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Home My WebLink AboutCVEA RE6 Application - Allison Creek ProjectCopper Valley Electric Association, Inc. Allison Creek Project AEA 13 - 006 Renewable Energy Fund Round 6 Grant Application September 21, 2012 Copper Valley Electric Association, Inc. PO Box 45 Glennallen, Alaska 99588 (907-)822-3211 * Fax (907) 822-5586 Renewable Energy Fund Round 6 Grant Application AEA 13-006 Application Page 1 of 25 7/3/2011 Allison Creek Project Grant Application SEPTEMBER 2012 Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 2 of 25 7/3//2012 Application Forms and Instructions This instruction page and the following grant application constitutes the Grant Application Form for Round 6 of the Renewable Energy Fund. An electronic version of the Request for Applications (RFA) and this form are available online at: http://www.akenergyauthority.org/RE_Fund-6.html If you need technical assistance filling out this application, please contact Shawn Calfa, the Alaska Energy Authority Grant Administrator at (907) 771-3031 or at scalfa@aidea.org. If you are applying for grants for more than one project, provide separate application forms for each project. Multiple phases for the same project may be submitted as one application. If you are applying for grant funding for more than one phase of a project, provide milestones and grant budget for each phase of the project. In order to ensure that grants provide sufficient benefit to the public, AEA may limit recommendations for grants to preliminary development phases in accordance with 3 ACC 107.605(1). If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. REMINDER: Alaska Energy Authority is subject to the Public Records Act AS 40.25, and materials submitted to the Authority may be subject to disclosure requirements under the act if no statutory exemptions apply. All applications received will be posted on the Authority web site after final recommendations are made to the legislature. In accordance with 3 AAC 107.630 (b) Applicants may request trade secrets or proprietary company data be kept confidential subject to review and approval by the Authority. If you want information is to be kept confidential the applicant must: o Request the information be kept confidential. o Clearly identify the information that is the trade secret or proprietary in their application. o Receive concurrence from the Authority that the information will be kept confidential. If the Authority determines it is not confidential it will be treated as a public record in accordance with AS 40.25 or returned to the applicant upon request. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 3 of 25 7/3//2012 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Copper Valley Electric Association, Inc. (CVEA) Type of Entity: Electric Utility Fiscal Year End: December Tax ID # 92-0023631 Tax Status: For-profit or x non-profit ( check one) Mailing Address PO Box 45 Glennallen, AK 99588 Physical Address Mile 187 Glenn Highway Glennallen, AK 99588 Telephone 907-822-3211 Fax 907-822-5586 Email Matthews@cvea.org 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name Jaime L. Matthews Title Manager of Administration & Finance Mailing Address PO Box 45 Glennallen, AK 99588 Telephone 907-822-8311 Fax 907-822-5586 Email Matthews@cvea.org 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) x An electric utility holding a certificate of public convenience and necessity under AS 42.05, or An independent power producer in accordance with 3 AAC 107.695 (a) (1), or A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes or No 1.2.2 Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If the applicant is a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes or No 1.2.3 As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement. Yes or No 1.2.4 If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) Yes or No 1.2.5 We intend to own and operate any project that may be constructed with grant funds for the benefit of the general public. If no please describe the nature of the project and who will be the primary beneficiaries. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 4 of 25 7/3//2012 SECTION 2 – PROJECT SUMMARY This is intended to be no more than a 1-2 page overview of your project. 2.1 Project Title – (Provide a 4 to 5 word title for your project) Allison Creek Project – FERC Project Number 13124 2.2 Project Location – Include the physical location of your project and name(s) of the community or communities that will benefit from your project in the subsections below. The Allison Creek Hydroelectric Project is located adjacent to the Prince William Sound, immediately south of Port Valdez, Alaska. CVEA is a member-owned electric cooperative providing central station electric service to a relatively large geographic area of Eastern Interior and Prince William Sound. CVEA is a stand-alone (not interconnected to another power system) electric utility. The service territory is divided into two districts, the Valdez District and the Copper River Basin District. The Valdez District is comprised of the organized area of the City of Valdez. The Copper River Basin District incorporates many outstretched communities. 2.2.1 Location of Project – Latitude and longitude, street address, or community name. Latitude and longitude coordinates may be obtained from Google Maps by finding you project’s location on the map and then right clicking with the mouse and selecting “What is here? The coordinates will be displayed in the Google search window above the map in a format as follows: 61.195676.-149.898663. If you would like assistance obtaining this information please contact AEA at 907-771-3031. 61.055388,-146.348126 2.2.2 Community benefiting – Name(s) of the community or communities that will be the beneficiaries of the project. All electric consumers located in the Copper River Basin and Valdez Districts. These communities include: Valdez, Glennallen, Gakona, Gulkana, Tazlina, Copper Center, Kluti- Kaah, Copperville, Kenny Lake, Tolsona, Mendeltna, Nelchina, Eureka, and Sheep Mountain. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind Biomass or Biofuels x Hydro, including run of river Transmission of Renewable Energy Geothermal, including Heat Pumps Small Natural Gas Heat Recovery from existing sources Hydrokinetic Solar Storage of Renewable Other (Describe) Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 5 of 25 7/3//2012 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) Pre-Construction Construction Reconnaissance Design and Permitting Feasibility x Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. The Allison Creek Project is a run of the river (ROR) alternative involving construction of a diversion structure on Allison Creek at elevation 1,300 feet. Water will be diverted from the creek into a 42 inch surface / buried penstock to a 6.5 megawatt powerhouse near tidewater. Attachment A is the Final Feasibility Study which provides details on this project as presented and approved by the CVEA Board of Directors. 2.5 PROJECT BENEFIT Briefly discuss the financial and public benefits that will result from this project, (such as reduced fuel costs, lower energy costs, etc.) CVEA’s vision is to reduce or eliminate our dependence on fossil fuel and stabilize the Cooperative’s cost of generation with regional, sustainable resources. Allison Creek is a fuel savings project which leads to lower cost and stable energy for CVEA’s members. The original cost of Allison Creek power was estimated to be 21¢ per kWh which was equivalent to $80/bbl oil. With grants already received, the cost of power is estimated to be 15.93¢ per kWh. Diesel costs are currently 27¢ per kWh. This is a large reduction in power costs. 2.6 PROJECT BUDGET OVERVIEW Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source of other contributions to the project. The total project is estimated to cost $38,804,000 (in 2010$). Cost details are provided on page 16 of Attachment A. CVEA has been awarded $13,288,000 through various grants. Page 1 of Attachment D details the source of funds, grants received so far, and a plan of finance for the future. Details are discussed later in the application. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 6 of 25 7/3//2012 2.7 COST AND BENEFIT SUMARY Include a summary of grant request and your project’s total costs and benefits below. Grant Costs (Summary of funds requested) 2.7.1 Grant Funds Requested in this application. $ 6,114,000 2.7.2 Cash match to be provided $ 6,114,000 2.7.3 In-kind match to be provided $ 0 2.7.4 Other grant applications not yet approved $ 0 2.7.5 Total Grant Costs (sum of 2.7.1 through 2.7.3) $ 12,228,000 Project Costs & Benefits (Summary of total project costs including work to date and future cost estimates to get to a fully operational project) 2.7.6 Total Project Cost (Summary from Cost Worksheet including estimates through construction) $ 38,804,000 2.7.7 Estimated Direct Financial Benefit (Savings) $4,148,571 annually at current fuel costs. 2.7.8 Other Public Benefit (If you can calculate the benefit in terms of dollars please provide that number here and explain how you calculated that number in your application (Section 5.) $ Unknown, see section 5 for other benefits. SECTION 3 – PROJECT MANAGEMENT PLAN Describe who will be responsible for managing the project and provide a plan for successfully completing the project within the scope, schedule and budget proposed in the application. 3.1 Project Manager Tell us who will be managing the project for the Grantee and include contact information, a resume and references for the manager(s). If the applicant does not have a project manager indicate how you intend to solicit project management support. If the applicant expects project management assistance from AEA or another government entity, state that in this section. Please see Attachment B for all resumes. CVEA will be accepting bids in winter 2012/2013 for a Construction Manager at Risk. - CVEA’s Executive Engineer / Project Manager is John Duhamel. John is the Project Manager for CVEA and has been involved with the project for two years. John has led the role for CVEA in filing the license application which was submitted to FERC on August 30, 2011. - CVEA’s Chief Executive Officer (CEO) Robert A. Wilkinson has been in the utility industry for 26 years. Robert provides support to CVEA Management and communicates results and decisions to CVEA’s Board of Directors. - CVEA’s Manager of Administration & Finance is Jaime Matthews who has worked in the utility industry for 12 years. Jaime will be the grant manager for CVEA. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 7 of 25 7/3//2012 3.2 Project Schedule and Milestones Please fill out the schedule below. Be sure to identify key tasks and decision points in in your project along with estimated start and end dates for each of the milestones and tasks. Please clearly identify the beginning and ending of all phases of your proposed project. Please fill out form provided below. You may add additional rows as needed. Milestones Tasks Start Date End Date Equipment & Materials Purchase Key Equipment 1 Q 2013 4 Q 2014 Award Construction Contract Solicit, receive proposals and award 4 Q 2012 1Q 2013 Complete 30% Design Produce 30% Design for use in construction proposal development 3 Q 2012 1 Q 2013 Complete 100% Design Produce 100% Design for construction 3 Q 2012 2 Q 2013 Project Construction Break ground and build the project 3 Q 2013 3 Q 2015 Project Start-up Start-up and Commissioning 3 Q 2015 4 Q 2015 Dollars specific to this grant request are for purchasing equipment and materials. Please see attachment D for further breakdown in financial information. 3.3 Project Resources Describe the personnel, contractors, accounting or bookkeeping personnel or firms, equipment, and services you will use to accomplish the project. Include any partnerships or commitments with other entities you have or anticipate will be needed to complete your project. Describe any existing contracts and the selection process you may use for major equipment purchases or contracts. Include brief resumes and references for known, key personnel, contractors, and suppliers as an attachment to your application. See Attachment B for All Resumes. Michael Purdy with Michael E. Purdy Associates is assisting CVEA with all procurement activities associated with the project. McMillen LLC was chosen to complete the final design on the project and act as the Owner’s Representative throughout construction. In Winter 2012/2013 CVEA will accept bids for a Construction Manager at Risk. At this stage of the project CVEA has not purchased any major equipment but there are several power plant parts that have long lead times and will require purchasing soon. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 8 of 25 7/3//2012 3.4 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Please provide an alternative contact person and their contact information. Monthly written and financial reports are prepared for updating the Board of Directors at CVEA’s monthly board meetings which occur on the third Thursday of each month. Under CVEA’s current grants, monthly written and financial reports are prepared quarterly which include progress-to-date, accomplished milestones, and any changes or updates to the scope of the project. CVEA has been meeting with AEA personnel at least annually to provide in-person reports and to answer any questions on the project. 