A state agency has agreed to sell $78 million of revenue bonds to raise money for continued expansion of a publicly owned gas utility serving the Fairbanks North Star Borough.
The Alaska Industrial Development and Export Authority announced last week that the state agency’s board of directors approved the bond sale. Approval by the Interior Gas Utility board occurred in a narrow vote in February.
The IGU is carrying the risk, according to Karsten Rodvik, AIDEA external affairs officer. AIDEA is a “conduit to facilitate a market financing transaction for facilities owned by and paid for by third parties,” Rodvik wrote in an email.
“The conduit revenue bonds that are issued are payable out of revenues derived from the projects or the private businesses for which the projects are financed,” he wrote.
The IGU is owned by the borough but has “legal existence independent of and separate from the borough” under borough code. Gas utility ratepayers will repay the bonds as a portion of their gas bills.
An AIDEA news release states that “neither AIDEA’s credit or resources, nor the state’s, is at risk in connection with these bonds.”
The money will enable the IGU to finance projects to expand the Titan liquefied natural gas plant near Point Mackenzie in Southcentral Alaska and to install meters for hundreds of hoped-for new customers in Fairbanks and North Pole later this year, according to the AIDEA news release.
“This action taken by AIDEA is an important step to the realization of the
Interior Energy Project and bringing cleaner, more affordable energy to Alaskans in Fairbanks and North Pole,” Gov. Mike Dunleavy said in the news release.
The AIDEA board met on March 11 in Anchorage.
The IGU’s Titan II project includes constructing a 100,000-gallon-per-day modular feed plus a gas pretreatment and liquefaction plant. Two 75,000-gallon liquid natural gas storage tanks, an LNG loading rack with scales and an integrated power generation plant are also part of the project, according to the AIDEA news release.
The IGU is in the middle of a major buildout and completed a project to construct a huge natural gas storage tank in Fairbanks last year. The tank will pave the way for hundreds of new customers to be added to the gas network.
“We are very pleased to authorize this bonds issuance in continued support of the Interior Energy Project,” AIDEA Board Chairman Dana Pruhs said in the news release. “This reflects AIDEA’s ongoing dedication in working with the Legislature and the administration to bring affordable natural gas to Interior Alaska.”
AIDEA is a public corporation of the state whose purpose is to promote, develop and advance economic welfare. It has issued over $1.5 billion in bonds since its inception to fund more than 300 projects throughout the state, the news release stated.
While the IGU is affiliated with the borough, borough code vests management power with an independent board of directors with “the authority to borrow money and, as evidence of that borrowing, to enter into loan agreements and issue bonds, notes or other obligations. The utility may pledge any of its assets or revenues to pay or secure the payment of any such borrowing.”
Contact staff writer Amanda Bohman at 459-7545. Follow her on Twitter: @FDNMborough.