FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
- -------
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
----------------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________to_________________
Commission file number 33-42125
Chugach Electric Association, Inc.
- -------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Alaska 92-0014224
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
5601 Minnesota Drive Anchorage, Alaska 99518
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(907)563-7494
(Registrant's telephone number, including area code)
None
(Former name,former address and former fiscal year,if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MAY 1, 2000
----- --------------------------
NONE NONE
CHUGACH ELECTRIC ASSOCIATION, INC.
INDEX
Page Number
CAUTION REGARDING FORWARD-LOOKING STATEMENTS 3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheets, March 31, 2000 (Unaudited) and December 31, 1999 4
Statements of Revenues,Expenses and Patronage Capital,Three Months Ended
March 31, 2000 and 1999 (Unaudited) 6
Statements of Cash Flows, Three Months Ended March 31, 2000 and 1999
(Unaudited) 7
Notes to Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition (Unaudited) 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and reports on Form 8-K 17
Signatures 18
Exhibits 19
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Statements in this report that do not relate to historical facts, including
statements relating to future plans, events or performance, are forward-looking
statements that involve risks and uncertainties. Actual results, events or
performance may differ materially. Readers are cautioned not to place undue
reliance on these forward-looking statements, that speak only as of the date of
this report and the accuracy of which is subject to inherent uncertainty.
Chugach Electric Association, Inc. (Chugach or the Association) undertakes no
obligation to publicly release any revisions to these forward-looking statements
to reflect events or circumstances that may occur after the date of this report
or the affect of those events or circumstances on any of the forward-looking
statements contained in this report.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements of Chugach for the quarter ended March 31,
2000 follow:
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Assets
<TABLE>
March 31, 2000 December 31, 1999
-------------- -----------------
(Unaudited)
<S> <C> <C>
Utility plant:
Electric plant in service $ 643,812,440 $ 641,627,328
Construction work in progress 49,952,540 47,257,296
------------ ------------
693,764,980 688,884,624
Less accumulated depreciation 249,850,311 243,082,832
------------ ------------
Net utility plant 443,914,669 445,801,792
------------ ------------
Other property and investments, at cost:
Nonutility property 524,785 413,515
Investments in associated organizations 8,986,161 8,946,861
------------ ------------
9,510,946 9,360,376
------------ ------------
Current assets:
Cash and cash equivalents 8,290,496 4,110,030
Cash - restricted construction funds 629,629 538,404
Special deposits 182,164 182,164
Accounts receivable, net 15,254,436 17,911,749
Materials and supplies, at average cost 17,313,742 17,180,136
Prepayments 1,325,479 861,947
Other current assets 483,762 341,702
------------- -------------
Total current assets 43,479,708 41,126,132
------------ ------------
Deferred charges 22,377,894 22,067,237
------------ ------------
$519,283,217 $518,355,537
============ ============
</TABLE>
See accompanying notes to unaudited financial statements.
CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Liabilities and Equities
<TABLE>
March 31, 2000 December 31, 1999
-------------- -----------------
(Unaudited)
<S> <C> <C>
Equities and margins:
Memberships $ 970,659 $ 960,808
Patronage capital 122,653,143 117,335,481
Other 4,222,479 4,228,356
------------ -------------
127,846,281 122,524,645
------------ ------------
Long-term obligations, excluding current Installments:
First mortgage bonds payable 179,542,000 194,139,000
National Bank for Cooperatives bonds
Payable 142,848,267 143,011,295
------------ -------------
322,390,267 337,150,295
------------ ------------
Current liabilities:
Notes payable 18,000,000 -
Current installments of long-term debt 6,416,071 6,372,405
Accounts payable 6,978,459 9,508,851
Consumer deposits 1,096,610 1,059,677
Accrued interest 1,565,222 6,066,114
Salaries, wages and benefits 4,196,270 4,053,228
Fuel 4,457,822 4,381,304
Other 1,786,280 2,527,798
--------------- ------------
Total current liabilities 44,496,734 33,969,377
------------ ------------
Deferred credits 24,549,935 24,711,220
------------ ------------
$519,283,217 $518,355,537
============ ============
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Statements of Revenues, Expenses and Patronage Capital
<TABLE>
Three months ended March 31
2000 1999
(Unaudited)
<S> <C> <C>
Operating revenues $40,871,074 $ 39,424,237
---------- ------------
Operating expenses:
Power production 11,614,016 10,763,127
Purchased power 2,427,280 1,868,522
Transmission 969,735 672,493
Distribution 2,857,442 2,014,368
Consumer accounts/Service and
Informational expense 1,286,755 1,028,746
Sales expense 275,760 347,238
Administrative, general and other 4,519,116 4,755,495
Depreciation and amortization 5,753,352 5,171,884
--------- ------------
Total operating expenses 29,703,456 26,621,873
---------- ------------
Interest:
On long-term debt 6,509,705 5,925,943
Other 60,860 210,070
Charged to construction - credit (429,704) (4,605)
--------- -------------
Net interest expense 6,140,861 6,131,408
--------- ------------
Net operating margins 5,026,757 6,670,956
--------- ------------
Nonoperating margins:
Interest income 191,837 146,350
Other 157,499 8,985
------- -------------
Total nonoperating margins 349,336 155,335
------- ------------
Assignable margins 5,376,093 6,826,291
Patronage capital at beginning of period 117,335,481 109,622,996
Retirement of capital credits and
estate payments (58,431) (13,643)
-------- -------------
Patronage capital at end of period $122,653,143 $116,435,644
============== ============
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Statements of Cash Flows
<TABLE>
Three months ended March 31
---------------------------
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Assignable margins $ 5,376,093 $ 6,826,291
------------ ------------
Adjustments to reconcile assignable margins to net cash
provided (used) by operating activities:
Depreciation and amortization 5,753,352 5,171,884
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 2,657,313 4,362,215
Prepayments (463,532) (313,461)
Materials and supplies (133,606) (1,158,300)
Deferred charges (310,657) (3,733,860)
Other (344,554) (216,277)
Increase (decrease) in liabilities:
Accounts payable (2,530,392) (2,093,765)
Consumer deposits 36,933 22,522
Accrued interest (4,500,892) (5,387,259)
Deferred credits (161,285) (3,539,965)
Other (521,958) (1,435,233)
---------- ------------
Net cash provided (used) by operating activities 4,856,814 (1,495,208)
Cash flows from investing activities:
Extension and replacement of plant (3,866,228) (2,509,240)
Investments in associated organizations (39,300) (917)
---------------- -------------
Net cash used in investing activities (3,905,528) (2,510,157)
------------- -------------
Cash flows from financing activities:
Short-term borrowings, net 18,000,000 7,500,000
Proceeds from long-term debt 0 42,500,000
Repayments of long-term debt (14,716,362) (40,840,838)
Retirement of patronage capital (58,431) (13,643)
Other 3,973 295,825
---------- ------------
Net cash provided by financing activities 3,229,180 9,441,344
--------- ---------
Net increase in cash and cash equivalents 4,180,466 5,435,979
Cash and cash equivalents at beginning of period 4,110,030 2,312,574
----------- -----------
Cash and cash equivalents at end of period $8,290,496 $7,748,553
========== ==========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
March 31, 2000
(Unaudited)
1. Presentation of Financial Information
During interim periods, Chugach follows the accounting policies set forth
in its audited financial statements included in Form 10-K filed with the
Securities and Exchange Commission. Users of interim financial information
are encouraged to refer to the footnotes contained in Chugach's Form 10-K
when reviewing interim financial results. The accompanying unaudited
interim financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim period presented.
Certain reclassifications have been made to the 1999 financial statements
to conform to the 2000 presentation.
2. Lines of Credit
Chugach maintains a line of credit of $35 million with National Bank for
Cooperatives (CoBank). The CoBank line of credit expires August 1, 2000 but
carries an annual automatic renewal clause. At March 31, 2000, $18 million
was outstanding on this line of credit at an interest rate of 7.16%. In
addition, the Association has an annual line of credit of $50 million
available at the National Rural Utilities Cooperative Finance Corporation
(NRUCFC). At March 31, 2000, there was no outstanding balance on this line
of credit. The NRUCFC line of credit expires October 14, 2002.
3. Segment Reporting
During 1998, Chugach adopted the Financial Accounting Standards Board
Statement No. 131, Disclosures About Segments of an Enterprise and
Related Information, which establishes standards for reporting
information about a company's operating segments. The Association had
divided its operations into two reportable segments: Energy and Internet
service. The energy segment derives its revenues from sales of
electricity to residential, commercial and wholesale customers, while the
Internet segment derives its revenues from provision of residential and
commercial internet services and products. The reporting segments follow
the same accounting policies used for the Association's financial
statements and described in the summary of significant accounting
policies. Management evaluates a segment's performance based upon profit
or loss from operations. Jointly used assets are allocated by percentage
of reportable segment usage and centrally incurred costs are allocated
using factors developed by the Association, which are patterned upon
usage. The Internet segment began operations during 1998, the results of
which are immaterial to the financial statements. The following is a
tabulation of business segment information for the quarter ended March
31, 2000:
<TABLE>
Operating Revenues
<S> <C>
Internet $ 315,534
Energy $ 40,555,540
----------
Total operating revenues $ 40,871,074
==========
Assignable Margins
Internet $ -192,418
Energy $ 5,568,511
---------
Total assignable margins $ 5,376,093
=========
Assets
Internet $ 680,964
Energy $ 518,602,253
------------
Total assets $519,283,217
============
Capital Expenditures
Internet $ 135,377
Energy $ 792,303
-------
Total capital expenditures $ 927,680
=======
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Unaudited)
Reference is made to the information contained under the caption "CAUTION
REGARDING FORWARD-LOOKING STATEMENTS" at the beginning of this Report.
For certain information concerning a Treasury rate-lock transaction entered into
by Chugach in March 1999, reference is made to information appearing under the
caption "Additional Information Regarding Treasury Rate-Lock" in Item 5 of Part
II of this report.
RESULTS OF OPERATIONS
Current Year Quarter Versus Prior Year Quarter
Operating revenues, which include sales of electric energy to retail, wholesale
and economy energy customers and other miscellaneous revenues, increased by 3.7%
for the quarter ended March 31, 2000 over the same quarter in 1999. The increase
in revenues is primarily attributable to higher economy energy sales to Golden
Valley Electric Association, Inc. (GVEA), due to significant problems
encountered with the Healy Clean Coal Plant (HCCP) that commenced in late 1999
and have continued into the first quarter of 2000. This has forced GVEA to
purchase much of their energy requirements from Chugach. An increase in other
miscellaneous revenue from first quarter 1999 to first quarter 2000 is
attributed to new business venture revenues.
