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HomeMy WebLinkAboutNeck Lake hydro App Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 1 of 18 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. NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 2 of 18 9/3/2008 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Alaska Power & Telephone Company Type of Entity: Utility Mailing Address P.O. Box 3222, Port Townsend, WA 98368 Physical Address 193 Otto Street, Port Townsend, WA 98368 Telephone 360-385-1733 Fax 360-385-7538 Email glen.m@aptalaska.com 1.1 APPLICANT POINT OF CONTACT Name Glen Martin Title Permitting and Grants Manager Mailing Address Alaska Power & Telephone Company P.O. Box 3222 Port Townsend, WA 98368 Telephone 360-385-1733 x122 Fax 360-385-7538 Email glen.m@aptalaska.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.) NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 3 of 18 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. AP&T requests funding for Phase II: Resource Assessment/Feasibility Analysis/Conceptual Design, Phase III: Final Design and Permitting, and Phase IV Construction of the Neck Lake Hydroelectric Project (Project). 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. AP&T proposes to construct a small run-of-river hydroelectric project at Neck Lake, a 1,000 acre lake located 1.5 miles southwest of the community of Whale Pass on Prince of Wales Island. The Project would supply power to the community of Whale Pass, and would offset diesel generation, which is currently the sole source of electricity. The relatively high and modulated flows from the lake combined with the steep drop at the lower end of the outlet stream provide a good opportunity for a small run-of-river hydroelectric development. Facilities would include an access road, intake structure, 400 feet of penstock, a containerized power plant, a tailrace channel, and upgrade of 4 miles of transmission line. The hydroelectric facilities will be designed to avoid interference with the existing salmon rearing and collection facilities operated at Neck Lake by the Southern Southeast Regional Aquaculture Association (SSRAA). AP&T conducted a reconnaissance study of the site in 2008, and determined that there is sufficient potential to almost always provide enough generation for Whale Pass loads (see Section 7- Appendices for a copy of the reconnaissance report). The Project will provide clean, renewable electricity, as well as rate stabilization and lower rates for AP&T’s Whale Pass customers. 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. The total cost of the Project is estimated to be $2,440,000. AP&T proposes AEA grant funding of 80% of the total cost ($1,952,000), with AP&T providing the 20% balance out of its normal operating funds. The estimated funding by Phase is as follows: Phase AEA Grant Funds AP&T Matching Funds Total I – Reconnaissance (1) $0 $3,500 $3,500 II – Feasibility/Assessment $84,000 $20,500 $104,500 III - Design and Permitting $90,000 $23,000 $113,000 IV – Construction $1,780,000 $439,000 $2,219,000 Total $1,952,000 $488,000 $2,440,000 (1) AP&T conducted a site reconnaissance in 2008. The construction costs indicated in this application are based on the 2008 site reconnaissance. The proposed Phase II work could result in an optimum project arrangement with a cost NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 4 of 18 9/3/2008 significantly different than that shown. Ordinarily, AP&T would not include Phase IV in this grant request. However, AP&T believes this Project can be designed and permitted quickly and construction initiated in 2010, which is the time frame anticipated for the current round of grant funding. Therefore, AP&T requests funding for construction costs in this current application. Any changes to the expected construction cost of the Project that result from more detailed analyses in Phases II and III can be dealt with at the conclusion of those phases. 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. This project will reduce the cost of electricity to the residents of Whale Pass who presently pay 63.86 ¢/kWh (excluding PCE subsidy). AP&T estimates that diesel generation would decrease by about 95% at current load levels, with some diesel required occasionally when flow in the stream is low. This would decrease fuel costs for AP&T, and those savings would be passed on to AP&T’s customers. AP&T estimates the annual savings at current rates would be approximately $36,000 in the first year of operation (equivalent to about 13.9 ¢/kWh), and the savings would increase as the cost of diesel fuel increases. Residential customers using less than 500 kWh/month would see only a small decrease in their bill, assuming that AP&T’s savings result in a comparable decrease in the PCE COPA rate. Commercial customers and residential customers using over 500 kWh/month would see greater savings. The total savings by AP&T’s customers is estimated to be about $15,900/year at current rates. The State of Alaska would benefit from reduced draw on the PCE program. Currently, about 49% of AP&T’s Whale Pass retail sales are subject to COPA. The total savings to the State is estimated to be about $15,100/year at current rates. Lower energy costs could help stimulate economic development in Whale Pass. Customers who have discontinued AP&T service because of the high cost of power would likely reconnect if the Project is built. Other benefits to the Alaskan public would be a decrease in the environmental impacts of diesel generation by AP&T or self-generation by Whale Pass residents (e.g. air pollution, noise pollution, fuel spills, etc.). 