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HomeMy WebLinkAboutElva Feasibility Study Findings and Recommendations 1981reel dri~ · (.1 f,nJi CLftd AI.,ASKA t•O\VI~U AIT'l'IIOUI'I'Y LAKE ELVA HYDROELECTRIC PROJECT FEASIBILITY STUDY FINDINGS AND RECOMMENDATION April 30, 1981 A preliminary assessment of the Lake Elva Hydroelectric Project was initially made and presented in the "Bristol Bay Energy and Electric Power Potential" study conducted by Robert W. Retherford Associates for the Alaska Power Administration in 1979. This study prompted a "Reconnaissance Study of the Lake Elva and Other Hydroelectric Power Potentials in the Dillingham Area" which was conducted for the Alaska Power Authority by Robert W. Retherford Associates, also in 1979. For the community of Dillingham, the reconnaissance study indicated that the Lake Elva Project was the most cost effective option, although the cost of Lake Elva power was projected to be slightly higher than would result from development of a significantly larger regional project on the Tazimina River. The ensuing feasibility study was prompted by the reconnaissance study recommendation and from strong local support for the Lake Elva Project. Fund- ing for this feasibility study was made available to the Power Authority in July of 1980 and R. W. Beck and Associates was the engineering firm selected to conduct the investigations. If developed, the Lake Elva Project would feed into the Nushagak Electric Cooperative distribution system which currently supplies diesel power to the communities of Aleknagik and Dillingham. The 1980 load for the Cooperative was approximately 7,632,000 KWH with a peak demand of 1,452 KW. PROJECT DESCRIPTION: The Project site is located in Southwest Alaska within the Wood-Tikchik State Park approximately 45 air miles NNW of Dillingham, and is situated between Little Togiak Lake on the south and Amakuk Arm of Lake Nerka on the north. Hydrologic investigations conducted for the project indicate that the basin yields an average of 39,800 acre-feet (55 cfs) of runoff in an average year. The Project would include a 120-foot high rockfill dam located about 8,500 feet downstream from the outlet of the existing Lake Elva; a reservoir which would provide 26,800 acre-feet of active storage; a 6,700-foot long power conduit comprised primarily of buried concrete cylinder pipe; a steel-framed powerhouse containing two hot'izontal shaft Crossflow-type turbines each capable of delivering 750 KW under a rated net head of 280 feet; a 10-mile temporary construction road leading from the north end of Lake Aleknagik to the dam and powerhouse sites; about 1.5 miles of permanent site access roads; and approximately 33 miles of new 34.5-KV transmission line extending from the Project to the Village of Aleknagik, plus upgrading of approximately 22 miles of existing single-phase transmission line which extends from Aleknagik to Dillingham. The 1,500 KW Project, as planned, would provide dependable capacity of 1,200 KW. It would be capable of delivering 7,961,000 kwh of energy in an average year, and 7,769,000 kwh of firm annual energy, to the load center in Dillingham. FINDINGS: The Lake Elva Hydroelectric Project has been found to be feasible from a technical and environmental standpoint and could provide a reliable source of electricity for Nushagak Electric Cooperative, Inc. by early 1985. Field in- vestigations and studies revealed nothing unusual about the project site with respect to hydrological, geotechnical and other technical aspects. The project design concept is straightforward and typical of designs for similar size pro- jects of this type. Environmental concerns identified in the study include the impacts of flow interruptions, flow regime changes, and the loss of flow over a portion of Elva Creek. These impacts could alter groundwater flows to the Lake Nerka beaches where salmon spawn and could change water quality, most notably temperature and possibly cadmium concentrations. Other concerns include the impacts of access road