Retail rates did not change in the first quarter 2000 compared to the first
quarter 1999. The operating revenue increase mentioned above was offset by a
decrease in wholesale revenue due to a decrease in wholesale demand and energy
rates. The demand and energy rates of Homer Electric Association, Inc. (HEA),
declined 0.30%. Wholesale demand and energy rates charged to Matanuska Electric
Association, Inc. (MEA), also declined 3.8% in the first quarter 2000 compared
to the first quarter 1999. Wholesale demand and energy rates charged to Seward
did not change in this quarter compared to the same quarter last year.he new
power sales agreement.
Pursuant to a Settlement Agreement with Alaska Electrical Generation &
Transmission Cooperative (AEG&T/MEA/Homer), Chugach is required to grant a
refund to AEG&T/MEA/Homer retroactive to January 1, 1997 (based on the 1996 test
year filing). A provision for wholesale rate refund of approximately $980,000,
$993,000 and $570,000 were recorded at December 31, 1997, December 31, 1998 and
December 31, 1999, respectively, to accommodate certain rate adjustment clauses
contained in the Settlement Agreement. Year-to-date March 2000 provisions total
approximately $59,000. The demand and energy rates based on the 1996 test year
were approved on an interim and refundable basis in June 1999. Chugach expects a
final RCA order in the year 2000. In April 2000, Chugach refunded to MEA
$1,809,801, and in May 2000, refunded to HEA $86,132. These represented the
uncontested portion of the refunds associated with the 1996 test year revenue
requirement.
Power production expense increased from the first quarter 1999 to the first
quarter 2000 due to an increase in fuel prices and maintenance costs related to
Beluga Units 3 and 5. Purchased power expense also increased for the quarter
ended March 31, 2000, compared to the same period in 1999 due to power purchases
from Anchorage Municipal Light & Power in February and March 2000. These
purchases were made to allow maintenance on the above-mentioned Beluga units
without waiting for repair work to be completed on the avalanche-damaged 115 kV
line to Kenai. Transmission and distribution expenses increased significantly in
this period compared to the same period last year due to damage and outages
caused by avalanches resulting from severe weather. Sales expense decreased from
first quarter 1999 to the same period in 2000 due to a reduction in advertising
expense. Administrative, general and other expenses also decreased for the
three-month period ended March 31, 2000 as a result of the update to the IS
clearing process described above and an overall decrease in the amount of IS
expense in 2000.
Depreciation expense increased in the first quarter 2000 compared to the first
quarter 1999 due to an adjustment in the first quarter 1999 for the unitization
of a capital project. Interest on long-term debt increased in the first quarter
2000 over the same period last year as a result of the issuance of CoBank 7 in
December 1999. Interest charged to construction was higher in the first quarter
2000 due to significantly higher Construction Work in Progress (CWIP) balances
compared to the first quarter 1999. Other interest expense decreased in the
first quarter 2000 as compared to the same period in 1999 due to a decrease in
short-term borrowing activity in 2000.
Other nonoperating margins were higher for the quarter ended March 31, 2000,
compared to the same period in 1999 due to patronage capital credits received
from CoBank in the first quarter of 2000. Allowance for Funds Used During
Construction (AFUDC) was also higher the first quarter 2000 compared to the same
period in 1999 due to the higher CWIP balances described above.
Financial Condition
Total assets increased by .2% from December 31, 1999 to March 31, 2000. The
increase was due primarily to an increase in electric plant in service and
construction work in progress. This was caused by the re-powering of Beluga
Units 6 and 7, the Cooper Lake major overhaul, the International Generating
Terminal (IGT) auxilliary improvement, the lower Summit Lake transmission line
rebuild and the fuel cell project. There was also an increase in accounts
receivable caused by wholesale power bills that were accrued but not paid at
March 31, 2000. Non-utility property also increased which was caused by
increased investments in the Internet Service Provider (ISP) venture. Notable
changes to total liabilities include the decrease in first mortgage bonds
resulting from the March bond payment and Chugach's purchase of first mortgage
bonds. Notes payable increased due to borrowing activity in the latter part of
the first quarter, that was offset by a decrease in accounts payable. Accrued
interest also decreased due to the March semi-annual bond payment.
Liquidity and Capital Resources
Chugach has satisfied its operational and capital cash requirements primarily
through internally generated funds, an annual $50 million line of credit from
NRUCFC and a $35 million line of credit with CoBank. At March 31, 2000, there
was no balance outstanding with NRUCFC; $18 million was outstanding with CoBank,
which carried an interest rate of 7.16%.
Capital construction in 2000 is estimated at $30.8 million. At March 31, 2000,
approximately $3.87 million has been expended. Capital improvement expenditures
are expected to increase in the upcoming second and third quarters as the
construction season begins in April and extends into October.
Chugach has negotiated a supplemental indenture (Third Supplemental Indenture of
Trust) with CoBank that previously allowed up to $80 million in future bond
financing. Chugach executed an amendment to the Third Supplemental Indenture of
Trust (Seventh Supplemental Indenture of Trust) that eliminated the maximum
aggregate amount of bonds the Company may issue under the agreement. At March
31, 2000, Chugach had bonds in the amount of $143.1 million outstanding under
this financing arrangement. The balance is comprised of a $667 thousand bond
(CoBank 1) which carries an interest rate of 8.95% maturing in 2002, a $10
million bond (CoBank 2) priced at 7.76% due in 2005, a $21.5 million bond
(CoBank 3), priced at 5.60%, a $23.5 million bond (CoBank 4) priced at 5.60%, a
$15 million bond (CoBank 5) priced at 5.60% due in 2002, 2007 and 2012, a $42.5
million bond (CoBank 6) carrying a variable interest rate currently priced at
7.40% (as of May 2000) and a $30 million bond (CoBank 7) carrying a variable
interest rate currently priced at 7.40%(as of May 2000) both due in March, 2002.
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 March 31, 2000 there were no amounts outstanding under this financing
arrangement.
Chugach management continues to expect that cash flows from operations and
external funding sources will be sufficient to cover operational and capital
funding requirements in 2000 and thereafter.
Changes in Accounting Principles
Chugach is required to implement Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities (SFAS No.133),
effective January 1, 2001. Due to the interest rate risk inherent in the
existing treasury rate lock, Chugach cannot currently determine the impact of
implementation of SFAS No. 133 on its financial condition or its results of
operations.
<PAGE>
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 has participated in national benchmarking projects to improve system
operations. Studies have focused on mailroom operations, remittance processing,
new service connections, system reliability and power production. 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.
Chugach has implemented strategic alliances in the purchasing and warehousing
areas. These alliances are designed to improve efficiency and thus, contribute
to lower operating costs.
Chugach has been active at the State Legislature 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 attempting to
create exclusive service territories. At this time no bill relating to customer
choice has moved out of legislative committee, thus, it is not possible to
predict the outcome of this legislative process.
Chugach operates with three divisions: Finance and Energy Supply, Transmission
and Distribution Network Services, and Retail Services. Chugach operates a key
account program for larger customers and is developing new services to enhance
existing customers' satisfaction.
Chugach commenced operation as an internet service provider in February 1999.
Also in 1999, Chugach began selling spare microwave bandwidth to industrial
customers.
Chugach's labor negotiations under its three collective bargaining agreements
with the International Brotherhood of Electrical Workers Local 1547 (IBEW) have
concluded and most of the issues were resolved subsequent to the issuance in
February and in April of the fact-finding recommendations of the fact
finder/arbitrator. A final decision by the arbitrator as a result of the binding
arbitration hearing, which occurred in March 2000 on the remaining issues, is
anticipated in mid to late May.
ENVIRONMENTAL MATTERS
Compliance with Environmental Standards
Chugach's operations are subject to certain federal, state and local
environmental laws that 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.
Environmental Matters
Chugach has discovered polychlorinated biphenyls (PCB's) in paint and greases at
the Cooper Lake Hydroelectric plant, which is undergoing a turbine overhaul.
Chugach is working with the Environmental Protection Agency (EPA) to devise a
method of dealing with the contamination. Meanwhile, the overhaul is continuing.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Chugach is exposed to a variety of risks, including changes in interest rates
and changes in commodity prices due to repricing mechanisms inherent in gas
supply contracts. In the normal course of its business, Chugach manages its
exposure to these risks as described below. Chugach does not engage in trading
market risk sensitive instruments for speculative purposes.
Interest rate risk - As of March 31, 2000, except for CoBank 6 and 7 which carry
variable interest rates that are periodically repriced, Chugach's outstanding
borrowings were at fixed interest rates. The following table provides
information regarding cash flows (dollars in thousands):
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fair
2000 2001 2002 2003 2004 Thereafter Total Value
---- ---- ---- ---- ---- ---------- ----- -----
Long-term debt, including
current portion $ 156 $6,430 $99,410 $5,041 $5,502 $212,267 $328,806 $340,192
</TABLE>
Commodity price risk - Chugach's gas contracts provide for adjustments to gas
prices based on fluctuations of certain commodity prices and indices. Purchased
power costs are passed directly to Chugach's wholesale and retail customers
through a fuel surcharge, therefore, fluctuations in the price paid for gas
pursuant to long-term gas supply contracts does not normally impact margins. The
fuel surcharge mechanism mitigates the commodity price risk related to market
fluctuations in the price of purchased power.
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Chugach Electric Association, Inc. v. Matanuska Electric Association, Inc.
3AN-99-10830 CI
- --------------------------------------------------------------------------------
Reference is made to Item 3, Part I of the Form 10-K filed by Chugach with
respect to the annual report for the period ending December 31, 1999 with
respect to this litigation.
On April 17, 2000, the Superior Court granted a motion filed by Chugach adding
the Regulatory Commission of Alaska ("RCA") as a party. The court has postponed
oral argument on the summary judgement motions until June 22, 2000, to allow
time for the RCA to brief issues relating to the RCA's authority to enforce
provisions of the wholesale power agreement between Chugach and MEA.
Note that the name of this case has been corrected from the previous report to
reverse the order of the parties.
Chugach Electric Association, Inc. v. Alaska Public Utilities Commission
3AN-98-11548 CI
- --------------------------------------------------------------------------------
Reference is made to Item 1, Part I of the Form 10-K filed by Chugach with
respect to the annual report for the period ending December 31, 1999, with
respect to competition. On April 15, 2000, the Superior Court ruled in favor of
the State in the appeal Chugach had taken of the agency decision requiring that
Chugach obtain prior permission from the Regulatory Commission via a request to
expand its service territory authorized under its Certificate of Public
Convenience and Necessity before seeking to serve customers in the Anchorage
Municipal Light & Power ("ML&P") service territory. Chugach will appeal the
decision to the Alaska Supreme Court which will review the agency decision on a
de novo basis.
