Electrical Power for Valdez and the Copper River Basin-1981

energy would be fully utilized. As a result the annual power benefits arereduced by approximately 9 percent to $4,534,000. A summary of the resultingeconomic justification for the low case is as follows:Average Annual Benefits ($1,000)Average Annual Costs (1,000)Net Annual Benefits $1,000)Benefit-Cost Ratio4,5343,2341,3001.40The above sllmnary is based on the power-on-1ine date of the selected plan(1990). A delayed power-on-1ine date of 1995 under the low growth assumptionreduces the problem of underuti1ization. Nevertheless, 2 years must elapsebefore the project is fully absorbed. Resulting benefits and costs have beenbrought back to a 1990 base for the purpose of comparison.Average Annual Benefits ($1,000)Average Annual Costs ($1,000)Net Annual Benefits ($1,000)Benefit-Cost Ratio4,3342,2662,0681. 91The effects of various fuel cost escalation rates on the low load growthscenario and the 1990 power-on-1ine date are shown at the end of this text.Impact of Solomon Gu1ch ' s Secondary Energy:As previously stated, benefits for the selected plan were estimated underthe assumption that the availability of secondary energy from Solomon Gulchwould not reduce the usability of Allison Lake's firm energy. In reality,Solomon Gu1ch ' s secondary energy \'lou1d probably render some of Allison's finnenergy surplus for short intervals during high flow years early in the projectlife. Due to the lack of data on Solomon Gu1ch ' s secondary energy output anddue to the limited significance of the potential effect, the SUbstantialanalysis effort required to quantify the effect was judged to be unwarrantedfor a small hydro project. To test the sensitivity of the analysis to thissimp 1 ifyi ng assumpti on, however, benefi ts \~ere reestimated based on theassumption that all of the Solomon Gulch secondary energy would displaceAl1ison ' s firm energy. This is clearly an extreme test, but it provides anupper-based estimate of the significance of this assumption. As shown,benefits are reduced to $1,717,000 under this extreme test, a reduction of 5percent. Ttli s confi rms that no si gnifi cant change in study fi ndi ngs wou1 doccur by quantifyi ng the di sp1 acement of All i son Lake IS fi rm energy by SolomonGul::h I s secondary.Average Annual Benefits ($1,000)Average Annual Costs ($1,000)Net Annual Benefits ($1,000)Benefit-Cost RatioAlternate Discount Rate:4,7173,2341,4831.46Interest rates for evaluation of civil works projects are annuallyestablished by law for use by all Federal water resource agencies. Thecurrent applicable rate is 7-3/8 percent, but some higher rate is likely forC-9