and transmission line corridors upon anadromous waterways, accessability to prime moose habitat, and visual resources. The total estimated construction cost of the project is high, primarily due to its remote location. The estimated total construction cost based on January 1981 price levels is $29,449,000. According to Power Authority criteria for conducting economic analyses using discounted life cycle costs, the Project is equal in cost to the alternative of continued expansion of NEC's diesel electric generation system. In other words, the benefit-to-cost ratio is 1 to 1. The Project cannot be financed without state assistance. The Governor's financing program contained in HB 310 permits the project to be financed while minimizing state financial assistance. Of the three state assisted financing plans evaluated, a three percent loan for a 35-year term would provide the lowest cost energy to consumers, but the greatest cost to the State. RECOMMENDATIONS: If the Lake Elva Hydroelectric Project is to be pursued, the next step would be preparation and submittal of a license application, followed by continued environmental studies and project design. Construction could begin immediately after receipt of the license which can be anticipated not earlier than July 1982. The ke Elva Project would provide 74 percent of the projected Dillingham electrical energy demand in 1985 and a decreasing proportion thereafter. The project was found to be marginally feasible with the same life cycle cost as continued use of diesel, utilizing established Power Authority economic criteria. These criteria include an assumption of 3.5 percent diesel fuel escalation over and above the rate of inflation for twenty years. The Lake Elva Project does have the benefit, however, of producing inflation free renewable energy so that in the event fossil fuels escalate at higher rates than those assumed in the economic analysis, the cost of Lake Elva power would be less than continued diesel generation. The project also has the benefit of providing power on line three or more years earlier than the larger regional Tazimina River Hydroelectric Project. The Tazimina Project has the potential of fully satisfying the electrical ~nergy requirements of fifteen communities within the Bristol Bay Region, in- cluding Dillingham for at least 20 years. Furthermore, the Tazimina Project could possibly produce electrical energy at a lower unit cost than Lake Elva, primarily due to better site conditions and economies of scale. However, the Tazimina Project would not come on line until early 1988, provided no serious environmental problems are encountered. The Tazimina Project has not had the benefit of a detailed feasibility study as has the Lake Elva Project, so there is some degree of uncertainty as to its technical, economic and environmental feasibility. There appears to be a high degree of local support for both pro- jects. Beginning in June 1981, the Power Authority will conduct a feasibility study of the Tazimina Hydroelectric Project, and an interim assessment of the project's feasibility will be available in February, 1982. In the event the Tazirnina Project does not prove feasible, one year would be lost in advancing the Lake Elva Project if licensing is not pursued immediately. It is therefore the recommendation of the Power Authority that a license application for the Lake Elva Project be prepared and submitted to the Federal Energy Regulatory Commission. When the interim assessment of Tazimina's fea- sibility becomes available in February of 1982, a decision should be made at that time to proceed with final design and construction of the Lake Elva Project or instead to turn to Tazirnina hydroelectric development or another more cost effective project. ~?.