, those portions occupied by 300
feet of transmission line as shown on sheet 4 of 36 of the as-built survey, the
width is 37.5 feet as the transmission line runs along the section line
(containing approximately 0.26 acres).
The area described contains approximately 49.98 acres.
T. 14 N., R. 2 W., (partially surveyed)
Sec. 2, those portions occupied by 4,950 feet of
transmission line and 4,350 feet of access road as shown on sheets 7 and 8 of 36
of the as-built survey (containing approximately 11.52 acres);
2
<PAGE>
Sec. 10, those portions occupied by 3,850 feet of transmission line and 2,375
feet of access road as shown on sheet 7 of 36 of the as-built survey (containing
approximately 8.26 acres);
Sec. 11. those portions occupied by 1,800 feet of transmission line and 100 feet
of access road as shown on sheet 7 of 36 of the as-built survey (containing
approximately 3.17 acres);
Sec. 15, those portions occupied by 5,650 feet of transmission line and 1,100
feet of access road as shown on sheets 6 and 7 of 36 of the as-built survey
(containing approximately 10.49 acres);
Sec. 21, those portions occupied by 2,200 feet of transmission line and 1,000,
feet of access road as shown on sheet 6 of 36 of the as-built survey (containing
approximately 4.48 acres);
Sec. 22,) those portions occupied by 3,550 feet of transmission line and 3,100
feet of access road as shown on sheet 6 of 36 of the as-built survey (containing
approximately 8.24 acres);
Sec. 28, those portions occupied by 5,800 feet of transmission line and 4,150
feet of access roads as shown on sheet 6 of 36 of the as-built survey
(containing approximately 12.85 acres).
Sec. 33, those portions occupied by 6,700 feet of transmission line and 6,200
feet of access road as shown on sheets 5 and 6 of 36 of the as-built survey
(containing approximately 15.81 acres.
The area described contains approximately 74.82 acres.
For all townships the total is approximately 983.58 acres.
3
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF CONTRACT NO. 85-80AP10022.000
This ASSIGNMENT AND TRANSFER OF CONTRACT NO. 85-80AP10022.000 is made this 2nd
day of October, 1997, between the UNITED STATES OF )AMERICA, acting by and
through the Department of Energy, Alaska Power Administration, whose address is
2770 Sherwood Lane, Juneau, AK 99801- 8545, represented by the officer executing
this document, pursuant to the Reclamation Act of June 17,, 1902, 32 Stat. 388,
as amended, the Eklutna Project Act of 1950, 64 Stat. 382, as amended, the
Energy Organization Act of August 4, 1977, 91 Stat. 565, as amended, and the
Alaska Power Administration Asset Sale and Termination Act, 109 Stat. 557, as
amended, herein referred to as UNITED STATES, and the Municipality of Anchorage,
doing business as Municipal Light and Power, the Chugach Electric Association,
Inc., and the Matanuska Electric Association, Inc., collectively referred to
herein as EKLUTNA PURCHASERS, whose address is, Eklutna Project, HC 04, Box
7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, for mutual benefits and other good and
valuable consideration, hereby assigns and transfers to the EKLUTNA PURCHASERS,
their successors or assigns, all right, interest, duty and obligation of the
UNITED STATES, in connection with the CONTRACT NO. 85- 80AP10022.000.
The EKLUTNA PURCHASERS hereby accept all right, interest, duty and obligation
associated with CONTRACT No. 85-80AP10022.000.
<PAGE>
IN WITNESS THEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
CONTRACT NO. 85-80AP10022.000 as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
The undersigned hereby concur in the ASSIGNMENT AND TRANSFER OF CONTRACT NO.
85-AP10022.000:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF RIGHT-OF-WAY LICENSES
This ASSIGNMENT AND TRANSFER OF LICENSES is made this 2nd day of October, 1997,
between the UNITED STATES OF AMERICA, acting by and through the Department of
Energy, Alaska Power Administration, whose address is 2770 Sherwood Lane,
Juneau, AK 99801-8545, represented by the officer executing this document,
pursuant to the Reclamation Act of June 17, 1902, 32 Stat. 388, as amended, the
Eklutna Project Act of 1950, 64 Stat. 382, as amended, the Energy Organization
Act of August 4, 1977, 91 Stat. 565, as amended, and the Alaska Power
Administration Asset Sale and Termination Act, 109 Stat. 557, as amended, herein
referred to as UNITED STATES, and the Municipality of Anchorage, doing business
as Municipal Light and Power, the Chugach Electric Association, Inc., and the
Matanuska Electric Association, Inc., collectively referred to herein as EKLUTNA
PURCHASERS, whose address is, Eklutna Project, HC 04, Box 7785, Palmer, AK
99645.