Matanuska Electric Association, Inc. v. Chugach Electric Association, Inc.
3AN-99-8152 CI
- --------------------------------------------------------------------------------
Reference is made to the discussion of this matter in Item 3, Part I of the Form
10-K filed by Chugach with respect to the annual report for the period ending
December 31, 1999. No material changes have occurred since the last report on
this matter.
Matanuska Electric Association, Inc. v. Chugach Electric Association, Inc.
U-98-180
- --------------------------------------------------------------------------------
Reference is made to the discussion of this matter in Item 3, Part I of the Form
10-K filed by Chugach with respect to the annual report for the period ending
December 31, 1999. No material changes have occurred since the last report on
this matter.
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Additional Information Regarding Treasury Rate-Lock
On March 17, 1999, Chugach entered into a Treasury rate-lock transaction with
Lehman Brothers Financial Products Inc. (Lehman Brothers) for the purpose of
taking advantage of favorable market interest rates in anticipation of
refinancing Chugach's Series A Bonds Due 2022 on their first call date (March
15, 2002). As of March 31, 2000, the aggregate principal amount of Series A
Bonds due 2022 was $174,310,000. Under the Treasury rate-lock contract, Chugach
will receive a lump-sum payment from Lehman Brothers on March 15, 2002, if the
yield on 10- or 30-year Treasury bonds as of mid-February, 2002, exceeds a
specified target level (5.653% and 5.838%, respectively). Conversely, on the
same date, Chugach will be required to make a payment to Lehman Brothers if the
yield on the 10- or 30-year Treasury bonds falls below its stated target yield.
The fair value of the treasury rate lock agreement on May 2, 2000, approximated
$7,455,000.
Patronage Capital
Chugach has an approved Equity Management Plan, which establishes 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. On January 19,
2000, the Board of Directors passed a resolution putting all members on a
15-year rotation.
Other Assets
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, AML&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. 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.
In April 2000, AEA issued $47,710,000 of Power Revenue Refunding Bonds, Fourth
Series, for the purpose of refunding $46,235,000 of the Second Series Bonds. The
refunded Second Series Bonds have a call date of July 1, 2000. The refunding
resulted in percentage savings of 7.58%. This produced a Net Present Value
savings to the participating utilities of approximately $3,505,000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Bylaws of the Registrant (as amended April 27, 2000).
Ninth Supplemental Indenture of Trust dated as of April 25, 2000, by and
between Chugach Electric Association, Inc. and Security Pacific Bank
Washington, N.A.
Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended March 31, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHUGACH ELECTRIC ASSOCIATION, INC.
By: /s/ Eugene N. Bjornstad
Eugene N. Bjornstad
General Manager
Date: May 12, 2000
By: /s/ Evan J. Griffith Jr.
Evan J. Griffith, Jr.
Executive Manager, Finance & Energy Supply
Date: May 12, 2000
<PAGE>
EXHIBITS
Listed below are the exhibits which are filed as part of this Report:
Exhibit
Number Description Page
3.2 Bylaws of the Registrant (as amended April 27, 2000) 20
4.10 Ninth Supplemental Indenture of Trust dated as of April 25, 2000,
by and between Chugach Electric Association, Inc. and Security
Pacific Bank Washington, N.A. 32
27 Financial Data Schedule **
CHUGACH ELECTRIC ASSOCIATION, INC.
BYLAWS
ARTICLE I
MEMBERSHIP
SECTION 1. Requirements for Membership. Any person, firm, association,
corporation, or body politic, or subdivision thereof, shall become a member of
CHUGACH ELECTRIC ASSOCIATION, INC. by:
(a) Making a written application for membership therein;
(b) Agreeing to purchase from the Association electric energy as hereinafter
specified;
(c) Agreeing to comply with, and be bound by, the articles of incorporation
and bylaws of the Association, and any rules and regulations adopted by
its board of directors; and
(d) Paying the membership fee hereinafter specified.
No person may hold more than one membership in the Association, and no
membership in the Association shall be transferable, except as provided in these
bylaws.
SECTION 2. Membership Certificates. Repealed April 30, 1998.
SECTION 3. Joint Membership. A husband and wife may apply for a joint
membership and, subject to the compliance with the requirements set forth in
Section 1 of this Article, may be accepted for such membership. The term
"member" as used in these bylaws shall be deemed to include a husband and wife
holding a joint membership, and any provisions relating to the rights and
liabilities of membership shall apply equally with respect to the holders of a
joint membership. Without limiting the generality of the foregoing, the effect
of the hereinafter specified actions by, or in respect to, the holders of a
joint membership shall be as follows:
(a) The presence at a meeting of either or both shall be regarded as the
presence of one member and shall have the effect of constituting a
joint waiver of notice of the meeting;
(b) The vote of either separately, or both jointly, shall constitute one joint
vote;
(c) A waiver of notice signed by either or both shall constitute a joint waiver;
(d) Notice to either shall constitute notice to both;
(e) Expulsion of either shall terminate the joint membership;
(f) Withdrawal of either shall terminate the joint membership;
(g) Either, but not both, may be elected or appointed as an officer or
director, provided that both meet the qualifications for such office.
SECTION 4. Conversion of Membership. (a) A membership may be converted to a
joint membership upon the written request of the holder thereof, and the
agreement by such holder to comply with the articles of incorporation, bylaws,
and rules and regulations adopted by the board of directors. The membership
shall be reissued by the Association in such manner as shall indicate the
changed membership status.
(b) Upon the death of a married member the surviving spouse shall succeed
to the membership. The membership shall be reissued in such manner as shall
indicate the changed membership status; provided, however, that the estate of
the deceased shall not be released from any debts due the Association.
SECTION 5. Membership and Service Connection Fees. The non-refundable
membership fee shall be five dollars. Payment of the membership fee and
completion of a membership application are conditions of service. The board of
directors may also, as a condition of service, require the payment of a consumer
deposit or the furnishing of other acceptable security.
SECTION 6. Purchase of Electric Energy. Each member may, as soon as
electric energy shall be available, purchase from the Association all electric
energy purchased for use on the premises specified in his application for
membership, unless the member is an electric public utility purchasing electric
energy for resale. Each member shall pay monthly at rates which shall from time
to time be fixed by the board of directors. The board of directors may limit the
amount of electric energy which the Association shall be required to furnish to
its member(s). Each member shall pay to the Association such minimum amount per
month, regardless of the electric energy consumed, as shall be fixed by the
board of directors from time to time. Each member shall also pay all amounts
owed by him to the Association as and when the same shall become due and
payable. Production or use of electric energy on such premises, regardless of
the source thereof, by means of facilities which shall be interconnected with
the Association's facilities, shall be subject to appropriate regulations as
shall be fixed from time to time by the Association.
SECTION 7. Termination of Membership. (a) Any member of the Association may
withdraw from membership with written notice. Additionally, the board, by at
least a two-thirds vote of all members of the board, may expel any member who
fails to comply with Association regulations. Members subject to expulsion will
be contacted in writing by the Association and will have ten (10) days to comply
with Association regulations. An expelled member may be reinstated by a majority
vote of the board or by a vote of the members at any annual or special meeting.
The board may also cancel membership if the member:
1) has not purchased electric energy for six (6) months;
2) has had a disconnect order active for thirty (30) days without signing a
reconnect order; or
3) has been disconnected because of nonpayment of electric energy debts to
the Association provided that this delinquency has continued for at
least thirty (30) days after termination of service.
(b) Upon the withdrawal, death, cessation of existence or expulsion of a
member, the membership of such member shall thereupon terminate, except as
provided in Article 1, Section 4. Termination of membership in any manner shall
not release a member or his estate from any debts due the Association.
ARTICLE II
RIGHTS AND LIABILITIES OF MEMBERS
SECTION 1. Property Interest of Members. Upon dissolution, after paying, or
discharging, or adequately providing for the payment or discharge of all its
debts, obligations and liabilities, other than those to patrons arising by
reason of their patronage, the Association shall distribute any remaining sums,
first to patrons for the pro rata return of all amounts standing to their credit
by reason of their patronage, and second, to members for the pro rata repayment
of membership fees. Any sums then remaining shall be distributed among its
members and former members in proportion to their patronage, except as
participation in such distribution may have been legally waived. In the event of
the lawful liquidation, through transfer or sale of all the property and assets
of the Association, the proceeds of such liquidation, transfer or sale shall be
distributed in the same manner as hereinabove provided for in the case of
dissolution.
SECTION 2. Non-liability for Debts of the Association. The private property
of the members shall be exempt from execution or other liability for the debts
of the Association, and no members shall be liable or responsible for any debts
or liabilities of the Association.
ARTICLE III
MEMBERS, MEETINGS AND ELECTIONS
SECTION 1. Annual Meeting. The annual meeting of the members shall be held
on such convenient date, on or after the 1st day of April, and on or before the
1st day of May of each year, at such place or building in the Municipality of
Anchorage, State of Alaska, as shall be designated by the board of directors in
the notice of meeting, for the purpose of electing directors, passing upon
reports for the previous fiscal year, and transacting such other business as may
come before the meeting. Failure to hold the annual meeting at the designated
time shall not work a forfeiture or dissolution of the Association.
SECTION 2. Special Meetings. Special meetings of the members may be called
by resolution of the board of directors, or upon a written request signed by any
four directors to the president, or by a written request made to the president
and signed by not less than ten percent (10%) of the members. The resolution or
request shall specify the purpose of the meeting. All signatures for a request
of a special meeting by members shall be collected within the single ninety (90)
calendar day period immediately preceding the date on which signed requests are
first presented to the Association, and the board of directors shall establish
such policies as may be necessary and convenient to ensure compliance with this
provision. It shall thereupon be the duty of the secretary to cause notice of
such meeting to be given as hereinafter provided. Special meetings of the
members may be held at any place within the Municipality of Anchorage specified
in the notice of the special meeting.
SECTION 3. Notice of Members' Meetings. Written notice stating the place,
day and hour and agenda of the annual meeting shall be delivered by mail to each
member not less than thirty (30) or more than sixty (60) days before the date of
the meeting. Notice of a special meeting of the members, including but not
limited to a meeting where a merger or dissolution of the Association, or sale,
lease, or other disposition of more than fifteen percent (15%) of the
Association's total assets, less depreciation, as reflected on the books of the
Association at the time of the transaction, shall be delivered, together with
notice of the purpose for which the meeting is called, not less than ninety (90)
or more than one hundred twenty (120) days before the date of the meeting, with
notice of a public hearing on the proposed action to be held not less than sixty
(60) days before the meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the member at
his address as it appears on the records of the Association, with postage
thereon prepaid. The failure of any member to receive notice of an annual or
special meeting of the members shall not invalidate any action which may be
taken by the members at any such meeting.
