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HomeMy WebLinkAboutCopper Valley Executive Summary Draft 1995AEA Executive Summary lz5 ky Background In 1993, the Alaska State Legislature appropriated $35 million for a zero-interest, 50-year loan for construction of a power transmission line (referred to as the “Intertie”) linking Alaska’s Railbelt region to the service area of the Copper Valley Electric Association De (CVEA). The Intertie is intended to create a power supply infrastructure that would allow power suppliers in the Railbelt region to offer long-term, relatively low-cost power to CVEA. The legislature’s hope for the Intertie is that reduced power bills wail p velopment in the Copper Valley and Valdez areas. The state loan for the Intertie was contingent upon the resui quired study was completed and published as the Copp, the State of Alaska Department of Community and R& as the 1994 Intertie Study). This report updates the ‘in June 1995. Results of the presented in a report entitled ‘as the 1995 Power Supply Study). port also summarizes a power supply study cé study, which also assessed the feasibility of th Following are conclu to the 1994 Intertie Study and from a review of CVEA’s 1995 Power Sup 1. Whether economic devel@pmént in the Copper Valley and Valdez areas will result from the Intertie is dependent upon its impact on CVEA rates. CVEA rates could be affected in the following ways: ° With sole ownership of the Intertie, CVEA projects that its costs will be higher than with diesel generation by as much as 3 percent, or 0.4 cents per kilowatt- hour (kWh), during the first four years of Intertie operation. Thereafter it proj- ects its costs relative to the diesel alternative will decrease over time to be 6 percent or 0.9 cents per kWh lower by 2014. The average residential customer would incur as much as a $24 increase in power bills during the first four years of the Intertie; thereafter the average residential customer bills would be lower, building from no savings the first year to $55 in annual savings in 2014. 1 All data on cost and rate impacts in this Executive Summary are in terms of constant 1995 prices. T. tN & Guldol 8/23/95 1 Lobe a. aus e Long-term reduction in CVEA rates associated with CVEA’s sole HH of © the Intertie is dependent upon projected growth in CVEA energy requirements. With sole ownership of the Intertie and no growth in energy requirements be- yond 1994 levels, CVEA’s costs would be higher than with diesel generation by 6 percent, or 0.9 cents per kWh, in 1999. Thereafter, this difference would decrease with time to essentially no difference in 2010. (For the average resi- dential customer, the higher rate in 1999 would equate to $55 in extra power costs for the year.) e If CVEA builds the Intertie and Petro Star, CVEA’s largest customer, perma- nently leaves the system and is not replaced by another customer with equiva- lent energy requirements, CVEA rates could exceed:thgse associated with diesel generation by 8 percent or 1.2 cents per kWh in 999. decreasing over time to no difference by 2010. Under these conditio sénomic development would be impeded during the first 10 years of the Int e If CVEA builds the Intertie, the addi | like Moe? s would reduce per kWh. (For a customer like 1 million over 5 years.) ° CVEA and a potential Railbelt (CEA), are currently di cussing x integrate its cost into its overall system would be relieved from all or most of alternative is the primary consideration for the state, the électric loads continue to grow as projected. Feasibility of the 2. If development of the le Intertie is feasible if CVE: Intertie is dependent on Petro Star not leaving the CVEA system, returning to the system once the Intertie is complete, or being replaced by a customer with similar energy re- quirements. CVEA and Petro Star are currently attempting to reach an agreement that provides a more competitive rate to Petro Star in return for its obligation to remain a CVEA customer. If CVEA loses Petro Star as a customer, continued reliance on diesel generation is cleay the least-cost alternative Se 3. The feasibility of Petro Star or Alyeska selling power to CVEA only exists prior to con- 4p struction of the Intertie. During that period, marketing power is a realistic possibility, given CVEA’s long-term potentially avoided cost of nearly 7 cents. However, once the Intertie exists, the price at which these firms could market power would be about 4 cents. wad abou FP Syutebe Loot on, ch, 8/23/95 a 4. Based on data currently available, Allison Lake hydroelectric project, Silver Lake hydro- electric project, and Valdez Coal cogeneration? do not appear to be viable alternatives. 5. Fuel escalation rates evaluated in this study do not significantly impact these conclusions. QW analysis and Results ae Following is a review of\the/update results and a summary of CVEA’s 1995 Power Supply Plan results. Update to the 1994 Intertie Study This update reevaluates the relative costs of power supply altern: same procedures and analytical model used in the 1994 Inte; following 7 factors are evaluated: (1) the potential loss.¢' Petro Star refinery in Valdez, (2) the potential additig Alyeska Marine Terminal in Valdez, (3) future optiori: the High Altitude Auroral Research Project begoming c current and projected fuel oil prices paid by € of generation in the Railbelt, (6) the possibilit energy, power supply from the Railbelt for CVEA using the e'Study. “The effects of the A’s largest.,customer, the larger industtial customer, the -Trans-Alaska Gas System and \d'(7}a different power generation plan if ower generation within its service area. Solomon Gulch for additional generation there ° Silver Lake—Hydroelectric generation ° Valdez Coal—Coal-fired cogeneration producing electricity and steam for dis- trict heating and electricity This report updates the above-listed alternatives and evaluates two additional options: ° Petro Star cogeneration ° Alyeska cogeneration 2 Cogeneration is a process by which waste heat from an industrial process is used to generate electricity. 3 Firm energy is energy that is supplied continuously to the customer; economy energy is interruptible at any time for any reason and is therefore less expensive than firm energy. 8/23/95 3 Based on documented data available for this study, Allison Lake, Silver Lake, and Valdez Coal are not viable alternatives. Also, data were not available on the cost of developing and operating cogeneration resources at either Petro Star or Alyeska. Therefore, this executive summary compares only the All Diesel alternative and the Intertie alternative. (Maximum rates that Petro Star or Alyeska could charge for generation were calculated in this update and are summarized at the end of this section. Detailed descriptions of each of the alternatives are provided in the complete report.) Updated life-cycle costs and benefit/cost ratios for the All Diesel and Intertie alternatives are shown in the Summary Table. The table is divided into three sections. Summary Table Copper Valley Intertie Feasibility Updat Present Value and Benefit/Cost Ratio for Cost-Estimate Re: ).