~~ Eric P. Yould Executive Director LAKE ELVA PLM OF FINANCE Prepared by the Alaska Power Authority April, 1981 ..... A plan of finance is prepared for any new power project identified in a feasibility study as the most feasible alternative for development. The purpose of a plan of finance is to present various alternatives available to finance the power project and to identify the most appropriate means to achieve the lowest cost electric power for consumers while minimizing the amount of state assistance required. The Lake Elva project is marginally ible based upon a life cycle cost present worth analysis as compared to the base case plan of all diesel generation. The alternative means available to finance the projects are low interest loans from the Rural Electrification Administration (REA), Power Authority tax exempt revenue bonds, and state financing assistance in some form. REA loan funds may not be available due to federal budget reductions which may seriously impact the REA program. The Power Authority, under the current financing program, could not finance the project since the credit of the local community is not sufficient to provide security to bond purchasers of its capacity to repay the large debt. Therefore, state assistance in some form will be necessary to finance the project. Table I presents the annual costs of the Lake Elva project under 35 year levelized debt service for interest rates of 8.5% and 10.0%. Cost of energy for the Lake Elva plan is reflected in Table II. The analysis is based upon hypothetical financing conditions including general inflation, 8.5% interest rate, and 3.5% escalation of fuel prices above the general inflation rate for 20 years. Cost of energy for the base case plan of con- tinued all diesel generation is reflected in Table III which is based on the same factors. The 8. interest rate used herein is the standard rate currently used by the Power Authority to make its cost of power analysis of projects. Since the project can not be financed without state assistance, the cost of energy was also analyzed based upon a financing interest rate of the previous years average from municipal bond yield rates reported in the 30 year revenue index of the Weekly Bond Buyer, which is currently approximately 10%. ble IV presents the cost of energy in ¢/KWH. Lake Elva Lake Elva and Diesel and Diesel All Diesel Year 1 35 r 8. r 8.5%/20 year 1985 54.3 45.3 20.4 1990 52.5 45.3 30.7 1995 61.1 55.0 51.7 2000 73.7 72.3 80. 1 State assistance employed to finance the project could be accomplished in various ways, including direct grants, or equity investments, low interest loans, and graduated interest loans, or with a combination of financing measures as presented in HB 310. Three alternatives for state assistance will be analyzed. l. A state grant of 60% of the Total Construction Cost and Power Authority revenue bond financing of 40% of the Cost at a rate estimated to be ll% in the current market. 2. A state loan for a 35 year term at a subsidized interest rate of 3% on the unpaid balance. 3. A state grant of $4,707,500 based upon $2,500 per capita for the 1656 residents of Dillingham and 227 residents of Aleknagik, revenue financing at 10.5 of the remaining construction costs (improved interest rate based upon the completion fund feature of HB 310 and the debt adjust- ment funding of the project, which is also a characterization of HB 310), and an appropriation of $12,000,000 for a debt assistance loan fund for the project. FINANCING ALTERNATIVE l. Total Construction Cost (l/81 Bid) Grant (60% of TCC) To be Financed Escalation (7% per year) Total Remaining Construction Cost Interest During Construction (ll%) Total Investment Cost Financing Expenses Reserve Fund Total Capital Requirements Annual Debt Service Annual O&M, Administration, Insurance and Interim Replacements TOTAL ANNUAL COST $29,499,000 17,699,400 $11,799,600 l ,498,400 $13,298,000 l ,732,000 $15,030,000 494,000 l ,976,000 $17,500,000 $ l ,976,000 331,000 $2,307,000 Table V presents the cost of energy for financing alternative l. The present worth cost of the state assistance is the value of the grant which is $17,699,400. FINANCING ALTERNATIVE 2. Total Construction Cost (l/81 Bid) State Loan (3% for 35 years) To Be Financed $29,499,000 29,499,000 Interest During