SECTION 4. Waiver of Notice. Repealed April 23, 1986.
SECTION 5. Quorum. Seven and one-half percent (7 1/2%) of all members of
the Association (voting in person or by mail), including at least fifty (50)
members present in person, shall constitute a quorum for a regular or special
meeting of the members. No business shall be conducted at a regular or special
meeting of the members lacking a quorum, except for counting marked ballots as
specified in this Article III, Section 9(d) and announcing the results thereof.
If a quorum is lacking with respect to any meeting of the members, a majority of
those present in person may adjourn the meeting to another date and time no
later than forty five (45) days after the adjourned meeting at a place within
the Municipality of Anchorage, provided that the Secretary shall notify all
members of the date, time and place of such meeting by delivering notice thereof
no later than ten (10) days in advance of such meeting. At such meeting, the
only business that may be conducted is business that could lawfully have been
conducted at the originally scheduled meeting.
SECTION 6. Voting. (a) Only members who have purchased electric energy or
received other services from the Association within the six (6) months preceding
the record date of the election shall be entitled to vote. Each such member
shall have only one vote upon each matter submitted to a vote at a meeting of
the members.
(b) A non-natural member may designate an individual to vote on its behalf,
in accordance with the member's own procedures. The election committee may
require the designated individual to submit satisfactory written proof of his
designation, prior to his voting.
(c) Members may vote by a mailed official ballot on all matters on which a
vote of the members is required or permitted under these bylaws.
(d) Except as otherwise required by law, the articles of incorporation, or
these bylaws, all questions to be submitted to a vote of the members shall be
decided by a vote of a majority of the members voting thereon at a meeting with
respect to which a quorum exists. For purposes of these bylaws, a mailed ballot
validly returned by the deadline for return of mailed ballots shall be
considered to be a vote at the meeting to which it relates.
(e) Directors shall be elected by the plurality vote of the members voting
(in person or by mail) at a meeting with respect to which a quorum exists.
Action to amend these bylaws or to remove a director pursuant to Article IV,
Sections 7 and 8 of these bylaws may be taken only by the affirmative vote of a
majority of those members voting at a meeting with respect to which a quorum
exists.
(f) Any sale, lease, or other disposition of more than fifteen percent
(15%) of the Association's total assets, less depreciation, as reflected on the
books of the Association at the time of the transaction, must be approved by the
members pursuant to the provisions of Article IX, Section 1 of these bylaws.
(g) A merger of the Association with any other cooperative, or with any
other entity to the extent permitted by applicable law, must be approved by the
affirmative vote of members constituting two-thirds (2/3) of the members voting
at a meeting with respect to which a quorum exists.
SECTION 7. Record Date. To determine the members entitled to notice of a
meeting of the members or to vote on matter that is to be submitted to a vote of
the members, or or any other proper purpose, the board of directors may fix date
that occurs no more than thirty (30) days before the ate of notice or
distribution of mail ballots as the record date or the determination. If a
record date is not fixed for the etermination of members entitled to notice of a
meeting or o vote on a matter, the date on which notice of the meeting r of mail
voting is first mailed shall be the record date. hen a determination of members
entitled to vote at a eeting is made, the determination applies until the
meeting s adjourned sine die. To determine whether a person is a ember for
purposes of deciding whether a sufficient number f members have signed a
petition to hold a special meeting f members for any purpose, the board of
directors may fix a ecord date that occurs no more than thirty (30) days before
the date on which petitions are first received by the Association. The record
date fixed for the original meeting shall be the record date for the adjourned
meeting under Article III, Section 5.
SECTION 8. Order of Business. (a) The order of business at the annual
meeting of the members and, insofar as possible, at all other meetings of the
members, shall be essentially as follows:
1) Report on the number of members present in person in order to determine the
existence of a quorum.
2) Reading of the notice of the meeting and proof of the due publication or
mailing thereof.
3) Reading of unapproved minutes of previous meetings of the members,
making technical changes only to the minutes, and approval thereof.
4) Presentation and consideration of reports of officers, directors and
committees.
5) Election of directors.
6) Unfinished business.
7) New business.
8) Adjournment.
(b) Proposed amendments to the bylaws upon which voting is being conducted
by ballot may be discussed at the annual meeting, but shall not be treated as
being before the annual meeting for action, other than passage or defeat of the
proposed amendments. They may not be further amended or tabled by action of the
annual meeting.
SECTION 9. Elections and Election Committee.
(a) At the beginning of each calendar year, and not less than ninety (90) days
prior to the annual meeting, the board of directors shall appoint an election
committee, as provided for in Article XV of these bylaws. The committee shall
consist of the master election judge, who shall chair the committee, and not
more than twelve election judges. This committee shall have the responsibility
for conducting all voting by secret ballot during the calendar year. The
election committee shall devise such procedures, and adopt such rules and
regulations, subject to the approval of the board of directors, as may be
reasonably necessary or convenient to the discharge of the election committee's
responsibilities. These responsibilities shall include, but are not limited to
(1) the registration of members at the annual or special meeting, and (2) the
obligation of insuring the fairness, impartiality, confidentiality, and
integrity of the voting process. The master election judge and election judges
shall be selected from the Association membership, with consideration for
geographical representation. In case of a vacancy, the board of directors shall
appoint an Association member to complete the unexpired term of the committee
member.
(b) The election committee shall cause the preparation of an official
ballot containing the names of the candidates for the office of director and the
proposed bylaw amendments. The ballot shall be designed with the position of
names of the candidates changed as many times as there are candidates. As nearly
as possible, an equal number of ballots shall be printed after each change. In
making the changes of position, the name of the candidate shall be taken and
placed at the bottom and the column moved up so that the name that before was
second is first after the change. After the ballots are printed, they shall be
placed in separate stacks, one stack for each change of position. The ballots
shall then be gathered by taking one from each stack, the intention being that
every other ballot in the accumulated stack of ballots shall have the names of
the candidates in a different position. The ballot shall also include a brief
description concerning the number of offices to be filled at the election and
the time, place, and method of voting. At least thirty (30) days prior to the
meeting, an official ballot shall be mailed by the secretary to each member with
1) a statement of the number of directors' seats to be filled, 2) the
candidates' names and election statements, 3) an explanation of any other
matters to be voted on by mail, the proposed changes to the bylaws, with the
Bylaws Committee's comments and 4) a report covering the calendar year
immediately preceding the annual meeting prepared by the General Manager setting
forth the attendance record of directors at regular and special board meetings,
together with a summary setting forth the agenda business items voted and the
vote of each director. The candidates' statements:
1) Shall specify whether the candidate was nominated by the Nominating
Committee or by petition.
2) Shall specify whether the candidate is:
(i) A member, officer, director, or employee of any
union local currently acting as a bargaining agent for
Association employees.
(ii) A person who has within the last two years had a
financial interest in a bid, proposal, project, or contract
with Chugach.
(iii) A spouse, child, brother, sister, parent, stepparent, stepchild
or stepsibling of: a) any person included in subparagraph (i) or (ii) above
or b) an employee of the Association.
3) May include a photograph of the candidate, and a statement not to exceed
200 words.
The election committee shall procure a post office box where all ballots shall
be received.
(c) Mailed ballots, to be valid, must be received in the designated post
office box by 12:00 Noon three (3) calendar days prior to the annual meeting or
special meeting. In lieu of casting a ballot by mail, a member may register a
vote by special ballot at the meeting.
(d) The election committee shall make proper arrangements to secure all
ballots before, during, and following the election. Marked ballots shall be
counted as soon after the close of balloting as may be reasonable under the
circumstances. The results thereof will be announced as soon as the count is
completed. Marked ballots will be retained and secured for a period of ninety
(90) days following the election, after which time they may be destroyed.
(e) The election committee may employ such additional election clerks as
may be required to register members at the annual or special meeting, to assist
in the counting of the ballots and otherwise to ensure the efficient management
of the meeting and balloting. Each candidate for the office of director may have
a representative present during all times that ballots are being counted. The
decision of a majority of the election committee shall be conclusive with
respect to the eligibility of any person to vote and the validity of any ballot
cast.
(f) A recount of votes cast for a director's seat may only be requested by
a candidate in that election. A request for a recount must be made in writing
and received by the Election Committee within 10 days of the close of balloting.
The recount will be done in the same manner as and by the same entity that
performed the original vote count. If the recount indicates that the candidate
requesting the recount has lost the election by more than 1 percent of the total
votes cast, then the cost of the recount shall be borne by the candidate. If the
recount indicates that the candidate requesting the recount has either won a
seat or lost by a margin of 1 percent or less, then the cost of the recount
shall be borne by the Association.
A group of 10 or more members who voted in that election may request a
recount of the ballots for a bylaws change or ballot question. A request for a
recount must be made in writing and received by the Election Committee within 10
days of the close of balloting. The same provision for payment of the costs as
provided above shall prevail, with the voters who requested the recount paying
for the recount if the margin is greater than 1 percent, and the Association
bearing the expense if the margin is 1 percent or less.
(g) In the event of a tie for an election of a director, a bylaws change or
a ballot question, a recount of the ballots shall be done. The Association shall
bear the cost of recounts in the event of a tie. If the recount confirms the
existence of a tie, then a run-off election shall be conducted by mail within 60
days of the date the results of the recount are certified. The form and content
of the ballots shall comply with this Article III, Section 9(b). The run-off
election shall be conducted by the Election Committee. The provisions of this
Article III, Section 9(d), (e) and (f) shall apply.
ARTICLE IV
DIRECTORS
SECTION 1. General Powers. The management of the business and the affairs
of the Association shall be vested in a board of seven (7) directors who shall
exercise all of the powers of the Association, except such as are by law, the
articles of incorporation, or by these bylaws conferred upon or reserved to the
members.
SECTION 2. Election and Tenure of Office. The persons named as directors in
the articles of incorporation shall compose the board of directors until their
successors shall have been elected and shall have qualified. Directors shall be
elected by secret ballot either mailed or cast in person at annual or special
meetings of the membership, by and from the members, to serve for a three-year
term, not to exceed three consecutive three year terms, until their successors
shall have been elected and qualify, provided that the terms of directors shall
be staggered so that one-third of the directors, or a number as close to
one-third as possible, shall be elected each year. The directors elected to fill
vacancies as provided in Article IV, Section 8 of these bylaws, shall serve only
for the unexpired portion of the term vacated. Where the remaining unexpired
terms to be filled are of different lengths, the longest term shall be given to
the director receiving the most votes. If the size of the board is subsequently
increased, the initial terms of the directors to fill the newly created seat or
seats shall be scheduled so that, as nearly as possible, an equal number of
terms expire each year. At each annual or special meeting, members shall be
elected to fill the seats on the board which become vacant as contemplated by
Article IV, Section 8 of these bylaws.
