Electrical Power for Valdez and the Copper River Basin-1981

INTRODUCTIONThe purpose of this section is to outline the basic assumptions usedin making the economic analysis for hYdro development in the Valdez­Copper Valley area. Evaluation is based exclusively on economic benefitsthat can be derived from hydropower development. Evaluation of theAllison Lake development was accomplished by comparing the benefits toaccompanying costs. The benefit value of hYdroelectric power is measuredby the cost of providing the equivalent power from the most likelyalternative source (diesel).The base condition of the selected plan calls for the installment ofthe PRT by 1984. The proposed Allison hydro project would then augmentthe system with a power-on-line date of 1990. These projectedinstallment dates are derived from the community's future power needs, asposited by the Alaska PO\ter Administration's load growth forecast. TheAll i son hYdro component of the sel ected pl an is the subject of a margi nalanalysis in the latter half of this appendix.PROJECT COSTSA detailed cost estimate of the selected project is contained inSection D of the appendix.Interest During Construction:For the purpose of the screening analysis, interest duringconstruction was based on the formula of simple interest (7-3/8 percent)applied to a uniform expenditure over the construction period.Annual Costs:The compound interest charge on costs incurred during the constructionperiod of any project is considered a logical cost of the constructionphase and is added to first cost to establish the investment cost. Thisinvestment cost can then be transformed into an average annual fixed costby applying the appropriate capital recovery factor associated with the7-3/8 percent interest rate and 100-year economic project life. Byadding operations, maintenance, and replacement costs, a total annualcost is establ i shed for the purpose of determi ni ng comparabil ity andfeelsi bil i ty.Operation, Maintenance, and Replacement Costs (OM&R):Annual or~&R costs were provided by the Al aska Power Admi ni strati on(APA) and a more detailed discussion appears in the section on assessmentand evaluation of detailed plans. An OM&R cost of $200,000 has beenestablished for the Allison Lake project.C-l