Before the FERC Application for New License for the Annex Creek ...

D-2
2.0 FAIR VALUE, NET INVESTMENT, SEVERANCE DAMAGES
2. 1 FAIR VALUE
Fa 1 r va 1 ue of the Project is defi ned as the amount neces sary to
reproduce the existing facilities in 1985. The cost of each major Project
feature was estimated at a reconnaissance level, using actual construction
costs for the newer or recently rehabilitated Project features when aval1-
able. For the older features, the costs were estimated based on similar
existing projects 1n Alaska. Table D-l presents the 1985 costs for constructing
the Annex Creek Component which are estimated to be $12,400,000. Table D-Z
presents the 1985 costs for the Salmon Creek Component which are estimated to
be $18,700,000.
A di fferent measure for determi n; ng the fa i r va 1 ue of the Project
is to esti mate the va 1 ue of the ex i sti ng features, 1 es s an amount for deprec i­
ation over time. This method was considered but proved inappropriate for this
Project because complete records of Project additions and deletions over the
life of the Project were not available. A complete explanation of this method
is included in Appendix D-1.
2.1.1 Annex Creek Component
The Annex Creek Dam was reconstructed in 1967 at a cost of $62,000.
Using the Water and Power Construction Cost Composite Index, the cost was
escalated to $200,000 at 1985 bid price level.
The Annex Creek Tunnel cost estimate was based on data from the
recently proposed Dorothy Lake Project. The lake tap cost estimate was determined
by consulting with Dave Westfall of R. W. Beck and Associates who has:
26 years of experience in design and construction of tunnels and associated
features. The tunnel and lake tap are estimated to cost $3,100,000 at 1985
bid price level.
The Annex Creek Penstock cost was estimated based on the costs of
the recently constructed Lower Salmon Creek Penstock and the Neets Bay Project
pipeline near Ketchikan, Alaska. A review of the Neets Bay Project pipeline
was inc 1 uded because the s; te ; s s; m; 1 ar to Annex Creek. Pens tock cost 1 s
estimated as $2,100,000.
The Annex Creek Powerhouse cost was estimated using the recently
constructed Lower Salmon Creek Powerhouse plus an allowance for the site's
remote location. Powerhouse cost is estimated as $1,600,000.
The Annex Creek transmission line cost was estimated to be
$5,400,000 based on existing projects.
2.1.2 Salmon Creek Component
The eXisting Salmon Creek Dam was built for a normal maximum water
surface elevation of 1172 feet (USCD). For safety considerations (see Dal1l