3.5 Project Risk Discuss potential problems and how you would address them. Since 2007, CVEA has been studying the hydroelectric potential of the Allison Lake Basin. In 2010 CVEA completed review of five project alternatives including construction of an earth filled dam at elevation 1,345 feet and a 9,000 foot penstock to a powerhouse near tidewater. The project, which was deemed technically feasible, had significant geotechnical, access and avalanche challenges that drove project economics to an unacceptable level. The current project reduces construction risk associated with the site, lessens avalanche and access risks, and has fewer environmental impacts. In comparison to other hydroelectric projects, the risks and problems for this project are quite small. There is always the risk of cost over-runs due to the discovery of unknown conditions (such as archeological finds or unstable ground) but our current research finds this remote. Cost over-runs could also occur because of harsh weather during construction. Because the terrain is steep, the working conditions of the project are difficult and safety cabling of people and materials will be common. Much of the construction will be accomplished with helicopters and/or a tram system. This adds the risks associated with helicopter operations and weather will have an impact on the progress of helicopter work. The use of a tram system will help to keep construction progressing despite weather unworthy to fly in. Other risks will be spelled out in very detailed plans such as the erosion control plan, spill control and prevention plan, quality control plan, and other site plans. In all, the risks and problems can be controlled by planning and proper oversight. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 9 of 25 7/3//2012 SECTION 4 – PROJECT DESCRIPTION AND TASKS The level of information will vary according to phase(s) of the project you propose to undertake with grant funds. If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. 4.1 Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available. Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be available for the market to be served by your project. For pre-construction applications, describe the resource to the extent known. For design and permitting or construction projects, please provide feasibility documents, design documents, and permitting documents (if applicable) as attachments to this application. Attachment A, Pages 6-12 discuss details on system loads, resources, hydrology, etc. The fully subscribed energy potential is 23,300,000 kWhs per year. With existing system loads, and nature of seasonal generation, CVEA has the ability to utilize 16,000,000 of these kWhs. All the information presented in this grant application is based on 16,000,000 kWhs. In early 2011, CVEA distributed a Strategic Issues Paper to all CVEA members. This paper discusses projects and technologies being researched. A copy of this report is located at the following location: http://www.cvea.org/resources/pdfs/strategicIssuesPaper2011.pdf CVEA continues to evaluate other alternatives to reduce the cost of power for CVEA’s members. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. CVEA generates electrical power at its two diesel plants, one in Valdez and one in Glennallen, a Cogeneration project in Valdez, and a 12 megawatt hydro facility in Valdez. Power is transferred between the two districts on a 106-mile transmission line through Thompson Pass and the Chugach Mountains. The CVEA Cogeneration Plant is a state-of-the-art facility located at the Petro Star Valdez Refinery. It is a 5.2 megawatt Solar turbine and heat recovery unit that utilizes "light straight run" as its fuel source and provides exhaust heat to the attached crude heater for Petro Star’s use in the refining process. The plant was completed in the spring of 2000 and is remotely controlled from the Solomon Gulch hydroelectric facility. Efficiency for this unit is 9.3 kWhs per gallon for production of electricity but the project sells heat at a combined efficiency of 75-80%. Annual O&M costs for 2012 are budgeted at $47,700 which does not include labor. The Glennallen Diesel Plant (GDP) is the oldest of CVEA’s three thermal plants. It has expanded over the years to meet the needs of CVEA customers. The available generation Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 10 of 25 7/3//2012 capacity of the plant is 11 megawatts. The GDP houses a total of seven diesel engines; three Fairbanks Morse 38D8 1/8 opposed piston units, two Enterprise DSR 46 units, one Caterpillar 3516B unit, and one EMD unit with a capacity of 2.8 megawatts. The five largest units are remotely controlled from the Solomon Gulch hydroelectric facility. The current average efficiency is 14 kWhs per gallon. Annual O&M costs for 2012 are budgeted at $274,000 which does not include labor. The Valdez Diesel Plant (VDP) was constructed after the 1964 Good Friday Earthquake that caused the city of Valdez to relocate to its present location. The plant houses one Fairbanks Morse 38D8 1/8 opposed piston unit, three Enterprise DSR 46 units, and a trailer-mounted Solar Centaur turbine unit. The available generation capacity of this plant is 8.9 megawatts. The three largest units are remotely controlled from the Solomon Gulch hydroelectric facility. The average efficiency is 13.7 kWhs per gallon. Annual O&M costs for 2012 are budgeted at $88,200 which does not include labor. Previously owned by the Four Dam Pool Power Agency, CVEA acquired ownership of the Solomon Gulch hydroelectric facility in February 2009. The 12-megawatt Solomon Gulch hydroelectric facility is located on Dayville Road in Valdez. Power is generated by two Fuji Francis water turbines. The facility began providing power to CVEA customers in 1982. CVEA operates its dispatch center from this facility. The plant is manned 24 hours a day, seven days a week. Plant operators are responsible for the operation of up to four generation plants at one time via remote control operations. From the hydro plant, operators can start and stop units in any or all of CVEA's three generation facilities: Glennallen diesel, Valdez diesel, or the cogeneration plant, as well as the hydro project. Annual O&M costs for 2012 are budgeted at $282,500 which does not include labor. CVEA's service areas are tied together with a 106-mile, 138-kilovolt transmission line that is owned and operated by CVEA. The transmission line provides a link to all four generating plants. Power can flow from any of the generating facilities to end consumers. Historically, power flows from the Solomon Gulch hydro plant to the Copper River Basin District during the summer months. The transmission line traverses severe terrain between the two districts and parts of it, in the Thompson Pass area, has severe avalanche risk. The transmission line was last damaged by an avalanche in December 2009. CVEA’s Rates CVEA had not had a base rate change since 1998. In June 2012 the overall rate structure was changed. In general the Cost of Power was replaced by the Fuel Charge and G&T Charge. This allows CVEA to explain the costs related to our rates. In addition a heat credit will be applied in the months the Cogen is producing heat. Additional information can be found on CVEA’s website at www.cvea.org The graph on the following page illustrates CVEA’s average revenue per kWh collected for 2009, 2010 and 2011. The average revenue includes the cost of power charge which is included in a separate line below. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 11 of 25 7/3//2012 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. Currently CVEA generates approximately 51% of our kWhs with hydro. This will increase to 66% after Allison Creek. The graph below illustrates before Allison Creek and after. 2009 2010 2011 Residential 0.1999$ 0.2212$ 0.2773$ Small Commercial 0.2161$ 0.2483$ 0.2813$ Large Commercial <200 KW 0.1980$ 0.2316$ 0.2620$ Large Commercial >200 KW 0.2044$ 0.2345$ 0.2687$ Residential 0.1730$ 0.1941$ 0.2514$ Small Commercial 0.1854$ 0.2162$ 0.2527$ Large Commercial 0.1867$ 0.2136$ 0.2530$ Cost of Power per kWh (all)0.1159$ 0.1492$ 0.1824$ VALDEZ COPPER BASIN Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 12 of 25 7/3//2012 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The Allison Creek project would have a positive impact on CVEA’s members by lowering the Cost of Power and would allow CVEA to not be as dependent on fossil fuels as we are today. In addition, the project will provide long term energy at a stable price. 4.3 Proposed System Include information necessary to describe the system you are intending to develop and address potential system design, land ownership, permits, and environmental issues. 4.3.1 System Design Provide the following information for the proposed renewable energy system: A description of renewable energy technology specific to project location Optimum installed capacity Anticipated capacity factor Anticipated annual generation Anticipated barriers Basic integration concept Delivery methods The primary features of the run of river project include the following: - A low diversion structure on Allison Creek at elevation 1,300 - A 42” diameter surface / buried penstock - A 6.5 MW powerhouse along Allison Creek at elevation 130 with a 3.8 mile transmission line leading to the Petro Star substation - A permanent 550 foot access road to the powerhouse and a temporary 4,500 foot trail for penstock construction access - Additional details can be found in the final feasibility report in Attachment A The general arrangement is identified on the map on the following page. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 13 of 25 7/3//2012 The fully subscribed energy potential is 23,300,000 kWhs per year; however, with existing system loads, and nature of seasonal generation, CVEA has the ability to utilize 16,000,000 of these kWhs. Page 6 of Attachment A discusses the run of the river operation. Without a reservoir to regulate available flows at the intake, the project can only be operated when instantaneous flows are within the range of physical capability of the generating equipment. All flows greater than the maximum capability will flow past the intake as spill. On the basis included in the final feasibility report, the plant could operate approximately 62% of the time and the total amount of the water available for generation is represented in the chart on the following page. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 14 of 25 7/3//2012 The chart below identifies the energy potential on a monthly basis. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 15 of 25 7/3//2012 4.3.2 Land Ownership Identify potential land ownership issues, including whether site owners have agreed to the project or how you intend to approach land ownership and access issues. The land surrounding Allison Lake is owned by the State of Alaska. CVEA has acquired an access permit from Alyeska for field studies as the work requires a physical crossing of Alyeska property. This permit is renewed annually. 4.3.3 Permits Provide the following information as it may relate to permitting and how you intend to address outstanding permit issues. List of applicable permits Anticipated permitting timeline Identify and discussion of potential barriers CVEA was awarded the FERC preliminary permit on September 4, 2008. The purpose of the preliminary permit is to secure and maintain priority to allow CVEA to study the power potential of Allison Lake and develop information necessary to support a license application. The license application was filed on August 30, 2011. Other permits required are standard among hydroelectric projects. Land use permits from the land owners and water rights permits are typical requirements and are obtained before construction begins on the project. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 16 of 25 7/3//2012 4.3.4 Environmental Address whether the following environmental and land use issues apply, and if so how they will be addressed: Threatened or Endangered species Habitat issues Wetlands and other protected areas Archaeological and historical resources Land development constraints Telecommunications interference Aviation considerations Visual, aesthetics impacts Identify and discuss other potential barriers CVEA has completed the necessary studies required to submit a license application. CVEA has worked closely with all agencies to study the necessary aspects of the project prior to the license application being filed. Additional study may occur as required by FERC prior to a license being issued. Environmental studies will continue through construction and for 5 years after the project is complete. 4.4 Proposed New System Costs and Projected Revenues (Total Estimated Costs and Projected Revenues) The level of cost information provided will vary according to the phase of funding requested and any previous work the applicant may have done on the project. Applicants must reference the source of their cost data. For example: Applicants records or analysis, industry standards, consultant or manufacturer’s estimates. 