SECTION 3. Qualifications. (a) A person shall be eligible to serve as a
director, who:
1) Has been a member and bona fide resident in the area served by the
Association for 12 continuous months before appointment to the board,
or the notice of the election;
2) Is not in any way employed by a competing enterprise, however, an
employee of the Municipality of Anchorage who is not directly employed
by Municipal Light and Power is eligible to serve if he or she has no
fiduciary duties which in any way pertain to Municipal Light and Power;
3) Does not have a financial interest in a competing enterprise;
4) Is not a supplier, contractor, consultant, or other entity which does
business with the Association or a person with more than a 10%
ownership interest in a supplier, contractor, consultant, or other
entity which does business with the Association, except for providers
whose annual business with the Association does not exceed $25,000;
5) Is not an employee of the Association nor a member, officer, director,
nor employee of any union local currently acting as a bargaining agent
for Association employees;
6) Is not a person living in the same household with and financially
interdependent upon any person included in paragraphs 2, 3, 4, and 5,
above; and
7) Maintains i) his or her membership, ii) bona fide residency in the area
served by the Association, and iii) a minimum of 12 continuous months
of bona fide residency in the area served by the Association throughout
his or her term of office.
(b) An individual who is the authorized representative of a non-natural
entity (corporation, association or partnership, for example) which itself is
qualified under subsection (a) may become or remain a director if he is
qualified under subsections (a)(1), (2), (3), (4), (5), (6) and (7). If the
individual or the non-natural member fails to meet the prescribed
qualifications, or if the non-natural member changes its authorized
representative, the individual shall become subject to removal under subsection
(c), and the director's position shall become vacant, without power of
appointment by the non-natural member.
(c) Upon establishment of the fact that a director is holding office in
violation of any of the foregoing provisions including the disclosure provisions
of Article III, Section 9(b), subsection (2), the board of directors shall
remove such director from office unless the basis for disqualification is
remedied within thirty (30) days of notice of disqualification by the board of
directors.
(d) Directors are ineligible for employment by the Association for a period
of two (2) years after their term has expired.
(e) "Bona fide resident" is hereby defined to mean: 1) a person whose
primary residence is in the area served by the Association, and who actually
lives at this primary residence with the intention to remain there permanently
or indefinitely and 2) a non-natural entity who chooses as their authorized
representative a person who is a "bona fide resident" as defined in 1).
"Primary residence" shall mean the residence that is the chief or main
residence of the person and where the person actually lives for the most
substantial portion of the year. "Intention" shall mean the unequivocal
intention of the person as evidenced by that person's acts and words and by the
circumstances.
Nothing contained in this section shall affect in any manner whatsoever the
validity of any action taken at any meeting of the board of directors.
SECTION 4. Nominations. (a) Nominating Committee. It shall be the duty of
the board of directors to appoint, not less than one hundred and twenty days
before the dates of a meeting of the members at which directors are to be
elected, a committee on nominations, as provided for in Article XV of these
bylaws. The committee shall consist of not less than five nor more than seven
members, who shall be selected from different sections of the service area of
the Association as to insure equitable representation. No member of the board of
directors may serve on such committee. The committee shall seek qualified
candidates, as well as screen potential nominees. Public notice for nominations
shall be given ninety days prior to the meeting. The committee, keeping in mind
the principle of geographical representation, shall approve, prepare and post at
the principal office of the Association, at least seventy days before the
meeting, a list of nominations for directors, which may include a greater number
of candidates than are to be elected.
(b) Petition. Any fifty or more members, acting together, may make other
nominations by petition not less than sixty days prior to the election, and the
secretary shall post such nominations at the same place where the list of
nominations made by the committee is posted.
SECTION 5. General Manager and Financial Advisor. The board of directors
may appoint the following:
(a) General Manager. The general manager may be but shall not be required
to be a member of the Association. The general manager, together with
such other staff, agents and employees as he may select shall perform
such duties and shall exercise such authority as the board of directors
may from time to time vest in him.
(b) Financial Advisor. The Board, at its sole discretion, may engage the
services of a financial advisor, which may be used to advise on any and
all fiscal matters. The financial advisor shall report to the board.
SECTION 6. Policy, Rules and Regulations. The board of directors shall have
the power to make, adopt and enforce such policy, rules and regulations, not
inconsistent with law, the articles of incorporation, or these bylaws, as it may
deem advisable for the management of the affairs and business of the
Association, for the protection of its investment, and for the interest and
welfare of the members thereof. Such policy statements, rules and regulations
shall be in writing and shall be made available for review by the members.
SECTION 7. Removal of Directors by Members. Any member may bring charges
against a director to remove such director for cause. "Cause" means that the
director has committed an act or omission materially and adversely affecting the
business of the Association, which amounts to criminal conduct, fraud, gross
negligence, failure to perform prescribed duties, or gross misconduct in office.
The charging member shall bring charges by filing with the secretary such
charges in writing, together with a petition signed by at least two percent (2%)
of members which requests the removal of such director by reason of the charges.
The charges set forth in the petition must specifically allege grounds which, if
true, would constitute cause for removal. The signatures of members on the
petition shall be acceptable only when affixed to a sheet on which the petition
and the relevant charges are fully set forth; and, provided further, that the
person who solicited the signatures affixed to such petition shall acknowledge
thereon before a person authorized to take acknowledgments of deeds that he had
read the petition and the said charges against such director to each of the
members prior to the latter subscribing their names thereto. All signatures on
petitions to remove a director shall be collected within the single ninety (90)
calendar day period immediately preceding the date on which petitions are first
presented to the Association, and the board of directors shall establish such
policies as may be necessary and convenient to ensure compliance with this
provision. A director who is the subject of such charges shall be informed in
writing of the charges promptly upon receipt of such petitions by the
Association. The director shall have an opportunity at a special hearing on the
proposed removal, to be heard in person, or by counsel, and to present evidence
in respect to the charges, and the member or members bringing the charges
against the director shall have the same opportunity. This special hearing to
present evidence and testimony shall occur before ballots are sent to members
for voting by mail in connection with the special meeting at which the question
of removal shall be considered and voted upon by the members. The question of
the removal of such director shall be considered and voted upon at a meeting of
the members conducted in accordance with procedures established for regular
annual membership meetings. The question of removal shall be decided by the vote
of a majority of the members voting thereon at a meeting with respect to which a
quorum exists.
SECTION 8. Vacancies. Any vacancy occurring in the board shall be filled by
the affirmative vote of the majority of the remaining directors, and the member
so appointed to the board shall serve until his successor has been elected. At
such election following the existence of such vacancy, the members shall elect
one of their number to serve as director during the unexpired portion of the
term vacated, subject, however to provisions of Article IV, Section 2, 3 and 4
of these bylaws.
SECTION 9. Compensation. (a) Directors shall not receive any salary for
their services as directors, except that, by resolution of the board of
directors, a fixed fee and expenses of attendance, if any, may be allowed for
attendance at each meeting of the board of directors, or a meeting of a
committee thereof, or when a director is otherwise representing the Association
in an official capacity. No attendance other than regular or special board
meetings shall be reimbursed unless authorized in advance by the majority vote
of the board. The fixed fee shall not exceed $100.00 per meeting, and a director
may not be compensated for more than two regular board meetings per month, and
an additional 12 special board meetings per year. The total compensated meetings
shall not exceed 70 meetings per year for a director, and 85 meetings per year
for the president. The Association may not provide health insurance for
directors or their families, or insurance for risks except those incurred in
their capacity as directors.
(b) Directors' expense reimbursement requests shall be reviewed and
approved by the majority vote of the board. Directors may not receive salaries
for their services as directors, and, except in emergencies, shall not receive
salaries for their services in any other capacity without the approval of the
members.
ARTICLE V
MEETINGS OF DIRECTORS
SECTION 1. Regular Meeting. A regular meeting of the board of directors
shall be held without notice immediately after, and at the same place as, the
annual meeting of the members. A regular meeting of the board of directors shall
also be held monthly at such time and place in the Municipality of Anchorage,
State of Alaska, as the board of directors may provide by resolution. Such
regular monthly meetings may be held without notice other than such resolution
fixing the time and place thereof except that the board shall cause notice of
the selection of the time and place of the regular meetings to be given to the
members promptly after it is selected.
SECTION 2. Special Meetings. Special Meetings of the board of directors may
be called by the president, or by any three directors, and it shall thereupon be
the duty of the secretary to cause notice of such meetings to be given as
hereinafter provided. The president of the directors calling the meeting shall
fix the time and place, which shall be in the Municipality of Anchorage, State
of Alaska, for the holding of the meeting.
Written notice of the time, place and purpose of any special meetings of
the board of directors shall be delivered to each director not less than three
days previous thereto, either personally or by mail, by or at the direction of
the secretary, or upon default in duty by the secretary, by the president or the
directors calling the meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the director at
his address as it appears on the records of the Association, with postage
thereon prepaid.
SECTION 3. Quorum. A majority of the board of directors shall constitute a
quorum; provided, that if less than a majority of the directors are present at
said meeting, a majority of the directors present may adjourn the meeting from
time to time; and provided further, that the secretary shall notify any absent
directors of the time and place of such adjourned meeting. The act of the
majority of the directors present at the meeting at which a quorum is present
shall be the act of the board of directors. Each director present shall vote or
abstain on each motion. Each director shall dis-close any financial interest of
the director or of a member of the director's immediate family in a matter
before the board.
SECTION 4. Director Attendance. If a director is absent from three
consecutive regular board meetings or four regular board meetings, whether
consecutive or not, or from 25% of all meetings, including regular and special
meetings, board workshops, and committee meetings, in either of the two six
month periods described below, the director shall be deemed to have resigned
from the board of directors, and the vacancy thereby resulting will be filled as
provided in Article IV, Section 8, of these bylaws. For purposes of compliance
with this bylaw, attendance will be evaluated for two separate six month periods
beginning May 1st and November 1st of each year. A director who is absent on
Association business, including reasonable travel time to and from such
business, shall not be counted absent, provided such travel and absence was
approved in advance by the board. For purposes of this Section, an absence shall
not be counted if it is excused by a vote of a majority of the members of the
board not requesting the excuse at the next regular or special board meeting.
However, no more than two absences per director may be excused by the board in
either 6-month period.
SECTION 5. Membership Attendance. (a) Regular meetings, special meetings
and work sessions shall be open to all Association members. The notice of such
meeting and an agenda shall be posted in a conspicuous place in the public
places of business of the Association not later than three days prior to the
meeting. The board of directors shall adopt a policy establishing additional
means of providing public notice of meetings.