2.5 PROJECT COST AND BENEFIT SUMARY Include a summary of your project’s total costs and benefits below. 2.5.1 Total Project Cost (Including estimates through construction.) $ 2,440,000 2.5.2 Grant Funds Requested in this application. $ 1,952,000 2.5.3 Other Funds to be provided (Project match) $ 488,000 2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $ 2,440,000 2.5.5 Estimated Benefit (Savings) [Net savings over 50 years at 0% discount rate.] $ 15,000,000 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.) $ 7,290,000 NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 5 of 18 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. Greg Mickelson, AP&T’s V.P. of Power Operations will be the Project Manager for all phases of work. Mr. Mickelson is located in Klawock on POW, and is an engineer with extensive experience in project management and electrical generation, transmission and distribution. Mr. Mickelson has been a part of AP&T’s team for over 30 years and has been an essential part of their success. He has overseen numerous projects on POW, having been there since 1983, that have also had grant funding and is familiar with procedures put in place for their use. Please see Mr. Mickelson’s resume in Section 7 – Appendices. AP&T’s personnel will conduct all Phase II engineering work and will utilize contractors for the environmental studies in Phase II. Phase III final design and permitting will be conducted by AP&T’s experienced staff. Resume’s of key personnel are included in Section 7 – Appendices. Phase IV construction would be either by AP&T using personnel hired from the local communities, or by experienced contractors from the local communities with AP&T supervision. 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 bar schedule of the expected design and construction sequence is provided in Section 7 - Appendices. The following summarizes key activities and dates of the schedule. Note that this schedule is for the entire development sequence; activities funded by this grant will be in Phases II, III, and IV. Phase I: Reconnaissance: Completed Summer 2008 Phase II: Resource Assessment/Feasibility Analysis/Conceptual Design: 2008-2009 In late 2008, AP&T will have a surveyor develop topographic mapping of the Project. Early in 2009, the conceptual design from the Phase I reconnaissance work by AP&T will be reviewed and augmented to develop a firm arrangement for presenting to permitting agencies. In additional, a cost estimate will be prepared for the selected arrangement and an economic analysis conducted. The results will be presented in a feasibility report. At the same time, AP&T will work with the permitting agencies to develop study plans for environmental surveys to be conducted later in 2009. These surveys may include fish surveys, wildlife assessments, botanical surveys, wetlands surveys, archaeological survey (initial SHPO review), and water quality testing. AP&T believes that environmental field surveys for this Project will be very limited, since the impact area is quite small, and there should be a wealth of information already available from permitting and operation of the SSRAA facilities. Also in 2009, geotechnical investigations may be conducted at the intake and powerhouse areas. NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 6 of 18 9/3/2008 Phase III: Permitting and Final Design: Fall 2009 – Summer 2010 In this phase, permits and land easements will be acquired, and final design documents prepared. Permits will include: COE Section 404 permit, ADFG fish habitat permit, ADNR land lease or easement, ADNR water rights, ACMP coastal zone consistency determination, and SHPO review. Final design will begin in Fall 2009 and will proceed into the summer of 2010 with the intent to start construction in the Fall of 2010. Phase IV: Construction: Summer 2010 –2011 Once all permits are received and funding for this phase is secured, AP&T will place the order for generating equipment and begin off-site fabrication of the intake and powerhouse modules. On-site construction will begin in 2011 and continue through the end of 2011. The construction work should not be significantly compromised by weather at this temperate location. 