Construction and Construction Inflation could be paid from investment earnings on the loan amount. Annual Debt Service Annual O&M, Administration, Insurance and Interim Replacements TOTAL ANNUAL COST $ l , 373,000 331,000 $ l ,704,000 Table VI presents the cost of energy for financing alternative 2. The present worth of the state assistance is the present value of the dif- ference between the annual debt service presented in Table IV and the annual debt service for financing alternative 2 for the 35 years of debt service repayment. The effective debt service in Table IV is the annual debt service of $4,360,000 less the interest earnings on the reserve fund, or $3,924,000. Therefore, the annual difference is $3,924,000-$1,373,000 = $2,551,000. The present worth value at 10% of $2,551,000 of annual assistance over 35 years discounted at 10% is $24,602,000. FINANCING IVE 3. Total Construction Cost (l/81 Bid) Grant To Be Financed Escalation (7% per year) Total Remaining Construction Cost Interest During Construction (10. Total Investment Cost Financing Expenses Reserve Fund TOTAL CAPITAL REQUIREMENTS Annual Debt Service Annual O&M, Administration, Insurance, and Interim Replacements TOTAL ANNUAL COST $29,499,000 4,707,500 '$24,701 '500 3,173,500 $27,965,000 3,535,000 $31,500,000 1,036,000 3,964,000 $36, soo-,ooo 3,964,000 331 ,000 -r 4,295,000 Table VII presents the cost of energy for financing alternative 3. The present worth cost of state assistance for this alternative is the value of the per capita grant, or $4,707,500. Table VIII illustrates the rate impacts and funding provided by the debt assistance feature of the financing program in HB 310. Each year a loan is made to the utility to lower the cost of energy sold to utility consumers to the rate which would have been charged for continuation of the present diesel generation. The loan interest rate is the same as the revenue bond yield rate (assumed to be 10.5% in this alternative), and principal and interest payments are deferred as necessary to permit the utility and consumers to repay the debt assistance loans when the benefits of the project are realized. Since the return to the state is ultimately realized at market rates, the present value of the assistance provided by this financing feature over the full term of this loan is zero. The debt assistance fund must be capitalized at $12,000,000 for the project. This should be sufficient, together with assumed invest- ment earnings of 1 to fund the annual debt assistance loans. SUMMARY AND CONCLUSIONS Summarized below is the estimated system cost of energy (¢/kwh) for various years for the three state assisted financing options analyzed and the estimated present value of the state assistance. This can be compared to the previously summarized cost of energy examples wherein no state assistance is provided. Alternative Alternative 2 Alternative 3 Year 60% Grant 3% Loan HB 310 1985 29.1 25.0 20.4 1990 32.5 29.2 30.7 1995 44.2 41.4 51.7 2000 62.7 60.2 80.1 2004 87.1 34.8 116.0 Present Value of state Assistance $17,699,400 $24,602,000 $4,707,500 In the early years of project operation, Alternative 3 provides lowest system cost of energy and minimized the amount of state assistance. Alter- natives 1 and 2 provide a higher cost of energy in the first 5 years of project operation due to the particular terms of the respective financing plans. In Alternative 1, the percentage of the total construction cost of Lake Elva to be financed by a grant could be increased. In Alternative 2, the state loan to finance construction could be made at lower interest rates. Either of these scenarios, which would lower the cost of energy in the early years, would also consequently increase the present value of the state assistance. A feature of Alternative 3 which is less attractive is that the local consumers may not realize the benefits of the hydroelectric project until beyond the 40th year of project operation, when all state debt assistance loans are repaid. This time period for realizing the benefits