\a2 a» si Ze ve + Ww noe: Woe f a) il Low Fuel ate Q Alternatives pe 1 rce Alternatives’ Without With Petro Star Petro Star Alyeska All Diesel 67,632 40,346 92,414 59: 59,101 49,296 64,293 66,281 63,247 51,521 70,833 Intertie - Economy Energy® - Firm Energy* 's Compared to Diesel ($000 All Diesel 0 0 0 0 Intertie - Economy Energy* 21,523 8,531 -8,950 28,121 - Firm Energy* 14,982 4,385 -11,175 21,581 Benefit/Cost Ratio All Diesel 1.00 1.00 1.00 1.00 Intertie - Economy Energy* 1.08 0.75 1.36 1.14 0.82 1.44 - Firm Energy* 1.00 0.72 1.23 1.07 0.78 1.30 ‘ast in the Intertie Feasibility Study ul 2. 1993 dollars based on a 4.5 percent discount rate Wo) ' } OW 3. Assumes either an economy energy sale from the Railbelt or a firm energy sale from MI 1 4. Assumes either a firm energy sale with CVEA ownership of the Intertie or CEA ownership with an Wud \ aubs& 2A remcA, “integrated sale" to CVEA (see text) (St cca aS nod cq Ategd tab& 1. Based on medium-high forec: The first section—Cost—compares the costs associated with each of the alternatives. The next section—Savings Compared to Diesel-compares the difference in cost between the Intertie and the All Diesel alternatives. The final section—Benefit/Cost Ratio—identifies conditions under which the Intertie alternative would be more beneficial than the All Diesel alternative: A ratio over 1 indicates that the Intertie alternative is more beneficial than the All Diesel alternative; a 8/23/95 4 ratio less than 1 indicates that the Intertie alternative is less beneficial than the All Diesel alternative*. The All Diesel alternative is used as a baseline in this study because it is CVEA’s current method of generating power to meet energy requirements beyond those met by Solomon Gulch Hydroelectric Project®. The Summary Table compares the All Diesel and Intertie alternatives under different sets of assumptions regarding two important parameters to the analysis: fuel costs and energy re- quirements. Since the cost of fuel for CVEA affects the overall cost of each alternative dif- ferently, two scenarios for fuel cost were used in comparing the alternatives: low fuel cost escalation (a rate of change in fuel cost of -1.18) and high fuel cost escalation (a rate of change in fuel cost of 0.45). Another factor that affects the overall cost of the power supply alternatives is the amount of energy requirements, that are placed gri the system. As for fuel costs, changes in CVEA’s energy requirements affect the cost of ‘different alternatives differently. Three energy requirement scenarios were included in'this'study update and are presented in the Summary Table: e With Petro Star —- Assumes Petro Star: CVEA. e to purchase energy from . tonger purchase energy from jarably sized consumer will replace replaced by the additi ning in 1999; : ighest set of benefit/cost ratios assuming Petro Star contin- f£:CVEA. This finding is generally the same as in the 1994 In- tertie Study. With a firm energy supply, the Intertie costs are about the same as those projected for the All-Diesel alternative assuming low fuel cost escalation. Otherwise, the Intertie is calculated to have a 7 to 14 percent advantage compared to the All Die- sel alternative, with the most benefit being achieved if Alyeska were to join the system as a customer. If energy demands decrease because Petro Star no longer purchases power from CVEA, the All Diesel alternative has the highest benefit/cost ratio. The Intertie would cost $9 million to $14 million more than implementing the All Diesel alternative if Petro Star is no longer a customer of CVEA. ‘ Data shown in the Summary Table are estimates. As such, they are not precise; small differences between alternatives are not be considered significant. 5 CVEA is required to take or pay for all Solomon Gulch generation up to the demand on CVEA’s system. © These escalation rates are based on the Alaska Department of Revenue’s spring 1995 forecasts. 8/23/95 5 As fuel costs increase, the benefit of the Intertie alternative increases relative to the All Diesel alternative. The advantage of the Intertie alternative over the All Die- sel alternative increases by 6 to 8 percentage points for the high fuel cost scenario. As mentioned earlier, data were not available on the cost of developing and operating cogen- eration resources at either Petro Star or Alyeska; however, maximum rates that these firms could charge for generation were calculated in this update. In order to be cost competitive, the cost of generation from these facilities would need to be less than the cost CVEA would otherwise incur over the long term. Without the Intertie, these costs are estimated to be as low as 7 cents per kWh. If the Intertie were constructed, the market for output from Petro Star or Alyeska would be limited to nonexistent. It would be limited to prices of about 4 cents per kWh if CVEA were to buy energy from the Railbelt without:any conditions regard- ing the quantity it would be obligated to buy; it would be non it if CVEA were to enter into a contract with a Railbelt utility that obligated CVEA tq; yer to meet all of its en- da different focus than the 1994 alternatives from the standpoint to develop and operate the re- r the state loan, which is simply a trans- on. On the other hand, CVEA’s 1995 quired facilities. However, the fer of funds to pay for a portion: Power Supply Study evaluated t its ratepayers. Since the state l ers, it was considered ii reduce the cost of the Intertie to CVEA’s ratep wench OVER Cow cout iesel INIA a dif- fered significantly from 1 in the 1994 Intertie Study. With the same method used to calculate results shown in*the’Summary Table, the CVEA diesel/ generation plan compared to the All Diesel alternative in the 1994 Intertie Plan resulted in benefit/cost ratios from 1.13 to 1.22 depending on the fuel and load scenarios. In some scenarios, benefits of the CVEA version of the All Diesel alternative are higher than those for the Intertie; in some cases they are lower. For example, if Petro Star continues to be a customerythe CVEA All Diesel alter- native has greater benefits than the Intertie alternative assuming low fuel cost escalation; as- suming high fuel cost escalation, the benefits are similar for the two alternatives. The CVEA All Diesel alternative continues to have greater benefits assuming the permanent loss of Petro Star loads, while the Intertie continues to have greater benefits assuming the addition of new loads like those of Alyeska. As a result of its focus;’ Besides a differently configured All Diesel alternative, the CVEA power supply study fore- casts the utility’s overall cost of power for two other power supply alternatives: the Base In- tertie alternative (with the Intertie owned by CVEA) and an Intertie-CEA Integration alternative (with the Intertie owned by CEA, a potential power supplier from the Railbelt). As mentioned earlier, the CVEA analysis reflected the benefits of the $35-million state loan to the 8/23/95 6 ays Low id) es ie ge owner of the Intertie. CVEA also assumed purchase power rates proposed by CEA in response to a request for proposals for power supply from CVEA’ and assumed the same load forecasts used to calculate data shown in the Summary Table of this Executive Summary. provide the utility with comparable benefits assuming Petro Star remains on the system and some adverse effects for the Base Intertie alternative assuming that Petro Star permanently leaves the system. Permanent loss of Petro Star would add 0.9 cents per kWh to CVEA’s to- tal long-term power cost. However, the Intertie-CEA Integration alternative showed present value benefits of $6.8 million with Petro Star and $5.7 million without Petro Star. This is be- cause, under this scenario, the cost of the Intertie is borne by CEA. Results of the CVEA analysis show that the All Diesel and Base Intertie alternatives would os 4 7 CVEA rejected this proposal. 8/23/95 7 1. Introduction In May 1993, the Alaska State Legislature appropriated $35 million for a zero interest, 50-year loan to utilities participating in the design and construction of a 138-kilovolt (kV) transmission line between Sutton and Glennallen, the “Copper Valley Intertie.” The purpose of this transmission line is to provide the power supply infrastructure necessary to make long- term, relatively low-cost power from Alaska's Railbelt region available within the service area of Copper Valley Electric Association (CVEA), promoting economic development within the region. CVEA is a rural electric cooperative that provides electric service to approximately 3,000 member-customers in Valdez, Glennallen, and other communities in the Copper River Valley. : Appropriation of the $35-million loan was contingent in part. ment specified that the evaluation of alternatives cons technical factors and that future costs to meet long-t timated and compared. The State of Alaska Departmi Division of Energy, was charged with preparing.this co tracted with the firm of R.W. Beck to conduit and, in April 1994, submitted the report entitlé (referred to as the 1994 Intertie Stud ‘ty:Study—Copper Valley Tie wow’ if Community and Regional Affairs issued értie were satisfactory and dirécted the Division ie loan. However, a rnb changed conditions wlés to appoint a committee to review key issues in y Intertie. The committee consists of the Commissioner of nunity and Regional Affairs, the Commissioner of the Department of Natural Resources, and thi tive Director of the Alaska Industrial Development and Export Authority. As part $ committee’s review, CH2M HILL was commissioned to update the 1994 Intertie Study to reflect significantly changed conditions. The updated study was conducted using the same computer model and general approach employed in the 1994 Intertie Study. Revisions to the 1994 Intertie Study model in this update were limited to changes for which documented and generally accepted data were available. Computer model analyses were conducted by R.W. Beck under the direction of CH2M HILL. In July 1994, the Commissioner, a finding that the required studies: of Energy to issue the Coppet* since mid-1994 led Goyérné connection with the € the Department of Corti Currently, CVEA’s primary source of power supply is from the Solomon Gulch Hydroelectric Project located near Valdez. The Solomon Gulch project is owned by the State of Alaska with output sold exclusively to CVEA under a long-term power sales agreement. Under this agreement, CVEA must take or pay for all of Solomon Gulch’s output up to the demand on CVEA’s system. The peak capacity of Solomon Gulch is 12 megawatts (MW) with average energy generation of about 55-million kilowatt-hours (kWh). Because of limited available storage at Solomon Gulch, most generation is available during the 4-months period from June through September, which is CVEA’s off-peak period. During this 4-months, Solomon Gulch generates an average of 10 MW; during the remainder of the year, it generates an average of 8/23/95 8 4 MW. In the future, it is expected that Solomon Gulch generation will be reduced during the period of October to May so that reservoirs will not be drawn down completely. With this change in operation, Solomon Gulch reservoirs will be high enough to provide firm capacity throughout the year. This update to the 1994 Intertie Study reflects significant and documented changes in condi- tions since the 1994 Intertie Study was completed. Specifically, this report considers the following: 1. Power demand and cogeneration options for CVEA’s largest customer, the Petro Star re- finery in Valdez 2. Cogeneration and possible power purchase options for the a Marine Terminal 3. Future options for the TransAlaska Gas System and the High Altitude Auroral Research Project to become customers of CVEA : 4. Changes in fuel oil prices paid by CVEA 5. Changes in oil price forecasts 6. Changes in CVEA power generation opti rely on diesel generation for power*supply 7. Changes in the cost of powe 8. In addition to updating interim final report, Eva. Supply Study). This repo in the 1994 Intertie Study. epared by R.W. Beck using a different model than that used A fundamental difference between the analyses in the 1994 Intertie Study and CVEA’s 1995 Power Supply Study is the perspective from which each was conducted. The 1994 Intertie Study and this update to it were conducted from the perspective of the State of Alaska, while the 1995 Power Supply Study was conducted from the perspective of CVEA and its members. The State of Alaska perspective evaluates benefits and costs that accrue to all Alaskans. For example, from the State of Alaska’s perspective, the cost of power that could be generated in the Railbelt for sale across the Intertie to CVEA is valued at the cost to generate the energy rather than at the price the energy may be sold to CVEA. Another example of the State of Alaska’s perspective relates to the state loan, which is seen as a transfer of funds from one set of Alaskan residents to another to pay for a portion of project construction. From this perspective, the loan is neither a benefit nor a cost and therefore was not considered in the 1994 Intertie Study. 8 Firm energy is energy that is supplied continuously to the customer, as opposed to economy energy, which is interruptible at any time for any reason and is therefore less expensive than firm energy. 