4.4.1 Project Development Cost Provide detailed project cost information based on your current knowledge and understanding of the project. Cost information should include the following: Total anticipated project cost, and cost for this phase Requested grant funding Applicant matching funds – loans, capital contributions, in-kind Identification of other funding sources Projected capital cost of proposed renewable energy system Projected development cost of proposed renewable energy system The total construction cost is estimated at $32,106,000 (in 2010 $). The total project cost is estimated at $38,804,000. CVEA is requesting $6,114,000 in this round of grant applications. Attachment D on Pages 1 gives the details on CVEA’s plan of finance. CVEA plans to apply for any federal funding that may come available. The remaining amount will be funded with loans. CVEA will continue to explore all possibilities to secure the lowest cost financing available. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 17 of 25 7/3//2012 4.4.2 Project Operating and Maintenance Costs Include anticipated O&M costs for new facilities constructed and how these would be funded by the applicant. (Note: Operational costs are not eligible for grant funds however grantees are required to meet ongoing reporting requirements for the purpose of reporting impacts of projects on the communities they serve.) Project O&M costs are estimated at $280,000 as identified in Page 16 on Attachment A. CVEA is not pursuing grant funding for O&M as these costs would be funded through electric rates. 4.4.3 Power Purchase/Sale The power purchase/sale information should include the following: Identification of potential power buyer(s)/customer(s) Potential power purchase/sales price - at a minimum indicate a price range Proposed rate of return from grant-funded project CVEA estimates the first year cost of power to be approximately 15.93¢. This estimate includes financing the remaining $25,516,000 at 7%. For every 100 basis point reduction (1%), the project cost is reduced by approximately .6¢ per kWh. For every $1 million in grant funds received, the project cost is reduced .5¢ per kWh. CVEA will use 16,000,000 out of the 23,300,000 kWhs on start up. Subscription of the excess power will occur as the member base grows. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Renewable Energy Source The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. 23,300,000 kWh Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel) Existing Energy Generation and Usage a) Basic configuration (if system is part of the Railbelt1 grid, leave this section blank) i. Number of generators/boilers/other 14 (see page 9 of grant application for breakdown) ii. Rated capacity of generators/boilers/other 37.1 MW (see page 9 of grant application) 1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 18 of 25 7/3//2012 iii. Generator/boilers/other type Fairbanks Morse, Enterprise, Caterpillar, Solar iv. Age of generators/boilers/other Ranges from 1952-2009 v. Efficiency of generators/boilers/other Ranges from 9.3 kWh / gallon to 15.2 kWh / gallon, average diesel efficiency 14.0 kWh / gallon b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor $1,336,179 ii. Annual O&M cost for non-labor $692,400 c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the Railbelt grid, leave this section blank) i. Electricity [kWh] 80,421,185 kWh’s – 2011 gross generation ii. Fuel usage Diesel [gal] 1,758,616 gallons – 2011 actual Other LSR: 1,883,401 gallons – 2011 actual iii. Peak Load 13.50 MW – 2011 actual iv. Average Load 12.30 MW – 2011 actual v. Minimum Load 11.40 MW – 2011 actual vi. Efficiency Ranges from 9.3 kWh / gallon to 15.2 kWh / gallon vii. Future trends Minimal growth d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] N/A ii. Electricity [kWh] iii. Propane [gal or MMBtu] iv. Coal [tons or MMBtu] v. Wood [cords, green tons, dry tons] vi. Other Proposed System Design Capacity and Fuel Usage (Include any projections for continued use of non-renewable fuels) a) Proposed renewable capacity (Wind, Hydro, Biomass, other) [kW or MMBtu/hr] Hydro b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] 16,000,000 kWh first year (assumption used in all analysis) 23,300,000 kWh fully subscribed ii. Heat [MMBtu] N/A c) Proposed annual fuel usage (fill in as applicable) i. Propane [gal or MMBtu] ii. Coal [tons or MMBtu] iii. Wood [cords, green tons, dry tons] Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 19 of 25 7/3//2012 iv. Other Project Cost a) Total capital cost of new system $38,804,000 b) Development cost $32,106,000 c) Annual O&M cost of new system $280,000 d) Annual fuel cost N/A Project Benefits a) Amount of fuel displaced for i. Electricity 1,142,857 gallons x $3.63 = $4,148,571 ii. Heat iii. Transportation b) Current price of displaced fuel $3.63 per gallon c) Other economic benefits d) Alaska public benefits Power Purchase/Sales Price a) Price for power purchase/sale N/A Project Analysis a) Basic Economic Analysis Project benefit/cost ratio $102,136,856 / $38,804,000 = 2.63 Payback (years) 16 years (see attachment D: financial backup for details) 4.4.5 Proposed Biomass System Information Please address the following items, if know. (For Biomass Projects Only) - N/A What woody biomass technology will be installed (cord wood, pellets, chips, briquettes, pucks). Efficiency of the biomass technology. Thermal or electric application. Boiler efficiency. Displaced fuel type and amount. Estimated tons of wood pellets or chips (specify) to be used per year, and average moisture percentage. Estimated cords of wood to be used per year, specify whether dry or green and the moisture Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 20 of 25 7/3//2012 percentage. Ownership/Accessibility. Who owns the land and are their limitations and restrictions to accessing the biomass resource? Inventory data. How much biomass is available on an annual basis and what types (species) are there, if known? SECTION 5– PROJECT BENEFIT Explain the economic and public benefits of your project. Include direct cost savings, and how the people of Alaska will benefit from the project. The benefits information should include the following: Potential annual fuel displacement (gallons and dollars) over the lifetime of the evaluated renewable energy project Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price, RCA tariff, or cost based rate) Potential additional annual incentives (i.e. tax credits) Potential additional annual revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available) Discuss the non-economic public benefits to Alaskans over the lifetime of the project This project allows CVEA to displace approximately 1,664,000 gallons of fossil fuel when fully subscribed. At current load levels, utilizing 16,000,000 kWhs per year, CVEA will displace 1,142,857 gallons per year. At current fuel prices this equates to approximately $4,148,571 annually. With a 2% increase in fuel annually over 30 years, this equates to a fuel savings of $178,600,856 as identified on Page 5 of Attachment D. With the addition of Allison Creek and the project costs, CVEA members will save approximately $1,853,698 in the first year. This savings increases as fuel costs increase. CVEA is excited at the prospect of adding Allison Creek to our power production capabilities. Allison Creek will move our hydro production from 51% to 66% and it eliminates the use of 1.66 million gallons of diesel fuel per year. This in turn eliminates 19,000 tons of CO2 emissions, and 10,000 tons of other hazardous emissions. As an additional benefit, it reduces the chance of acidification of the oceans at our current rate and it reduces the chances of an oil spill since we would need fewer refueling operations. The positive effects of eliminating the use of fossil fuel cannot be ignored when calculating the merit of this project. We understand that Allison Creek has a footprint (albeit small) in the environment. We understand that some impacts will be felt by birds, fish, mammals and view- shed. We have been working very closely with state and federal agencies to minimize these impacts and we believe we have achieved a project that has an overwhelmingly net positive impact on the environment and community. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 21 of 25 7/3//2012 SECTION 6– SUSTAINABILITY Discuss your plan for operating the completed project so that it will be sustainable. Include at a minimum: Proposed business structure(s) and concepts that may be considered. How you propose to finance the maintenance and operations for the life of the project Identification of operational issues that could arise. A description of operational costs including on-going support for any back-up or existing systems that may be require to continue operation Commitment to reporting the savings and benefits CVEA is a locally regulated IRC 501 (c)(12) cooperative electric utility organized and doing business under AS 10.25 Alaska Electric and Telephone Cooperative Act. CVEA was incorporated in 1955 and has been doing business under Certificate of Public Convenience and Necessity No. 10 since 1959. CVEA proposes to own and operate the Allison Creek hydroelectric facility. CVEA demonstrates sustainability in its every day successful operation of the cooperative. The maintenance and operations would be funded through electric rates. CVEA owns redundant generation assets to adequately back up the Allison Creek project in the event the project cannot deliver energy to the CVEA system. CVEA has identified the benefits in Section 5 and has a commitment to report any other savings and benefits as the project progresses. SECTION 7 – READINESS & COMPLIANCE WITH OTHER GRANTS Discuss what you have done to prepare for this award and how quickly you intend to proceed with work once your grant is approved. Tell us what you may have already accomplished on the project to date and identify other grants that may have been previously awarded for this project and the degree you have been able to meet the requirements of previous grants. CVEA is moving forward with the project as identified with the project schedule included in Attachment B. CVEA currently has 18,000,000 available for commercial financing through National Rural Utilities Cooperative Finance Corporate (NRUCFC). Once numbers are finalized a full plan of finance will be developed. CVEA has been in compliance with the three grants issued on this project: - State of Alaska 2008 capital budget appropriation (grant #2195314) $ 1,000,000 - Renewable Energy Fund Round I (grant 2195390) $ 2,288,000 - State of Alaska 2010 capital budget appropriation (grant #7910012) $10,000,000 Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 22 of 25 7/3//2012 SECTION 8– LOCAL SUPORT Discuss what local support or possible opposition there may be regarding your project. Include letters of support from the community that would benefit from this project. In June 2011, CVEA solicited support from CVEA members for the Allison Creek Project. This was a very successful effort and the final product comprised of two volumes of letters and signed petitions given to the State of Alaska in support of a capital budget appropriate request. In summary CVEA received 326 letters of support and 700 petition signatures. Included with this application are 14 letters, more are available upon request. There is no known opposition of the Project. SECTION 9 – GRANT BUDGET Tell us how much you want in grant funds Include any investments to date and funding sources, how much is being requested in grant funds, and additional investments you will make as an applicant. Provide a narrative summary regarding funding sources and your financial commitment to the project. Please see the attached estimate of budget costs. CVEA is requesting funds for equipment purchases as there is a long lead time for these types of items. A typical long lead time purchase at CVEA is separated into payment phases: award of contract, fabrication of equipment, completion and delivery. Attachment D, financial backup breaks out the project funding by the phases identified in the budget form. Applications should include a separate worksheet for each project phase that was identified in section 2.3.2 of this application, (Reconnaissance, Feasibility, Conceptual Design, Design and Permitting, and Construction). Please use the tables provided below to detail your proposed project’s budget. Be sure to use one table f or each phase of your project. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 23 of 25 7/3//2012 If you have any question regarding how to prepare these tables or if you need assistance preparing the application please feel free to contact AEA at 907-771-3031 or by emailing the Grant Administrator, Shawn Calfa, at scalfa@aidea.org. Tables created for milestones within the funding period. Please see Attachment D for breakdown by month for entire project. Milestone or Task Anticipated Completion Date RE- Fund Grant Funds Grantee Matching Funds Source of Matching Funds: Cash/In- kind/Federal Grants/Other State Grants/Other TOTALS (List milestones based on phase and type of project. See Milestone list below. ) Owner’s Representative 4 Q 2015 $ 100,000 $ 100,000 Cash $ 200,000 Construction Services 3 Q 2015 $ 425,000 $ 425,000 Cash $ 850,000 Project Mgmt, Insurance, etc. 2 Q 2014 $ 625,000 $ 625,000 Cash $1,250,000 Equipment & Materials 1 Q 2015 $4,964,000 $4,964,000 Cash $9,928,000 $ $ $ $ $ $ $ $ $ TOTALS $6,114,000 $6,114,000 $12,228,000 Budget Categories: Direct Labor & Benefits $ $ $ Travel & Per Diem $ $ $ Equipment $4,964,000 $4,964,000 Cash $ 9,928,000 Materials & Supplies $ $ $ Contractual Services $ 725,000 $ 725,000 Cash $ 1,450,000 Construction Services $ 425,000 $ 425,000 Cash $ 850,000 Other $ $ $ TOTALS $6,114,000 $6,114,000 $12,228,000 Equipment and Materials will be detailed out in winter 2012/2013. There are many long lead time items that have to be purchased. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 24 of 25 7/3//2012 SECTION 10 – AUTHORIZED SIGNERS FORM Community/Grantee Name: Copper Valley Electric Association, Inc. Regular Election is held: Date: 9-21-12 Authorized Grant Signer(s): Printed Name Title Term Signature John Duhamel Executive Engineer See attached signed board resolution Temporary in CEO’s absence Robert A. Wilkinson Chief Executive Officer See board resolution I authorize the above person(s) to sign Grant Documents: (Highest ranking organization/community/municipal official) Printed Name Title Term Signature Robert A. Wilkinson Chief Executive Officer See board resolution Grantee Contact Information: Mailing Address: Jaime L. Matthews Phone Number: 907-822-8311 Fax Number: 907-822-5586 E-mail Address: Matthews@cvea.org Federal Tax ID #: 92-0023631 Please submit an updated form whenever there is a change to the above information. Allison Lake Hydropower DevelopmentFINAL FEASIBILITY STUDYADDENDUM January 2011 The Energy Company Robert A. Wilkinson, CEO December 20, 2010 Copper Valley Electric Association H-327730 P.O. Box 45 Glennallen, AK 99588-2832 Dear Robert Subject: Allison Creek Hydroelectric Project Final feasibility Study – Addendum We are pleased to submit herewith our Addendum to the Final Feasibility Study for the Allison Lake Hydroelectric Project. This addendum presents our analysis of two additional options for the project as follows: • Alternative 4a (Alt 4a): A run-of-river development on Allison Creek commencing approximately 2,000 downstream of the outlet of Allison Lake consisting of a diversion structure and a penstock leading to a 6.5 MW powerhouse at the same location as considered for Alt 3c. • Alternative 4b (Alt 4b): The addition of an inflatable gate on the Solomon Gulch Spillway that would raise the normal maximum water surface of Solomon Lake by five feet. Our principal conclusions for these two alternatives as stated within the report include: • Alternative 4a - A run-of-river Alt 4a development of the Allison Creek basin is not cost effective with operation within the existing CVEA system load. - With the addition of 2 MW to the CVEA system load, the project would be competitive with the cost of diesel generation. - The reduced scale of the hydropower development of the Allison Creek basin as offered by Alt 4a would reduce the risk of construction cost overruns, seepage and dam safety concerns and environmental impacts as compared to Alt 3c. - Alt 4a is superior to Alt 3c in all respects. • Alternative 4b - The addition of inflatable gates to the Solomon Gulch Spillway as proposed for Alt 4b would add approximately 2 GWh of energy to the CVEA system. - The addition of inflatable gates to the Solomon Gulch Spillway as proposed for Alt 4b would require amendment to existing FERC License for the Solomon Gulch Project. - On the basis of the energy potential and cost estimates prepared for this evaluation, Alt 4b currently would not be an economically viable project. Based on these conclusions we recommend that the CVEA adopt Alt 4a as the preferred alternative for the development of the hydroelectric potential of the Allison Creek basin and that further consideration of Alt 3c and Alt 4b be terminated. We greatly appreciate the opportunity to work with you on this interesting project. If you have any questions regarding the subject report, be sure to give us a call. Yours very truly, A. Richard Griffith, P.E. Project Manager Hatch Acres Corporation 6 Nickerson Street, Suite 101, Seattle, WA 98109 USA Tel: 206-352-5730 • Fax: 206-352-5734 • www..hatchacres.com Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 i Table of Contents 1. Introduction............................................................................................................................................1 1.1 General..........................................................................................................................................1 1.2 Alternative 4 – General Arrangement.............................................................................................2 1.3 Alternative 4a – Diversion Structure on Allison Creek with Penstock leading to Powerhouse (Alt 4a).......................................................................................................................3 1.4 Alternative 4b – Raising Solomon Gulch Reservoir Maximum Water Surface 5 feet with Inflatable Gates on Spillway (Alt 4b) ..............................................................................................4 2. Power Studies..........................................................................................................................................6 2.1 Unconstrained Run-of-River Operation ..........................................................................................6 2.2 System Loads and Resources..........................................................................................................7 2.2.1 System Loads........................................................................................................................7 2.2.2 System Resources.................................................................................................................7 2.3 AUTO Vista Model: Allison Creek Run-of-River Hydropower Development...................................8 2.4 Hydrology......................................................................................................................................8 2.5 Hydro Equipment Characteristics ...................................................................................................9 2.6 AUTO Vista Results........................................................................................................................9 3. Project Construction Cost and Construction Schedule..........................................................................13 3.1 Construction Cost Estimates .........................................................................................................13 3.1.1 Alternative 4a.....................................................................................................................13 3.1.2 Alternative 4b.....................................................................................................................14 3.2 Construction Schedule.................................................................................................................15 3.3 Economic Analysis.......................................................................................................................16 3.3.1 Cost of Power – Alternative 4a...........................................................................................16 3.3.2 Cost of Power – Alternative 4b...........................................................................................17 4. Regulatory and Environmental Considerations......................................................................................19 4.1 Alternative 4a...............................................................................................................................19 4.1.1 Regulatory Considerations..................................................................................................19 4.1.2 Environmental Field Investigations .....................................................................................19 4.1.3 Environmental Considerations............................................................................................20 4.2 Alternative 4b ..............................................................................................................................21 4.2.1 Regulatory Considerations..................................................................................................21 4.2.2 Environmental Field Studies ...............................................................................................21 4.2.3 Environmental Considerations............................................................................................21 5. Conclusions and Recommendations......................................................................................................22 5.1 Conclusions.................................................................................................................................22 5.1.1 Alternative 4a.....................................................................................................................22 5.1.2 Alternative 4b.....................................................................................................................22 5.2 Recommendations .......................................................................................................................23 6. References.............................................................................................................................................24 Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 ii Tables Table 1.1 FFS – Design and Economic Conditions..................................................................................1 Table 2.1 AUTO Vista Hydrologic Years ................................................................................................9 Table 2.2 Annual Generation – Existing Condition, Loads and Resources............................................10 Table 2.3 Annual Generation – Alt 4a w/ Existing Load........................................................................10 Table 2.4 Annual Generation – Alt 4b w/ Existing Load .......................................................................10 Table 2.5 Annual Generation – Existing Resources w/ 2 MW Additional Load.....................................11 Table 2.6 Annual Generation – Alt 4a w/ 2 MW Additional Load ........................................................11 Table 2.7 Annual Generation – Alt 4b w/ 2 MW Additional Load........................................................11 Table 2.8 Annual Benefits – Alt 4a & 4b...............................................................................................12 Table 3.1 Alternative 4a – Total Construction Cost (Bid 1/2010)..........................................................14 Table 3.2 Alternative 4b – Total Construction Cost (Bid 1/2010) .........................................................15 Table 3.3 Basic Assumptions for Economic Analysis.............................................................................1 6 Table 3.4 Alternative 4a – First Year Annual Cost (2010 Dollars).........................................................16 Table 3.5 Alternative 4a – Cost of Power.............................................................................................17 Table 3.6 Alternative 4b – Cost of Power.............................................................................................18 Table 4.1 Summary of Major Environmental Field Studies ...................................................................20 Figures Figure 1.1 Alternative 4 General Arrangement........................................................................................2 Figure 1.2 Alternative 4a – Plan and Profile............................................................................................3 Figure 1.3 Diversion Structure – Plan and Cross Section.........................................................................4 Figure 1.4 Typical Obermeyer Gate Installation......................................................................................5 Figure 1.5 Solomon Gulch Obermeyer Spillway Gate Cross Section.......................................................5 Figure 2.1 Allison Creek Annual Flow-Duration Curve............................................................................6 Figure 2.2 Allison Average Monthly Distribution of Energy Production ..................................................7 Figure 2.3 AUTO Vista Model Elements: Alts 4a and 4b..........................................................................8 Figure 2.4 Allison Powerhouse Unit Characteristics – 2 x 3.25 MW Units..............................................9 Figure 3.3 Alternative 4a – Construction Schedule................................................................................15 Appendices Appendix A – Alternative 4a, System Dispatch Appendix B – Obermeyer Gate Cost Estimate Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 1 1. Introduction 1.1 General A fundamental premise of the studies leading to the Final Feasibility Study (FFS) for the Allison Lake Hydroelectric Project (Project) of May 2010 was that