would be advanced in relation to the actual increases in the cost of diesel genera- tion. Table VIII illustrates the relationship between the cost of energy and the rate of repayment of the state debt assistance loans. If diesel fuel costs escalate above 3. over the rate of general inflation for a period in excess of 20 years, the state debt assistance loans would be repaid more rapidly. Alternative 3 assumes that the cost of energy to be charged consumers would be equivalent to the cost of energy with an all diesel system. Table VIII shovJS that an all diesel system would generate power cheaper than the system with Lake Elva for the first 13 years of Lake Elva operation, therefore, annual state debt assistance loans would be necessary. In succeeding years, the higher cost of energy associated ~<lith an all diesel system v10uld be charged to customers in order to achieve a revenue return to repay the state debt assistance loans. The analysis was based upon nominal dollars which illustrate the impacts of a general inflation rate of per annum and a fuel escalation rate of 3. for only 20 years. If the cost of energy in future years is discounted at n the assumed rate of inflation, the real cost of energy in the market area of the project would actually decrease for Alternatives 1 and 2, and only increases gradually due to the rising costs of di fuel and the repayment of the debt assistance loans in Alternative 3. The discounted cost of energy would be: Alternative Alternative 2 Alternative 3 Year 60% Grant 3;; Loan HB 31 1985 29.1 25.0 20.4 1990 23.2 20.8 21.9 1995 22.5 21.0 26.3 2000 22.7 21.8 .0 2004 24. l 23.4 32. 1 In conclusion, Alternative 2 provides the lowest cost energy, but with the greatest state assistance Alternative 3 minimizes sta assistance but results in appreciably higher energy costs. The reason the project does not provide significant benefi to the market area is that the economic feasibility of the project based upon specific assumptions is marginal in that the benefit to cost ratio of the system with Lake Elva compared to an all diesel system is 1 .0. The benefits of lower cost energy in future years from the project are largely based upon the state assistance or subsidy provided with each financing alternative. All other benefits derived from the renewable resource generation are provided by the infla tion nature of the investment of the project. AI.~ASiiA t•O\VI~U AIT'I'IIOI:I'I'Y CAPITAL COSTS: Interest Rates TABLE I LAKE ELVA PROJECT PROJECT ANNUAL COSTS COST OF POWER ANALYSIS Total Construction Cost ...................... . (January 1981 Bid) calation (7% per year) .................... . Total Construction Cost ..................... .. (January 1983 Bid) Net Interest during Construction ............ . Total Investment Cost ........................ . Financing Expenses (2. of TCR) ........... . Reserve Fund (One Year 1 s Debt Service) ................................. . TOTAL CAPITAL REQUIREMENTS (TCR) ............. . ANNUAL COSTS: ( 1) Net Debt Service ............................. . Operating Costs: Operation and Maintenance ................... . Administrative and General (34% of O&M) ............................. . Insurance (0.1 of TCR) .................. . Interim Replacements (0.14% of TCR) ........ . TOTAL ANNUAL COST ........................... . (1) -Annual Costs for Operation in 1985. 8.5% $29,449,000 3, 701,000 $33,150,000 _2, 978 !000 $36, 128,000 1,021,000 3,683,000 $40,832,000 $ 3,683,000 159,000 54,000 61,000 57,000 $ 4,014,000 10.0% $29,449,000 $33,150,000 3,503,000 $36,653,000 1,050,000 4,360,000 $42,063,000 $ 4,360,000 159,000 54,000 62,000 59,000 $ 4,694,000 i* LE II Tot a 1 Annual Total Project Diesel Diesel Total Generation Annual Debt Interest Project Generation Diesel Fuel Annual Cost of ired Sales Service Earnings O&M Cost Required O&M Cost Cost Cost Power Year (Mwh) (Mwh) ($000) ($000) ($000) (Mwh) __ ( $000) ($000) ($000) (¢/kwh) 1985 10,692 9,844 3,683 (313) 331 2,731 384 371 4,456 45.3 1986 11,219 10,324 3,683 (313) 354 3,258 410 490 