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

D-3
Safety Report, included in the Supporting Design Document to Exhibit F), the
current reservoir surface elevat10n is not allowed to exceed El 1140 (USCD).
Therefore, for determining the fair value of the dam, a cost of $9,500,000 was
estimated assuming a smaller da. would be built to operate at this reduced
1 eve 1 . Thi s est1mate was based on recently constructed concrete arch dams in
Alaska with some consideration of remoteness.
The Salmon Creek Upper Penstock cost estimate of $900,000 was based
on the actua 1 cost of the recent1 y reconstructed Lower Pens tock, whi ch was
$2,200,000.
The actua 1 cost for the Lower Salmon Creek Powerhouse was used in
this estimate; it was also used to estimate the cost of the Upper Salmon Creek
Powerhouse. Lower Salmon Creek Powerhouse cos t $1,900,000; the Upper Sa 1 mon
Creek Powerhouse cost $800,000.
The Salmon Creek transmission line cost was estimated to be
$700,000 using the same basis as the Annex Creek transmission line.
2.2 NET INVESTMENT
Net investment is defined as the original Project value less book
depreciation over the life of the Project. The total net investment for the
Project as of December 3l~ 1984 1s $7,247,627.64, as shown in Table D-3.
2.3 SEVERANCE DAMAGES
Severance damages are defined as the cost for the Applicant to find
alternative sources of power if the Annex Creek and Salmon Creek Hydroelectric
Project was taken over by another enti ty. In thi s case, it; s assumed that
the Project would be replaced by a 10-MH baseload diesel generator over the
1 i cense period of 40 years. Ten megawatts was se 1 ected to rep 1 ace the combined
Annex Creek Powerhouse and the Lower Salmon Creek Powerhouse installed
capacity of 10.3 MH. A diesel generator has an estimated life of 20 years;
therefore, a second generator would replace the first at the 21st year.
Information used for the diesel alternative is from the Juneau 20 Year Power
Supply Plan dated December 1984.
Table D-4 presents the Project annual cost including the fixed
charges on the tota 1 net investment and operati ng and maintenance expenses.
Table D-5 presents the total annual cost using diesel to generate the equivalent
amount of energy as Annex Creek and Salmon Creek. This includes purchasing
power from Snettisham rather than generating the equivalent amount of
diesel in the first 7 years. This table also includes the fixed costs,
operation and maintenance expenses, and fuel costs of operating the diesel
units.