WITNESSETH, that the UNITED STATES, for mutual benefits and other good and
valuable consideration, hereby assigns and transfers to the EKLUTNA PURCHASERS,
their successors or assigns, all right, interest, duty and obligation of the
UNITED STATES, in connection with the Right-of-Way Licenses listed in Exhibit A,
attached hereto and made a part hereof.
The EKLUTNA PURCHASERS hereby accept all right, interest, duty and obligation
associated with the Right-of-Way Licenses referred to in Exhibit A.
<PAGE>
IN WITNESS THEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
RIGHT-OF-WAY LICENSES as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
EXHIBIT A
LICENSE NUMBER NAME PURPOSE
EK-ROW-95-01 MOA/AWWU Water main crossing APA
Transmission line near
Structure No. 30/1
EK-ROW-95-02 Enstar Gas line within APA ROW
along Northern Lights
Blvd.
EK-ROW-95-03 MOA/ATU Telephone lines within
APA ROW Along Northern
Lights Blvd.
EK-ROW-96-01 City of Palmer Pedestrian walkway,
Palmer Substation
EK-ROW-96-02 MOA/AWWU Eklutna Lake Intake and
water Project
transmission line within
APA ROW
EK-ROW-96-03 MOA/AWWU Sewer Line within APA
ROW along Northern
Lights Blvd.
EK-ROW-96-04 MOA/AWWU Water system within APA
ROW along Northern
Lights Blvd.
EK-ROW-96-06 Prime Cable Telecommunications lines
within APA ROW Northern
Lights Blvd.
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF
"COOPERATIVE LAND MANAGEMENT AGREEMENT BETWEEN THE UNITED STATES OF AMERICA
THROUGH THE ALASKA POWER ADMINISTRATION AND THE BUREAU OF LAND MANAGEMENT AND
THE STATE OF ALASKA THROUGH THE ALASKA DIVISION OF PARKS AND OUTDOOR RECREATION
FOR THE MANAGEMENT OF CERTAIN LANDS IN THE UPPER EKLUTNA VALLEY"
This ASSIGNMENT AND TRANSFER OF "COOPERATIVE LAND MANAGEMENT AGREEMENT BETWEEN
THE UNITED STATES OF AMERICA THROUGH THE ALASKA POWER ADMINISTRATION AND THE
BUREAU OF LAND MANAGEMENT AND THE STATE OF ALASKA THROUGH THE ALASKA DIVISION OF
PARKS AND OUTDOOR RECREATION FOR THE MANAGEMENT OF CERTAIN LANDS IN THE
UPPER EKLUTNA VALLEY" is made this 2nd day of October, 1997, between the UNITED
STATES OF AMERICA, acting by and through the Department of Energy, Alaska Power
Administration, whose address is 2770 Sherwood Lane, Juneau, AK 99801-8545,
represented by the officer executing this document, pursuant to the Reclamation
Act of June 17, 1902, 32 Stat. 388, as amended, the Eklutna Project Act of 1950,
64 Stat. 382, as amended, the Energy Organization Act of August 4, 1977, 91
Stat. 565, as amended, and the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, as amended, herein referred to as UNITED STATES,
and the Municipality of Anchorage, doing business as Municipal Light and Power,
the Chugach Electric Association, Inc., And the Matanuska Electric Association,
Inc., collectively referred to herein as EKLUTNA PURCHASERS, whose address is,
Eklutna Project, HC 04, Box 7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, for mutual benefits and other good and
valuable consideration, hereby assigns and transfers to the EKLUTNA PURCHASERS,
their successors or assigns, all right, interest, duty, and obligation of the
UNITED STATES, Alaska Power Administration, in connection with the "Cooperative
Land Management Agreement Between The United States of America through The
Alaska Power Administration and The Bureau of Land Management and The State of
Alaska through The Alaska Division of Parks and Outdoor Recreation for The
Management of Certain Lands in the Upper Eklutna Valley."
<PAGE>
The EKLUTNA PURCHASERS hereby accept all right, interest, duty and obligation
associated with the "COOPERATIVE LAND MANAGEMENT AGREEMENT BETWEEN THE UNITED
STATES OF AMERICA THROUGH THE ALASKA POWER ADMINISTRATION AND THE BUREAU OF LAND
MANAGEMENT AND THE STATE OF ALASKA THROUGH THE ALASKA DIVISION OF PARKS AND
OUTDOOR RECREATION FOR THE MANAGEMENT OF CERTAIN LANDS IN THE UPPER EKLUTNA
VALLEY".