an additional hydropower project is needed to support the Solomon Gulch Project during winter months. Currently the Copper Valley Electric Association, Inc. (CVEA) must rely on diesel generation to meet system load to make up for the inability of the Solomon Gulch Project to generate during the winter period. The Allison Creek basin exhibits the same basic annual pattern of inflow as the Solomon Gulch basin. The 7 months of May through November are estimated to account for 98% of the annual inflow leaving only a 2% contribution for the 5 months of December through April. Accordingly, the focus of project studies has been to determine the most cost-effective manner to develop storage within Allison Lake to allow for generation during the low flow winter time period. In all, six different schemes, Alt 1, Alt 2 and Alt 3a through Alt 3d, were reviewed and reported on as part of the previous studies for the Project. The manner in the proposed design for each alternative to provide the necessary storage is described in Section 1.3 through Section 1.5 of the FFS. The Project studies have shown that each of the six arrangements are technically and environmentally feasible. However, the studies also reveal that each arrangement includes significant challenges potentially affecting their long term economics and/or operational reliability as listed in Table 1.1. Table 1.1 Final Feasibility Report Design and Economic Considerations Alternative Design and Economic Considerations Alt 1 Tunnel cost Alt 2 Tunnel cost Alt 3a Reliable operation of siphon and maintenance thereof during winter period Alt 3b Drilling of micro-tunnel in glacial moraine Alt 3c Embankment cost, foundation conditions for embankment, seepage, liquifaction & avalanches Alt 3d Embankment cost, foundation conditions for embankment, seepage, liquifaction & avalanches Subsequent to the completion of the FFS, the range of challenges as summarized above led to a concern regarding the viability of a storage project within the Allison Creek drainage. However, the high elevation of the first 2000’ below the outlet of Allison Lake suggests that there would be a significant amount of energy available from Allison Creek as a run-of-river project. To date the system load characteristics of CVEA has been such that much of the this additional energy would be stranded; i.e. there would be no load available for the project to serve. Recently, however, a 2 MW industrial facility has been brought into the CVEA system. This additional load will provide an opportunity to CVEA to more fully operate a run-of-river project to accommodate what would otherwise be served by diesel generation. This scheme is referred to as Alt 4. The purpose of this Addendum to the FFS dated May 2010, is to present the evaluation of the economic viability of alternative run-of-river arrangements for capturing the hydropower potential of Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 2 Allison Creek as a project to serve an expanded CVEA system load. Accordingly, the scope of work leading to this Addendum to the FFS has included the following activities: 1. Development of alternative project arrangements consistent with the purposes of this Addendum 2. Review of Allison Lake hydrology as related to the run-of-river hydropower potential of the identified alternatives 3. Preliminary layout and cost estimate of hydroelectric project features for each of the identified project arrangements 4. Economic evaluation of the identified alternatives 5. Environmental review of the of the identified alternatives 6. Preparation of this addendum to the Final Feasibility Report including the resulting conclusions and recommendations 1.2 Alternative 4 – General Arrangement The primary features of the run-of-river project selected for this review include the following: • A low diversion structure on Allison Creek at El. 1300, • A 42” diameter surface / buried penstock, • A 6.5 MW powerhouse along Allison Creek at El. 130 with a 1.75 mile transmission line leading to the Solomon Gulch switchyard, and • A permanent 1,000 foot access road to the powerhouse and a temporary 4,500 foot trail for penstock construction access. The general arrangement for Alt 4 of these features is shown in Figure 1.1. Two versions of Alt 4 are reviewed herein as described in the following paragraphs. Figure 1.1 Alternative 4 General Arrangement ALTERNATIVE 4 Diversion Structure Powerhouse Penstock Allison Lake ALTERNATIVE 4 Diversion Structure Powerhouse Penstock Allison Lake Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 3 1.3 Alternative 4a – Diversion Structure on Allison Creek with Penstock leading to Powerhouse (Alt 4a) Alt 4a includes the primary features as described above. Plan and profile views of Alt 4a are shown in Figure 1.2. The general details of the penstock and powerhouse are shown on Figures B.6 and B.7 respectively within Appendix B of the FFS. The actual dimensions of the penstock and powerhouse will be in proportion to the 42” penstock and 6.5 MW powerhouse as referenced above for Alt 4 in lieu of the 36” penstock and 4 MW powerhouse for Alt 3c as shown in the FFS. The access road to the powerhouse as shown in Figure 1.2 will be designed in accordance with the criteria set forth in Appendix C.3. The design of the access trail from the loop road off the Trans Alaska Pipeline System corridor to the point where the penstock crosses over a ridge will follow the same alignment to that point as was studied for the construction access for Alt 3c. However, the width of the corridor will be reduced consistent with the use helicopters as the primary access for construction of the penstock and diversion structure. Figure 1.2 Alternative 4a – Plan and Profile PLAN PROFILE The diversion structure will located along Allison Creek at approximately El. 1300. The specific location and type of diversion scheme to be used for the run-of-river option will be determined at the next level of the design process. A conceptual drawing of the type of diversion structure used for the present purpose is shown in Figure 1.3. Surface / Buried Penstock 0+005+0010+0015+0020+0025+0030+0035+0040+0045+0050+0055+0060+0065+00100 500 1000 Elevation (ft)Station(ft ) Powerhouse 70+00Surface / Buried Penstock 0+005+0010+0015+0020+0025+0030+0035+0040+0045+0050+0055+0060+0065+00100 500 1000 Elevation (ft)Station(ft ) Powerhouse 70+00Diversion Structure Powerhouse S u rf a ce / B u ri ed Pe n st o c k AccessTrail AccessRoad Allison Lake Diversion Structure Powerhouse S u rf a ce / B u ri ed Pe n st o c k AccessTrail AccessRoadAccessRoad Allison Lake Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 4 Figure 1.3 Diversion Structure – Plan and Cross Section PLAN CROSS SECTION 1.4 Alternative 4b – Raising Solomon Gulch Reservoir Maximum Water Surface 5 feet with Inflatable Gates on Spillway (Alt 4b) Alt 4b adds additional storage to Solomon Gulch reservoir by modifying the spillway with 5 foot high inflatable gates extending the full length of the 450 foot long spillway. The proprietary Obermeyer Gate System consist of steel panels that are raised up by inflating a rubber bladder. This is necessary because the alternative rubber bladder gates without steel panels are not sufficiently controllable. They must be either in the fully inflated or fully deflated mode and can release too much water into the tailrace during the transition. The Obermeyer gates can operate at any stage between up or down thereby controlling water release. The profile view of Alt 4b is shown in Figure 1.5. 130013101300131001020 5030 40 SCALE IN FEET42”FPenstockAllison Creek130013101300131001020 5030 40 SCALE IN FEET 01020 5030 4001020 5030 40 SCALE IN FEET42”FPenstockAllison CreekAllison CreekEL. 1300 EL. 1306 WS EL. 1301 @ 80 cfs WS EL. 1305 @ 800 cfs 15 201005 SCALE IN FEET EL. 1300 EL. 1306 WS EL. 1301 @ 80 cfs WS EL. 1305 @ 800 cfsWS EL. 1305 @ 800 cfs 15 201005 SCALE IN FEET 15 20100515 20100 5 15 201005 SCALE IN FEET Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 5 Figure 1.4 Typical Obermeyer Gate Installation Figure 1.5 Solomon Gulch Obermeyer Spillway Gate Cross Section COLLAPSIBLE REINFORCED RUBBER RESTRAINING STRAP TYP (3) PLACES EACH 19.56’ GATE SECTION TOP OF GATE EL. 690.0 STEEL GATE PANEL SUPPLIED IN NOMINAL 19.56’ LENGTHS. (23) GATE PANELS SPAN 450’ GATE LENGTH DUCTILE IRON CLAMP CASTING EL. 684.5 INFLATABLE DUAL CHAMBER AIR BLADDER SUPPLIED IN NOMINAL 19.56’ LENGTHS RESTRAINING STRAP ANCHOR BOLT TYP (6) PLACES EACH 19.56’ GATE SECTION STAINLESS STEEL MAIN ANCHOR BOLT TYP 12’ ON CENTER COLLAPSIBLE REINFORCED RUBBER RESTRAINING STRAP TYP (3) PLACES EACH 19.56’ GATE SECTION TOP OF GATE EL. 690.0 STEEL GATE PANEL SUPPLIED IN NOMINAL 19.56’ LENGTHS. (23) GATE PANELS SPAN 450’ GATE LENGTH DUCTILE IRON CLAMP CASTING EL. 684.5 INFLATABLE DUAL CHAMBER AIR BLADDER SUPPLIED IN NOMINAL 19.56’ LENGTHS RESTRAINING STRAP ANCHOR BOLT TYP (6) PLACES EACH 19.56’ GATE SECTION STAINLESS STEEL MAIN ANCHOR BOLT TYP 12’ ON CENTER Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 6 2. Power Studies 2.1 Unconstrained Run-of-River Operation By definition, without a reservoir to regulate available flows at the intake, a hydropower project can only be operated when instantaneous flows are within the range of physical capability of the generating equipment. All flows greater than the maximum capability will flow past the intake as spill. In addition, all flows required for other instream uses as well as all flows less than that required to operate the smallest hydropower unit must be passed by the intake. This condition is illustrated in Figure 2.1 in the form of an annual flow duration curve for the run-of- river hydropower arrangement described in Section 1. The curve, which is based on the hydrology defined in the FFS, shows that a run-of-river facility installed on Allison Creek could operate whenever the flows in the creek are between 9 cfs and 85 cfs for the condition: • The minimum instream flow release is 5 cfs • The minimum turbine flow is 4 cfs, and • The maximum turbine flow is 80 cfs. Figure 2.1 Allison Creek Flow Annual Flow-Duration Curve On this basis, the plant could operate approximately 62% of the time and the total amount of water available for generation, Qgen, is represented by the blue cross-hatched area within Figure 2.1. The difference in elevation between the diversion structure and the powerhouse times Qgen times 8,760 hours in a year provides an estimated 23.3 GWh as the average total amount of energy potentially available from a run-of-river project on Allison Creek. The same basic approach as applied to monthly flow duration curves results in the monthly distribution of the 23.3 GWh as shown in Figure 2.2. 0.0 50.0 100.0 150.0 200.0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ExcedenceFlow (cfs)Instream Flow Qmin=5 cfs Unit Qmin=4 cfs Generation 23.3 GWh (Unit Qmax=80 cfs) Spill ExcedenceFlow (cfs)0.0 50.0 100.0 150.0 200.0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ExcedenceFlow (cfs)Instream Flow Qmin=5 cfs Unit Qmin=4 cfs Generation 23.3 GWh (Unit Qmax=80 cfs) Spill ExcedenceFlow (cfs) Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 7 Figure 2.2 Allison Average Monthly Distribution of Energy Production The above analysis is valid for the case that the energy from the project is not constrained by the system load conditions. Specifically, the monthly distribution of energy as shown in Figure 2.2 is important from the perspective the ability of CVEA to assimilate a run-of-river project on Allison Creek into their system. For example, the Solomon Gulch Project can substantially accommodate the total system under current load conditions for the month of July. Accordingly, the 4.8 GWh available generation from Allison Lake could theoretically be stranded and the Allison Creek flows would spill past the intake. However, the complete loss of the 4.8 GWh will be offset to some degree by the storage capability within Solomon Gulch by allowing Solomon Gulch to remain full longer into the fall season. The analysis of this opportunity is with the AUTO Vista model as presented in the FFS is presented below for Alt 4a and Alt 4b. 2.2 System Loads and Resources 2.2.1 System Loads The AUTO Vista model operates on an hourly time step to meet system loads in the most cost effective manner using available system resources as a function of their respective cost of production. For the present study, two cases for the system load were considered as follows: • The system load as recorded by CVEA data for 2006, as was the basis for all previous studies. • The above case with the addition of a new 2 MW load to continuously serve Petro Star for 50 weeks of the year. 2.2.2 System Resources The system resources considered for the existing case included the combined diesel plant facilities in Valdez and Glennallen, the combined cycle unit as operated under the contract with Petro Star, and the existing hydropower facilities at the Solomon Gulch Project. The proposed development included the additions as discussed in Section 1 above as well as retirement of the existing thermal generation resources to the extent possible in each respective case under consideration. 