(b) No closed or executive sessions shall be held except to discuss:
1) Matters the immediate knowledge of which would clearly have an adverse
effect on the Association's finances;
2) Subjects that tend to prejudice the reputation and character of a
person; however, that person may request a public discussion;
3) Matters discussed with an attorney for the Association, the immediate
knowledge of which could have an adverse effect on the Association's
legal position.
SECTION 6. Minutes. Minutes will be kept for all regular and special
meetings and shall include each director's vote on each matter voted upon by the
board of directors. Copies of the minutes shall promptly be given to Association
members upon request. The board of directors may prescribe a reasonable fee for
such copies provided such fee shall not exceed the actual labor and material
costs of reproduction. An electronic recording of all regular and special
meetings shall also be made and kept for at least one year; Association members
may request a transcription of the tape upon payment of the cost of
transcription by a court reporter service; members shall also be permitted to
listen to such tapes at the headquarters building.
SECTION 7. Telephonic Board Meetings. For the purpose of the holding of any
regular or special meeting, the Board of Directors can validly conduct such
meeting by communicating with each other by means of conference telephones or
similar communications equipment as allowed by law. Telephonic attendance by
directors shall be permitted without limitation if the director is unable to
attend in person due to Association business provided the absence was approved
in advance by the board as provided under Article V, Section 4. Telephonic
attendance for reasons other than Association business shall be limited to 25%
of the meetings by any one director for the 6-month period beginning May 1 and
the 6-month period beginning November 1. For attendance evaluation, a director
is deemed absent from each meeting where the telephonic attendance limit was
exceeded.
The amendments to this Bylaw will take effect May 1, 1997.
ARTICLE VI
OFFICERS
SECTION 1. Number. The officers of the Association shall be a president,
vice-president, secretary and treasurer, and such other officers as may be
determined by the board of directors from time to time. The offices of secretary
and treasurer may be held by the same person.
SECTION 2. Election and Term of Office. The officers shall be elected
annually by ballot, by and from the board of directors, at the meeting of the
board of directors held immediately after the annual meeting of the members. If
the election of officers shall not be held at such meeting, such election shall
be held as soon thereafter as conveniently may be. Each officer shall hold
office until the first meeting of the board of directors following the next
succeeding annual meeting of the members, or until his successor shall have been
elected and shall have qualified. A vacancy in any office shall be filled by the
board of directors for the unexpired portion of the term.
SECTION 3. Removal of Officers and Agents by Directors. Any officer or
agent elected or appointed by the board of directors may be removed by the board
of directors whenever in its judgement the best interests of the Association
will be served thereby.
SECTION 4. President. The president shall:
(a) Be the principal executive officer of the Association and, unless
otherwise determined by the members or the board of directors, shall
preside at all meetings of the members and the board of directors;
(b) Sign any deeds, mortgages, deeds of trust, notes, bonds, contracts or
other instruments authorized by the board of directors to be executed,
except in cases in which the signing and execution thereof shall be
expressly delegated by the board of directors or these bylaws to some
other officer or agent of the Association, or shall be required by law
to be otherwise signed or executed; and
(c) In general, perform all duties incident to the office of president and
such other duties as may be prescribed by the board of directors from
time to time.
SECTION 5. Vice-President. In the absence of the president, or in the event
of his inability or refusal to act, the vice-president shall perform the duties
of the president, and when so acting, shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice-president shall
also perform such duties as from time to time may be assigned to him by the
board of directors.
SECTION 6. Secretary. The secretary shall be responsible for:
(a) Keeping the minutes of the meetings of the members and of the board of
directors;
(b) Seeing that all notices are given in accordance with these bylaws, or
as required by law;
(c) The safekeeping of the corporate records and seal of the Association,
and affixing the seal of the Association to all documents, the
execution of which on behalf of the Association under its seal is duly
authorized in accordance with the provisions of these bylaws;
(d) Keeping a register of the names and post office addresses of all members;
(e) Keeping on file at all times a complete copy of the articles of
incorporation and bylaws of the Association containing all amendments
thereto, which copy shall always be open to the inspection of any
members, and at the expense of the Association, forwarding a copy of
the bylaws and of all amendments thereto to each member on request; and
(f) In general, performing all duties incident to the office of secretary,
and such other duties as from time to time may be assigned by the board
of directors.
SECTION 7. Treasurer. The treasurer shall be responsible for:
(a) Custody of all funds and securities of the Association;
(b) The receipt of, and the issuance of receipts for, all moneys due and
payable to the Association, and for the deposit of all such moneys in
the name of the Association in such bank or banks as shall be selected
in accordance with the provisions of these bylaws; and
(c) In general, performing all the duties incident to the office of
treasurer and such other duties as from time to time may be assigned by
the board of directors.
SECTION 8. Delegation of Duties. In the absence of an officer, or in the
event of his inability or refusal to act, the board of directors will appoint
one of their number to perform the duties of his office; provided that the
offices of president and vice-president may not be combined with any other
office; and, provided further, nothing herein shall limit the right and duty of
the vice-president to perform the duties of the president in the event that the
president is absent, is unable to act, or refuses to act. The board of directors
may provide for the delegation of one or more of the duties of the secretary and
treasurer.
SECTION 9. Bonds of Officers. The treasurer, and any other officer or agent
of the Association charged with responsibility for the custody of any of its
funds or property, shall give bond in such sum, and with such surety, as the
board of directors shall determine. The board of directors, in its discretion,
may also require any other officer, agent or employee of the Association to give
bond in such amount and with such surety as it shall determine.
SECTION 10. Budget. The Board of Directors shall review, revise and approve
an annual operating budget prior to each fiscal year.
SECTION 11. Reports. The officers of the Association shall submit, at each
annual meeting of the members, reports covering the business of the Association
for the previous fiscal year. Such reports shall set forth the condition of the
Association at the close of such fiscal year.
ARTICLE VII
PATRONAGE CAPITAL
SECTION 1. Patronage Capital. The Association shall at all times be
operated on a cooperative, nonprofit basis for the mutual benefit of its
patrons. The Association's operations shall be so conducted that all patrons,
members and non-members alike, will through their patronage furnish capital for
the Association, subject to the provisions for sinking funds and reserves as
provided by Article VIII of these bylaws.
In order to induce patronage and to assure that the Association will
operate on a nonprofit basis, the Association is obliged to account on a
patronage basis to all its patrons, members and non-members alike, for all
amounts received from the furnishing of electric energy in excess of operating
costs and expenses properly chargeable against the furnishing of electric
energy. All such amounts in excess of operating costs and expenses are received
with the understanding that they are furnished by the patrons, members and
non-members alike, as capital. The Association is obligated to pay all such
amounts in excess of operating costs and expenses to the patrons by credits to a
capital account for each patron. The books and records of the Association shall
be set up and kept in such a manner that at the end of each fiscal year the
amount of capital, if any, so furnished by each patron, is clearly reflected and
credited in an appropriate record to the capital account of each patron, and the
Association shall within a reasonable time after the close of the fiscal year
notify each patron of the amount of capital so credited to his account. All such
amounts credited to the capital account of any patron shall have the same status
as though they had been paid to the patron in cash in pursuance of a legal
obligation to do so, and the patron had then furnished the Association
corresponding amounts for capital. In the event of dissolution or liquidation of
the Association, after all outstanding indebtedness of the Association shall
have been paid, outstanding capital credits shall be retired without priority on
a pro rata basis before any payments are made on account of property rights of
members. If, at any time prior to dissolution or liquidation, the board of
directors shall determine that the financial condition of the Association will
not be impaired thereby, the capital then credited to patrons' accounts may be
retired in full or in part, according to policies adopted by the board. Capital
credited to the account of each patron shall be assignable only on the books of
the Association pursuant to written instructions from the assignor, and only to
successors in interest or successors in occupancy in all or a part of such
patron's premises served by the Association, unless the board of directors,
acting under policies of general application, shall determine otherwise. All
other amounts received by the Association from its operations in excess of costs
and expenses shall, insofar as permitted by law, be:
(a) Used to offset any losses incurred during the current or any prior
fiscal year; and
(b) To the extent not needed for that purpose, allocated to its patrons on
a patronage basis, and any amount so allocated shall be included as
part of the capital credited to the accounts of patrons, as herein
provided.
Notwithstanding any other provisions of these bylaws, the board of
directors, at its discretion, shall have the power at any time, upon the death
of any patron, if the legal representative of his estate shall request in
writing that the capital credited to any such patron be retired prior to the
time such capital would otherwise be retired under the provisions of these
bylaws, to retire capital credited to any such patron immediately upon such
terms and conditions as the board of directors, acting under policies of general
application, and the legal representative of such patron's estate shall agree
upon, provided, however, that the financial condition of the Association will
not be impaired thereby.
ARTICLE VIII
FISCAL MANAGEMENT AND ACCOUNTING
SECTION 1. Revenues and Expenditures. The board of directors shall adopt
and maintain a system of accounting for receipts and expenditures in conformance
with the laws of the United States and of the State of Alaska applicable to
cooperative associations and corporations, which system shall at all times
provide the proper reserves for payments of interest and principal on
outstanding indebtedness, reserves for taxes, insurance, depreciation,
replacement of capital plant and facilities, and such other reserves and
accounts as the board of directors shall deem proper.
SECTION 2. Accounting System and Reports. The accounting system adopted and
maintained by the board of directors shall conform to such rules and regulations
applicable to accounting systems, their establishment and operation, and which
may be established by any applicable laws, rules and regulations of the United
States, the State of Alaska, or any regulatory agency thereof of competent
jurisdiction. The board of directors shall also, after the close of each fiscal
year, cause to be made a full, complete and independent audit of the accounts,
books, and financial conditions of the Association as of the end of each fiscal
year. A reasonably comprehensive and easily understood summary of the audit
report shall be submitted to the members prior to each annual meeting.
SECTION 3. Disclosure. Repealed April 25, 1996.
ARTICLE IX
DISPOSITION OF PROPERTY
SECTION 1. Disposition of Property. (a) The board of directors shall have
full power and authority to authorize the disposition of property of the
Association, or to authorize the execution and delivery of a mortgage or
mortgages, or a deed or deeds of trust, of any and all of the property, rights,
privileges, licenses, franchises and permits of the Association, whether
acquired or to be acquired, and wherever situated, as well as the revenues
therefrom, all upon such terms and conditions as the board of directors shall
determine, to secure any indebtedness of the Association.