IN WITNESS THEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
"COOPERATIVE LAND MANAGEMENT AGREEMENT BETWEEN THE UNITED STATES OF AMERICA
THROUGH THE ALASKA POWER ADMINISTRATION AND THE BUREAU OF LAND MANAGEMENT AND
THE STATE OF ALASKA THROUGH THE ALASKA DIVISION OF PARKS AND OUTDOOR RECREATION
FOR THE MANAGEMENT OF CERTAIN LANDS IN THE UPPER EKLUTNA VALLEY" as of the day
and year first written above.
Acceptance: United States of America
Municipality of Anch Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
<PAGE>
The undersigned hereby concur in the ASSIGNMENT AND TRANSFER OF "COOPERATIVE
LAND MANAGEMENT AGREEMENT BETWEEN THE UNITED STATES OF AMERICA THROUGH THE
ALASKA POWER ADMINISTRATION AND THE BUREAU OF LAND MANAGEMENT AND THE STATE OF
ALASKA THROUGH THE ALASKA DIVISION OF PARKS AND OUTDOOR RECREATION FOR THE
MANAGEMENT Or CERTAIN LANDS IN THE UPPER EKLUTNA VALLEY":
The Bureau of Land Management
U.S. Department of Interior
/s/ Nick Douglas
Name:
District Manager
Title:
State of Alaska
Division of Parks and Outdoor Recreation
Alaska Department of Natural Resources
/s/ Jim Statton
Name
Director
Title:
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF
AGREEMENT FOR PUBLIC WATER SUPPLY AND ENERGY GENERATION FROM
EKLUTNA LAKE, ALASKA, AS SUPPLEMENTED
This ASSIGNMENT AND TRANSFER OF AGREEMENT FOR PUBLIC WATER SUPPLY
AND ENERGY GENERATION FROM EKLUTNA LAKE, ALASKA, AS SUPPLEMENTED
is made this 2nd day of October, 1997, between the UNITED STATES OF AMERICA,
acting by and through the Department of Energy, Alaska Power Administration,
whose address is 2770 Sherwood Lane, Juneau, AK 99801-8545, represented by the
officer executing this document, pursuant to the Reclamation Act of June 17,
1902, 32 Stat. 388, as amended, the Eklutna Project Act of 1950, 64 Stat. 382,
as amended, the Energy Organization Act of August 4, 1977, 91 Stat. 565, as
amended, and the Alaska Power Administration Asset Sale and Termination Act, 109
Stat. 557, as amended, herein referred to as UNITED STATES, and the Municipality
of Anchorage, doing business as Municipal Light and Power, the Chugach Electric
Association, Inc., and the Matanuska Electric Association, Inc., collectively
referred to herein as EKLUTNA PURCHASERS, whose address is, Eklutna Project, HC
04, Box 7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, for mutual benefits and other good and
valuable consideration, hereby assigns and transfers to the EKLUTNA PURCHASERS,
their successors or assigns, all right, interest, duty and obligation of the
UNITED STATES, in connection with the AGREEMENT FOR PUBLIC WATER SUPPLY AND
ENERGY GENERATION FROM EKLUTNA LAKE, ALASKA, AS SUPPLEMENTED.
The EKLUTNA PURCHASERS hereby accept all right, interest, duty and obligation
associated with AGREEMENT FOR PUBLIC WATER SUPPLY AND ENERGY GENERATION FROM
EKLUTNA LAKE, ALASKA, AS SUPPLEMENTED.
<PAGE>
IN WITNESS THEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
AGREEMENT FOR PUBLIC WATER SUPPLY AND ENERGY GENERATION FROM EKLUTNA LAKE,
ALASKA, AS SUPPLEMENTED as of the day and year first written above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
The undersigned hereby concur in the ASSIGNMENT AND TRANSFER OF AGREEMENT
FOR PUBLIC WATER SUPPLY AND ENERGY GENERATION FROM EKLUTNA LAKE,
ALASKA, AS SUPPLEMENTED:
MUNICIPALITY OF ANCHORAGE
/s/ George J. Vakalis for
Larry D. Crawford
Municipal Manager
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
Duplicate Original
QUITCLAIM DEED
Federal Reserved Water Right Under the Eklutna Project Act of 1950, 64 Stat.