0.1 0.0 0.0 0.1 2.2 4.3 4.8 4.3 3.6 2.7 1.0 0.4 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Annual Energy = 23.3 GWh Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 8 2.3 AUTO Vista Model: Allison Creek Run-of-River Hydropower Development AUTO Vista was used to evaluate the generation benefits of various upgrade configurations under consideration for the Project during the studies leading to the FFS Report. As stated at the close of Section 1, the focus of this Addendum includes Alt 4a and Alt 4b as discussed below. The following is a description of the program and a discussion of the how AUTO Vista was applied for the condition that the run-of-river operation of the Project is required to operate within the CVEA system. The AUTO Vista model for the Project includes the drainage basins for both the existing Solomon Gulch Project and Allison Lake. It is comprised of a series of arcs and nodes with each element having its set of characteristics as defined in the FFS. The graphical model for the existing system, Alt 4a and Alt 4b as expressed in these terms is shown in Figure 2.3. Major features of the AUTO Vista model are briefly described below. Figure 2.3 AUTO Vista Model Elements: Alt 4a and Alt 4b 2.4 Hydrology The hydrology used for the AUTO Vista model is based on the work done by the U.S. Army Corps of Engineers (COE) in 1982 as part of their evaluation of the potential project configurations for maximizing the Allison Lake resource. The correlations developed from that study results in a 39- year period of average daily flows from 1950 through 1989. A statistical analysis of this period of record was performed to establish a representative smaller group of 7 years for use within the present AUTO Vista. The set of 7 years was chosen on the basis of balancing the wet to dry conditions of annual inflow to the two basins. The specific years chosen and the associated representative inflow conditions are summarized in Table 2.1. ALSQ (Allison Lake Inflow) ALSS (Allison Lake Spill) ALSP (Allison Lake Power) ALST (Allison Lake TWL) SLGR (Solomon Gulch Reservoir) SLGQ (Solomon Gulch Inflow) SLGP (Solomon Gulch Power) SLGT (Solomon Gulch TWL) S_SINK (Source_Sink) SINS (Solomon Instream Flow) SLGS (Solomon Gulch Spill) SLGINS_RJ (Solomon Gulch INS Junc) ALSSPWY_RJ (Allison SPWY TWL) ALSR (Allison Lake) A_SINK (Source_Sink) ALSQ (Allison Lake Inflow) ALSS (Allison Lake Spill) ALSP (Allison Lake Power) ALST (Allison Lake TWL) SLGR (Solomon Gulch Reservoir) SLGQ (Solomon Gulch Inflow) SLGP (Solomon Gulch Power) SLGT (Solomon Gulch TWL) S_SINK (Source_Sink) SINS (Solomon Instream Flow) SLGS (Solomon Gulch Spill) SLGINS_RJ (Solomon Gulch INS Junc) ALSSPWY_RJ (Allison SPWY TWL) ALSR (Allison Lake) A_SINK (Source_Sink) ALSR (Allison Lake) A_SINK (Source_Sink) Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 9 Table 2.1 AUTO Vista Hydrologic Years 2.5 Hydro Equipment Characteristics The performance curves for the Solomon Gulch powerhouse have been included as provided by the CVEA. The new units at the proposed Allison Lake powerhouse for Alt 4a is based on Hatch Acres in-house generic data for Pelton units. Both alternatives include a 6.5 MW generating station comprised of two 3.25 MW generating units. A plot of the characteristics used in this analysis for each of the 3.25 MW units is shown in Figure 2.4. All elements of the conduit system components for each alternative have been assumed to perform in accordance with published engineering data. Figure 2.4 Allison Powerhouse Unit Characteristics – 2 x 3.25 MW Units 2.6 AUTO Vista Results Stacked bar charts indicating the most efficient dispatch of system resources as required to meet the system load are included in Appendix A for the existing condition, Alt 4a and Alt 4b. The first charts compare the existing condition to the development alternatives for the 1961 water year, which is the 50% year as indicated in Table 2.1. Total Inflow Year Percentile Acre-Feet 1969 10% 28,900 1984 25% 30,800 1954 25% 30,900 1961 50% 33,200 1957 75% 36,100 1977 75% 37,900 1989 90% 42,800 Average 34,400 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 5 10 15 20 25 30 35 40 45Discharge (cfs)Efficiency (%)0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Power (MW)Calculated Efficiency Caculated Power Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 10 The annual generation for the base case of the existing load and resource condition for each of the 7 years included in the analysis is shown in Table 2.2 and the annual generation for Alt 4a and Alt 4b for the existing load condition is shown in Tables 2.3 and 2.4 below. Table 2.2 Annual Generation – Existing Condition, Loads and Resources Table 2.3 Annual Generation – Alt 4a w/ Existing Load Table 2.4 Annual Generation – Alt 4b w/ Existing Load Generation (MWh) Year Solomon Allison Total Hydro Diesel Cogen Total 196 9 51,900 0 51,90 0 11,300 23,100 86,400 1984 55,200 0 55,200 8,100 23,000 86,400 1954 55,700 0 55,700 7,600 23,000 86,400 1961 59,700 0 59,70 0 6,100 20,600 86,400 1957 58,500 0 58,500 7,200 20,700 86,400 1977 61,800 0 61,80 0 3,100 21,500 86,400 1989 62,100 0 62,100 4,400 19,900 86,400 Average 57,800 0 57,800 6,800 21,700 86,400 Generation (MWh) Year Solomon Allison Total Hydro Diesel Cogen Total 196 9 54,60 0 13,700 68,400 50 0 17,50 0 86,400 1984 54,000 15,100 69,200 300 16,900 86,400 1954 49,500 13,800 63,400 500 22,500 86,400 1961 53,20 0 14,100 67,300 50 0 18,50 0 86,400 1957 55,100 11,800 67,000 500 18,900 86,400 1977 57,80 0 12,400 70,200 30 0 15,90 0 86,400 1989 57,900 10,300 68,200 400 17,800 86,400 Average 54,600 13,000 67,700 400 18,300 86,400 Generation (MWh) Year Solomon Allison Total Hydro Diesel Cogen Total 1969 55,100 15,30 0 70,400 500 15,50 0 86,400 1984 55,000 16,200 71,200 400 14,800 86,400 1954 51,900 13,600 65,500 500 20,300 86,400 1961 55,300 14,40 0 69,800 400 16,20 0 86,400 1957 56,100 12,900 69,000 500 16,800 86,400 1977 59,300 12,90 0 72,200 500 13,70 0 86,400 1989 59,300 10,900 70,100 500 15,800 86,400 Average 56,000 13,700 69,700 500 16,200 86,400 Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 11 The annual generation for the base case of the additional 2MW load and resource condition for each of the 7 years included in the analysis is shown in Table 2.5 and the annual generation for Alt 4a and Alt 4b for the additional 2MW load condition is shown in Tables 2.6 and 2.7 below. Table 2.5 Annual Generation – Existing Resources w/ 2 MW Additional Load Table 2.6 Annual Generation – Alt 4a w/ 2 MW Additional Load Generation (MWh) Year Solomon Allison Total Hydro Diesel Cogen Total 1969 57,000 18,100 75,100 3,000 25,500 103,500 1984 57,700 19,000 76,700 3,000 23,900 103,500 1954 53,500 17,800 71,300 8,200 24,100 103,500 1961 58,900 16,600 75,500 4,200 23,800 103,500 1957 59,600 15,200 74,800 4,600 24,200 103,500 1977 61,900 15,700 77,700 2,000 23,900 103,500 1989 62,600 14,000 76,600 4,600 22,400 103,500 Average 58,700 16,600 75,400 4,200 24,000 103,500 Table 2.7 Annual Generation – Alt 4b w/ 2 MW Additional Load The annual general benefits from the AUTO Vista Analyses for Alt 4a and Alt 4b can then be summarized for each load case as shown in Table 2.8 in terms of the incremental hydropower generation and associated reduction on thermal power as required to satisfy the system load for each of the alternatives under consideration. Please note that the minor differences between the hydro and thermal generation values for each alternative are due to rounding within the AUTO Vista modeling. Generation (MWh) Year Solomon Allison Total Hydro Diesel Cogen Total 1969 51,700 0 51,700 28,700 23,100 103,500 1984 54,800 0 54,800 25,600 23,100 103,500 1954 55,500 0 55,500 24,900 23,100 103,500 1961 59,100 0 59,100 21,400 23,000 103,500 1957 62,100 0 62,100 19,800 21,700 103,500 1977 66,000 0 66,000 15,200 22,400 103,500 1989 66,500 0 66,500 15,500 21,600 103,500 Average 59,400 0 59,400 21,600 22,600 103,500 Generation (MWh) Year Solomon Allison Total Hydro Diesel Cogen Total 196 9 58,200 19,000 77,200 900 25,400 103,500 1984 58,500 20,200 78,700 1,000 23,900 103,500 1954 55,600 17,800 73,400 5,900 24,200 103,500 1961 60,400 17,100 77,500 2,300 23,700 103,500 1957 61,300 15,600 76,900 2,600 24,100 103,500 1977 63,800 15,700 79,500 300 23,700 103,500 1989 63,800 14,900 78,600 2,500 22,400 103,500 Average 60,200 17,200 77,400 2,200 23,900 103,500 Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 12 Table 2.8 Annual Benefits – Alt 4a & 4b Resource Existing Alt 4a Alt 4b Existing Alt 4a Alt 4b Hydro 57,800 67,700 69,700 59,400 75,400 77,400 Fossil 28,500 18,700 16,700 44,200 28,200 26,100 Total 86,300 86,400 86,400 103,600 103,600 103,500 Benefit 9,900 11,900 16,000 18,000 Existing Load - Generation (MWh) 2 MW Addition - Generation (MWh) Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 13 3. Project Construction Cost and Construction Schedule Construction costs and schedules were prepared and reported for the various upgrade configurations under consideration for the Project during the Pre-Feasibility Study, Interim Feasibility Review and Final Feasibility Study. As stated at the close of Section 1, the focus of this Addendum to the Final Feasibility Study Report includes Alt 4a and Alt 4b as discussed below. 3.1 Construction Cost Estimates All cost estimates are based on January 2010 bid price levels. The Direct Construction cost for each alternative is the total of all costs directly chargeable to the construction of the project and in essence represents a contractor’s bid. Indirect costs include an allowance for contingencies, engineering and owner administration and are added to the Direct Construction Cost to result in the Total Construction Cost. The contingency used for all alternatives was 25%. Engineering and Owner Administration assumed for all alternatives was 15% of construction cost, inclusive of contingencies. The period of time required to complete the FERC licensing process can be expected to be approximately 3 years. Adding another 2+ years to construct the project over three construction seasons suggests that a realistic on-line date of the project to be in the range of 2015. Accordingly, it is appropriate to include escalation to the above costs to determine a realistic on-line cost for the project. However, for the purposes of the present economic analyses, 2010 dollars are used herein to avoid the need to hypothesize what the cost of thermal generation may be that far into the future. 3.1.1 Alternative 4a The basis for the construction cost of the various elements of Alt 4a are listed below as follows: • Mobilization. The mobilization cost is taken directly from the estimates for Alt 3c on the basis that the construction activities for the initial year of construction are nearly identical. • Construction Access Trail. The cost of the 4,500 foot access trail to the high point of the penstock above the powerhouse is estimated as 60% of the estimate for the access road for Alt 3c. The overall length of the trail is approximately 30% of that of the route for Alt 3c and the width of the road bench for the trail will be two-thirds for that required for Alt 3c. However, the alignment for the trail will be the same as that for the Alt 3c road, which is by far the most difficult portion for construction. • Diversion Structure. The cost for the diversion structure is based on the unit costs for similar features of the nearby diversion structure for the Humpback Creek project that is currently under construction for Cordova Electric Cooperative. • Surface Pipeline / Penstock. The cost of the surface pipeline / penstock is based on the detailed estimates developed for the comparable penstock segments of Alt 3c as included in Appendix E of the FFS. • Powerhouse. The costs for the major equipment within the 6.5 MW powerhouse are based on preliminary quotations from equipment suppliers while the cost for other lower cost items were obtained from in-house cost data and from recently obtained bid prices on similar construction. • Switchyard. The switchyard cost is taken directly from the estimate for Alt 3c. • Transmission. The transmission cost is taken directly from the estimate for Alt 3c. Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 14 The resulting construction cost estimate for Alt 4a is summarized in Table 3.1. Table 3.1 Alternative 4a Total Construction Cost (Bid 1/2010) Item 1. Mobilization $1,573,000 2. Construction Access Trail $2,916,000 3. Dam, Intake & Spillway a. Diversion Structure $2,230,000 b. Spillway $0 $2,230,000 4. Surface Penstock / Pipeline a. HDPE Pipeline $0 b. Steel Pipeline $5,176,000 Subtotal $5,176,000 5. Powerhouse a. Civil Works $2,594,000 b. Turbine & Generator $4,710,000 c. Misc. Mech. Equip.$683,000 d. Misc. Elec. Equip.$1,015,000 e. Bridge Crane $187,000 Subtotal $9,189,000 6. Switchyard $525,000 7. Transm. & Interconnection $310,000 Direct Construction Cost (Bid 1/09)$21,919,000 Escalation -$590,000 Direct Construction Cost (Bid 1/10)$21,329,000 Contingencies $6,076,000 Engineering & Owner Admin.$4,111,000 Total Construction Cost (Bid 1/10)$32,106,000 3.1.2 Alternative 4b The cost for the addition of a Obermeyer Gate on the top of the Solomon Gulch Spillway 5 feet in height was considered on its own as an incremental feature for the CVEA system. The cost of this addition is based on a preliminary quotation for the gate materials and a configuration as suggested by the Obermeyer company. The costs for modifications to the existing spillway and installation of the gate are based on estimated quantities of construction and in-house unit costs. The resulting cost for Alt 4b is summarized in Table 3.2. Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 15 Table 3.2 Alternative 4b Total Construction Cost (Bid 1/2010) Item Labor $2,106,000 Equipment $235,000 Materials $1,951,000 Direct Construction Cost (Bid 1/10)$4,292,000 Contingencies $858,000 Engineering & Owner Admin.$773,000 Total Construction Cost (Bid 1/10)$5,923,000 3.2 Construction Schedule The construction schedule for Alt 4a and Alt 4b is primarily controlled by the following major factors: • Delivery time for major powerhouse equipment • Access to Allison Lake for construction activity • Four month window for construction activity at Allison Lake A similar approach has been used to develop a schedule for each alterative relative to the purposes of the cost estimates presented above and the annual costs presented below for each alternative. The schedule for Alt 4a is presented in Figure 3.3 as an example thereof. Figure 3.3 Alternative 4a Construction Schedule Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 16 3.3 Economic Analysis Annual costs of the Project can be apportioned into fixed and variable costs. For this analysis, the fixed amount, amortization of the Total Capital Requirements less earnings on Reserves, is based on 7% interest rate financing over a 30-year term. Variable annual costs escalate each year and include operation and maintenance (O&M) costs, administrative and general expenses, interim replacements and insurance. The basic assumptions for determining the annual fixed and variable costs of the Project are shown in Table 3.3. Table 3.3 Basic Assumptions for Economic Analyses Item Value Construction Period (Alt 4a) 25 months Financing Term 30 years Financing Interest Rate 7% Reinvestment Rate Same as financing Escalation of Project Costs 3% annually Financing Reserve 1 year of debt service Financing Expenses 3% of Total Investment Cost Variable Annual Costs $500,000 3.3.1 Cost of Power – Alternative 4a The Total Investment cost includes interest during construction (IDC) over an assumed 25-month construction period. As outlined above, we have assumed that construction at the project site would come to a stop during the winter months, with the exception of equipment installation within the powerhouse structure. The development of the annual cost for Alt 4a is shown in 2010 dollars on Table 3.4. Table 3.4 Alternative 4a – First Year Annual Cost (2010 dollars) Item Cost Total Construction Cost (Bid 1/10)$32,106,000 Interest During Construction 2,435,000 Total Investment Cost $34,541,000 Reserve Fund 3,127,000 Financing & Legal 1,036,000 Working Capital 100,000 Total Capital Requirements (1/10)$38,804,000 Annual Cost Debt Service $3,127,000 O&M Cost 280,000 Administrative & General 112,000 Insurance 50,000 Interim Replacements 50,000 Earnings on Reserve Fund (219,000) Total First-Year Annual Cost $3,400,000 Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 17 As discussed in Section 2 above, the unit cost of power becomes a function of the extent to which the power available from the Project can actually contribute to the CVEA system load on a day-to- day, hour-to-hour basis. In this regard, three scenarios are presented including: 1. The AUTO Vista studies performed indicate that a total of 9,900,000 kWh from the Project can be used within the existing CVEA system load. 2. With an additional 2 MW of load within the CVEA system, the AUTO Vista studies performed also indicate that a total of 16,000,000 kWh from the Project can be effectively utilized. 3. The review of the available flow data for Allison Creek indicate that a 6.5 MW run-of- river project at the site would have the capability to produce a total of 23,300,000 kWh at such time that the CVEA system load that would not constrain its operation. The cost of power resulting from these three scenarios is presented in Table 3.5. Table 3.5 Alternative 4a – Cost of Power 3.3.2 Cost of Power – Alternative 4b As indicated by the results included in Table 2.8, the addition of the Obermeyer gate to the Solomon Gulch spillway adds 2,000,000 kWh to the energy for the Alt 4a development with and without the anticipated additional 2 MW of load to the CVEA system. Further, the Alt 4b contribution to the CVEA system load is essentially the same without a run-of-river development of Allison Creek. The resulting cost of power during the first year of operation is shown in Table 3.6. Item Value Alt 4a with Existing System Load (kWh)9,900,000 First-Year Cost of Power (1/2010) ($/kWh)$0.343 Alt 4a with 2 MW Additional Load (kWh)16,000,000 First-Year Cost of Power (1/2010) ($/kWh)$0.213 Alt 4a with Expanded CVEA System (kWh)23,300,000 First-Year Cost of Power (1/2010) ($/kWh)$0.146 Total First-Year Annual Cost $3,400,000 Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 18 Table 3.6 Alternative 4b – Cost of Power Item Cost Total Construction Cost (Bid 1/10)$5,469,000 Interest During Construction 255,000 Total Investment Cost $5,724,000 Reserve Fund 526,000 Financing & Legal 172,000 Working Capital 100,000 Total Capital Requirements (1/10)$6,522,000 Annual Cost Debt Service $526,000 O&M Cost 280,000 Administrative & General 112,000 Insurance 50,000 Interim Replacements 50,000 Earnings on Reserve Fund (37,000) Total First-Year Annual Cost $981,000 Added Hydro Generation, Existing System (kWh)2,000,000 First-Year Cost of Power (1/2010) ($/kWh)$0.491 Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 19 4. Regulatory and Environmental Considerations 4.1 Alternative 4a 4.1.1 Regulatory Considerations CVEA provided the Preliminary Application Document (PAD), including the Draft Application for License and Preliminary Draft Environmental Assessment (PDEA) (Draft Application) for the Allison Lake Project to entities listed on the Project Contact List on April 13, 2010. The PAD, including the Draft Application for License, described the proposed 4.5 MW storage project and was prepared under the regulation for Major Unconstructed Project Less Than 5 MW pursuant to 18 CFR 4.61. The proposed run-of-river modification to the Project would have an installed capacity of 6.5 MW and therefore would be greater than 5 MW and the Application for License would be prepared pursuant to 18 CFR 4.41, Major Unconstructed Project Greater Than 5 MW. This change in the applicable FERC regulation would not significantly affect the environmental work to date and the PDEA, however, the Engineering Exhibit A as provided on April 13, 2010, would need to be modified and expanded to address engineering Exhibits A through D as required by 18 CFR 4.41. The change from the 4.5 MW storage project to the proposed 6.5 MW run-of-river project will require: • Revision of the PDEA to present the run-of-river project description and related operation. • Preparation of the revised engineering exhibits. The Draft Application as provided on April 13, 2010, included the engineering Exhibit A for the proposed 4.5 MW storage project pursuant to 18 CFR 4.61. The change to the proposed 6.5 MW run-of-river project changes the applicable FERC regulation to 18 CFR 4.41 and the engineering exhibits expand to Exhibits A through D. • Preparation and issuance of Revised Scoping Document 1 (SD1). The process for issuing the revised SD1 was discussed with FERC Staff. CVEA will not be required to hold new scoping meetings, nor conduct an additional site visit. FERC Staff recommended that CVEA (1) provide a revised SD1 along with a revised PAD to entities on the Project Contact List; and, (2) following provision of these revised documents, schedule a teleconference with the resource agencies and other interested participants to discuss the revised proposed Project. In light of the above, the level of effort going forward for document preparation for the 6.5 MW run- of-river option would be greater than that required for the 4.5 MW storage option due to the redundancies involved with the 18 CFR 4.41 process. However, the downstream benefits in the activities for development of the run-of-river project would be greatly increased as discussed below, greatly overweighing the additional effort required for document preparation and the licensing process itself. 4.1.2 Environmental Field Investigations In support of the preliminary permit, environmental field investigations began in 2008 for the Project. The status of these field investigations and desk-top reviews as of May 2010 is summarized in Section 5 of the FFS and the complete reports can be found in Appendix F to the FFS. The major studies conducted are listed in Table 4.1. All of the studies to date are equally applicable to the run-of-river project as discussed herein and those arrangements considered in the FFS. Further, the selection of a run-of-river arrangement for the Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 20 project is not expected to require any new major areas of study in the support the FERC licensing process. However, as indicated by Table 4.1, on-going work will be required in several areas as follows: • Water Use & Quality. The on-going work in this area will primarily be continued monitoring of the two stream gages in order to develop and maintain a continuous record for the flow regime for Allison Creek. • Biological Resources. The baseline work for fish populations and habitat, vegetation, birds and mammals, and wildlife habitats is complete. Areas that will require further work include: - Aquatic Resources: Further work will be necessary to provide a basis for final negotiation of the amount of flow required to maintain an in-stream flow between the diversion structure and the powerhouse. - Wetlands: Further work will be required to evaluate the extent of any wetlands located along the selected transmission line alignment. • Archaeological / Historical Resources. The field work for the archaeological and historical resources of the project area has been completed. Table 4.1 Summary of Major Environmental Field Studies Type of Field Investigation Conducted By Timeline Geological Resources (As described in Section 2) R&M Consultants Began: 2008 Completed: 2009 Water Use and Quality R&M Consultants Began: 2008 Completed: on-going Biological Resources - Fish and Aquatic Resources - Vegetation - Wetlands - Birds and Mammals - Wildlife Habitats ABR, Inc. Began: 2008 Completed: on-going Archaeological/Historical NLUR, Inc. Began: 2009 Completed: 2010 4.1.3 Environmental Considerations While the regulatory framework for Alt 4a is more detailed than that associated for Alt 3c, the associated scope of environmental issues is greatly reduced. The more significant elements of this comparison are: • Allison Lake would be left in its natural state in the case of Alt 4a, which has not been the case for all arrangements previously considered. In the lake-tap alternatives the lake would have been drawn down by as much as 100 feet during the winter season; and in the case of Alt 3c the lake would have been raised 43 feet thereby inundating the existing east and west shorelines and the delta at the south end of the lake. Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 21 • The construction activity of the dam near the outlet of the lake would disturb a significant area with attendant concerns for water quality within Allison Creek to a much greater extent that would be associated with the construction of the diversion structure for Alt 4a. • The construction of the diversion structure for Alt 4a would not require that a road be constructed to the outlet of Allison Lake nor the extensive amount of traffic thereon associated with the construction of the major dam structure included with Alt 3c. • In the case of Alt 3c, there would be a potential for seepage beneath and around the dam resulting in a loss of water available for hydropower generation as well as changed ground water conditions in the glacial moraine downstream of Allison Lake. While not likely, any seepage that may occur at the location of the diversion structure associated with Alt 4a would be very minor. • In the case of Alt 4a, the flow regime within Allison Creek would remain unchanged between Allison Lake and the diversion structure as well as the within the reach downstream of the powerhouse, the latter being the area of primary concern for the habitat for both resident and anadromous fish species. All of these factors would greatly reduce the level of effort of that required for Alt 4a as compared to Alt 3c for agency consultation throughout the remaining licensing activities as well as for environmental monitoring during construction and operation of the project. 4.2 Alternative 4b 4.2.1 Regulatory Considerations An amendment to the existing Solomon Gulch Project FERC License (No. P-2742) would be required for the proposed five foot raise in the normal maximum water surface of Solomon Lake as proposed for Alt 4b. The amendment would require that agency consultation take place in a manner comparable to that currently anticipated for the Allison Lake development. As part of the consultation process, issues that were not resolved according to current practice during the original licensing process would likely be revisited by existing agency staff. 