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HomeMy WebLinkAboutElfin Cove Hydropower GrantAppPhase 3 2008 Grant Application Alaska Renewable Energy Fund for Phase 3 of Elfin Cove Hydropower Project Submitted to Alaska Energy Authority by Elfin Cove Utility Commission Community of Elfin Cove Non-Profit Corporation November 7, 2008 Contents 1. Applicant Information 2. Project Summary 3. Project Management 4. Project Description 5. Project Benefit 6. Grant Budget 7. Certification Attachments Application Cost Worksheet Budget Information (spreadsheet) Resolution of the Board of Directors, Community of Elfin Cove Non-Profit Corporation Location Maps and Aerial Photograph Certificate of Public Convenience and Necessity Resumes Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 1 of 20 9/2/2008 Application Forms and Instructions The following forms and instructions are provided for preparing your application for a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA) and the forms are available online at http://www.akenergyauthority.org/RE_Fund.html The following application forms are required to be submitted for a grant recommendation: Grant Application Form GrantApp.doc Application form in MS Word that includes an outline of information required to submit a complete application. Applicants should use the form to assure all information is provided and attach additional information as required. Application Cost Worksheet Costworksheet.doc Summary of Cost information that should be addressed by applicants in preparing their application. Grant Budget Form GrantBudget.xls A detailed grant budget that includes a breakdown of costs by task and a summary of funds available and requested to complete the work for which funds are being requested. Grant Budget Form Instructions GrantBudgetInstr.pdf Instructions for completing the above grant budget form. • 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 a plan and grant budget for completion of each phase. • 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. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 2 of 20 9/3/2008 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Community of Elfin Cove Non-Profit Corporation, Elfin Cove Utility Commission Type of Entity: Electric utility Mailing Address P.O. Box 1, Elfin Cove, AK 99825 Physical Address Community Building, Elfin Cove Telephone 907-239-2226 Fax 907-239-2226 Email janedbutton@hotmail.com 1.1 APPLICANT POINT OF CONTACT Name Jane Button Title Project Administrator Mailing Address P.O. Box 2, Elfin Cove, AK 99825 Telephone 907-723-8514 Fax 907-239-2226 Email janedbutton@hotmail.com 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, or A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes 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 a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes 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 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.) Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 3 of 20 9/3/2008 SECTION 2 – PROJECT SUMMARY Provide a brief 1-2 page overview of your project. 2.1 PROJECT TYPE Describe the type of project you are proposing, (Reconnaissance; Resource Assessment/ Feasibility Analysis/Conceptual Design; Final Design and Permitting; and/or Construction) as well as the kind of renewable energy you intend to use. Refer to Section 1.5 of RFA. The project proposed here is Phase 3 of the hydroelectric power project for the Community of Elfin Cove, Alaska. Phase 3 is for final design and permitting. 2.2 PROJECT DESCRIPTION Provide a one paragraph description of your project. At a minimum include the project location, communities to be served, and who will be involved in the grant project. The project, when it is completed, will include a hydroelectric power plant, and associated infrastructure for access and connection, to serve the community of Elfin Cove. The power plant will be located at the mouth of Crooked Creek, a tributary of Port Althorp in Cross Sound. Upon completion, the hydroelectric facility will include: a diversion structure on Crooked Creek; a 1,000-foot long diversion conduit from Crooked Creek to Jim's Lake; a 1,300-foot long penstock from Jim's Lake to tidewater; a hydro power house with Turgo type turbine and programmable automatic paralleling switchgear at tidewater; an on- ground transmission line to the newly renovated diesel power plant; fiber optic communication cable between the hydroelectric powerhouse and the town site diesel power plant control room; and access trails to the power house and diversion structure. This project will be carried out by local project administrators, with technical and engineering support subcontracted to a consulting engineering firm. At the end of Phase 3 (proposed here) we should be prepared to begin final construction on the hydroelectric power project. 