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. Key (i.e. critical path) milestones for the Project are: • Completion of topographic mapping by January 2009. • End of Phase II (decision point after completion of feasibility analysis) • Receipt of all necessary permits and land access agreements by July 2010. • End of Phase III (decision point after completion of design and final cost estimate) • Award contract for supply of the generating equipment by April, 2010 • Completion of access road to intake site by January 2011. The schedule described in 3.2 above is consistent with these milestones. 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. Key AP&T personnel involved in the project and their roles will be: • Greg Mickelson, Project Manager & Construction Superintendent • Bob Berreth, Electrical Design • Ben Beste, Mechanical Design • Larry Coupe, Civil Design • Glen Martin, Resource Assessment and Permits Resume’s can be found in Section 7 – Appendices Phase I: Reconnaissance Already completed by AP&T. Phase II: Resource Assessment/Feasibility Analysis/Conceptual Design In this phase AP&T will acquire property access and complete environmental and engineering/conceptual design studies. AP&T may use the following contractors for the various surveys: • Wetlands delineation - - HDR Alaska Inc. • Threatened and endangered plant species survey - - HDR Alaska Inc. NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 7 of 18 9/3/2008 • Fish surveys - - Romey Associates, LLC (or possibly staff from SSRAA Hatchery) • Water quality sampling - - Analytica Group Environmental Laboratories • Cultural resource surveys - - Browne Research • Topographic mapping - - Craig Templin • Seismic refraction surveys - - Philip H. Duoos, Geophysical Consultant AP&T permitting specialists will compile the environment information into resource assessment documents as required by the various permitting agencies. AP&T engineers will conduct the engineering/conceptual design studies in-house. Phase III: Final Design & Permitting AP&T will soon file for a jurisdictional determination from the Federal Energy Regulatory Commission (FERC), and expects to receive that determination in early 2009. AP&T is confident that FERC will not have jurisdiction, and therefore a FERC license will not be required. Accordingly, in this phase the following permits will be acquired: • 404 permit (Corps of Engineers) • Coastal zone consistency determination (ADNR-DCOM) • Fish habitat permit (ADF&G) • Land lease or easement (ADNR) • Water right (ADNR) • SHPO review AP&T will prepare the final design documents in-house using its staff civil, mechanical, and electrical engineers, who all have extensive experience in hydroelectric development. These engineers designed AP&T’s South Fork Hydroelectric Project which entered service in 2005, as well as AP&T’s Kasidaya Creek Hydroelctric Project which will enter service later in 2008. Phase IV: Construction Construction will be by local contractors and AP&T staff, as follows: • Access road - - local contractor(s) or force account • Intake fabrications - - Reynold Grey Machining and Services • Intake on-site construction - - local contractor(s) or force account • Penstock materials procurement - - AP&T • Penstock installation - - local contractor(s) or force account • Generating equipment procurement - - AP&T • Powerhouse fabrications - - Reynold Grey Machining and Services • Powerhouse construction - local contractor(s) and force account • Transmission line construction - - local contractor(s) and force account • Testing and start-up - - AP&T Reynold Grey Machining and Services is a welding and fabrication company in Port Townsend, Washington that AP&T has used frequently for similar work, including fabrication of container modules for diesel powerplants recently installed in Slana and Allakaket. Reynold Grey is located near AP&T’s engineering staff, who thereby can conveniently oversee the proposed fabrication work. AP&T will negotiate purchase orders for materials and equipment from vendors who have performed well on AP&T’s recent projects. Resumes for the above-mentioned firms and individuals are included in Section 7 - Appendices. NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 8 of 18 9/3/2008 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. During Phases II and III, AP&T proposes to provide quarterly reports to AEA regarding the status of the work. AP&T has provided similar reports to AEA and other grant funding agencies in the past several years on other projects, and has established the necessary procedures for producing the report expeditiously. Besides the quarterly reports, at the completion of Phase II, AP&T will provide AEA with a copy of a report that includes the conceptual design drawings and cost estimate. At the completion of Phase III, AP&T will provide AEA with a copy of the final design drawings, specifications, and cost estimate, and the permits along with a request to release the grant funds. During Phase IV, communications within the team would consist of: • Weekly reports