Electrical Power for Valdez and the Copper River Basin-1981

CHAPTER VI II .FINANCIAL ANALYSISThe costs developed in this chapter compare the alternatives identifiedin Chapte~ VI as future energy supply possibilities: . (1) Allison CreekNo.1 or No.2, (2) pressure reducing turbines (PRT's) in .the A1yeskaPipeline, and (3) the Railbe1t interconnection. An indication of theexpenses related to continued use of diesels is also presented. Costsfor the PRT's are taken from the January 1980CVEA power cost study.Chapter VII indicated the PRT's and Allison Creek are more complimentarythan a1ternative--they are both needed. Therefore, costs are presentedmore for prospective than comparison. The Rai1be1t interconnectionappears a close alternative to Allison Creek asa follow-up to thePRT's. Costs come from the March 1979 Susitna Power Market Study.Cost SummaryCost summaries are shown for all of the above possibilities. Thesesummaries include investment, OM&R, and interest during construction(IDC). Investment and IDC total costs are converted to average annualcosts by use of a capital recovery factor at 8 percent discount rate and50-year repayment for Allison Creek and 30-year for the PRT's. AllisonCreek investment costs were submitted by the Corps of Engineers inAugust 1980 with an October 1980 price level. Project OM&R is takenfrom Mahoney Lake criteria (see bibliography item 12). Annual costs areassumed to inflate at the same rate for all alternatives; therefore noinflation has been applied. A busbar (losses included) cost comparisonvalue is computed by adding OM&R to annual investment costs, then dividingthe sum by firm annual energy. Tables VIII-1A and VIII-1B give theAllison Creek cost summary for alternate powerp1ant sites 1 and 2.The pressure reducing turbine cost estimates are shown on Table VIII-2.The investment and OM&Rcosts are given in the January 1980 CVEA PowerCost Study. They have been given an increase to reflect an October 1980price level. Amortized life was assumed to be 30 years, as suggested inthe CVEA study. A cost comparison value was computed similarly toAllison Creek. Annual energy assumes an 80 percent capacity factor.Table VIII-3 adapts costs of the CVEA-Rai1be1t interconnection in theMarch 1979 Susitna Power Market study to this Valdez/Glennallen study.The October 1978 prices have been raised 10 percent to agree with theAllison Creek level of October 1980. However, an 8 percent rather thanthe Susitna study 7.5 percent was used to calculate annual costs. TheSusitna study used 100,000 to 300,000 MWh per year energy transfer.However, 50,000 MWh annually compares better with Allison Creek, thePRT's, and the load requirements. Unit costs, therefore, of the transmissionline have more than doubled. Costs of purchasing Rai1be1tenergy come from average rate determinations as shown in Table VIII-3A.39