(b) The sale, lease, or other disposition of more than fifteen percent
(15%) of the Association's total assets, less depreciation, as reflected on the
books of the Association at the time of the transaction, must also be approved
by the affirmative vote of members constituting not less than two-thirds (2/3)
of the members voting where the number of members voting to approve the
transaction also constitutes a majority of all of the members of the
Association, except that if such a disposition is to another cooperative or to
the State of Alaska pursuant to Alaska Statutes Section 10.25.400, such
disposition must also be approved by a majority of those members voting on the
issue in an election in which at least ten percent (10%) of the members vote.
ARTICLE X
SEAL
The corporate seal of the Association shall be in the form of a circle and
shall have inscribed thereon the name of the Association and the words
"Corporate Seal, State of Alaska."
ARTICLE XI
FINANCIAL TRANSACTIONS
SECTION 1. Contracts. Except as otherwise provided in these bylaws, the
board of directors may authorize any officer or officers, agent or agents, to
enter into any contract, or execute and deliver any instrument, in the name and
on behalf of the Association, and such authority may be general or confined to
specific instances.
SECTION 2. Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, and all notes, bonds or other evidences of indebtedness issued
in the name of the Association, shall be signed by such officer or officers,
agent or agents, employee or employees of the Association, and in such manner,
as shall from time to time be determined by resolution of the board of
directors.
SECTION 3. Deposits. All funds of the Association shall be deposited
from time to time to the credit of the Association in such
bank or banks as the board of directors may select.
SECTION 4. Fiscal Year. The fiscal year of the Association shall begin on
the first day of January of each year and shall end on
the thirty-first day of December of the same year.
SECTION 5. Full and Open Competitive Bidding. It is deemed to be in the
best interest of the Association: to encourage and require full and open
competitive bidding of contracts; to take affirmative steps to insure that the
Association selects the lowest responsible bidder for its requirements from
among the broadest range of suppliers qualified by expertise and resources; and
to insure that responsible bidders are not excluded. These requirements shall
not apply in emergency matters, to professional service contracts, or (in the
discretion of the Association) to contracts reasonably expected to be less than
$50,000. The Directors shall require a review of the Association's bidding
procedures and qualifications and shall take such actions as may be in the best
interests of the Association as determined herein.
Within thirty (30) months of the passage of this Section 5, the Board of
Directors shall have fully implemented the provisions of this Section 5.
ARTICLE XII
MISCELLANEOUS
SECTION 1. Membership in Other Organizations. The Association may, with the
approval of the Board of Directors, become a partner, member, shareholder or
holder of any other interest in any entity engaging in any lawful business.
SECTION 2. Waiver of Notice. Any member or director may waive in writing
any notice of a meeting required to be given by these bylaws. The attendance of
a member or director at any meeting shall constitute a waiver of notice of the
meeting, unless the person participates in the meeting solely for the express
purpose of objecting to the transaction of any business on the ground that the
meeting has not been lawfully called or convened.
SECTION 3. Interpretation. Wherever the masculine gender is used in
these bylaws it shall be construed also to refer to the feminine.
ARTICLE XIII
AMENDMENTS
SECTION 1. Notice. These bylaws may be altered, amended or repealed by the
members at any regular or special meeting, or by ballot as provided for in
Article III, Section 9, provided the notice of such meeting shall have contained
a copy of the proposed alteration, amendment or repeal. Notice to the membership
shall be given ninety days prior to the annual meeting election for submission
of recommended bylaw changes.
SECTION 2. Bylaws Committee. It shall be the duty of the board of directors
to appoint, not later than December 15th of each year, members to a committee on
bylaws, as provided in Article XV of these bylaws. The committee shall consist
of not less than five nor more than seven members, who shall be selected from
different sections of the service area of the Association so as to insure
equitable representation. No member of the board of directors may serve on such
a committee. The committee shall review the bylaws of the Association, consider
any recommendations for revisions thereof which may be made by the board of
directors or any member, and report their recommendations concerning the bylaws
to the annual membership meeting. Nothing herein shall be interpreted to limit
the authority of the board of directors to propose changes in the bylaws, or the
right of the members to call a special meeting for any proper purpose pursuant
to Article III, Section 2, herein.
ARTICLE XIV
ADVISORY COUNCIL
SECTION 1. Member Advisory Council. The board of directors shall create
and establish a Member Advisory Council to advise the board.
SECTION 2. General Duties. It shall be the duty of the board of directors
to appoint members to the advisory council, as provided in Article XV. Members
shall be selected from different sections of the service area to the Association
so as to insure equitable representation.
ARTICLE XV
STANDING AND AD HOC COMMITTEES
SECTION 1. General. This section shall apply to standing and ad hoc
committees which may from time to time be appointed by the board. Standing
committees include: the Election Committee, as provided for in Article III,
Section 9; the Nominating Committee, as provided for in Article IV, Section 4;
the Bylaws Committee, as provided for in Article XIII, Section 2; and the Member
Advisory Council, as provided for in Article XIV.
SECTION 2. Compensation. Members of standing and ad hoc committees
shall receive no compensation or gratuity for their participation in the
affairs of the Association.
SECTION 3. Terms. The terms of standing committee members shall be for no
more than three (3) years and be staggered so that, as nearly as possible,
one-third shall expire each year.
SECTION 4. Membership. In order to be fairly representative of the
Association's diverse membership, it is preferable that standing and ad hoc
committees be comprised of members who reflect that diversity. Toward that end,
the selection process shall include consideration of the member's occupation,
education, experience, geographical area in which service is provided by the
Association, and type of service provided by the Association. A person is
eligible to serve on such committees provided that such person is not:
(a) an employee or director of the Association;
(b) a director, officer or employee of any union local currently acting as a
bargaining agent for Association employees;
(c) a person employed by a competing enterprise, however, an employee of the
Municipality of Anchorage who is not directly employed by Municipal Light
and Power is eligible to serve if he or she has no fiduciary duties which
in any way pertain to Municipal Light and Power;
(d) a person having a financial interest in a competing enterprise;
(e) a supplier, contractor, consultant or other entity which does business with
the Association or a person with more than a 20% ownership interest in a
supplier, contractor, consultant or other entity which does business with
the Association except for providers whose actual business with the
Association does not exceed $50,000; or
(f) a person living in the same household with and financially interdependent
upon any of the persons listed in (a) through (e), above.
SECTION 5. Vacancy. In the case of a vacancy, the board of directors shall
appoint an Association member in accordance with the provisions of this Article
to complete the unexpired term of a committee member.
ARTICLE XVI
INDEMNIFICATION
The Association shall indemnify and defend directors, officers, employees
or agents of the Association who are, or are threatened to be made, parties to
civil, criminal or administrative proceedings, for expenses (including
attorneys' fees), judgments, fines and settlements, actually and reasonably
incurred, if the acts complained of were performed within the scope of the
director's, officer's, employee's or agent's duties, and the director, officer,
employee or agent acted in good faith and in a manner he reasonably believed
should be in, or not opposed to, the best interests of the Association, and,
with respect to a criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The Association may purchase and maintain
insurance to provide for such indemnification and defense.
ARTICLE XVII
MEMBER ACCESS TO INFORMATION
SECTION 1. Access Rights. The rights of the members to examine and make
copies of the books and records of the Association at a reasonable time and for
a proper purpose in accordance with Alaska Statutes shall not be infringed. The
following information is deemed to be requested for a proper purpose without any
showing whatsoever and shall be made available to members on request of a
member.
(a) Names and mailing addresses of Association members when requested
by a candidate running for election to the Association Board;
(b) Salary, title, job classification and position description, benefits,
leave accrued and cashed-in, and hours worked, but not employee name, for each
employee position in the Association;
(c) Collective bargaining agreements of any kind to which the Association
is a party;
(d) Published information which shall include:
1) Documents provided to any regulatory authority including, but not
limited to Alaska Public Utilities Commission (APUC), Federal Energy
Regulatory Commission (FERC) and Securities and Exchange Commission
(SEC) filings,
2) Documents provided in open session to the Board of Directors or
Association committees, including but not limited to budget documents,
feasibility studies, audits or cost effectiveness studies,
correspondence between the Association and third parties and minutes of
Board of Directors or Association committee meetings.
SECTION 2. Charges. The Association may charge no more than the actual
incremental cost of producing the above information.
SECTION 3. Policies and Procedures. Nothing in this Article XVII prevents
the Association from allowing for additional disclosure of Association
information or from developing other rules for disclosure and payment therefor
by policy or procedure provided that the policy or procedure shall in no way
restrict the disclosure required in this Article XVII.
39
Return to:
Don Edwards, General Counsel
Chugach Electric Association, Inc.