382, As Amended, Including State of Alaska Water Rights Certificate of
Appropriation (Amended) ADL 44944
This QUITCLAIM DEED is made this 2nd day of October, 1997, between the UNITED
STATES OF AMERICA, acting by and through the Department of Energy, Alaska Power
Administration, whose address is 2770 Sherwood Lane, Juneau, AK 99801-8545,
represented by the officer executing this document, pursuant to the Reclamation
Act of June 17, 1902, 32 Stat. 388, as amended, the Eklutna Project Act of 1950,
64 Stat. 382, as amended, the Energy Organization Act of August 4, 1977, 91
Stat. 565, as amended, and the Alaska Power Administration Asset Sale and
Termination Act, 109 Stat. 557, as amended, herein referred to as the UNITED
STATES, and the Municipality of Anchorage, doing business as Municipal Light and
Power, the Chugach Electric Association, Inc., and the Matanuska Electric
Association, Inc., collectively referred to herein as EKLUTNA PURCHASERS, whose
address is, Eklutna Project, HC 04, Box 7785, Palmer, AK 99645.
WITNESSETH, that the UNITED STATES, for mutual benefits and other good and
valuable consideration, hereby RELEASES and QUITCLAIMS to the EKLUTNA
PURCHASERS, their successors or assigns, as tenants in common according to their
fractional interests as more particularly set forth herein, all right, title,
and interest of the UNITED STATES in and to that certain federal reserved water
right created by the Eklutna Project Act of 1950, 64 Stat. 382, as amended, and
including State of Alaska Water Rights Certificate of Appropriation (Amended)
ADL 44944, recorded May 9, 1995, in the official records of Anchorage Recording
District, Third Judicial District, State of Alaska, in Miscellaneous Book 2784,
pages 690-692.
<PAGE>
The right, title and interest of the UNITED STATES hereby released and
quitclaimed to the EKLUTNA PURCHASERS vests in the EKLUTNA PURCHASERS as tenants
in common to the full extent of the undivided interests set forth below:
Municipality of Anchorage, d/b/a
Municipal Light and Power 16/30
Chugach Electric Association, Inc. 9/30
Matanuska Electric Association, Inc. 5/30
IN WITNESS THEREOF, the UNITED STATES has executed this QUITCLAIM DEED as of the
day and year first written above.
UNITED STATES OF AMERICA
Department of Energy
Alaska Power Administration
/s/ Rodney L. Adelman
Rodney L. Adelman
Administrator
ACKNOWLEDGMENT
STATE OF ALASKA
Third Judicial District
The foregoing instrument was acknowledged before me this 2nd day of October,
1997, by Rodney L. Adelman, Administrator, Alaska Power Administration, United
States Department of Energy. Witness my hand and official seal.
/s/ Lee Anne Mackay
Notary Public
(Seal)
My Commission expires: 5/25/2000
<PAGE>
Duplicate Original
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
ASSIGNMENT AND TRANSFER OF THE
JUNE 3, 1957, PERMIT LETTER; AND REVOCABLE PERMIT OF USE DATED APRIL 9,
1958; REGARDING THE KNIK RIVER BRIDGE
This ASSIGNMENT AND TRANSFER is made this 2nd day of October, 1997, between the
UNITED STATES OF AMERICA, acting by and through the Department of Energy, Alaska
Power Administration, whose address is 2770 Sherwood Lane, Juneau, AK
99801-8545, represented by the officer executing this document, pursuant to the
Reclamation Act of June 17, 1902, 32 Stat. 388, as amended, the Eklutna Project
Act of 1950, 64 Stat.. 382, as amended, the Energy Organization Act of August 4,
1977, 91 Stat. 565, as amended, and the Alaska Power Administration Asset Sale
and Termination Act, 109 Stat. 557, as amended, herein referred to as UNITED
STATES, and the Municipality of Anchorage, doing business as Municipal Light and
Power, the Chugach Electric Association, Inc., and the Matanuska Electric
Association, Inc., collectively referred to herein as EKLUTNA PURCHASERS, whose
address is, Eklutna Project, HC 04, Box 7785, Palmer,.AK 99645.
WITNESSETH, that the UNITED STATES, for mutual benefits and other good and
valuable consideration, hereby assigns and transfers to the EKLUTNA PURCHASERS,
their successors or assigns, all right, interest, duty, obligation and liability
of the UNITED STATES, in connection with the June 3, 1957, permit letter and
April 9, 1958 Revocable Permit of Use.
The EKLUTNA PURCHASERS hereby accept all right, interest, duty, obligation and
liability associated with the June 3, 1957, permit letter and April 9, 1958
Revocable Permit of Use.