4,624 44.8 1987 11,761 10,818 3,683 ( 313) 379 3,800 440 631 4,820 44.6 1988 12,317 11,323 3,683 ( 313) 405 4,356 470 799 5,044 44.6 1989 12,888 11,840 3,683 (313) 434 4,927 503 999 5,306 44.8 1990 13,472 12,368 3,683 ( 313) 464 5,511 538 1,235 5,607 45.3 1991 13,982 12,834 3,683 (313) 497 6,021 828 1,491 6,186 48.2 1992 14,487 13,293 3,683 ( 313) 532 6,526 886 1,786 6,574 49.5 1993 14,989 13,750 3,683 (313) 569 7,028 948 2' 125 7,012 51.0 1994 15,498 14,213 3,683 (313) 609 7,537 1,014 2,518 7' 511 52.8 1995 16,003 14, 1 3,683 (313) 651 8,042 1,085 2,969 8,075 .0 1996 16,430 15,057 3,683 ( 313) 697 8,469 1,161 3,455 8,683 57.7 1997 16,848 15,433 3,683 (313) 745 8,887 1,243 4,006 9,364 60.7 1998 17,257 15,801 3,683 ( 313) 798 9,296 1,329 4,630 10,127 64.1 1999 17,647 16,149 3,683 ( 313) 853 9,686 1,423 5,331 10,977 68.0 18, 16,492 3,683 ( 313) 913 10,071 1,522 6,125 11,930 72.3 1 18,400 16,820 3,683 (313) 977 10,439 1,629 7,015 12,991 77.2 2002 18,750 17,100 3,683 ( 313) 1 ,046 10,789 1,743 8,012 14' 171 82.9 2003 19,100 17,350 3,683 (313) 1,119 11 '139 1,865 9,140 15,494 89.3 2004 19,500 17,725 3,683 ( 313) 1,197 11,539 1,995 10,463 17, 5 96.1 TABLE I II COST DIESEL GENERATI tal New New Annual Diesel Diesel Diesel Diesel Total Generation Interest Capacity Generation Debt Diesel Fuel Annual Cost of Required Earnings Required Required Service O&M Cost Cost Cost Power Year {~1wh {$000) (kw) -{Mwh) ($000) ($000) (SOOO) ($000) (¢/kwh) 1985 10,692 9,844 0 0 10,692 0 5 1,454 2,006 20.4 1986 11,219 10,324 0 0 11,219 0 590 1,686 2,276 22.1 1987 11 '761 10,818 0 0 11 '761 0 632 1,953 2,585 23.9 1988 12,317 11 ,323 0 0 12,317 0 676 2,260 2,936 25.9 1989 12,888 11,840 0 0 12,888 0 723 2,614 3,337 28.2 1990 13,472 12,368 0 0 13,472 0 77<'1, 3,019 3,793 30.7 1991 13,982 12,834 (22) 1,250 13,982 255 1 ,052 3,462 4,747 37.0 1992 14,487 13,293 (22) 0 14,487 255 1 '172 3,964 5,369 40.4 1993 14,989 13,750 {22) 0 14,989 5 1,256 4,532 6,021 43.8 1994 15,498 14,213 (22) 0 15,498 255 1,344 5,178 6,755 47.5 1995 16,003 14,671 (22) 0 16,003 2 1,438 5,908 7,579 51.7 1996 16,430 15,057 (22) 0 16,430 255 1,538 6,702 8,473 56.3 1997 16,848 15,433 (22) 0 16,848 255 1,646 7,594 9,473 61.4 1998 17,257 15,801 {22) 0 17,257 255 1,761 8,596 10,590 67.0 1999 17,647 16,149 (22) 0 17,647 255 1,884 9,713 11,830 73.7 2000 18,032 16,492 (22) 0 18,032 255 2,016 10,967 13,216 80.1 2001 18,400 16,820 (22) 0 18,400 255 2,157 12,365 14,755 87.7 2002 18,750 17,100 ( ) 0 18,750 255 2,309 13,924 16,466 96.3 2003 19,100 17,350 (22) 0 19,100 2 2,470 15,673 18,376 105.9 2004 19,500 17,725 (22) 0 19 '500 255 2,643 17,681 20,557 116.0 TABLE IV PROJECT ECT GENERATI Or! 10% LOAN FOR 35 YEARS Total New ft.nnua 1 Tota 1 Project Diesel Diesel Diesel Total Generation Annual Debt Interest Project Generation Debt Diesel Fuel Annual Cost of Required Sales Service Earnings O&M Cost Required Service O&M Cost Cost Cost Power Year ( Mv;h') ( ~1wh) ($000) ($000) ($000) (Mwh) ($000) ($000) ($000) ($000) (¢/kwh) 1985 10,692 9,844 4,694 (436) 331 2,731 0 384 371 5,344 54.3 1986 11,219 10,324 4,694 (436) 354 3,258 0 410 490 5,512 53.4 1987 11,761 10,818 4,694 (436) 379 3,800 0 440 631 5,708 52.8 1988 12,317 11,323 4,694 (436) 405 4,356 0 470 799 5,9 52.4 1989 12,888 11,840 4,694 (436} 434 4,927 0 503 999 6,194 52.3 1990 13,472 12,3 4,694 (436) 464 5,511 0 538 1,235 6,495 52.5 1991 13,982 12,834 4,694 (436) 497 6,021 0 1,491 7,074 55.1 1992 14,487 13,293 4,694 (436) 2 6,526 0 886 1,786 7,462 . 