P.O. Box 196300
Anchorage, AK 99519-6300
NINTH SUPPLEMENTAL INDENTURE OF TRUST
(Amending Legal Description of Real Property
(Acquired and/or Released by the Company to Exhibit A of the Indenture)
THIS NINTH SUPPLEMENTAL INDENTURE OF TRUST, dated as of April 25,
2000, is amendatory and supplemental to that certain Indenture of Trust
dated September 15, 1991 (the ?Original Indenture?), by and between CHUGACH
ELECTRIC ASSOCIATION, INC., an Alaska electric cooperative (the ?Company?),
and SECURITY PACIFIC BANK WASHINGTON, N.A., a national banking association,
recorded September 25, 1991, under the following recording numbers:
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
Recording District Recording Number, Book and Page
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Anchorage 91-040327 (Book 2195, Page 178)
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Kenai 91-7151 (Book 389, Page 637)
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Palmer 91-011276 (Book 663, Page 167)
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Seward 91-1051 (Book 62, Page 251)
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Valdez 91-0738 (Book 114, Page 233)
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
The Original Indenture was amended by those, First, Second, Third,
Fourth, Fifth, Sixth, Seventh and Eighth Supplemental Indentures, dated as of
March 17, 1993, May 19, 1994, June 29, 1994, March 1, 1995, September 6, 1995,
April 3, 1996, June 1, 1997 and February 4, 1998, respectively, and recorded as
follows:
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------- --------------------- ----------------------------------------------- ---------------------------
RECORDING DISTRICT SUPPLEMENTAL RECORDING NUMBER, BOOK AND PAGE RECORDING DATE
INDENTURE
- -------------------- --------------------- ----------------------------------------------- ---------------------------
- -------------------- --------------------- ----------------------------------------------- ---------------------------
Anchorage First 93-014587 (Book 2394, Page 638) March 30, 1993
Second 94-036094 (Book 2656, Page 313) May 23, 1994
Third 94-046579 (Book 2678, Page 629) July 11, 1994
Fourth 95-015010 (Book 2772, Page 604) March 31, 1995
Fifth 96-006182 (Book 2886, Page 853) February 12, 1996
Sixth 96-028052 (Book 2936, Page 602) June 10, 1996
Seventh 97-044282 (Book 3117, Page 356) September 2, 1997
Eighth 98-021693 (Book 3232, Page 498) April 20, 1998
- -------------------- --------------------- ----------------------------------------------- ---------------------------
- -------------------- --------------------- ----------------------------------------------- ---------------------------
Kenai First 94-3630 (Book 441, Page 841) April 27, 1994
Second 94-4844 (Book 444, Page 348) May 31, 1994
Third 94-6354 (Book 447, Page 238) July 11, 1994
Fourth 95-0383 (Book 461, Page 299) April 10, 1995
Fifth 96-1826 (Book 480, Page 485) March 12, 1996
Sixth 96-4713 (Book 486, Page 796) June 18, 1996
Seventh 97-7086 (Book 513, Page 807) September 4, 1997
Eighth 98-3320 (Book 528, Page 037) April 28, 1998
- -------------------- --------------------- ----------------------------------------------- ---------------------------
- -------------------- --------------------- ----------------------------------------------- ---------------------------
Palmer First 94-6629 (Book 763, Page 279) April 26, 1994
Second 94-008794 (Book 768, Page 219) May 27, 1994
Third 94-011249 (Book 773, Page 460) July 11, 1994
Fourth 95-003739 (Book 0800, Page 693) April 4, 1995
Fifth 96-003374 (Book 0840, Page 390) March 12, 1996
Sixth 96-008674 (Book 0852, Page 453) June 18, 1996
Seventh 97-014700 (Book 0911, Page 038) September 4, 1997
Eighth 98-007176 (Book 0946, Page 137) April 28, 1998
- -------------------- --------------------- ----------------------------------------------- ---------------------------
- -------------------- --------------------- ----------------------------------------------- ---------------------------
Seward First 94-562 (Book 72, Page 239) April 29, 1994
Second 94-0832 (Book 72, Page 786) June 2, 1994
Third 94-1091 (Book 73, Page 283) July 12, 1994
Fourth 95-0392 (Book 76, Page 575) April 4, 1995
Fifth 96-0301 (Book 80, Page 589) February 29, 1996
Sixth 96-0853 (Book 81, Page 859) June 19, 1996
Seventh 97-1278 (Book 87, Page 352) September 10, 1997
Eighth 98-0632 (Book 90, Page 707) April 29, 1998
- -------------------- --------------------- ----------------------------------------------- ---------------------------
- -------------------- --------------------- ----------------------------------------------- ---------------------------
Valdez First 94-0604 (Book 122, Page 677) April 27, 1994
Second 94-0767 (Book 122, Page 967) May 31, 1994
Third 94-0971 (Book 123, Page 269) July 11, 1994
Fourth 95-0383 (Book 126, Page 214) April 10, 1995
Fifth 96-0158 (Book 128, Page 435) February 28, 1996
Sixth 96-0550 (Book 129, Page 361) June 19, 1996
Seventh 97-0972 (Book 133, Page 332) September 22, 1997
Eighth 98-0408 (Book 135, Page 186) April 29, 1998
- -------------------- --------------------- ----------------------------------------------- ---------------------------
</TABLE>
<PAGE>
The Original Indenture, as amended by the First, Second, Third, Fourth,
Fifth, Sixth, Seventh and Eighth Supplemental Indentures, is referred to herein
as the ?Indenture.? All capitalized terms used and not otherwise defined in this
Ninth Supplemental Indenture shall have the meanings assigned to those terms in
the Indenture, except where the context clearly indicates otherwise.
The Indenture secures payment of the principal of (and premium, if any)
and interest on the Outstanding Secured Bonds (as defined in the Indenture) and
the performance of the covenants contained in such Outstanding Secured Bonds and
the Indenture.
Pursuant to the Indenture, the Company did grant, bargain, sell, alien,
remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set
over and confirm to Security Pacific Bank Washington, N.A., as Trustee, all
property, rights, privileges and franchises of the Company of every kind and
description, real, personal or mixed, tangible and intangible, whether then
owned or thereafter acquired by the Company, except any Excepted Property (as
defined in the Indenture), and granted a security interest therein for the
purposes therein expressed.
The purpose of the First, Second, Fourth, Fifth, Sixth and Eighth
Supplemental Indenture was to amend the legal description of certain real
property (described in the respective Supplemental Indentures) acquired and/or
released by the Company to Exhibit A of the Indenture after the date of the
Original Indenture, and to confirm the substitution of Seattle-First National
Bank (successor by merger to the original Trustee, Security Pacific Bank
Washington, N.A.) as Trustee under the Indenture. The purpose of the Third
Supplemental Indenture was to establish a new series of bonds to be designated
First Mortgage Bonds, CoBank Series, to be issued to the National Bank for
Cooperatives pursuant to the terms of a Credit Agreement between the Company and
the National Bank for Cooperatives. The National Bank for Cooperatives was
subsequently merged into CoBank, ACB (?CoBank?), which has thereby succeeded to
the interests of the National Bank for Cooperatives under such Credit Agreement
and all outstanding CoBank Bonds. The purpose of the Seventh Supplemental
Indenture was to amend the terms of the Third Supplemental Indenture
establishing the First Mortgage Bonds, CoBank Series, to eliminate the maximum
aggregate amount of bonds of such series the Company may issue.
As a result of the acquisition by U.S. Bank Trust National Association
(formerly known as First Trust National Association, a national banking
association,) of the trust business of Bank of America NW, N.A. (formerly known
as Seattle-First National Bank), U.S. Bank Trust National Association has
succeeded to the interest of the Trustee under the Indenture.
On January 22, 1999 and February 1, 1999, the Company acquired
additional interests in real property which real property was not specifically
described in Exhibit A to the Indenture, but which interest was intended to be
subjected to the lien of the Indenture from and after the date of the Company's
acquisition thereof.
<PAGE>
On December 23, 1998, the Company released interests in real property
which real property was included in Exhibit A to the Indenture, and which
interest is now intended to be released from the lien of the Indenture from and
after the date of the Company?s release thereof.
The purpose of this Ninth Supplemental Indenture is to a) confirm that
the Company's interest in the acquired real property described in Exhibit A
attached hereto, including the Company's interest in all improvements thereon
and appurtenances thereto, is in all respects subject to the lien of the
Indenture in the same manner and to the same extent as if legally described in
Exhibit A to the Indenture, and Exhibit A to the Indenture is hereby amended as
to the Company's interest in the real property described in Exhibit A attached
to this Ninth Supplemental Indenture; and b) to confirm that the Company no
longer has an interest in the real property described in Exhibit B attached
hereto and such real property is therefore no longer subject to the lien of the
Indenture.
CHUGACH ELECTRIC ASSOCIATION, INC.,
an Alaska electric cooperative
By /s/ Eugene N. Bjornstad
Title: General Manager
U.S.BANKTRUST NATIONAL ASSOCIATION,
a national banking association
By /s/ D Woodard
Title: Vice President
<PAGE>
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this 15th day of
March, 2000, by Eugene N. Bjornstad, the General Manager of CHUGACH ELECTRIC
ASSOCIATION, INC., an Alaska electric cooperative, on behalf of the cooperative.
/s/ Dianne Hillemeyer
NOTARY PUBLIC in and for Alaska.
My commission expires 5-13-2000.
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that Michael A.
Jones, is the person who appeared before me, and said person acknowledged that
he signed this instrument, on oath stated that he was authorized to execute the
instrument and acknowledged it as the Vice President of U.S. BANK TRUST NATIONAL
ASSOCIATION, to be the free and voluntary act and deed of said national banking
association, for the uses and purposes therein mentioned.
Given under my hand and official seal this 25 day of April, 2000.
/s/ Shirley D. Young
Print name: Shirley D.
Young NOTARY PUBLIC in and
for Washington, residing at
King County My commission
expires 11/15/2000.
<PAGE>
EXHIBIT A
(Ninth Supplement Indenture)
Property Acquired (two parcels):
Lot 15, Block 3, PATRICIA SUBDIVISION, according to the official plat
thereof, filed under Plat Number 69-54, Records of the Anchorage
Recording District, Third Judicial District, State of Alaska.
SUBJECT to reservations and exceptions in U.S. Patent and/or in Acts
authorizing the issuance thereof; real property taxes, if any due;
easements and notes on plat; easements of record; and reservation of
all oil, gas and mineral rights in instrument recorded April 5, 1965,
in Book 299 at Page 34.
Lot 19, Block 2, PATRICIA SUBDIVISION, according to the official plat
thereof, filed under Plat Number 69-54, Records of the Anchorage
Recording District, Third Judicial District, State of Alaska.
SUBJECT to reservations and exceptions in U.S. Patent and/or in Acts
authorizing the issuance thereof; real property taxes, if any due;
easements and notes on plat; easements of record; and reservation of
all oil, gas and mineral rights in instrument recorded April 5, 1965,
in Book 299 at Page 34.
<PAGE>
EXHIBIT B
(Ninth Supplement Indenture)
Released Property (one parcel):
A parcel of land within Tract A, CEA Hillside Substation Subdivision according
to Plat 91-8, on file in the office of the District Recorder, Anchorage
Recording District, Seward Meridian, Alaska, and as shown on the Attachment A, a
drawing of the State of Alaska Department of Transportation and Public
Facilities Right of Way Required for Rabbit Creek Road Rehabilitation FM-0504(7)
Parcel No. 3 dated April 1998, said parcel more particularly described as
follows:
Beginning at the southeast corner of said Tract A; thence along the
east property line N 00 22? 53? W 15.50 feet; thence S 74 57? 54?
W 100.00 feet; thence S 00 22? 53? E 15.50 feet; then along the
south property line of said Tract A, said south property line also
being the north boundary line of the Rabbit Creek Road right of way,
N 74 57? 54? E 100.00 feet to the southeast corner of said Tract A
and the point of beginning. Said parcel containing 1500 square feet,
more or less.
<PAGE>
["Attachment A" contains a drawing of Parcel No. 3 for the State of Alaska
Department of Transportation and Public Facilities Right of Way Required for
Rabbit Creek Road
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 8,920,126
<SECURITIES> 0
<RECEIVABLES> 16,365,664
<ALLOWANCES> 481,661
<INVENTORY> 14,107,446
<CURRENT-ASSETS> 43,479,708
<PP&E> 693,764,980
<DEPRECIATION> (249,850,311)
<TOTAL-ASSETS> 519,283,217
<CURRENT-LIABILITIES> 44,496,734
<BONDS> 322,390,267
0
0
<COMMON> 0
<OTHER-SE> 127,846,281
<TOTAL-LIABILITY-AND-EQUITY> 519,283,217
<SALES> 40,871,074
<TOTAL-REVENUES> 40,871,074
<CGS> 0
<TOTAL-COSTS> 29,703,456
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,140,861
<INCOME-PRETAX> 5,376,093
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,376,093
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,376,093
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