2.3 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. Include a project cost summary that includes an estimated total cost through construction. For Phase 3 (proposed here) the total funds needed are $395,200, which would consist of $347,200 in grant funding, and $48,000 in local matching funds. In addition, there will be in-kind contributions of local labor, materials, tools, and logistical support (i.e., skiff transport and other access to the project site). The estimated costs for the full project (Phases 3 and 4 combined) are shown in Table 1, on the following page. These estimates are based on the assumption that Phase 3, including the FERC permitting process, will take three years, beginning in 2009, and that Phase 4, the construction, can begin in 2012. Phase 3Total Costs EstimatedWork Item Material Labor (2006 Est.) for 2012Revised 1984 Estimate 600,000Increase for higher Labor Rate 60,000 60,000Less 10' x 12' Powerhouse Shed and Concrete Pad -7,500 -6,700 -14,200Less Pelton Turbine/Single Phase Generator -142,000 -8,000 -150,000Less Single Phase Transmission component -58,000 -8,700 -66,7004000' of Access Trails 10,000 30,000 40,000Hydro Powerhouse and foundation pilings 30,000 10,000 40,000Floating dock and pilings12,000Turgo Turbine/3-Phase generator with PLC and Switchgear 160,000 20,000 180,000Armored fiber optic data cable 12,500 4,500 17,0009000' 5kV 3-phase #2 armored cable transmission line 135,000 65,000 200,000112.5kVA step-up and step-down transformers 16,000 8,000 24,000Diesel plant switchgear connection and programming 10,000 10,000 20,000Construction Subtotal962,100$ 1,237,236$ Freight40,000 51,439Design and Construction Administration 80,000 80,000 0Construction Management80,000 102,878FERC Permitting 300,000 150,000 0Local Project Administration 15,200 55,662Project subtotal 395,200$ 1,312,100$ 1,447,215$ 15% Contingency196,815 217,082Total Project cost 395,200$ 1,508,915$ 1,664,297$ Proposed funding sources for Phase 3Alaska Renewable Energy Fund grant 347,200$ 88%Local matching funds 48,000$ 12%Totals 395,200$ 100%From AEA Concept Design ReportPhase 4Table 1.Crooked Creek/Jim's Lake Hydroelectric Generation Cost Estimate Summary Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 5 of 20 9/3/2008 2.4 PROJECT BENEFIT Briefly discuss the financial benefits that will result from this project, including an estimate of economic benefits(such as reduced fuel costs) and a description of other benefits to the Alaskan public. Given Elfin Cove's historical electric usage throughout the year, we will be able to meet our energy needs largely with hydroelectric power from this project for nine months of the year. The remaining three months of high usage will require supplemental diesel generation. The estimated fuel savings will be 25,600 gallons of diesel fuel per year (Source: AEA, 2006. Concept Design Report for Elfin Cove). Using current fuel pricing of $5.72/gallon, this equates to an annual savings of $146,400 in fuel alone. Over a 20-year period, if fuel prices remained constant, this savings in fuel alone would amount to $2.9 million. (Note that because of Elfin Cove’s remote location and its limited selection of fuel suppliers, the recent decline in fuel prices has not reached Elfin Cove; therefore, fuel savings from this project are likely to remain important in Elfin Cove for the foreseeable future.) Saving fuel is not the only benefit of this project. Maintenance and replacement costs on the diesel generators will also be substantially diminished. Reduced loads on the newly renovated power plant will greatly extend the life of those diesel generators, thereby reducing replacement costs. This green energy source will further benefit the Alaskan public with cleaner air, less noise pollution, a more pristine environment, etc. All these factors will keep Alaska unspoiled, maintaining its desirability as a tourist destination. Tourism is important as a fundamental economic engine, especially in frontier Alaska. 2.5 PROJECT COST AND BENEFIT SUMMARY Include a summary of your project’s total costs and benefits below. 2.5.1 Total Project Cost (Including estimates through construction.) $2,203,497, Phases 2-4 2.5.2 Grant Funds Requested in this application. $ 347,200 2.5.3 Other Funds to be provided (Project match) $ 48,000 2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $ 395,200 2.5.5 Estimated Benefit (Savings) $2,928,640 over 20 years 2.5.6 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.) Incalculable (see second paragraph of Section 2.4, above) Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 6 of 20 9/3/2008 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 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. We expect that Jane Button and Hap Leon will serve as local project administrators, although the Community of Elfin Cove uses an open process to solicit applications and select personnel for such positions. Ms. Button and Mr. Leon both have experience in project management, most recently including coordinating the federal RUS grant-funded power system improvements for Elfin Cove, and Phase 2 of the Community’s hydroelectric project, currently underway. Resumes for Ms. Button and Mr. Leon are attached to this grant application. We also welcome project management support that AEA can provide to rural Alaskan communities. 