<PAGE>
IN WITNESS THEREOF, the parties have executed this ASSIGNMENT AND TRANSFER OF
THE JUNE 3, 1957, PERMIT LETTER; AND REVOCABLE PERMIT OF USE DATED APRIL 9,
1958; REGARDING THE KNIK RIVER BRIDGE as of the day and year first written
above.
Acceptance: United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Acceptance:
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Acceptance:
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
The undersigned hereby concur in the ASSIGNMENT AND TRANSFER OF THE JUNE 3,
1957, PERMIT LETTER; AND REVOCABLE PERMIT OF USE DATED APRIL 9, 1958; REGARDING
THE KNIK RIVER BRIDGE
State of Alaska
Department of Transportation and Public Facilities
/s/ William R Strickler
William R. Strickler
Chief, Traffic Safety and Utilities
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
Duplicate Original
UNITED STATES
DEPARTMENT OF ENERGY
ALASKA POWER ADMINISTRATION
EKLUTNA PROJECT, ALASKA
ASSIGNMENT OF CONTRACT DE-SC85-95AP10042
This Contract ASSIGNMENT is made this 2nd day of October, 1997, between the
UNITED STATES OF AMERICA, acting by and through the Department of Energy, Alaska
Power Administration, whose address is 2770 Sherwood Lane, Juneau, AK
99801-8545, represented by the officer executing this document, pursuant to the
Reclamation Act of June 17, 1902, 32 Stat. 388, as amended, the Eklutna Project
Act of 1950, 64 Stat. 382, as amended, the Energy Organization Act of August 4,
1977, 91 Stat. 565, as amended, and the Alaska Power Administration Asset Sale
and Termination Act, 109 Stat. 557, as amended, herein referred to as UNITED
STATES, and the Municipality of Anchorage, doing business as Municipal Light and
Power, the Chugach Electric Association, Inc., and the Matanuska Electric
Association, Inc., collectively referred to herein as EKLUTNA PURCHASERS, whose
address is, Eklutna Project, HC 04, Box 7785, Palmer, AK 99645.
I. Background
The United States owns, operates and maintains the Eklutna Project including
facilities for the generation and transmission of electric power and energy;
Pursuant to the Alaska Power Administration Asset Sale and Termination Act, 109
Stat. 557, the UNITED STATES intends to transfer all of its interest in the
Eklutna Project to the Eklutna Purchasers;
The United States entered into Contract No. DE-SC85-95AP10042 with the
Municipality of Anchorage, doing business as Municipal Light and Power, the
Chugach Electric Association, Inc., and the Matanuska Electric Association, Inc;
<PAGE>
The United States desires to assign its rights, duties and all interests or
obligations in Contract No. DE-SC85-95AP10042 to the Eklutna Purchasers;
The Eklutna Purchasers are willing to accept the assignment of the United
States' rights, duties and all interests or obligations in Contract No.
DE-SC85-95AP10042;
In consideration of the mutual benifits, the parties agree as follows:
II. Assignment of Contract No. DE-SC85-95AP10042
This Contract Assignment shall become effective on the date of execution.
The United States hereby assigns its rights, duties and all other interests or
obligations in Contract No. DE-SC85-95AP10042 to the Eklutna Purchasers.
The Eklutna Purchasers, hereby accept and assume the United States rights,
duties and all other interest or obligations in Contract No. DE-SC85-95AP10042.
The Eklutna Purchasers agree that they shall be subject to all of the provisions
and condition of Contract No. DE- SC85-95AP10042.
The Municipality of Anchorage, doing business as Municipal Light and Power,
hereby consents to the assignment of the United States' rights, duties and all
other interest or obligations in Contract No. DE-SC85- 95AP10042 to the Eklutna
Purchasers.
The Chugach Electric Association, Inc., hereby consents to the assignment of the
United States' rights, duties and all other interest or obligations in Contract
No. DE-SC85-95AP10042 to the Eklutna Purchasers.
The Matanuska Electric Association, Inc., hereby consents to the assignment of
the United States' rights, duties and all other
<PAGE>
interests or obligations in Contract No. DE-SC85-95AP10042 to the
Eklutna Purchasers.
The Municipality of Anchorage, doing business as Municipal Light and Power,
hereby releases the United States of its duties and all other obligations in
Contract No. DE-SC85-95AP10042.
The Chugach Electric Association, Inc., hereby releases the United States of its
duties and all other obligations in Contract No. DE- SC85-95AP10042.
The Matanuska Electric Association, Inc., hereby releases the United States of
its duties and all other obligations in Contract No. DE- SC85-95AP10042.
III. Agreement
All parties agree that this assignment shall become effective on the date of
execution.