by the Environmental Compliance Monitor (as likely to be required by the ADF&G Fish Habitat Permit) • Bi-weekly conference calls among the Project Manager, Construction Superintendent, the Design Engineers, and SSRAA managers. • Periodic site visits by the Project Manager and Design Engineers. These internal discussions will form the basis of quarterly reports to AEA. The reports will show in a clear and concise manner progress made on the various tasks/milestones, the work to be accomplished in the ensuing quarter, and potential problems and corrective actions to be considered or implemented. Cost data will also be provided on a quarterly basis. Microsoft Project or similar software will be used to develop and maintain schedule and budget information; updating of the management files will be on a monthly basis. 3.6 Project Risk Discuss potential problems and how you would address them. Site Control – AP&T does not yet have development rights on the land, but will apply to ADNR for those rights. AP&T is confident that its development will not conflict with the SSRAA operation already on the site. Seismic – Project components will be designed appropriately for seismic activity, since the Project will be located in a moderate-risk seismic zone. Structures will be buried as much as possible to minimize seismic impacts. Underground Construction – The Project does not include underground construction, which can be fraught with cost overrun potential. Geotechnical investigations will be made at the diversion and powerhouse areas to provide an adequate level of knowledge about ground conditions at those sites. Inclement Weather – Working conditions in the Project area during the winter could cause brief interruptions of the construction schedule. If prolonged interruptions occur that could jeopardize the completion schedule, AP&T will add contractors or more personnel as necessary to get back on schedule. NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 9 of 18 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. Proposed Energy Resource: The Neck Lake site has the potential to generate perhaps 3.2 GWh per year with an installed capacity of 750 kW, however, that would be much greater than the required generation (currently about 300 MWh/yr) . AP&T will evaluate the optimum installed capacity during Phase II; at this time an installed capacity of 124 kW is planned. At this time the only viable alternative to the Project is considered to be continued diesel generation. The Project would eliminate diesel generation for almost all of the year and subsidize diesel generation for the remainder. Pros: Compared to diesel generation, the Project will have the following advantages: • less expensive to operate than diesel (lower O&M); • no need to purchase as much fuel; • decrease chances of fuel spills; • no noise pollution for most of the year and reduced noise the remainder of the time; • no air emissions (CO2) for most of the year and reduced emissions in other periods; • fewer hazardous substances; • no particulate matter emissions for most of the year and reduced particulates in other periods ; • can come on-line after a power outage almost immediately, but diesel can’t; • lower and more stable electric rates for customers. Cons: As with all hydroelectric projects, the initial cost of development is much higher than for diesel generation. AP&T has been aggressively extending it transmission system to most of the communities on Prince of Wales Island, and is planning to connect Naukati in 2009 if funding is received. Theoretically, the transmission system could be extended another 25 miles to Whale Pass from Naukati, however, it would cost much more than the Project, and would likely be less reliable. 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. Existing Power Generation NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 10 of 18 9/3/2008 There are 3 gensets in AP&T’s Whale Pass diesel power plant, as follows: Unit #1 = JD4045, 70 kW, Installed 1995, 11.27 kWh/gal (averaged from 2008) Unit #2 = Cummins BT5.9, 100 kW, Installed 1995, 11.38 kWh/gal (averaged from 2008) Unit #3 = Cummins NT855-64, 160 kW, Installed 2008, 12.62 kWh/gal (avg. July/August 2008) 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. Diesel generation being the existing energy resource, this hydroelectric project will for nearly all of the year eliminate the use of diesel generators. At other times only one or more diesel gensets will be needed in addition to the hydro power. This will reduce the use of diesel and the frequency of their maintenance, including overhauls and replacement. The diesel generators that would be impacted are all owned and operated by AP&T in Whale Pass. The Project will reduce this area’s reliance on fossil fuels. AP&T also owns the transmission and distribution infrastructure, so no impacts will occur to existing energy infrastructure and resources. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The existing energy market for the Project is Whale Pass. Whale Pass is an isolated community on the northern end of POW, approximately 25 road miles above Naukati Bay. AP&T currently owns and operates all of the electrical infrastructure on the island. The Project will reduce fossil fuel consumption by the diesel power plant in Whale Pass by approximately 25,000 gallons per year, and at an average fuel cost of $3.22 per gallon, AP&T will have a fuel cost savings of approximately $90,000 annually. The existing diesel plant would be placed on standby status, reducing AP&T’s diesel operations and maintenance costs by about $24,000 annually. AP&T’s total savings is estimated to be about $36,000 in the first year of operation, equivalent to about 13.9 ¢/kWh. These savings would increase as the cost of diesel fuel increases. Whale Pass residential customers who use less than 500 kWh/month will see only a small decrease in their electric bills, since the PCE COPA would decrease proportionally. Commercial customers and residential customers who use more than 500 kWh/month will see a larger decrease in their electric bills (up to 13.9 ¢/kWh in the first year of operation). Electric rates would be much more stable once the Project is in operation. Currently, Whale Pass customers pay 63.86 ¢/kWh (excluding PCE subsidy). 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 NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 11 of 18 9/3/2008 • Basic integration concept • Delivery methods Renewable energy technology specific to location – The Project will be a conventional run-of- river hydroelectric project. Facilities to be constructed include: • 400 feet of single lane access road • Intake with fish screen, 34 cfs diversion capacity • 350 feet of 30- inch diameter pipeline • Powerhouse with four 31-kW generating units, each consisting of a pump-as-turbine and synchronous generator • Upgrade of about 4 miles of transmission line from single-phase to three-phase. Hydroelectric technology is well developed, and provides most of the renewable energy generated in the world in general and in Alaska in particular. The Project will utilize the abundant rainfall and steep topography afforded by the falls on the Neck Lake outlet stream to generate renewable energy. Optimum installed capacity – 124 kW (to be confirmed by Phase II studies). Anticipated capacity factor – 28% (to be confirmed by Phase II studies). Anticipated annual generation – Approximately 300 MWh/yr, which would off-set about 25,000 gallons of diesel used per year. If Whale Pass loads grow, the Project would be able to generate as much as 1,000 MWh/yr with the proposed installed capacity of 124 kW. Anticipated barriers – No technological barriers. Basic integration concept – Integration of hydropower is not particularly difficult; AP&T already operates two independent integrated hydro-diesel systems. For much of the year the hydro generation will be much more than the load, and therefore the diesel generation will be on standby; one or more hydro units will be on-line, with any excess generation shunted to dummy resistance loads. During low flow periods, possibly during late summer and during parts of the winter when flow is low, the hydro generation may be placed in lag position with diesel taking the lead. During the transition periods, diesel unit(s) will be block loaded in lag position, with the hydro in lead position. Preliminary studies indicated that the Project would be able to replace about 99.5% of the diesel generation, excluding planned or forced outages. Delivery methods – Project generation will be delivered to Whale Pass via a 4-mile-long transmission line from the powerhouse to the existing distribution system. The transmission line is currently single-phase 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 project is located on State land and AP&T will be applying for an easement or lease to use the land. 4.3.3 Permits NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 12 of 18 9/3/2008 Provide the following information is 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 Applicable Permits: • 404 permit (Corps of Engineers) • Coastal zone consistency determination (ADNR-DCOM) • Water right (ADNR), • State land easement (ADNR) • Fish habitat permit (ADF&G) • SHPO review Permitting Timeline: AP&T expects to complete environmental and design studies in 2009 in order to have permits by summer 2010. Potential Permitting Barriers: There are no known permitting barriers at this time. 