§ 26.30.050. Asset Retirement Obligation Investment Fund.

A.

Name. The name of the account required for the Asset Retirement Obligation Liability (ARO Liability) of Municipal Light & Power (ML&P) for its share of the liability for dismantling, removal and restoration of property related to the Beluga River Unit (BRU) gas field (ARO Liability) shall be the "ARO Investment Fund" referred to in this section as the "Fund".

B.

Purpose.

1.

The purpose of the Fund is to provide for the establishment of an investment fund to invest current and future amounts received from ML&P customers through an "ARO surcharge" at a long-term rate of return (the "ARO Sinking Fund"). The purpose of the surcharge is to provide funds to satisfy the ARO Liability on or prior to the end of the economic life of the BRU gas field.

2.

Use of the assets of the Fund are restricted specifically for discharging the ARO Liability.

C.

ARO Investment Fund Board.

1.

An investment board is hereby established for the ARO Liability Investment Fund (the "ARO Board"). The ARO Board shall consist of five members. The ARO Board shall meet at least semi-annually.

2.

The mayor shall appoint all ARO Board members, subject to assembly confirmation.

3.

The ARO Board members shall serve at the pleasure of the Mayor.

4.

ARO Board member appointments shall be for staggered, three-year terms. No more than two terms may expire in the same calendar year. Initial ARO Board appointments shall be one year for one member, two years for two members and three years for two members.

5.

The ARO Board members shall include at least one member of the Municipality's Public Finance & Investments Division staff, at least one member of the Municipal Light & Power (ML&P) staff and at least one non-municipal employee.

a.

Notwithstanding the qualifications of board and commission members set out in subsections 4.05.035A. and B., ARO Board members are not required to reside within the municipality.

b.

Notwithstanding the physical presence attendance requirements set out in subsection 4.05.060F., members of the ARO Board may attend and participate in meetings using telephonic or video conferencing equipment or facilities, provided a member's attendance in such manner is disclosed on the record.

6.

The ARO Board will manage the investment activity of the Fund. The ARO Board may engage the services of financial advisors, trustees, custodians, money managers, investment advisors and other support personnel deemed necessary for the performance of its duties and responsibilities. Required funding for these services will be from the investment earnings of the Fund.

7.

Administrative staff support for the ARO Board and for the investment of funds shall be provided initially by the Public Finance & Investments Division. The ARO Board may procure additional or other support personnel as they deem necessary for staff support and for the investment of funds or the movement of funds within in the Fund.

8.

The ARO Board will submit an annual report to the Assembly each calendar year not later than June 30. At a minimum, the report will contain the results of the prior fiscal year operations, investment returns, the most recent calculation of the ARO Liability calculated by an independent analyst or company selected by ML&P, the market value of the Fund and management's projections of future deposits by the ML&P utility to the Fund.

9.

The ARO Board shall have a cost estimate of the ARO Liability as of the end of the prior fiscal year performed by an independent analyst at least every five years beginning in 2019.

D.

Responsibility.

1.

The ARO Board shall be responsible for the investment of assets of the Fund to meet its purpose.

2.

The Fund shall pay an investment management fee to the Public Finance & Investments Division that is consistent with the investment management fee paid by other funds of the municipality for as long as the Fund exists.

E.

Investment objective.

1.

The investment objective of the Fund is to achieve a long-term rate of return on assets in the Fund which, in conjunction with monthly deposits of customer funds by ML&P, will be sufficient to satisfy the ARO Liability.

2.

Future deposits by ML&P to the Fund shall occur monthly no later than the twentieth business day of the following month. The deposits into this Fund by ML&P shall be equal to all funds collected from customers from the "ARO surcharge".

3.

The ARO Board shall develop and adopt written investment policies on such areas as they deem prudent to accomplish the purpose of the Fund.

F.

Procurement Policy. For purposes of AMC subsections 26.30.050C.6. and 26.30.050C.7., the ARO Board is not subject to AMC Title 7 Purchasing and Contracts and Professional Services.

(AO No. 2017-9 , § 1, 1-24-17)