1 1993 14,989 13,7 4,694 (436) 569 7,028 0 948 2 '125 7,900 57.5 1994 15,498 14,213 4,694 (436) 609 7,537 0 1,014 2,518 8,399 59.1 1995 16,003 14,671 4,694 (436) 651 8,042 0 1,085 2,969 8,963 61.1 1996 16,430 15,057 4,694 (436) 697 8,469 0 1,161 3,455 9,571 63.6 1997 16,848 15,433 4,694 (436) 745 8,887 0 1,243 4,006 10,252 66.4 1998 17,257 15,801 4,694 (436) 798 9,296 0 1,329 4,630 11,015 69.7 1999 17,647 16,149 4,694 (436) 853 9,686 0 1,423 5,331 11 ,865 73.5 2000 18,032 16,492 4,694 (436) 913 10,071 0 1,522 6,125 12,818 77.7 2001 18,400 16,820 4,694 (436) 977 10,439 0 1,629 7,015 13,879 82.5 2002 18,750 17,100 4,694 (436) 1 ,046 10,789 0 1,743 8,012 15,059 88.1 2003 19,100 17,350 4,694 (436) 1' 119 11 '139 0 1,865 9,140 16,382 94.4 2004 19,500 17,725 4,694 (436) 1,197 11 '539 0 1,995 10,463 17,913 101.1 E V LAKE ELVA PROJECT COST OF PROJECT GENERATI Financing Alternative 1 Total Annual Project Diesel Diesel Total Generation Debt Interest Project Diesel Fuel Annual Cost of Required Service Earnings O&f-1 Cost 0&~·1 Cost Cost Cost Pmver Year (Mwh ($000) ($000) ($000) ($000) ($000) ($000) l¢/kwh) 1985 10,692 9,844 1,976 (197) 331 2,731 384 371 2,865 29.1 1986 11,219 10,324 1,976 ( 197) 354 3,258 410 490 3,033 29.4 1987 11,761 10,818 1,976 ( 197) 379 3,800 440 631 3,229 29.9 1988 12,317 11 ,323 1,976 (197) 405 4,356 470 799 3,453 30.5 1989 12,888 11 ,840 1,976 ( 1 ) 434 4,927 503 999 3, 715 31.4 1990 13,472 12,368 1,976 ( 197) 464 5 '511 538 1,235 4,016 32.5 1991 13,982 12,834 1,976 (197) 497 6,021 828 1,491 4,595 35.8 1992 14,487 13,293 1,976 (197) 532 6,526 886 1,786 4,983 37.5 1993 14,989 13,7 50 1,976 ( 197) 569 7,028 948 2,125 5,421 39.4 1994 15,498 14,213 1,976 (197) 609 7,537 1,014 2,518 5,920 41.7 1995 16,003 14,671 1 '976 (197) 651 8,042 1,085 2,969 6,484 44.2 1996 16,430 15,057 1,976 (197) 697 8,469 1,161 3,455 7,092 47.1 1997 16,848 15,433 1,976 ( 197) 745 8,887 1 '243 4,006 7 '773 50.4 1998 17,2 15,801 1,976 ( 197) 798 9,296 1,329 4,630 8,536 54.0 1999 17,647 16,149 1,976 ( 197) 853 9,686 1,423 5,331 9,386 58.1 2000 18,032 16,492 1,976 (197) 913 10,071 1,522 6,125 10,339 62.7 2001 18,400 16,820 1,976 (197) 977 10,439 1,629 7,015 11,400 67.8 2002 18,750 17,100 1,976 ( 197) 1,046 10,789 1,743 8,012 12,580 73.6 2003 19,100 17,350 1,976 ( 197) 1,119 11,139 1,865 9,140 13,903 80.1 2004 19,500 17,725 1,976 ( 197) 1,197 11 ,539 1,995 10,463 15,434 87.1 E VI LAKE ELVA COST OF PROJECT GENERATION ternative 2 - Tot a 1 Annual Tota 1 Project Diesel Tota 1 Generation Annual Debt Interest Project Diesel Fuel Annual Cost of Required Sales Service Earnings O&M Cost O&M Cost Cost Cost Powel~ Year (Mwh) Mwh ($000) ($000) ($000) $000) ($000) ($000) (¢/kwh) 1985 10,692 9,844 1.373 0 331 2 '731 384 371 2,459 25.0 1986 11,219 10,324 1,373 0 331 3,258 410 490 2,627 . 5 1987 11,761 10,818 1,373 0 331 3,800 440 631 2, 3 26.1 1988 12,317 11,323 1,373 0 331 4,356 470 799 3,047 26.9 1989 12,888 11 ,840 1,373 0 331 4,927 503 999 3,309 27.9 1990 13,472 12,368 1,373 0 331 5,511 538 1,235 3,610 29.2 1991 13,982 12,834 1,373 0 1 6,021 828 1,491 4,189 32.6 1992 14,487 13,293 1,373 0 ~ 331 6,526 886 1,786 4, 577 34.4 1993 14,989 13,750 1,373 0 331 7,028 948 2,125 5,015 36.5 1994 15,498 14,213 1,373 0 331 7,537 1,014 2,5 5,514 38.8 1995 16,003 14,671 1,373 0 331 8,042 1,085 2,969 6,078 41.4 1996 16,430 15,057 1,373 0 331 8,469 1,161 3,455 6,686 44.4 1997 16,848 15,433 1,373 0 1 8,887 1,243 4,006 7, 47.7 1998 17,257 15,801 1,373 0 331 9,296 1,329 4,630 8,130 51.5 1999 17,647 16,149 1,373 0 331 9,686 1,423 5,331 8,980 55.6 2000 18.032 16,492 1,373 0 331 10,071 1,522 6, 5 9,933 60.2 16,820 1,373 0 331 10,439 1,629 7 ,015 10,994 65.4 2002 18,750 17,100 1,373 0 331 10,789 1,743 8,012 12,174 71.2 2003 19,100 17,350 1,373 0 331 11 '139 1,865 9,140 13,497 77.8 2004 19.500 17,7 1,373 0 331 11,539 1,995 10,463 15,028 84.8 TABLE VII LAKE ELVA PROJECT COST OF PROJECT GENERAl! Financing Alternative 3 tal nual Total Project Diesel Diesel Total Generation Annual Debt Interest Project Generation Diesel Fuel Annual Cost of Required Sales Service Earnings O&M Cost Required O&M Cost Cost Cost Power Year (Mwh) _(Mwh) ($000) ($000) ($000) (Mwh) ($000) ( $000) ( $000 )_ (¢/kwh) 1985 10,692 9,844 3,964 (404) 331 2,731 384 371 4,646 47.2 1986 11,219 10,324 3,964 (404) 354 3,258 410 490 4,814 46.6 1987 11 '761 10,818 3,964 (404) 379 3,800 440 631 5,010 46.3 1988 12,317 11 '323 3,964 (404) 405 4,356 470 799 5,234 46.2 1989 12,888 11,840 3,964 (404) 434 4,927 503 999 5,496 46.4 1990 13,472 12,368 3,964 (404) 464 5,511 538 1,235 5,797 46.9 1991 13,982 12,834 3,964 (404) 497 6,021 828 1,491 6,376 49.7 1992 