8/23/95 9 CVEA’s 1995 Power Supply Study considers benefits and costs from CVEA’s own perspec- tive. For example, the cost of generation in the Railbelt is based on the price charged for the energy rather than the cost to generate it. The $35 million zero-interest loan from the state is considered to be a benefit from CVEA’s perspective, because it reduces the cost of the Inter- tie to CVEA and its customers. All data on electric energy costs presented in this report are in terms of either constant 1993 or constant 1995 prices. That is, data were adjusted to exclude the effects of general inflation on prices. Cost data associated with the update to the 1994 Intertie Study are presented in terms of constant 1993 prices; cost data associated with the 1995 Power Supply Study and rates per kWh are presented in terms of 1995 prices. References to constant 1993 prices are made as “1993 dollars” or “1993$”; references to 1995 prices are mrade as “1995 dollars” or “1995$”. : “Real” price escalation, or price changes for specific co Gnd general inflation, were included in this analysis for fuel oil and natural g 8/23/95 10 2. Changed Conditions Since the 1994 Intertie Study Resource Options In the 1994 Intertie Study, six power resource alternatives were considered: All Diesel, the Intertie, Allison Lake, Silver Lake, Valdez Coal, and Conservation. Two additional resource possibilities that have arisen since 1994 Intertie Study are considered in this report: Petro Star Cogeneration and Alyeska Cogeneration. The current status of each of these resource alter- natives follows with pertinent changes noted. All Diesel The All-Diesel alternative assumes that the Intertie is not tors are added as needed to meet CVEA’s generation by Solomon Gulch. The 1995 Power Supply Stud In general, CVEA intends to significantly reduce lab visory control and data acquisition (SCADA), sy. cifics of its planned overall retirement and re Appendix A. Costs per kilowatt (kW) for ne ned plans for this alternative. ‘ough installation of a super- lly, it has changed the spe- Fating units as shown in ors also have been reduced. Intertie Basic plans for construction of t However, two conditions.a8 of generation by Railb per kWh (1.60 cents® t unchanged from the 1994 Intertie Study. ‘h,the Intertie have changed. First, the marginal cost supply to CVEA is now estimated at 1.67 cents dollars) compared with a 1993 cost of 2.35 cents per kWh assumed in the 1 dy. The current 1.67 cents per kWh estimate includes a fuel cost of 1.5 cents p a variable operations and maintenance (O&M) cost of 0.17 cents per kWh. The fuél.cost estimate is consistent with the fuel cost component of cur- rent economy energy sales by both Chugach Electric Association? (CEA) and Anchorage Municipal Light and Power (ML&P). The second changed condition associated with the Intertie relates to the quality of service to be delivered across the line. In the 1994 Intertie Study, economy energy deliveries were evaluated. Since then CVEA issued a request for proposals for firm energy supplies and both CEA and ML&P responded with proposals. Although CVEA rejected these proposals, a firm energy supply remains an option. One power supply alternative proposed by CEA and being discussed by CEA and CVEA is a concept whereby CEA participates in the financing of the Intertie and sells power supply to CVEA at the same rate as it provides to its other wholesale customers. Under this arrange- 9 CEA’s arrangement with Golden Valley Electric Association (GVEA) allows CEA to use GVEA’s share of the Bradley Lake Hydroelectric Project for load following and thereby create added efficiencies in operating CEA’s gas-fired turbines. CEA and CVEA could arrange for similar efficiencies in operation of CEA’s turbines by allowing CEA to also follow load with Solomon Gulch generation. 8/23/95 11 ment, CEA's investment in the Intertie would be allocated to most or all of its customers, so that the direct cost of the Intertie to CVEA would be minimal. This arrangement is being called the "integrated case." Allison Lake The Allison Lake alternative evaluated in the 1994 Intertie Study included hydroelectric gen- eration from a connection between Allison Lake and Solomon Gulch and added winter gen- eration at Solomon Gulch. This alternative, as it was originally outlined, is financially infeasible because contractual arrangements for generation at Solomon Gulch require an en- ergy generation charge of about 6 cents per kWh be paid for all generation at the project. However, developers associated with the Allison Lake project indicate that the original con- Commission (FERC) in December 1994 included a proposed:« ation with “stand-alone” generation at tidewater north of Allison Lake. This configuration would be fundamentally dif- in that:it would ‘have no connection to Solomon Gulch. Costs associated with the new configuration | in cost estimates have not been included in thi Silver Lake of 22 MW of electricity and’stearh for district heating. The project is planned to be con- structed at Valdez by Alaska Cogeneration Systems, Inc. (ACSI). ACSI meets the require- ments of being a “qualifying facility” under the terms of the Public Utility and Regulatory Policies Act of 1978 (PURPA), and the Alaska Public Utilities Commission has ordered CVEA to negotiate terms of a power supply agreement. To date, the parties have not come to terms. R.W. Beck estimated the cost of the ACSI project to be $36.6 million. This estimate is $10 million or 37 percent higher than the $26.7 million estimate ACSI provided to R.W. Beck during preparation of the 1994 Intertie Study. ACSI continues to believe that its own cost estimates are correct and that the project is therefore the least-cost alternative for CVEA. Evaluation made in this update to the 1994 Intertie Study is based on the R.W. Beck estimate. 8/23/95 12 Conservation The 1994 Intertie Study found that potential exists for cost-effective conservation, but that the amount of capacity and energy that could be saved was small compared to CVEA power re- quirements. As a result, this resource option can be combined with any other resource but by itself is not a viable substitute for other power supply options. Petro Star In 1995, Petro Star announced plans to install cogeneration facilities at its refinery in Valdez with operation beginning in mid-1996. According to company representatives, the current plan is to install a 3.9-MW turbine to generate electricity and hea ange equipment to use waste heat from the turbine to heat crude oil in its refining proc The company intends to lease the turbine for 4 to 7 years, avoiding a long-term capi nt and retaining the flexibility to purchase power from CVEA at a later date. not yet been approved by Petro Star's board of directo about 2 MW of capacity to sell ation process, CVEA would current avoided cost for June through Septe output as possible from Solomon Gulc ring the remainder of the year, CVEA’s Alaska Public Utilities Commission (APUC) is currently 6.5 cents p Over the longer term, Pet Petro Star’s net cost of ge: is confidential. However, company representatives indicate that if power supply were available in the range of 8 cents per kWh, they would not pursue the cogeneration project. The fact that Petro Star has chosen to defer investment in supplemental units to market power for profit is an indication that its generation costs are either greater than or not significantly lower than CVEA’s avoided cost. Alyeska Alyeska operates the Valdez Marine Terminal. From a power supply standpoint, it operates as a stand-alone facility in that it is not connected to any power supply system. Connection with a remote power supply would require the construction of a 2-mile transmission line. Alyeska operates three steam-powered generation systems fired by a combination of diesel fuel and hydrocarbon vapors from its tank farm vapor control system. Each of the three gen- erating units has a capacity of 12.5 MW for a total capacity of 37.5 MW. Alyeska currently generates 6 to 9 MW for its operations by running two of the three units at all times. 