4.2.2 Environmental Field Studies Ostensibly, the environmental field studies would focus on habitat values within the additional area to be submerged surrounding Solomon Lake as the result of the proposed five foot raise in the normal maximum water surface of Solomon Lake. It can be expected, however, that agency consultation would result in requests for further studies with regard to other aspects of the project that were not studied in accordance with current practice as part of the original licensing process. 4.2.3 Environmental Considerations No specific concerns of a fatal flaw nature have been identified with regard to the environmental effects of the proposed five foot raise in the normal maximum water surface of Solomon Lake as proposed for Alt 4b. Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 22 5. Conclusions and Recommendations 5.1 Conclusions 5.1.1 Alternative 4a In addition to the general conclusions relating to the development of a hydropower project in the Allison Creek basin as provided in the FFS, conclusions specific to the run-of-river Alt 4a gained as the result of the present evaluation include the following: • The scope of the project as propose for the run-of-river Alt 4a is significantly reduced from that associated with Alt 3c. • A run-of-river Alt 4a development of the Allison Creek basin can produce 22.3 GWh of energy on an average annual basis within the environment of an unconstricted system load. • A run-of-river Alt 4a development of the Allison Creek basin would produce 9.8 GWh of energy on an average annual basis within the existing CVEA system load. The project is not cost effective under this load condition. • With the addition of 2 MW to the CVEA system load, the Alt 4a average annual contribution to the CVEA system load would increase to 16.0 GWh. On this basis, the project would be competitive with the cost of diesel generation. • Further increases in the CVEA system load would in turn result in a further reduction in the cost of power from Alt 4a. • The reduced scale of the hydropower development of the Allison Creek basin as offered by Alt 4a would in turn minimize the risk of construction cost overruns relative to that potentially associated with Alt 3c. • The diversion structure proposed for Alt 4a would entail a minimal, if any, risk of seepage or other dam safety related issues in contrast to that potentially associated with the large dam at the outlet of Allison Lake as proposed for Alt 3c. • On the basis that the installed capacity of the run-of-river Alt 4a is expected to be greater than 5 MW, FERC 18 CFR 4.41 would be the required regulation for the preparation of a FERC License Application for the project. • The reduced scale of the hydropower development of the Allison Creek basin as offered by Alt 4a will result in an overall reduction in environmental effects relative to that associated with Alt 3c. • In contrast to any of the storage project arrangements as previously considered for development of the Allison Creek basin, the run-of-river configuration as proposed for Alt 4a would maintain the existing flow and temperature regimes downstream of powerhouse. This would be a major advantage for Alt 4a owing to the critical importance of this reach of Allison Creek to resident and anadromous fish populations. • Alt 4a is superior to Alt 3c in all respects. 5.1.2 Alternative 4b Conclusions specific to Alt 4b gained as the result of the present evaluation include the following: • The addition of inflatable gates to the Solomon Gulch Spillway as proposed for Alt 4b would add approximately 2 GWh of average annual energy to the CVEA system for service to all system load and resource conditions considered for the project, existing and future. Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 23 • The addition of inflatable gates to the Solomon Gulch Spillway as proposed for Alt 4b would require an amendment to existing FERC License for the Solomon Gulch Project. • On the basis of the energy potential and cost estimates prepared for this evaluation, the addition of inflatable gates to the Solomon Gulch Spillway as proposed for Alt 4b would not currently be an economically viable project relative to the other resources available to the CVEA. 5.2 Recommendations Based on the conclusions referenced and outlined above, we provide the following recommendations: • Adopt Alt 4a as the preferred alternative for the development of the hydroelectric potential of the Allison Creek basin. • Terminate further consideration of Alt 3c and Alt 4b. • Complete the analysis of the environmental effects of a hydropower development within the Allison Creek basin on the basis of Alt 4a. • Optimize the capacity of the powerhouse for the run-of-river Alt 4a. • Prepare a FERC License Application for Alt 4a pursuant to the provisions of 18 CFR 4.41. Copper Valley Electric Association, Inc. - Allison Lake Hydroelectric Project Addendum – Final Feasibility Report December 2010 24 6. References 1. Hatch Acres Corporation, Allison Lake Hydropower Development – FINAL FEASIBILITY STUDY, prepared for Copper Valley Electric Association, May 2010 . 2. HDR Engineering, Inc., SOLOMONGULCH HYDROELECTRIC PROJECT – RESERVOIR CAPACITY – FEASIBILITY STUDY, prepared for Copper Valley Electric Association, November 1991. Appendix A Alt 4a System Dispatch Nov DecApr MayJanJunMarFebSep Oct NovAugJulAlt 4aGeneration (MW)AUTOVista ANALYSIS AUTOVista ANALYSIS ––ALT 4aALT 4aAnnual Dispatch w/ Existing Load Annual Dispatch w/ Existing Load ––19611961SG 2Allison 1DieselAllison 2CogenSG 1ExistingAppendix A -1 Nov DecApr MayJanJunMarFebSep Oct NovAugJulAlt 4aGeneration (MW)AUTOVista ANALYSIS AUTOVista ANALYSIS ––ALT 4aALT 4aAnnual Dispatch w/ 2 MW Added Load Load Annual Dispatch w/ 2 MW Added Load Load ––19611961SG 2Allison 1DieselAllison 2CogenSG 1Existing + 2 MWAppendix A -2 McMillen Team Page 59 Attachment D: Financial backup page 1 Allison Creek Plan of Finance The final feasibility report indicates the total cost of the Allison Creek project in 2010 dollars is $38,804,000. Copper Valley Electric received $10,000,000 from the State of Alaska FY12 capital budget. The following language is included in Senate Bill 46; “It is the intent of the legislature that the state's capital investment into energy generation projects not exceed 50% of the total investment required to fully complete those projects”. Total Project Cost $38,804,000 Maximum 50% State of Alaska investment $19,402,000 State of Alaska Summary for Allison Creek 2008 Capital Budget Appropriation (Grant 2195314) $ 1,000,000 2009 Round I REF (Grant 2195390) $ 2,288,000 2011 Capital Budget Appropriation (Grant 7910012) $10,000,000 2012 Round V REF (Applications due 8/26/11) $ 6,114,000 note 1 Total State of Alaska $19,402,000 = 50% State Note 1: Section 1.15 of the Renewable Energy Fund Round V applications state construction is limited to $8 million per project however the 50% language from SB 46 limits CVEA from applying for all amounts eligible under the grant application. Other Round V limitations require final design and permitting to be $500,000 or no more than 20% of anticipated construction cost. CVEA’s estimate for construction only is $32 million. 20% equates to $6.4 million. Final design and permitting is estimated at $2.27 million which does not exceed the threshold in round 5. CVEA is not applying for final design and permitting costs. Round V Application CVEA is applying for $12,228,000 with 50% match: $6,114,000 State and $6,114,000 CVEA. Remaining Funding/Matching CVEA intends to apply for any Federal funding that may become available. If no grants are available, CVEA will secure funding through the lowest cost financing available. Currently CVEA is a 100% borrower through our banker National Rural Utilities Cooperative Financing Corporation (CFC). CVEA has been in contact with CFC throughout the project and verbally been given the okay to borrow the amount needed. CVEA will continue to explore all possibilities to secure the lowest cost financing available. Allison Creek Cash Flow by Year Format of Grant Budget Form for all funding Total Estimated Amount Through 12-31-12 1 Q 2013 2 Q 2013 3 Q 2013 4 Q 2013 Pre - Design and Construction (Filing License Appilcation)3,575,383 3,575,383 Design and Permitting 2,670,000 960,000 1,260,000 50,000 50,000 50,000 Project Scoping / contractor solicitation 50,000 50,000 Final enviornmental assessment and mitigation plans 20,000 20,000 Resolution of land use, right of way issues 20,000 20,000 Permit approvals 20,000 20,000 Final system design 1,900,000 750,000 1,150,000 Owner's Representative 600,000 100,000 50,000 50,000 50,000 50,000 Updated economic and financial analysis - Negotiated power sales agreements with approved rates - Final business and operational plan 60,000 60,000 Construction 32,558,617 - 5,000,000 3,700,000 3,625,000 3,375,000 Confirmation that all design/feasibility requirements complete 50,000 50,000 Completion of bid documents 50,000 50,000 Contractor/vendor selection and award 100,000 100,000 Construction phases (each project will have unique phases)850,000 125,000 125,000 Integration and testing 200,000 Decommissioning old systems (N/A)- - Equipment & Materials 27,995,000 5,000,000 3,000,000 3,000,000 3,000,000 Other: Project Mgmt, Insurance, Etc.3,163,617 500,000 500,000 250,000 Final acceptance, commissioning and start up 100,000 Operations Reporting 50,000 TOTAL 38,804,000 4,535,383 6,260,000 3,750,000 3,675,000 3,425,000 Cash Spending By Quarter Prior Funding (CVEA, RE1) pre-2012 3,860,000 10 Million Capital Budget Appropriation 675,383 6,260,000 3,064,617 Renewable Energy Fund Round 6 - CVEA 50%1,837,500 1,712,500 Renewable Energy Fund Round 6 - Grant 50%1,837,500 1,712,500 CVEA Financing 685,383 4,535,383 6,260,000 3,750,000 3,675,000 3,425,000 2013 P:\Finance\Grants\State Grant Applicatons\RE Round 6\Allison Creek Cash Flow Page 1 of 3 9/19/2012 Allison Creek Cash Flow by Year Format of Grant Budget Form for all funding Total Estimated Amount Pre - Design and Construction (Filing License Appilcation)3,575,383 Design and Permitting 2,670,000 Project Scoping / contractor solicitation 50,000 Final enviornmental assessment and mitigation plans 20,000 Resolution of land use, right of way issues 20,000 Permit approvals 20,000 Final system design 1,900,000 Owner's Representative 600,000 Updated economic and financial analysis - Negotiated power sales agreements with approved rates - Final business and operational plan 60,000 Construction 32,558,617 Confirmation that all design/feasibility requirements complete 50,000 Completion of bid documents 50,000 Contractor/vendor selection and award 100,000 Construction phases (each project will have unique phases)850,000 Integration and testing 200,000 Decommissioning old systems (N/A)- Equipment & Materials 27,995,000 Other: Project Mgmt, Insurance, Etc.3,163,617 Final acceptance, commissioning and start up 100,000 Operations Reporting 50,000 TOTAL 38,804,000 Cash Spending By Quarter Prior Funding (CVEA, RE1) pre-2012 10 Million Capital Budget Appropriation Renewable Energy Fund Round 6 - CVEA 50% Renewable Energy Fund Round 6 - Grant 50% CVEA Financing 1 Q 2014 2 Q 2014 3 Q 2014 4 Q 2014 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 3,500,000 3,375,000 3,475,000 3,250,000 250,000 125,000 225,000 3,000,000 3,000,000 3,000,000 3,000,000 250,000 250,000 250,000 250,000 3,550,000 3,425,000 3,525,000 3,300,000 1,775,000 789,000 1,775,000 789,000 1,847,000 3,525,000 3,300,000 3,550,000 3,425,000 3,525,000 3,300,000 2014 P:\Finance\Grants\State Grant Applicatons\RE Round 6\Allison Creek Cash Flow Page 2 of 3 9/19/2012 Allison Creek Cash Flow by Year Format of Grant Budget Form for all funding Total Estimated Amount Pre - Design and Construction (Filing License Appilcation)3,575,383 Design and Permitting 2,670,000 Project Scoping / contractor solicitation 50,000 Final enviornmental assessment and mitigation plans 20,000 Resolution of land use, right of way issues 20,000 Permit approvals 20,000 Final system design 1,900,000 Owner's Representative 600,000 Updated economic and financial analysis - Negotiated power sales agreements with approved rates - Final business and operational plan 60,000 Construction 32,558,617 Confirmation that all design/feasibility requirements complete 50,000 Completion of bid documents 50,000 Contractor/vendor selection and award 100,000 Construction phases (each project will have unique phases)850,000 Integration and testing 200,000 Decommissioning old systems (N/A)- Equipment & Materials 27,995,000 Other: Project Mgmt, Insurance, Etc.3,163,617 Final acceptance, commissioning and start up 100,000 Operations Reporting 50,000 TOTAL 38,804,000 Cash Spending By Quarter Prior Funding (CVEA, RE1) pre-2012 10 Million Capital Budget Appropriation Renewable Energy Fund Round 6 - CVEA 50% Renewable Energy Fund Round 6 - Grant 50% CVEA Financing 1 Q 2015 2 Q 2015 3 Q 2015 4 Q 2015 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 2,245,000 250,000 450,000 313,617 200,000 1,995,000 250,000 250,000 250,000 163,617 100,000 50,000 2,270,000 275,000 475,000 338,617 TOTAL 3,860,000 10,000,000 6,114,000 6,114,000 2,270,000 275,000 475,000 338,617 12,716,000 2,270,000 275,000 475,000 338,617 38,804,000 2015 P:\Finance\Grants\State Grant Applicatons\RE Round 6\Allison Creek Cash Flow Page 3 of 3 9/19/2012