L - Alaska Energy Data Inventory

To gain an exemption based on an inability to raise capital, acompany would have to show that the added capital needed to burn coalor alternate fuels, instead of oil or gas, equals 25 percent or moreof the annual average capital budget.In writing these regulations, it is clear that the administration'sintent is to severly limit the scope of exemptions and place a heavyburden of proof on utilities seeking an exemption. Based on the proposedregulations, it would appear that rail belt utilities would have adifficult time obtaining exemption for new base load plants. The AlaskaPower Administration, Department of Energy, agrees with this assessment.The APA Administrator, Robert J. Cross, writes that "(APA's) finding isthat exemptions don't seem all that permanent or pertinent in terms ofa large new hydro project coming on line in 1992. I just don't see thelogic of the oil assumption in benefit determinations for lOO-years ofpower from a major new hydro project." 1/ Also agreeing that oil is aninappropriate alternative for benefit calculation is the State's AlaskaPower Authority. The Power Authority's Executive Director, Eric P. Yould,states that, "oil-fired generation for the rail belt area may not be acceptableeither for legal and regulatory reasons or from the standpoint offuel availability." 2/ He notes further that Golden Valley ElectricCooperative at Fairbanks recently analyzed the coal versus oil-firedgeneration question. GVEA has determined that the coal-fired generationalternative is preferable to oil if capital costs are not prohibitive.The full text of both pieces of correspondence are containedin Exhibit C-7.Based on the foregoing, coal-fired generation has been selectedas the most likely and appropriate alternative against which to comparethe Susitna hydroelectric proposal. Coal is therefore the basis forthe base case benefit calculations. Oil-fired generation is addressedin the sensitivity analysis.Derivation of Power Benefits - The Base CaseAnnual power benefits were computed by applying the unit value ofcapacity and energy to the usable output of the hydropower project.Benefits were computed for each year of the lOO-year economic life ofthe project and were then discounted to the base date to determine thecombined present worth. The base date in all cases is the power-onlinedate of the Watana project. The prescribed Federal discountrate of 6-7/8 percent was used. The last step of the calculations1/~/Robert J. Cross, Administrator, Alaska Power Administration in amemo to FERC dated 9 November 19780Eric P. Yould, Executive Director, Alaska Power Authority in aletter to Colonel George Robertson dated 17 November 1978.C-65