AEA outlines $206 million federal grant for HVDC/Bradley transmission, state match and bond financing structure

The Alaska Energy Authority told the House Energy Committee that a $206 million federal grant for an HVDC transmission-related project (Bradley Lake/HVDC work) exists, with state appropriations and AEA-issued bonds identified as part of the match.

Curtis Thayer, executive director of the Alaska Energy Authority, said the project—s federal grant was approved about two years ago and that AEA has a signed grant agreement with the Department of Energy. He said the state appropriated $12.7 million last year toward the federal match and AEA issued bonds providing approximately $50 million toward the match. "That currently is on a pause right now with the federal government," Thayer said, but added reimbursements on billed work were being paid: "we've just got word that we had some reimbursements, and they've they're making payment on those reimbursements."

Thayer told the committee AEA decided to use some state funds to continue engineering work and limited procurement for roughly a 30- to 90-day window to avoid losing a construction season: "our spend for the next 30 day or 90 days for engineering work and some procurement and and early modeling is about $700,000. And we decided to move forward with this using the state funds on that because if we were to slow this down or wait 90 days, then we could lose a construction season or a whole season this summer."

AEA explained the bond financing history: when Bradley Lake paid off, utilities were relieved of debt service obligations that became available for required project work. Those excess payments supported the issuance of bonds in February 2022 that generated approximately $166 million. AEA described allocating $90 million to Sterling-Quartz Creek upgrades on the Kenai Peninsula, $28 million to battery energy systems (BESS) to support several utilities, and leaving about $50 million to help match federal funding for the large federal grant.

Thayer said the bonds are not state general-obligation bonds; they are revenue-backed by power sales agreements (the agency does not use the state's credit) and the interest earned on the bonds is retained with the projects. He also said legislative language in the governor's budget would allow AEA to retain interest on certain general‑fund appropriations and keep federal tax credits earned on projects within AEA to offset project costs rather than revert to the state general fund.

Ending: Committee members asked for more detail on bond structure and how bond interest and tax-credit retention would be applied to projects; AEA staff said those topics are part of forthcoming DCCED budget discussions.