Electrical Power for Valdez and the Copper River Basin-1981

value of 66.92 mills/kWh. This figure was the basic mill rate used foreconomi c eval uati ons throughout the report. Its primary shortcomi ng isthat it does not take into account any inflationary changes in thecapacity values or the O&M of the energy value which would put it on parwith the hydropower cost estimate. As a result these figures are seen tobe conservative.Transmission Losses:Benefits must be based on prime power which represents projectcapabilities less losses. The highly favorable location of the AllisonLake project necessitates only 3.5 miles of additional transmissionline. Thus, for benefit evaluation purposes capacity losses are assumedto be 2.0 percent. Whil e there "Ii 11 be addi ti onal losses through thetransmission network, this would be absorbed by the local utility andreflected in their rates to users. This practice is consistent with the(modified) power values provided by the Federal Energy RegulatoryCommission. For purposes of the final screening analysis, a 2 percentcapacity loss ,,,as applied to each project variation.Credit for Energy and Capacity:Opportunities exist for displacing energy which could theoretically beproduced by exi sti ng thermal pl ants. If the cost of hydro energy ischeaper than the cost of producing energy with the existing thermalplants, it is to the utilities· advantage to shut down the thermal plantsand purchase hydro energy. This I'lould conserve fossil fuel, which wouldotherwise be burned. The value of thennal energy that would be displacedis dependent on prevailing fuel costs. For the Valdez-Copper Valleyregion it is apparent that maximum possible displacement of thermalenergy is desirable. Although CVEA is expected to fully employ all hydrocapacity at the earliest opportunity, the capacity costs of displacedexisting diesel units cannot be claimed as a benefit. Thus the proposedproject is not given any credit for capacity until 1994. Capacity creditis thereafter IIstepped in ll according to a diesel retirement scheduleprovided by the Alaska Power Administration.As illustrated in Figure C-l, the communities projected pOI'ler demandover the year 1997 will exceed the total firm energy output of SolomonGulch, the PRT and Allison for nearly every interval in that period. Bythe follOl'ling year, the power demand exceeds the system·s firm energyoutput at every poi nt. The proposed project is therefore gi ven fullcredit for firm energy as it is absorbed into the system.Figure C-2 is similar to the previous figure except that it includessecondary energy and is adjusted to reflect conditions in the year 2000.r~ote - the absence of the PRT (caused by the exhausti on of thePrudhoe Bay field).C-3