PARTIES TO THE ORIGINAL CONTRACT:
United States of America
Municipality of Anchorage Department of Energy
dba Municipal Light and Power Alaska Power Administration
/s/ George J. Vakalis for /s/ Rodney L. Adelman
Larry D. Crawford Rodney L. Adelman
Municipal Manager Administrator
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
<PAGE>
EKLUTNA PURCHASERS BY:
Municipality of Anchorage
dba Municipal Light and Power
/s/ George J. Vakalis for
Larry D. Crawford
Municipal Manager
Chugach Electric Association, Inc.
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Matanuska Electric Association, Inc.
/s/ Wayne D. Carmony
Wayne D. Carmony
General Manager
<PAGE>
Recommended:
Anchorage Municipal Light & Power
/s/ Hank Nikkels
Hank Nikkels
Acting General Manager
Recommended:
Municipality of Anchorage
/s/ George Vakalis
George J. Vakalis
Operations Manager
Approved as to Form:
Municipality of Anchorage
/s/ Mary K. Hughes
Mary K. Hughes
Municipal Attorney
<PAGE>
National Rural Utilities Cooperative Finance Corporation
Revolving Line of Credit Agreement
("Agreement")
Name of Borrower: ___Chugach Electric Association, Inc.________________________
Address:__5601 Minnesota Drive; Anchorage, Alaska 99516_______________________
National Rural Utilities Cooperative Finance Corporation ("CFC"), a
District of Columbia corporation, has approved Borrower for a revolving line of
credit loan in an amount not to exceed___Fifty
Million____________________________________Dollars ($50,000,000) (hereinafter
referred to as the "CFC Commitment"). Borrower hereby agrees that the terms and
conditions herein, plus any additional terms and conditions agreed to in writing
by the parties, shall constitute a valid and binding agreement between Borrower
and CFC. In consideration of their mutual promises hereunder and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, CFC
and Borrower agree to the following terms and conditions:
1. Revolving Credit and Term. CFC agrees to advance funds to the Borrower
pursuant to the terms and conditions hereof (each such advance of funds is
referred to herein as an "Advance"), provided, however, that the amount at
any time outstanding under this line of credit shall not exceed the CFC
Commitment. The Borrower may borrow, repay and reborrow funds at any time
or from time to time for a period up to sixty_________ months from the
effective date hereof.
2. Requisitions. Requests for Advances shall be in such written form as CFC
may reasonably require from time to time.
3. Interest Rate and Payment. The Borrower unconditionally promises and
agrees to pay, as and when due, interest on all amounts advanced hereunder
from the date of each Advance and to repay all amounts advanced hereunder
with interest on the date this Agreement terminates as provided herein.
Interest shall be due and payable in accordance with CFC's regular billing
cycles as may be in effect from time to time. CFC shall send a payment
notice to the Borrower at least five days prior to the due date of any
interest payment. All amounts shall be payable at CFC's main office at
Woodland Park, 2201 Cooperative Way, Herndon, Virginia 20171-3025 or at
such other location as designated by CFC from time to time. The interest
rate on all Advances will be equal to the total rate per annum as may be
fixed by CFC from time to time, which shall not exceed the Prevailing Bank
Prime Rate (as defined herein), plus one percent per annum. Interest will
be computed on the basis of a 365 day year for the actual number of days
that any Advance is outstanding. The effective date of an interest rate
adjustment will be determined and published from time to time by CFC,
provided that no such adjustment may be effective on a date other than the
first or sixteenth day of any month, and any such adjustment shall remain
in effect until any subsequent change in the interest rate occurs, and
further provided that the failure of CFC to publish or otherwise announce
the interest rate adjustment on or before the effective date of such
adjustment shall not delay or otherwise alter such effective date.
The "Prevailing Bank Prime Rate" is that bank prime rate published in the
"Money Rates" column of the eastern edition of The Wall Street Journal on
the publication day immediately preceding the day on which an adjustment in
the interest rate hereof shall become effective. If The Wall Street Journal
shall cease to be published, then the Prevailing Bank Prime Rate shall be
determined by CFC by reference to another publication reporting bank prime
rates in a similar manner.
4. CFC Accounts. CFC shall maintain in accordance with its usual practices
an account or accounts evidencing the indebtedness of the Borrower
resulting from each Advance and the amounts of principal and interest
payable and paid hereunder. In any legal action or proceeding in respect of
this Agreement, the entries made in such account or accounts (whether
stored on computer memory, microfilm, payment notices or otherwise) shall
be presumptive evidence (absent manifest error) of the existence and
amounts of the Borrower's transactions therein recorded.