8/23/95 13) Although this provides a high degree of reliability, running these units at a light load is ineffi- cient and therefore costly. Alyeska expects its power requirements to increase to 7 to 11 MW when its tanker vapor con- trol system is completed at the end of 1997. The company stresses that its generation and va- por control systems are highly integrated: steam and inert exhaust gas associated with power generation are directly used in its vapor control system. It is unlikely that the Intertie would create an opportunity for Alyeska to generate power for sale to the Railbelt. This is because the marginal generation cost in the Railbelt is so low: less than 4 cents per kWh for firm energy generation. Even at low generation costs, line losses for deliveries from Valdez to the Railbelt would make it difficult for Alyégka generation to justify construction of the Intertie. However, Alyeska generation mightbe’a source of reduced power costs to the CVEA system. Costs that CVEA could avoid. use of the availability of A system was prepared as part of the ium-high, medium- low, and low power slowly declining oil indust ment of tourism. The’¢ “forecast and continue thré oho é forecast period in the medium-high case. The forecasts are summarized in Appen If Petro Star proceeds with its plan to generate its own power supply, CVEA energy require- ments would be reduced by about 25 percent. Based on the medium-low and medium-high forecasts, loss of Petro Star would translate into reductions in peak load of 2.4 MW in 1995 and 2.85 MW in 1997. Reductions in the forecast of CVEA energy requirements would be about 19-million kWh in 1995 and 22.5-million kWh in 1997. This would translate into cor- responding reductions in the use of Solomon Gulch generation during the summer months and diesel generation during the winter months. Potential power sales to Alyeska Marine Terminal in Valdez are not included in any of the 1994 Intertie Study forecasts. Besides the possibility of Alyeska selling power to CVEA, Alyeska and CVEA have discussed the possibility of Alyeska purchasing power from CVEA for use at the terminal facility. Among the factors critical to this decision are the price of en- ergy from CVEA, the cost of retrofitting Alyeska’s operation to separate this power supply from steam and inert gas generation for its operation, and the reliability of supply. Given Aly- 8/23/95 14 eska’s current power requirement of 50-million kWh per year, the addition of this load would more than offset the loss of Petro Star loads by nearly doubling CVEA’s other loads. Alyeska is particularly concerned about reliability of supply and would need a high degree of confi- dence in its power supplier, the supplier’s sources of supply, and availability and reliability of back-up power sources, before committing to an outside power supply. Possibilities for additional industrial loads beyond those included in the medium-high forecast include the Trans-Alaska Gas System (TAGS) and the High Altitude Auroral Research Proj- ect (HAARP). TAGS was included in the high forecast used in the 1994 Intertie Study; HAARP loads were not included in any of the 1994 Intertie Study load forecasts. The feasibility of TAGS is continually under study by Yukon Pacifi stakeholders in the project. TAGS would involve a pipeline sy: Trans-Alaska Pipeline to deliver natural gas from the North dez. At that location, the gas would be liquefied and load rporation and other djacent to the existing ti Anderson Bay near Val- Valdez economy would be significant. It is uncertain when TAGS construction wou ploration, two major owners of natural, ernment for development northeast of Glennallen require power supply in the range of 12 to Study. There is still significant uncertainty surrounding ents, and potential sources of power supply. 13 MW according to the, TS! development plans, power’ Fuel Oil Prices to CVEA The price CVEA pays for diesel fuel used in its generators has decreased since the 1994 In- tertie Study was conducted. In the 1994 Intertie Study, diesel fuel prices paid in 1993, the base year of the analysis, were 70 cents per gallon in Valdez and 75 cents per gallon in Glen- nallen. CVEA is currently paying 63 cents per gallon in Valdez and 65 cents per gallon in Glennallen. This decrease has primarily resulted from the 1993 startup of the Petro Star refin- ery in Valdez. Given its immediate proximity to CVEA, Petro Star was able to successfully outbid CVEA’s previous oil supplier with lower prices made possible by lower transportation costs. 8/23/95 15 Oil Price Forecasts Projected growth rates in future oil prices have also lowered since 1993. In the 1994 Intertie Study, real escalation (price changes in addition to general inflation) in fuel oil prices paid by CVEA were projected to increase at average rates ranging from 1.7 percent per year for the high forecast to 0.4 percent for the low forecast. The high oil price forecast was based on the Alaska Energy Authority’s (AEA) medium forecast (dated December 22, 1992), and the low oil price forecast was based on the medium scenario of the Alaska Department of Revenue in its Revenue Sources Book, dated November 15, 1993. AEA no longer prepares oil price fore- casts. However, the Department of Revenue continues to publish high, medium, and low oil price forecasts twice a year. In its spring 1995 Revenue Sources Book, the Department of Reventie forecasts a reduction in its medium forecast from that reported in November 199 S Revenue’s forecast in world oil prices over the past 2 years: 1994 Intertie Study, fuel oil prices paid by CVEA we escalation in real world oil prices. Using the same cg in future oil prices affect gas sup- of gas supplies to both CEA and ML&P il'price forecasts result in changes to the pro- 8/23/95 16 3. Updated Analysis Approach On the basis of changed conditions described above, the feasibility analysis of the Copper Valley Intertie was updated. This was done by reevaluating resource options considered in the 1994 Intertie Study and analyzing potential power supplies from either Petro Star or Alyeska. This analysis was conducted using the same computer model developed by R.W. Beck for the 1994 Intertie Study. This model was well designed for its purpasé atid provides useful ana- lytical results. Using this model, analysis was conducted fro (described on page 9), with 1993 as the base year for analysi dollars, and a real discount rate of 4.5 percent. The 1994 Intertie Study was updated as follows: 3. lesel géneration in 1995 were reduced from projected levels fez and 78 cents per gallon at Glennallen in the 1994 Intertie Study to 59 cents pe update. 