Analysis - The Institute for Southern Studies

Study #3 of 3:
2009 USWAG
On 11 June 2009 the Utility Solid Waste Action Group (Jim Roewer, Executive Director) provided to EPA a 14-page cost study USWAG
sponsored by the EOP Group Inc., containing an estimate of $39,000 million present value (PV) for conversion to dry disposal: “Cost
Estimates for Closure of Ash Ponds at Fossil Fuel Power Generation Facilities”, prepared in 2009 by EOP Group Inc. USWAG/EOP’s
$39,000 million PV estimate uses a 3% discount rate over 20 years with a 10-year implementation period, and consists of:
o $12,900 million PV (33%) for fly ash and bottom ash conversion to dry disposal
o $2,500 million PV (6%) for foregone sunk cost in ponds
o $23,700 million PV (61%) for construction of new wastewater plants for other non-ash ancillary wastewaters (e.g., stormwater)
which are currently co-mingled with the wet ash.
For purpose of comparing this estimate with the other two cost studies above, the following rough calculations extend the O&M costs from
the 20-year period from the USWAG/EOP study, to the 50-year period applied in this RIA:
o Dry management O&M cost = ($2.00 per ton higher cost than wet management) x (20.6 million tons per year in
impoundments) x (40-years after 10-year impoundment phase-out) = $1,648 million (undiscounted).
PV discounted @7% over 50-years = $279 million PV present value
o Waste water treatment plant (WWTP) O&M cost = ($525 million per year) x (40-years after 10-year impoundment phase-out)
= $21,000 million (undiscounted).
PV discounted @7% over 50-years = $3,558 million PV present value
Substituting these 50-year based PV O&M cost estimates for the 20-year based PV O&M cost estimates into the USWAG/EOP
$39,000 million 20-year PV total cost estimate produces the following 50-year based average annualized cost:
o Capital cost:($39,000 million PV total cost) – ($400 million 20-year PV dry management O&M) – ($5,200 million 20-year PV
WWTP O&M) = $33,400 million PV capital cost
Annual equivalent capital cost: ($33,400 million PV) x (0.07246 capital recovery factor @7% & 50-years) = $2,420 million per
year annualized capital cost
o O&M cost: ($279 million 50-year PV dry management O&M) + ($3,558 million 50-year PV WWTP O&M) = $3,837 million
PV present value O&M
Annualized O&M cost: ($3,837 million PV) x (0.07246 capital recovery factor @7% & 50-years) = $278 million per year O&M
o Total annualized cost (capital + O&M) = $2,698 million per year
Exhibit 4E below presents a summary of the extrapolated cost estimates based on the per-plant cost findings from these three alternative cost
studies, compared to the cost estimate based on the 2005 TVA cost study applied in this RIA.
90