5. Corporate and Regulatory Approvals. Borrower represents and warrants
that it has obtained any and all necessary corporate and regulatory
approvals for Borrower to execute, deliver and perform its obligations
under this Agreement.
6. Reports. During the term of this Agreement, Borrower agrees (a) to
provide CFC, within 120 days of the end of Borrower's fiscal year, its
annual financial statements, prepared in accordance with generally accepted
accounting principles ("GAAP") and audited by an independent certified
public accountant, or otherwise in form and substance satisfactory to CFC,
and (b) to provide CFC with any other reports or information which CFC may
from time to time reasonably request.
7. Fees. If any amount outstanding and due hereunder shall not be paid when
due, Borrower agrees to pay on demand CFC's reasonable costs of collection
or enforcement of this Agreement, or preparation therefor, including
reasonable fees of counsel. If payment of any principal and/or interest due
under the terms of this Agreement is not received at CFC's office in
Herndon, Virginia, or such other location designated by CFC within 5
business days after the due date thereof, then Borrower shall pay to CFC,
on demand, and in addition to all other amounts due under the terms of this
Agreement, any late-payment and additional interest charges as may then be
in effect pursuant to CFC's then current policies of general application
without setoff or counterclaim. For purposes of this Agreement, a "business
day" means a day that both CFC and the financial institution it employs for
funds remittance are open for business.
8. Limitation on Advances. While an Advance is outstanding, CFC reserves
the right to limit further Advances if the sum of (a) all Advances
outstanding, (b) the amount of any further Advance requested, and (c) the
total amount of Borrower's other unsecured outstanding debt, would exceed
the CFC Commitment.
9. Reduce Balance to Zero. In the event that the term of this Agreement is
greater than twelve months, then the Borrower agrees that for each 12-month
period while this Agreement is in effect, Borrower shall, for a period of
at least five consecutive business days, reduce to zero all amounts
outstanding hereunder. Borrower shall make the first balance reduction
within 360 days of the first Advance hereunder. Each subsequent balance
reduction shall be made within 360 days of the last day of such five-day
period.
10. Credit Support. With CFC's prior written approval, this Agreement may
be used as credit support for other financings.
11. Notices, Acceleration of Debt and Waivers. While an Advance is
outstanding, Borrower agrees to notify CFC in writing of (a) any
delinquency or default on any of its financial obligations in an amount in
excess of $500,000.00, (b) any material adverse change in its financial or
business condition, and (c) if any representation or warranty made in this
Agreement is no longer true in any material respect. If any delinquency,
default, or any other event as a result of which any holder of indebtedness
in an amount in excess of $500,000.00 may declare the same due and payable
shall occur and continue uncorrected for more than any applicable grace
period, or any representation or warranty herein shall no longer be true in
any material respect, or Borrower shall fail to perform or to comply with
any material term of this Agreement, or if the financial condition of
Borrower shall have changed to the extent that such change, in the
reasonable judgment of CFC, materially increases CFC's risk of repayment
hereunder, then CFC may declare at any time all outstanding principal,
interest and other amounts due hereunder immediately due and payable in
full with accrued interest, without presentment or demand, and may withhold
Advances. The Borrower waives the defense of usury and all rights to
setoff, counterclaim, deduction or recoupment.
12. Survival of Representations and Warranties and Payment Obligations.
Borrower agrees that its obligation to repay principal, interest and all
other amounts due hereunder, and the representations and warranties made
herein, shall survive termination of this Agreement. Borrower further
agrees that such repayment obligations shall be automatically reinstated if
and to the extent that for any reason any payment by or on behalf of the
Borrower is rescinded, set aside or must be otherwise restored, whether as
a result of any proceeding in bankruptcy or reorganization or otherwise.
13. Representations and Warranties. Borrower represents and warrants that
as of the date of its application for this line of credit, and on the date
of each Advance hereunder:
a) the Borrower is not in default of any of its financial obligations in an
amount in excess of $500,000.00;
b) there has been no material adverse change in the Borrower's business or
financial condition from that set forth in its most recent audited
financial statements;
c) no litigation is pending or, to the best of Borrower's knowledge,
threatened against the Borrower as to which there is a reasonable
possibility of a determination adverse to Borrower and which, if adversely
determined, would have a material adverse effect on the Borrower's ability
to perform under this Agreement;
d) the information contained in Borrower's audited financial statements,
its other financial reports and information otherwise submitted in
connection with this Agreement is complete and accurate, and said financial
statements and financial reports fairly represent the financial condition
of the Borrower as of the dates reflected thereon;
e) the execution, delivery and performance of this Agreement has been duly
authorized by the Borrower, which authorization has not been rescinded or
modified; and
f) all Advances hereunder will be used only for proper corporate purposes
14. Conditions of Lending. As a condition to CFC making Advances hereunder,
each of the following conditions shall be satisfied at the time of each
Advance:
a) CFC shall have received the Borrower's most recent annual financial
statements, prepared in accordance with GAAP and audited by an independent
certified public accountant, or otherwise in form and substance
satisfactory to CFC;
b) all representations and warranties set forth herein shall be true and
correct; and
c) the Borrower shall have obtained any and all necessary corporate,
regulatory and governmental approvals for the Borrower to execute, deliver
and perform its obligations under this Agreement.
15. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THE PERFORMANCE AND CONSTRUCTION OF THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
VIRGINIA.
(b) BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES COURTS LOCATED IN VIRGINIA AND OF ANY STATE COURT SO LOCATED FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. BORROWER IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE ESTABLISHING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
16. Severability. If any term, provision or condition, or any part thereof,
of this Agreement shall for any reason be found or held invalid or
unenforceable by any court or governmental agency of competent
jurisdiction, such invalidity or unenforceability shall not affect the
remainder of such term, provision or condition nor any other term,
provision or condition, and this Agreement shall survive and be construed
as if such invalid or unenforceable term, provision or condition had not
been contained herein.
17. Setoff. CFC is hereby authorized at any time and from time to time
without prior notice to the Borrower to exercise rights of setoff or
recoupment and apply any and all amounts held, or hereafter held, by CFC or
owed to the Borrower or for the credit or account of the Borrower against
any and all of the obligations of the Borrower now or hereafter existing
hereunder. CFC agrees to notify the Borrower promptly after any such setoff
or recoupment and the application thereof, provided that the failure to
give such notice shall not affect the validity of such setoff, recoupment
or application. The rights of CFC under this section are in addition to any
other rights and remedies (including other rights of setoff or recoupment)
which CFC may have.
18. Additional Terms and Conditions. Additional terms and conditions as set
forth herein or attached hereto are an integral part of this Agreement.
19. Termination and Cancellation of Existing Agreement. Borrower agrees
that its existing line(s) of credit No(s).
_09-60-008-R-5999________________________with CFC, if any, and any
agreement(s) relating thereto shall be terminated and any outstanding
principal, interest and other amounts outstanding thereunder shall be
transferred to the line of credit established pursuant to this Agreement
and deemed an Advance hereunder.
20. Miscellaneous. (a) This Agreement contains the entire agreement of the
parties hereto with respect to the matters covered and the transactions
contemplated hereby, and no other agreement, statement or promise made in
connection with this line of credit by any party hereto, or by any
employee, officer, agent or attorney of any party hereto which is not
contained herein shall be valid and binding. (b) Any amendment to this
Agreement must be in writing signed by both parties. (c) No failure or
delay by CFC in exercising any right or remedy hereunder shall operate as a
waiver or preclude the future exercise thereof or of any other right or
remedy. (d) If any payment is due from Borrower on a day which CFC is not
open for business, then such payment shall be made on the next succeeding
day on which CFC is open for business.
21. Effective Date. This Agreement is effective as of
__________________________.
(To be provided by CFC)
<PAGE>
22. Additional Terms and Conditions.
Name of Borrower:_______________________________________________________
Signed By:_/s/ Eugene N. Bjornstad_______________________________________
Title:_____________________________________________
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
By: _/s/ Robert D. Stephens__________________ Loan Number: _09-60-008-R-5100_
Assistant Secretary-Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> DEC-31-1997
<CASH> 5,589,307
<SECURITIES> 0
<RECEIVABLES> 24,367,167
<ALLOWANCES> (368,029)
<INVENTORY> 15,619,085
<CURRENT-ASSETS> 46,223,019
<PP&E> 650,030,198
<DEPRECIATION> (232,136,950)
<TOTAL-ASSETS> 485,567,299
<CURRENT-LIABILITIES> 34,461,148
<BONDS> 312,006,501
0
0
<COMMON> 0
<OTHER-SE> 109,119,697
<TOTAL-LIABILITY-AND-EQUITY> 485,567,299
<SALES> $143,947,730
<TOTAL-REVENUES> $143,947,730
<CGS> 0
<TOTAL-COSTS> 113,070,990
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,084,361
<INCOME-PRETAX> 7,554,397
<INCOME-TAX> 0
<INCOME-CONTINUING> 7,554,397
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,554,397
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