4. From 1995, CVEA’s al dil ptices were projected to increase at an average annual rate of 0.45 percent in the high f-price forecast and -1.18 percent in the low fuel-price forecast. 5. A comparison was made between the All Diesel Alternative reported by CVEA in its 1995 Power Supply Study and the All Diesel alternative outlined in the 1994 Intertie Study. As noted above, under CVEA’s scenario, CVEA will add a SCADA system to remotely control its diesel generators, thereby reducing the need for operators at both the Glennallen and Valdez diesel plants. Plans for diesel unit removal and replacement are shown in Appendix A. 6. The fuel and variable O&M costs associated with economy energy purchases were set at 1.61 cents per kWh (1993 dollars) in 1995. As in the 1994 Intertie Study, the fuel price component of this rate (1.44 cents per kWh) was assumed to change in real terms at the same rate as projected for fuel oil prices. 7. In addition to evaluating economy energy purchases from the Railbelt, the cost of a firm energy supply from the Railbelt was evaluated, as discussed below. 8/23/95 17 8. Costs of generation at Alyeska were not available or estimated for this update to the 1994 Intertie Study. Data on Petro Star generation costs were limited to a company represen- tative’s statement that Petro Star would not proceed with its cogeneration project if power were available in the range of 8 cents per kWh. As a basis for understanding the potential feasibility of these supply possibilities, CVEA’s avoided costs were estimated under the assumption that firm supplies were available from either Petro Star or Alyeska to meet all CVEA load requirements beyond those provided by Solomon Gulch. This avoided-cost information helps to define the price at which CVEA would theoretically be indifferent between continuing to meet load with diesel generation (the All Diesel alternative) or obtaining comparable supplies from either Petro Star or Alyeska. This information may be helpful in future discussions with these firms egarding the feasibility of providing power supplies to CVEA. All other assumptions and analyses were the same as those in provided below. Firm Power Supplies from the Railbelt, The analysis of firm supplies from the Railbe for CVEA to sign a firm power supp] suppliers or for CVEA to enter inte’ Intertie and provides firm powe or ML&P as independent power ereby CEA financially participates in the ribed above for the integrated case. Costs two alternative organiz is” ded to CVEA’s recent request for proposals for firm power supply: ML&P.and"t If ML&P were to provide foreseeable future. From 'th curred, so costs associated economy energy sales. to CVEA, no new capacity would be needed in the of Alaska perspective, no new capacity costs would be in- ithe’ firm supply from ML&P would be the same as projected for If CEA were to provide firm power to CVEA (either independently or by participating in In- tertie financing and integrating CVEA into its wholesale supply network), it would contribute to CEA’s need for new generation capacity in about ten years. Under CEA’s medium load forecast, the first new generating unit CEA plans to add would be a 40.5-MW turbine in 2005. Allocating a portion of costs associated with this unit to meet CEA firm load requirements would add an average of 0.7 cents per kWh to the real cost of power delivered to CVEA starting in 2005 (1993 dollars; based on a 4.5 percent real interest rate). Power Supplies from Petro Star or Alyeska As mentioned above, since data were not available on the cost of power generation at either Petro Star or Alyeska, CVEA’s avoided costs were calculated under the assumption that all of its power supply requirements beyond those met by Solomon Gulch would be provided by 8/23/95 18 Petro Star or Alyeska. Because these costs could be used as a basis for feasibility discussions with these firms, the analysis was conducted with costs estimated in nominal terms. In real present value terms, the avoided costs would be the same as present value calculated for the All Diesel alternative. The nominal cost analysis was conducted using a different model than that used for analysis of costs for other scenarios in the 1994 Intertie Study. The model developed by R.W. Beck for CVEA’s 1995 Power Supply Study was used to calculate CVEA’s avoided costs per kWh in nominal terms for each year between 1995 and 2014. Assumptions included a general in- flation rate of 3.5 percent per year and an interest rate on CVEA borrowings of 5.0 percent. Cost data were then adjusted to constant 1995 prices to facilitate comparisons with other 1995 cost data. Results Power Supply Alternatives Identified in the each power supply alternative included in thé Figures 1 and 2. The table presents a range tainties associated with future fuel costs-and fui above, the low and high fuel-cos nue’s spring 1995 forecast. Ass 2/3 the rate of change in world o was projected to be -1.18.p% jected to be 0.45 percent pé Results of the analysis of CVEA is also shown | umns titled “With Petro Star.aré based on future loads developing according to the medium- high forecast included in the 1994 Intertie Study and summarized in Appendix B. Petro Star loads are assumed to grow in the short term, and Petro Star remains a customer of CVEA for the entire study period. The results shown in the “Without Petro Star” column are based on the assumption that Petro Star discontinues service in 1996 and its demands on CVEA’s sys- tem are not replaced by any other customer(s). Results shown in the “With Alyeska” column are based on the assumption that Petro Star discontinues service from CVEA but are more than replaced by the addition of Alyeska loads starting in 1999. - Benefit/cost ratios shown in Table 1 were calculated with benefits for each resource alterna- tive defined as the avoidance of continued reliance on diesel generation (as defined in the 1994 Intertie Study). Therefore, benefit/cost ratios were calculated as the present value of costs for the All Diesel alternative divided by the present value of costs for the given resource alternative. Following is a summary of the results in Table 1: 8/23/95 19 1. The Intertie-Economy Energy and the All Diesel scenario under CVEA’s 1995 Power Supply Plan have the highest set of benefit/cost ratios assuming Petro Star remains as a customer of CVEA. With a firm energy supply, the Intertie has benefit/cost ratios equal to or greater than the All Diesel alternative identified in the 1994 Intertie Feasibility Study but less than the All Diesel alternative identified in CVEA’s 1995 Power Supply Plan. 2. IfPetro Star leaves the CVEA system permanently and is not replaced, continuation of either All Diesel alternative would have the highest set of benefit/cost ratios by a signifi- cant margin. The Intertie would be $9 million to $14 million more expensive than the All Diesel alternative under the 1994 Intertie Study configuration and $15 to $20 million un- der CVEA’s 1995 Power Supply Plan. 3. The Intertie would be of substantial benefit if Alyeska were | in the system as a customer. 