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 T&E Species: No impacts are anticipated to T&E species due to the projects location and small size. However, the agencies will be consulted prior to making any determination. Habitat Issues: The Southern Southeast Regional Aquaculture Association has established a rearing and trapping facility at the lake and outlet stream. Coho salmon smolts are reared in pens in the lake, then released into the lake for migration out to tidewater during the spring. When the adults return, they ascend a ladder into a single raceway, where they are quickly processed for shipment south. Water for the raceway and ladder is diverted from the head of the second (middle falls). A general arrangement of the SSRAA facilities is shown in the Reconnaissance Report located in Section 7 – Appendices (it is a preliminary drawing and is not 100% accurate). SSRAA’s existing knowledge of fish usage of the stream is expected to be sufficient so that additional fish surveys will not be required. Wetlands: There is potential for a small amount of wetlands to be impacted. A wetlands delineation may be necessary to determine what, if any, impacts there may be. Archaeological & Historical Resources: A review by SHPO of this site will need to occur to determine if an archaeological survey will be necessary. Because of SSRAA’s existing use of much of the site, an archaeological survey is unlikely to be required. NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 13 of 18 9/3/2008 Land Development Constraints: AP&T will coordinate with SSRAA to make sure their needs and goals are not affected by construction and operation of the Project. Telecommunications Interference: The 12 kV transmission line will not create interference with telecommunications. Aviation Considerations: There is no significant aviation in the Project area. Visual, Aesthetic Impacts: The Project will not be in a visually or aesthetically special view shed that needs protection. Potential Barriers: None 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 Anticipated project costs: • Phase I: ................................... $3,500 (AP&T records) • Phase II: ................................. $104,500 (AP&T estimate based on experience with other projects) • Phase III: ................................ $113,000 (AP&T estimate based on experience with other projects) • Phase IV: ................................ $2,219,000 (AP&T estimate based on experience with other projects) • Total: ...................................... $2,440,000 Requested grant funding: ..................$1,952,000 Applicant matching funds: ................. $488,000 (total match for this proposed grant and expected future grant) Other sources of funding: ................... None Projected capital cost:......................... $2,219,000 (capital cost is assumed to be the cost of Phase IV – Construction) NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 14 of 18 9/3/2008 Projected development cost: .............. $221,000 (development cost is assumed to be the total cost of Phase I, II, and III) 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 AP&T will operate and maintain the Project with proceeds from sale of power to its customers. No grant funding is requested for operation and maintenance. 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 AP&T is developing this Project to supply power to a community it already serves. The power generated by the Project ultimately will be sold to AP&T’s customers in Whale Pass at a lesser cost than the current cost of diesel generation. AP&T estimates that the current retail price for electricity to Whale Pass customers could be reduced by 13.9¢/kWh if the Project is funded as proposed herein (excluding PCE). Rate of Return: Not calculated. 4.4.4 Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. The Cost Worksheet is attached in Section 7 - Appendices. 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. AP&T will operate the Project to supply power to AP&T’s grid in Whale Pass for eventual sale to its retail customers. AP&T will maintain the Project as it does with its other hydroelectric resources, which can be expected to have a life of at least 50 years. The Project will be remotely operated, with continuous monitoring by a SCADA system. O&M personnel will visit the plant at least once per week for routine checks on the equipment. A routine maintenance schedule will be established, a brief annual shutdown is likely for maintenance. 4.4.6 Analysis and Recommendations Provide information about the economic analysis and the proposed project. Discuss your recommendation for additional project development work. AP&T has prepared an economic analysis for the Project based on the following assumptions: General Assumptions: • Term of analysis 50 years (of Project life) • General inflation rate 2.75% • Discount rate 0% and 12% NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 15 of 18 9/3/2008 • Annual generation (2007) 306 MWh • Annual load growth rate 0.5% Neck Lake Assumptions: • AEA grant funds $1,952,000 • AP&T funds $488,000 • Total cost (capital and development costs) $2,440,000 • First year of operation 2012 • Annual O&M cost (2008) $20,000 • O&M escalation rate General inflation rate • Generation at plant Varies with load (approx. 