14,487 13,293 3,964 (404) 532 6,526 886 1,786 6,764 50.9 1993 14,989 13,750 3,964 (404) 569 7,028 948 2 '125 7,202 52.4 1994 15,498 14,213 3,964 (404) 609 7,537 1, 014 2,518 7,701 54.2 1995 16,003 14,671 3,964 (404) 651 8,042 1 ,085 2,969 8,265 56.3 1996 16,430 15,057 3,964 (404) 697 8,469 1,161 3,455 8,873 58.9 1997 16,848 15,433 3,964 (404) 745 8,887 1,243 4,006 9,554 61.9 1998 17,257 15,801 3,964 (404) 798 9,296 1,329 4,630 10,317 65.3 1999 17,647 16,149 3,964 (404) 853 9,686 1,423 5, 1 11,167 69.1 2000 18,032 16,492 3,964 (404) 913 10,071 1,522 6,125 12,120 73.5 18,400 16,820 3,964 (404) 977 10,439 1,629 7,015 13' 181 78.4 2002 18,750 17,100 3,964 (404) 1,046 10,789 1,743 8,012 14,361 84.0 2003 19,100 17,350 3,964 (404) 1,119 11 '139 1,865 9 '140 15,684 90.4 2004 19,500 17,725 3,964 (404) 1,197 11,539 1,995 10,463 17,215 97.1 TABLE VIII LAKE ELVA PROJECT COST OF POWER GENERATI Financing Alternative 3 Debt Assistance Cost of Tota 1 Cost of Annual Deferred Loan B ance Annual Power Annual Power Debt Assist. Interest or Accrued Payment on w/Lake Elva Sales Diesel Only Loan Amount 10.5~~ Principal Loans Year (¢/kwh) (Mwh) (¢/kwh) ($000) ($000) ($000) ($000) 1985 47.2 9,844 20.4 2,638 0 2,638 0 1986 46.6 10,324 22.1 2,529 277 5,167 0 1987 46.3 10,818 23.9 2,423 543 8 '133 0 1988 46.2 11,323 25.9 2,299 854 11 ,286 0 1989 46.4 11,840 28.2 2,155 1,185 14,626 0 1990 46.9 12,368 30.7 2,004 1,536 18,166 0 1991 49.7 12,834 37.0 1,630 1,907 21,703 0 1992 50.9 13,293 40.4 1,396 2,279 25,378 0 1993 52.4 13,750 43.8 1,183 2,665 29,226 0 1994 54.2 14,213 47.5 9 3,069 33,247 0 1995 56.3 14,671 51.7 675 3,491 37,413 0 1996 58.9 15,057 56.3 391 3,928 41,732 0 1997 61.9 15,433 61.4 77 4,382 46,191 0 1998 65.3 15,801 67.0 0 4,581 50' 772 269 1999 69.1 16,149 73.7 0 4,588 55,360 743 2000 73.5 16,492 80.1 0 4,725 60,085 1,088 2001 78.4 16,820 87.7 0 4,745 64,830 1,564 2002 84.0 17,100 96.3 0 4,704 69,534 2,103 2003 90.4 17,350 105.9 0 4,612 7 4 '146 2,689 2004 97.1 17 '725 116.0 0 4,435 78,581 3,350 ntinuation of this schedule beyond 2004 reflects an ability of the utility to increase annual loan payments based upon the general rate of inflation and the diesel generators in the all diesel system. Debt Assistance \Cont.) Cost of Total Cost of Annual Deferred Loan Balance Annual Power Annual Power Debt Assist. Interest or Accrued Payment on w/Lake Elva Sales Diesel Only Loan Amount 10.5% Principal Loans Year {¢/kwh) (Mwh) {¢/kwhl ($000) ($000) ($000) ($000) 2005 101.0 18,000 122.1 0 4,453 83,034 3,798 2006 105.2 18,250 128.8 0 4,412 87,446 4,307 2007 109.7 18,500 135.8 0 4,354 91,800 4,828 2008 114.5 18,750 143.3 0 4,239 96,039 5,400 2009 119.5 19,000 151.2 0 4,061 100,100 6,023 2010 126.6 19,000 161.7 0 3,842 103,942 6,669 2011 134.2 19,000 172.9 0 3,561 107,503 7,353 2012 142.2 19,000 184.9 0 3,175 110,678 8 '113 2013 150.9 19,000 197.8 0 2 '710 113 '388 8,911 2014 160.1 19,000 211.5 0 2,140 115,528 9,766 2015 170.0 19,000 226.3 0 1,433 116,961 10,697 2016 180.6 19,000 242.0 0 615 117,576 11 ,666 2017 191.9 19,000 258.8 0 0 117,211 12 '711 2018 204.0 19,000 276.9 0 0 115,667 13,851 2019 217.0 19,000 296.2 0 0 112,764 15,048 2020* 191.3 19,000 320.7 0 0 100,018 24,586 2021 227.0 19,000 342.8 0 0 88,718 22,002 2022 242.9 19,000 366.4 0 0 74,568 23,465 2023 259.9 19,000 391.7 0 0 57,356 25,042 2024** 278.1 19,000 400.0 0 0 40,217 23,161 2025** 297.6 19,000 400.0 0 0 24,984 19,456 2026** 318.4 19,000 400.0 0 0 12,103 15,504 2027** 340.7 19,000 400.0 0 0 2,107 11,267 2028 364.5 19,000 376.8 0 0 0 2,328 2029 390.1 19,000 390.1 0 0 0 0 * An increased amount of funds are available in year 2020 for repayment of state debt because revenue bond debt service has expired, and the Reserve Fund is also used to reduce the state loan balance. ** Rates are held constant at $4.00/kwh until the debt service on state debt assistance loans is repaid. The rate increases beyond year 2020 after retirement of Revenue bond debt service could be decreased if it is desirable to extend the repayment period on state debt beyond 44 years.