4. IfPetro Stars loads were replaced by another load were to return to the CVEA system at completiono benefit/cost ratios consistent with conclusion num. éut t the same Size or if Petro Star iterti ntertie would have ve. Although Petro Star loads _they are not particularly large by industrial standards. To the extent ec t occurs in the CVEA service area beyond that forecasted, the economi power supply alternatives. With each. inc working on configurati ris. they believe make these projects viable power supply re- sources for the region, gost data since the 1994 Intertie Study were not available. Based on data available from the Intertie Study, these projects do not appear to be viable. A comparison of results for analytical cases that were common to both the 1994 Intertie Study and those shown in Table 1 is provided in Appendix D. Possible Power Supply Alternatives from Petro Star and Alyeska As discussed above, cost data on possible power supply alternatives from Petro Star and Aly- eska were not available for this study. Instead of attempting to estimate these costs, calcula- tions were made of long-term costs that CVEA would avoid if, instead of generating power, it 8/23/95 20 Table 1 Copper Valley Intertie Feasibility Update Present Value and Benefit/Cost Ratio for Cost-estimate Resource Alternatives" Fuel Scenario: Low Fuel Escalation High Fuel Price Escalation Load Scenario: With Without With With Without With Petro Star Petro Star Alyeska’ Petro Star Petro Star Alyeska® Present Value ($000)*: All Diesel - 1994 Intertie Study 60,483 35,936 81,263 67,632 40,346 92,414 - 1995 CVEA P.S. Plan 50,777 29,528 69,594 58,813 34,196 81,615 Intertie - Economy Energy 56,088 47,685 59,740 59,101 49,296 64,293 - Firm Energy 60,235 49,910 66,281 51,521 70,833 Allison Lake ® 59,972 44,168 77,933 44,781 85,249 Silver Lake 69,567 57,663 Valdez Coal 88,683 73,938 57,915 95,494 69,302 101,172 Present Value of Savings Compared to Diesel ($000): All Diesel - 1994 Intertie Study 0 0 0 0 - 1995 CVEA P.S. Plan 9,706 8,819 6,150 10,799 Intertie - Economy Energy 8,531 -8,950 28,121 - Firm Energy 4,385 -11,175 21,581 Allison Lake ® 4,409 -4,435 «7,165 Silver Lake -3,079 -17,569 _—-3,080 Valdez Coal -16,867 -28,956 —--8,758 Benefit/Cost Ratio: All Diesel - 1994 Intertie Study 1.00 1.00 1.00 1.00 1.00 1.00 - 1995 CVEA P.S. Plan 1.19 te22) Li 1.15 1.18 1.13 Intertie - Economy Energy 1.08 0.75 1.36 1.14 0.82 1.44 - Firm Energy 1.00 0.72 1.23 1.07 0.78 1.30 Allison Lake ® 1.01 0.81 1.04 1.07 0.90 1.08 Silver Lake 0.87 0.62 0.90 0.96 0.70 0.97 Valdez Coal 0.68 0.49 0.78 0.80 0.58 0.91 1 Possible generation resources at Alyeska and Petro Star are excluded from this analysis due to C lack of data on resource development costs. i ( ol W 2 Based on Medium-High forecast in the Intertie Feasibility Study a ow 3 Excludes Petro Star loads 4 1993 dollars based on a 4.5 percent discount rate ; \rot 5 Excludes 4-Dam Pool charge FN: mnf/c:RESULT2B.XLS [Sheet1] Printed: 8/11/95 5:34 PM Figure 1: Present Value of Costs for CVEA Resource Options - Low Fuel Escalation 120 100 BAII Deisel - '94 Study HAIl Deisel - '95 Study ao oO BIntertie - Economy M Intertie - Firm B Allison Lake O Valdez Coal Present Value of Costs (millions $) 8 Silver Lake B oO 20 With Without With Petro Star Petro Star Alyeska c:\aidea\GRAPHS.XLS>Fuel Esc - Low Figure 2: Present Value of Costs for CVEA Resource Options - High Fuel Escalation 120 100 BAIl Delsel - '94 Study All Deisel - '95 Study Bi Intertie - Economy M Intertie - Firm B Allison Lake O Valdez Coal Present Value of Costs (million $) 8 Silver Lake 20 With Without With Petro Star Perto Star Alyeska c:\aidea\GRAPHS.XLS>Fuel Esc - High were to receive all power, exclusive from Solomon Gulch generation, from either Petro Star or Alyeska. This avoided cost was calculated on two alternative bases for CVEA operations: those projected in the 1994 Intertie Study and those projected in CVEA’s 1995 Power Supply Plan. As noted above, the projection in the Intertie Feasibility Study assumes high capital and labor costs relative to the projection in the CVEA study.!° Result of the avoided-cost calculations are shown in Table 2. The nominal costs shown in this table were calculated assuming a 3.5 percent inflation rate and a 5.0 percent interest rate. This interest rate was assumed by CVEA in its 1995 Power Supply Study based on a hardship loan available from the Rural Utility Service. Once CVEA commits to a major power supply alternative, the utility’s avoided cost would decrease and with it Petro Star and Alyeska’s opportunity to market*power. Given the low generating costs in the Railbelt (less than 4 cents per kWh including:the capital cost of new generation), no realistic prospect exists for selling power there: € VEA’s avoided cost would either be nonexistent, because of a full-requirements set of: c contracts (assumed for an integrated scenario like that proposed by CEA), of as‘high as abi firm power supplies recently proposed by ML&P. 10 Differences in capital investments projected in the two studies are shown in Appendix A. 8/23/95 24 CVEA Avoided Cost Associated with All Generation Net of Solomon Gulch Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Table 2 Copper Valley Intertie Feasibility Update (cents per kWh) Avoided Diesel Generation Costs Based on Intertie Feasibility Study Real Nominal 1995$ 8.63 8.06 9.23 8.32 9.54 8.31 9.86 8.30 10.20 8.30 10.55 8.29 10.91 8.29 11.30 8.29 11.70 8.29 12.11 8.29 12.55 8.31 13.00 13.47 13.96 14.47 15.00 15. Based on CVEA Power Supply Study Real Nominal 1995$ 7.45 6.95 7.72 6.96 8.01 6.98 8.31 7.0! 