3.2 Project Schedule Include a schedule for the proposed work that will be funded by this grant. (You may include a chart or table attachment with a summary of dates below.) A schedule for Phase 3, as proposed here, is shown in Table 2, on the following page. This schedule is based on the assumption that a grant can be awarded in June, 2009, about a month after the legislature completes its work for 2009 and makes funding available. We expect to have an engineering firm retained under Phase 2 of this project, which is underway, so we can give the engineers notice to proceed shortly after the grant is awarded. We hope that the engineers can complete design and engineering work and a feasibility analysis during the last half of 2009 and the first half of 2010. The schedule also incorporates the assumption that the FERC permitting process (including coordination with resource agencies, public meetings, and permitting) can be completed in about three years. If unexpected issues should arise during the FERC process, the schedule might need to be extended somewhat beyond that shown in Table 2. We are aware that sometimes resource concerns require that changes be made in the design or operation of power plants. Although we have seen no evidence that Crooked Creek is a fish-producing stream, new information may arise during the course of Phase 3, and there may be other concerns which require modifications to the system design. For this reason, Table 2 shows possible additional engineering work (indicated by the cross-hatched bar) during the first half of 2012. Start CompletionTask Date DateQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Grant Award 6/1/2009Engineer Notice to Proceed 6/30/2009Design work 7/1/2009 12/31/2009 6 monthsInitial contact with resource agencies 9/1/2009Continuing resource agency coordination 10/1/2009 6/30/2011 21 monthsFERC coordination 10/1/2009 3/31/2012 30 monthsProject feasibility analysis 1/1/2010 4/30/2010 4 monthsFinal engineering and approved integration design 1/1/2010 6/30/2010 6 monthsCost estimates 7/1/2010 9/30/2010 3 monthsPublic meetings 6/1/2010 7/1/2010 1 monthEnvironmental issues resolved 1/1/2011 12/31/2011 12 monthsSite control, and land use authorizations obtained 1/1/2012 6/30/2012 6 monthsFERC permit awarded 7/1/2012Quarterly AEA ReportsFinal AEA Report & Closeout 9/1/2012 9/30/2012 1 monthQuarterly, or as requiredDuration2009 2010 2011 2012Table 2.Crooked Creek/Jim's Lake Hydroelectric ProjectPhase 3, Schedule and Milestones Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 8 of 20 9/3/2008 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. A detailed schedule for Phase 3 of this project, including key tasks and milestones, is shown in Table 2, on the following page. The key tasks are design and engineering, and coordinating the permitting process for the hydroelectric power project. This latter task includes resolving environmental issues. These tasks are broken out in more detail in Table 2, along with relevant milestones for the project. 3.4 Project Resources Describe the personnel, contractors, 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. The Community of Elfin Cove is in the process of selecting an engineering firm to work with us on Phase 2 of this project. One of our criteria for this selection process is that the firm be able to work with us through Phase 3 (proposed here) and be available for some involvement in the construction in Phase 4. Since we have not yet selected the engineers, it is too early to describe them in this section; however, we have been referencing a list of hydroelectric power consultants provided to us by AEA, and we expect that the firm selected will meet AEA’s approval. We do have two consultants working with us on the Phase 2 of this project: Bob Christensen, an environmental consultant with expertise in stream gauging (see attached resume) and Don Thomas, a hydrologist. We expect that we would continue using their services, but to a lesser extent, in Phase 3. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Because much of the work on Phase 3 of this project will be performed by an engineering firm (yet to be selected) that will be working for the Community, we expect to be in frequent communication with those engineers during the course of the project. Our local project administrators, in collaboration with the engineers, will prepare quarterly reports to the Alaska Energy Authority. These reports will summarize the progress of the project, as well as its financial status. 3.6 Project Risk Discuss potential problems and how you would address them. We view one of the purposes of Phase 3 (proposed here) as being to identify risks and potential problems that we might encounter in Phase 4, the actual construction of the hydroelectric system. Since we have not yet conducted Phase 3, it is too early to discuss these risks at this time. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 9 of 20 9/3/2008 SECTION 4 – PROJECT DESCRIPTION AND TASKS • Tell us what the project is and how you will meet the requirements outlined in Section 2 of the RFA. The level of information will vary according to phase of the project you propose to undertake with grant funds. • If you are applying for grant funding for more than one phase of a project provide a plan and grant budget for completion of each phase. • 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. In a Concept Design Report produced by Alaska Energy Authority in February of 2006, Alaska Energy and Engineering had HDR Alaska, Inc. review the existing hydroelectric study information, assess construction scenarios and review cost estimates. HDR’s analysis indicated that, given the stream gauging data available at the time, the output of the Crooked Creek/Jim’s Lake hydroelectric project can be expected to be 80kW. HDR’s assessment was that this is a viable project with direct and