8.62 8.94 9.28 4. Summary of CVEA Analysis of Power Supply Alternatives As noted above, analyses in the 1994 Intertie Study and in this update to that study were con- ducted from the perspective of the State of Alaska. In June 1995, CVEA conducted a sepa- rate analysis from its own perspective. That analysis, prepared by R.W. Beck, was presented in the 1995 Power Supply Study. In CVEA’s analysis, three primary power supply alterna- tives were evaluated: Diesel (continued reliance on diesel generation in the future), Base In- tertie (development of the Intertie with CVEA ownership), and Intertie-CEA Integration (development of the Intertie with CEA ownership). The analysis was conducted in nominal terms with projected total cest.of CVEA’s power supply, including that from Solomon Gulch, calculated both in “of present value and in terms of projected average power supply costs per kWh. Int alysis, the $35 million loan from the State of Alaska was assumed to reduce the cost tie options but not the cost of the Diesel alternative. The medium-high loa 994 Intertie Study was used in CVEA’s base analysis. As such, this,Jo “With Petro Star” scenario shown in Table 1. For coi Star” in Table 3. CVEA also evaluated a loa scenario shown in Table 1. 994 Intertie Study and the 1995 ns regarding capital investment and i es, and the escalation rates for the fuel ‘cifics of these differences were as follows: Power Supply Study. Differences operations for diesel units, fue nue forecast used. Both studies forecast escalation in fuel the rate of escalation in world oil prices. As noted above, the update to the 1994 Intertie Study was based on the spring 1995 Department of Revenue forecast of world oil prices; the 1995 Power Supply Study was based on the Fall 1994 forecast. The high fuel price escalation rate used in the update (0.45 percent per year) was similar to the fuel price escalation rate used in the 1995 Power Supply Plan (0.73 percent per year). e In the update to the 1994 Intertie Study, the fuel component of Railbelt generation costs was forecast to escalate at the same rate as fuel prices (0.45 percent per year in the high fuel price escalation scenario). In the 1995 Power Supply Plan, the fuel component of Railbelt generation costs was forecast to escalate at the same rate as world oil prices. In the base analysis to the 1995 Power Supply Plan, summarized below, this escalation rate averaged 1.1 percent per year. 8/23/95 " 26 Key results taken from the 1995 Power Supply Plan are shown in Table 3 and in Figures 3 and 4. Table 3 shows the differences in the present value of costs for the three alternatives from CVEA’s perspective. The Intertie-CEA Integration case provides CVEA with a net benefit of $6.9 million in the With Petro Star scenario and a $5.7-million benefit in the Without Petro Star scenario. Without integration with CEA, potential benefits of the Intertie to CVEA are small under the With Petro Star scenario and negative under the Without Petro Star scenario. CVEA’s total cost of power per kWh with and without Petro Star loads is shown in Figures 3 and 4, respectively. With Petro Star, the Intertie-CEA Integration alternative would provide the lowest cost power to CVEA once the Intertie is in place. Although the Base Intertie al- ternative would result in higher power costs than the Diesel alternative in its first few years, it is projected to become less costly starting in 2004. In the Without Petro Star scenario, the Intertie-CEA Integrati lowest cost of power in each year. Because the Intertie-C the cost of the Intertie is borne by CEA, CVEA’s po the loss of Petro Star loads. The cost of power for thie. the cost of power in the Diesel alternative because CVE. cated over fewer kWh. For the Diesel alternative, CVEA, ing plant would be less if Petro Star loads were lo ative still provides the ratian alternative assumes ts per kWh ate hardly affected by jase, Entertie native is higher than d costs in the Intertie are allo- vestment in new diesel generat- 8/23/95 a? Table 3 Present Value and Benefit/Cost Ratio for Power Supply Alternatives from CVEA's Perspective (Dollar Amounts in Thousands) With Without Petro Star Petro Star Present Value: Diesel $85,000 $68,700.0 Base Intertie $83,900 $72,300.0 Intertie-CEA Integration $78,200 $63,000.0 Present Value of Savings Compared to Diesel: Diesel Base Intertie Intertie-CEA Integration Benefit/Cost Ratio: 1.00 0.95 1.09 Diesel Base Intertie Intertie-CEA Integration Figure 3 Projected CVEA Total Supply Cost per KWh With Petro Star Loads 14.0 12.0 + 10.0 - 8.0 + 6.0 - Cost of Power (cents/KWh) 4.0 - 2.0 0.0 1 1 \ \ . ! ‘ ‘ . 1 \ : — tk 1 wn ‘Oo N eo an So = Nn oO a no \o SB eo a oO a N oO st QV a an an an So So So Q So So So co x co co mal $$ 8 € 8 & RR RRR RR RR RR RR R Year —e— Diesel —a-— Base Intertie —a— Intertie - CEA Integration Source: R.W. Beck and Associates, Interim Final Report to Copper Valley Electric Association, Evaluation of Power Supply Alternatives, June 1995. Figure4 Projected CVEA Cost of Power Without Petro Star Loads 14.0 12.0 10.0 8.0 6.0 + Cost of Power (cents/KWh) 4.0 - 2.0) 0.0 . f 1 1. 1 1 1. 1 . 1 1 1 . 1 1 1 1 1. R & & & & 8 Ss Sill] re & 8 Ss iS 3 3 gS a nN 2] Si a Ov a a oN o o o So oO Oo oa Oo oO oO oO oO Oo oO oO a a a a a N N N N N nN N N N N N N N nN N Year —e Diesel + —x-— Intertie - CEA Integration Source: R.W. Beck and Associates, Interim Final Report to Copper Valley Electric Association, Evaluation of Power Supply Alternatives, June 1995. Appendixes 8/23/95 Appendix A Alternative Plans for All Diesel Scenario (Rated kW) 1994 Intertie Study CVEA Power Supply Study Glennallen Glennallen Valdez Additions Additions SCADA? =a Retirements Retirements 5730°7SCADA? | 5000 (Units 6 Additions Retirements 2150 | -- 25004 a 2500 (Unit “Two 2865 kW units. °SCADA for remote operation of generating units. “Combustion turbine for back-up and quick-start peaking. | ‘<Glennallen Unit 7 would be removed from the Glennallen power plant in 1996 and installed in the V: r:Plant in 1997. seal002b76a.doc 8/23/95 Appendix B CVEA Load Forecast Included in the 1994 Cooper Valley 1994 Intertie Study Load Forecast Scenarios Fiscal Year High Medium-High | Medium-Low Low Peak Demand (MW) 1992 10.9 10.9 1Q# 10.9 1997 16.4 15.2 13.8 2002 18.1 16.0 13.6 2013 22.0 172 9.4 Average Annual -0.7 Growth Rate, 1992-2013 (%) Fiscal Year irements (MWh) 1992 59,227 59,227 1997 88,141 9215 2002 92,400 77,734 2013 99,453 49,360 Average Annual 3.7 2.5 2.5 -0.9 Growth Rate, 1992-2013 (%) 8/23/95 Appendix 3” Ss Alaska Department of Revenue Projected WTI Crude Oil Prices Base (Mid) Case 25.00 20.00 E 15.00 a : 3 a a 10.00 = 5.00 0.00 | + 1992 1995 1998 2001 2004 2007 — Spring 93 —t— Fall 93 Spring 94 ~Fall 94. —*— Spring 95 c:\aidea\GRAPHS.XLS>Crude Oil Prices 2010 Appendix D Comparison of Base Results--April 1994 Study Vs. August 1995 Update Med-High Load Projection/ High Fuel Escalation April'94 Aug. '95 Study Update Difference Cumulative Present Value in 1993 ($000) All Diesel $84,771 $67,632 $17,139 Intertie $72,604 $59,101 $13,503 Allison Lake - w/o 4/dp charge $71,989 $63,223 $8,766 Silver Lake $74,929 $70,71 Valdez Coal $76,567 $84, Benefit/Cost Ratio All Diesel Intertie Allison Lake - w/o 4/dp charge Silver Lake Valdez Coal CH2M HILL 7/19/95