indirect economic benefit. Reliable back-up diesel generation is in place with the Elfin Cove powerhouse upgrade project completed in 2007. Additionally, a distribution system upgrade will be completed by summer 2009. Some of the pros of this project include: • Reduced dependence upon costly diesel fuel; • Reduced air pollution from diesel exhaust, • Reduced hazardous waste from lubricants and system maintenance, and potential of land or water pollution in the event of fuel spills; and • Greatly reduced cost for power generation. Because southeast Alaska is a temperate rainforest with abundant precipitation, the energy source is completely renewable. Hydropower is a proven alternative energy technology. We have considered alternatives to hydropower. The passes between Cross Sound and Icy Strait, in Elfin Cove’s geographic area, offer a great potential for tidal power generation. We are interested in exploiting this resource, and would welcome the opportunity to become a model community powered by tidal energy, but it is a nascent technology, and we would like to reduce our reliance on diesel fuel as soon as possible, and as much as is possible, given the seasonal nature of our demand. The potential for wind power in Elfin Cove’s area has been assessed and found to be inadequate. The only identified negative impact of the use of hydropower would be during the winter months when the community will lose heat that is currently recovered from the diesel generators as the source for heat for the Community Building and the Community Shop. Installing a waste oil heater is a possible solution to building heat requirements. This option would also solve the problem of disposition of waste oil, which currently must be transported out of Elfin Cove. Electric heating in these two buildings can also be used as a “dump-load” to utilize any surplus power generated by this project in the winter. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 10 of 20 9/3/2008 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. Elfin Cove’s powerhouse, originally constructed in 1985, was upgraded in 2007 with funding from a $1.2 million grant from the USDA Rural Utility Service. Three new diesel generators were installed at that time, sized at 67 kW, 101 kW and 179 kW, for a total installed capacity of 347 kW. Parallel switchgear, improved ventilation and fire suppression and alarm systems were part of the project. Our most recent data show efficiencies of 10 to 12 kW per gallon of diesel burned. Our electrical distribution system also dates from the mid-1980’s, and is in need of expansion, with some components due for replacement. A Denali Commission grant is in place to upgrade the distribution system to residential and commercial buildings in Elfin Cove, and to install conveniently located pedestals for power to boats in the harbor and on the dry dock grid. Because of a scheduling conflict with the preferred contractor, completion of the distribution system work has been postponed until spring, 2009. 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. Because the Elfin Cove power plant is newly upgraded (2007) and the distribution system will be new in summer 2009, the back-up generation situation for the proposed hydropower project is in excellent condition. A hydropower project will significantly extend the life of the newly installed diesel generators by greatly reducing the number of hours they run each year. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Elfin Cove’s electric utility customers currently pay approximately 60 cents per kilowatt-hour for the energy they consume. The base electric rate is $0.42/kWh, with a variable fuel surcharge which is currently at $0.177/kWh. Residential and community customers get a significant reduction in that rate, as a result of Alaska’s Power Cost Equalization program. Commercial and federal customers get no relief from the high rates charged. If we were able to cut out the fuel cost for much of the year, the energy price to all electric power consumers in Elfin Cove could be reduced considerably. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 11 of 20 9/3/2008 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 best current renewable energy technology for our location is hydropower. The hydroelectric facility will include: • A diversion structure on Crooked Creek • An approximately 1,000-foot long diversion conduit from Crooked Creek to Jim's Lake • An approximately 1,300-foot long penstock from Jim's Lake to tidewater in Port Althorp • A hydroelectric power house at tidewater, with Turgo type turbine and programmable automatic paralleling switchgear The proposed installed capacity will be 80 kW. That estimate is based on data collected in the 1980’s, and hydropower generation technology has advanced since then, likely netting a higher output from the targeted watersheds. If our plant could produce 80 kW continuously, over a year the output would be 700,800 kWh. Due to reduced flows in cold or dry months, the plant will not likely produce its potential output on a full-time basis. AEA’s Concept Design Report (2006) estimated a more realistic production of 320,000 kWh per year. The question of capacity factor will be resolved when we have analyzed the stream gauge data (being collected in Phase 2, which is ongoing) and when the engineers have reviewed the new streamflow data in light of current hydroelectric generation technology. The remote location of the watersheds will likely require that the work be completed mainly with hand or small power tools after staging of materials by helicopter drop. There is no road access to either Elfin Cove or Port Althorp. Integration of the hydropower into the existing grid will be via an on-ground transmission line to the newly renovated diesel power plant and delivered to the end user via Elfin Cove’s grid distribution system. There will be a fiber-optic communication cable between the hydroelectric powerhouse and the town site diesel power plant control panel. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 12 of 20 9/3/2008 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. Most of the elements of the proposed project (the proposed diversion, pipeline, penstock, powerhouse and most of the transmission line) are on Tongass National Forest land, managed by the U.S. Forest Service. We expect that, given the close coordination we have already initiated, we can obtain the necessary permits from the Forest Service to develop this project. The Community of Elfin Cove has a good working relationship with the USFS Hoonah Ranger District, having several years ago negotiated with the Forest Service for a transfer of land in Elfin Cove. More recently, we are in the process of procuring U.S. Forest Service permits and have contacted the USFS Hoonah Ranger District and have filed an application for permits to place stream gauges on both Crooked Creek and Jim’s Lake, under Phase 2 of this project. We have been informed that the USFS is very interested in cooperating with Elfin Cove to move the project along. Once it reaches Elfin Cove, the transmission line will follow the trail where the existing distribution line is now located. Most of this trail is on state right-of-way. A short length of it, near the head of the bay, crosses privately-owned land; the landowner in question is very supportive of this project (including participating in the development of this proposal) and we do not expect any problems in obtaining the necessary permission to cross that land. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 13 of 20 9/3/2008 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 We have been informed by the Federal Energy Regulatory Commission (FERC) that because of the small size and location (in Alaska) of this project, our license should come from the Regulatory Commission of Alaska (RCA) rather than from FERC; however the RCA has not completed its applications for licensing jurisdiction. We therefore expect that we will have to go through the FERC Integrated Licensing Process outlined in Section 241 of the Energy Policy Act of 2005. This process will involve coordination with a number of resource agencies, including, but possibility not limited to, the following: U.S. Forest Service The Forest Service manages the land at the project site, because it is located in the Tongass National Forest. We will have to coordinate with the Forest Service and obtain necessary permission from them to develop this project. Our relationship with the Forest Service was discussed in more detail in the previous section (4.3.2) of this proposal. Alaska Department of Natural Resources The State of Alaska owns tidelands and bottomlands, which it manages through the Department of Natural Resources (DNR). We will need to obtain permits from DNR Army Corps of Engineers If we install pilings, a floating dock, or any other structure on the beach or in the waters of Port Althorp, we would require a permit under Section 404 of the Clean Water Act, and/or Section 10 of the Rivers and Harbors Act, from the U.S. Army Corps of Engineers. Obtaining these permits also involves a public review and comment period. These permits have been issued fairly routinely for docks and similar projects in and around Elfin Cove in recent years. Alaska Department of Fish and Game Alaska Statute 16.05.841, the Fishway Act, and Alaska Statute 16.05.871, the Anadromous Fish Act, both would require that we provide prior notification and obtain permit approval from the Department of Fish and Game (ADFG) Habitat Division to construct a hydraulic project or to use, divert, obstruct, or change the natural flow or bed of a body of water. This permit approval will be necessary even though Crooked Creek is not listed by ADFG as an anadromous fish-producing stream. Crooked Creek is not listed in the Catalog of Waters Important for Spawning, Rearing, or Migration of Anadromous Fishes – Southeastern Region (ADFG, Special Publication 08-06, June 2, 2008). Still, it is likely that certain sampling and surveys will be required as part of Phase 3 of this project in order to confirm the presence or absence of fish in that stream. One of the consultants working with us on Phase 2 of this project has a good working relationship with ADFG permitting staff, and has experience in the sampling and surveying needed to determine whether a stream supports anadromous fish, or other resources of concern. One of our community members is also a fishery biologist with extensive experience in fish surveys and sampling. We expect that we can efficiently coordinate our project with any concerns that may arise about natural resources. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 14 of 20 9/3/2008 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 To the best of our knowledge, the proposed hydroelectric project will not impact any threatened or endangered species. There are no significant habitat issues, wetlands or protected areas in the geographic area under consideration. The proposed project presents no threat to any fish, plantlife, wildlife or marine life. No archaeological or historical resources will be disturbed by the project. The only building to be constructed is a powerhouse that will be located on pilings at tidewater and thus presents no land development issues. There will be no interference to telecommunications. Due to the remote location of the project, and the small size of the structures, there are no aviation considerations. The powerhouse and dock will be visible from the water at close range, but their small size is not likely to cause significant negative impact. Any public concerns will be addressed during a public meeting process. We realize, however, that during the permitting process, we will likely be required to conduct surveys to document the presence or absence of species of concern, and to determine whether there will be any impact of the project on them. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 15 of 20 9/3/2008 4.4 Proposed New System Costs (Total Estimated Costs and proposed 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 project cost, including Phase 2 (which is underway), Phase 3 (which we are proposing here) and Phase 4 (construction) is estimated to be $2,203,500. The development costs alone (Phases 2 and 3) total $524,000, while the construction cost in the year 2012 is estimated to be $1,664,300. These cost estimates are detailed in Table 1, and are based on the following sources: • Original estimates of construction costs from Alaska Power Authority Elfin Cove Reconnaissance Study (1984), revised by Alaska Energy Authority Concept Design Report (2006) (hereinafter referred to as the CDR). • Construction costs adjusted to estimated 2012 using the Engineering News Review Construction Cost Index. The average construction inflation from December, 2005 to November, 2008, was extended through to the year 2012 to arrive at the estimate in this proposal. • Costs for the design and permitting process are from the CDR, with permitting costs adjusted to reflect recent experience and advice of AEA staff members. It is likely that, over the next four years, actual construction inflation will vary from that used in this estimate. Given the current economic turmoil, at this time it is premature to speculate on the details of construction costs that will not be incurred until at least four years from now 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. • Total anticipated project cost for this phase • Requested grant funding Because Phase 3 (proposed here) is intended to provide final design and engineering for the hydroelectric system, it is too early at this point to estimate operating and maintenance costs for a system that has yet to be designed. We are not requesting any funding support for O&M costs, and we do not expect to request any such support, because our existing electric utility has a fee structure adequate to finance all of our O&M costs. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 16 of 20 9/3/2008 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 The Elfin Cove Utility Commission, which has been operating for 23 years, has an existing customer base. This project would provide power to them at the rates that are in effect at the time the hydroelectric power is generated and used. Currently, the rates are $0.42 per kW, plus a fuel surcharge of $0.177. At this time, it is too early to speculate on what the rates might be when the plant is constructed, which will be sometime after 2012. However, when the hydroelectric system is in operation, we can remove the fuel surcharge from electric power generated by that system. 4.4.4 Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Download the form, complete it, and submit it as an attachment. Document any conditions or sources your numbers are based on here. The Cost Worksheet is attached at the end of this application. Note that the cost estimates in that form agree with those in Table 1, earlier in this document. As described above the estimates are derived in part from the following sources: • Original estimates of construction costs from Alaska Power Authority Elfin Cove Reconnaissance Study (1984), revised by Alaska Energy Authority Concept Design Report (2006) (hereinafter referred to as the CDR). • Construction costs adjusted to estimated 2012 using the Engineering News Review Construction Cost Index. The average construction inflation from December, 2005 to November, 2008, was extended through to the year 2012 to arrive at the estimate in this proposal. • Costs for the design and permitting process are from the CDR, with permitting costs adjusted to reflect recent experience and advice of AEA staff members. In developing these cost estimates, we are also assuming that Phase 3 will take approximately three years, and that Phase 4 construction will begin in 2012. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 17 of 20 9/3/2008 4.4.5 Business Plan 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. When the hydroelectric project is completed, it will be integrated into the overall power generation system for Elfin Cove. The Community of Elfin Cove Non-Profit Corporation, through its subsidiary, the Elfin Cove Utility Commission (ECUC) already has a system in place for operation and maintenance of our system, setting price structures, billing and reporting, all of which allow us to operate our electrical system in a sustainable manner. We already have personnel on staff to implement our existing system; those personnel are competent to deal with expanded responsibility brought on by the addition of a hydroelectric power plant. ECUC operates “in the black” and has no debt burden. The addition of the hydroelectric power plant should allow us to continue operating in that manner, and to save for future infrastructure needs. By providing for most of our electric power needs for nine months of the year, and a slightly smaller proportion of those needs for the remaining three months, this project will allow us to reduce our consumption of diesel fuel, and therefore reduce the effect of fuel price variability on our operations. Among other benefits, it will allow us to reduce (and possibly eliminate) the fuel surcharge in our billing for electric power when the hydroelectric plant is operating. As a working business plan, we have the Business Operating Plan of the Elfin Cove Utility Commission Electric Utility Upgrade Projec.. The plan, prepared in 2007, is still in review, but it is a blueprint for sustainable operations and management of our electric utility. This proposed hydroelectric project, when integrated into our Community power system, will therefore bring some stability and predictability to the financial operation of our electric utility. 4.4.6 Analysis and Recommendations Provide information about the economic analysis and the proposed project. Discuss your recommendation for additional project development work. Affordable, environmentally sound, renewable energy is a cornerstone of any community’s sustainability. The proposed project will provide a foundation upon which the current Elfin Cove economy can be maintained and economic development can be generated. The proposed hydroelectric project meets both of these needs. Elfin Cove currently has six major consumers of electrical energy. Five of these are tourism-related businesses. The other business is a nonprofit association that operates a general store, a liquor store, a laundry and other support services for the commercial fishing fleet. All are dependent on a healthy environment and affordable energy. The Community of Elfin Cove has discussed a number of potential areas of economic growth. These growth areas include expansion of tourism-related businesses, expanded support of the commercial fishing fleet to include buying fish, making ice, and developing value-added product, and developing trade industry services. The successful completion of this project will demonstrate the renewable energy potential in the area surrounding Elfin Cove. Future energy development could include expansion of hydroelectric generation and the significant potential of tidal energy. Funding for the current project will seed future development of renewable energy resources that will fuel a sustainable economy in this rural region. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 18 of 20 9/3/2008 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 (gal and $) 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 avoided cost of ownership) • 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 The potential fuel displacement, based on the CDR’s estimates of hydropower production, is 25,600 gallons per year. Over a 20-year project lifetime, this savings would amount to 512,000 gallons. At current (November, 2008) fuel prices in Elfin Cove, this amounts to a savings of $146,500 per year, or $2.9 million over a 20-year project lifetime. If in the long-term, fuel prices should increase at a rate of 5 percent annually, the savings in fuel costs could amount to over $6.4 million over a 20-year period. The anticipated revenue from this project, also based on the CDR’s estimates of power production, would be $134,484 per year, or 2.7 million over a 20-year period. Note that the estimates of revenue earned (above) do not incorporate the fuel surcharge (because we would not charge the customers a fuel surcharge for electricity generated by the hydroelectric plant) while the estimates of fuel savings and resultant cost savings do incorporate the current cost of fuel. This is why the estimated revenue shown above ($134,484 per year) is lower than the estimated savings in fuel cost ($146,500 per year). In addition to the economic benefits, the people of Alaska will benefit from cleaner air (including reduced emissions of carbon dioxide), reduced noise, and the pride in knowing that we can rely more on our own resources to support our economy and community. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 19 of 20 9/3/2008 SECTION 6 – GRANT BUDGET Tell us how much your total project costs. Include any investments to date and funding sources, how much is requested in grant funds, and additional investments you will make as an applicant. Include an estimate of budget costs by tasks using the form - GrantBudget.xls Provide a narrative summary regarding funding sources and your financial commitment to the project. The cost of this project (the total of Phases 2 and 3, and Phase 4) is estimated at $2,203,497. The cost for Phase 3 alone (proposed here) is $395,200. For funding sources, in this application we are requesting a grant from the Renewable Energy Fund of $347,200. The Community of Elfin Cove Non-Profit Corporation will provide local matching funds of $48,000, or 12 percent of the cost of Phase 3. The Community of Elfin Cove Non-Profit Corporation has been committed to developing hydroelectric power since we developed a community-wide power system in the 1980’s. Toward that end, we established a fund to develop hydroelectric power. Our local match of $44,000 for Phase 2, and our commitment of $48,000 in this application for Phase 3 is evidence of our local support for hydroelectric power. In addition, we have set aside funds, and we are saving more resources, to help pay for the construction of this project in Phase 4. Attachments 1. Application Cost Worksheet 2. Budget Information (spreadsheet) 3. Resolution of the Board of Directors, Community of Elfin Cove Non-Profit Corp. 4. Location Maps and Aerial Photograph 5. Certificate of Public Convenience and Necessity 6. Resumes Renewable Energy Fund RFA AEA 09-004 Application Cost Worksheet Page 1 Application Cost Worksheet Please note that some fields might not be applicable for all technologies or all project phases. Level of information detail varies according to phase requirements. 1. Renewable Energy Source The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. 320,000 kWh from hydropower Unit depends on project type (e.g. windspeed, hydropower output, biomass fuel) 2. Existing Energy Generation a) Basic configuration (if system is part of the railbelt grid, leave this section blank) i. Number of generators/boilers/other 3 ii. Rated capacity of generators/boilers/other 347 kW (total) iii. Generator/boilers/other type diesel generators iv. Age of generators/boilers/other 1.5 year v. Efficiency of generators/boilers/other 10 to 12 kW per gallon of diesel burned b) Annual O&M cost i. Annual O&M cost for labor FY 08 $ 19,643 ii. Annual O&M cost for non-labor FY 08 $ 130,215 (which is mostly the cost of fuel) c) Annual electricity production and fuel usage (fill in as applicable) i. Electricity [kWh] FY 08 379,500 ii. Fuel usage (if system is part of the Railbelt grid, leave this section blank Diesel [gal] FY 08 29,500 Other iii. Peak Load 227 kW iv. Average Load June-Aug: 85 kW, Sept-May: 29 kW v. Minimum Load 18 kW vi. Efficiency 10-12 kWh/gallon vii. Future trends We expect usage to remain relatively stable. d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] ii. Electricity [kWh] iii. Propane [gal or MMBtu] iv. Coal [tons or MMBtu] v. Wood [cords, green tons, dry tons] vi. Other Renewable Energy Fund RFA AEA 09-004 Application Cost Worksheet Page 2 3. Proposed System Design a) Installed capacity 80 kW b) Annual renewable electricity generation i. Diesel [gal or MMBtu] ii. Electricity [kWh] 320,000 kWh iii. Propane [gal or MMBtu] iv. Coal [tons or MMBtu] v. Wood [cords, green tons, dry tons] vi. Other 4. Project Cost a) Total capital cost of new system $1,600,286 (Phase 4 construction cost) b) Development cost $ 524,000 (total of Phases 2 and 3 costs) c) Annual O&M cost of new system Unknown at this time d) Annual fuel cost Zero 5. Project Benefits a) Amount of fuel displaced for i. Electricity 25,600 gallons per year (AEA Concept Design Report) ii. Heat iii. Transportation b) Price of displaced fuel $149,400 per year (at November, 2008 price of $5.72) c) Other economic benefits 3,996 per year savings in O&M costs d) Amount of Alaska public benefits Unknown 6. Power Purchase/Sales Price a) Price for power purchase/sale At $0.42 per kWh (2008 rates, without fuel surcharge) Renewable Energy Fund RFA AEA 09-004 Application Cost Worksheet Page 3 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio Minimum of: 1.37 benefit to 1.00 cost Payback The benefit/cost ratio shown above was calculated by dividing the sum of the fuel cost savings over 20 years and O&M cost savings over 20 years, by the sum of Phases 2, 3 and 4 development and construction costs. Fuel costs were estimated using November, 2008 fuel prices in Elfin Cove, with no inflation-adjustment over the 20-year period. A higher benefit/cost ratio could be calculated by inflation-adjusting the fuel prices, but we do not want to make assumptions about future fuel prices. A higher benefit/cost ratio could also be calculated by adding in other benefits besides fuel savings. These benefits (such as clean air, reduced noise levels, and a more pristine environment) are discussed in Section 2.4 of our grant application but we did not place a dollar value on them, so it is difficult to include them in the benefit/cost calculation. BUDGET INFORMATIONBUDGET SUMMARY:Milestone or Task Federal Funds State FundsLocal Match Funds (Cash)Local Match Funds (In-Kind) Other Funds TOTALS1. Engineering and design $70,283 $9,717 $80,0002. FERC and other permitting $263,563 $36,437 $300,0003. Local project adminstration $13,354 $1,846 $15,2004$05$06$0Totals $347,200 $48,000Milestone # or Task #BUDGET CATEGORIES:123456TOTALSDirect Labor and Benefits$0Travel, Meals, or Per Diem$0Equipment$0Supplies$0Contractual Services $80,000 $300,000 $15,200 $395,200Construction Services$0Other Direct Costs$0TOTAL DIRECT CHARGES $80,000 $300,000 $15,200 $0 $0 $0