99%) Diesel Assumptions • Average Cost of diesel fuel (2008) $3.22/Gal • Average efficiency 11.9 kWh/Gal • Fuel escalation rate 3.75% • Variable O&M cost (2007) $24,000 • O&M escalation rate General inflation rate • Minimum annual O&M cost (2008) $5,000 A copy of the economic analysis is provided in Section 7. The analysis shows the following: Discount Rate (1) 0% 12% Net Present Value of Neck Lake Costs (2) $4,883,000 $748,000 Net Present Value of Fuel Cost Savings (3) $15,007,000 $752,000 Benefit-Cost Ratio for AP&T (4) 4.60 2.11 Net Present Value of PCE Savings $7,290,000 $395,000 Benefit-Cost Ratio for State of Alaska (5) 3.73 0.20 (1) Low and high discount rate values for comparison. (2) Annualized AP&T capital cost plus O&M cost, discounted to 2012. AP&T funds annualized over 50 years at the indicated discount rate. (3) Annualized costs without Neck Lake less annualized cost with Neck Lake, discounted to 2012. AP&T funds annualized over 50 years at the indicated discount rate. (4) B/C ratio =[(3)+(4)]/(3) (5) B/C ratio = NPV of PCE savings divided by proposed AEA grant amount ($1,952,000). For purposes of this analysis, the benefits to the State of Alaska are based on the assumption that 49% of the Project savings would accrue to the State through lower PCE COPA payments. This percentage is based on 2007-08 historical data for Whale Pass PCE reimbursements. The analysis indicates positive net benefits for all cases except the high discount rate case for the NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 16 of 18 9/3/2008 State of Alaska. For the State of Alaska, a discount rate less than 4.2% results in positive net benefits. Therefore, we recommend AEA provide the necessary funding for Project construction as described in this application. 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 people of Alaska will benefit from the Project development as follows: Potential annual fuel displacement: Over the last 10 years, Whale Pass used an average of about 25,000 gallons of diesel fuel annually to generate an average of 306,000 kWh/year. For 2008, the average fuel price for Whale Pass average has been $3.22 per gallon. Over a 50 year period the Project could potentially save 1,620,000 gallons of diesel fuel valued at $16,300,000, assuming a 3.75% escalation rate in the price of diesel fuel and 0.5% annual load growth. Anticipated annual revenue: If funded as proposed herein, the Project is estimated to result in a decrease in generation costs of about $36,000 in the first year of operation. AP&T would expect to have a new rate tariff for Whale Pass that passes those savings on to the Whale Pass customers, i.e. AP&T’s revenues would decrease by $36,000 in the first year of operation. Potential additional annual incentives: Not estimated. Potential additional revenue streams : Not estimated. Non-economic public benefits to Alaskans: Reduced air emissions and noise, reduced chance for oil spills. Other benefits: The State of Alaska would spend less on the PCE program, since the Project generation would decrease the amount of diesel generation subject to PCE reimbursement. PCE savings are estimated to be $7,290,000 over the 50-year life of the Project. In the short term the local economy would benefit due to local hire for construction. In the long term, lower and more stable electric rates could lead to more residential and commercial development, which in turn would add more income to this community. NECK LAKE HYDROELECTRIC PROJECT Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 17 of 18 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 Total Project Costs: $2,440,000 Investments to date and funding sources: AP&T has spent approximately $3,500 to date on Phase I development activities for the Project. To date, all costs have been paid out of AP&T’s general operations funds. Amount requested in grant funds: $1,952,000 (for Phase II, Phase III, and Phase IV) Additional investment by AP&T: AP&T will provide matching funding equaling 20% of the total cost of Project development ($488,000). This matching amount will be paid from AP&T’s general operations funds. APPENDICES TABLE OF CONTENTS 1. Certificate of Public Convenience & Necessity 2. Corporate Resolution 3. Project Maps 4. Reconnaissance Report 5. Project Schedule 6. Letters of Support 7. Resume’s 8. Cost Worksheet 9. Grant Budget Form CERTIFICATE OF PUBLIC CONVENIENCE & NECESSITY CORPORATE RESOLUTION PROJECT MAPS RECONNAISSANCE REPORT Neck Lake Hydropower Potential By Larry Coupe November 7, 2008 1. Introduction Neck Lake is a 1,000 acre lake located 1.5 miles southwest of the community of Whale Pass (3.5 miles from Whale Pass by road). The lake surface is normally at El 87. The outlet stream flows for about 1,000 feet before emptying in Whale Pass; there are three distinct waterfalls near the lower end of the stream, and most of the fall from the lake occurs at these waterfalls. The relatively high and modulated flows from the lake combined with the steep drop at the lower end of the outlet stream provide a good opportunity for a small hydroelectric development to serve Whale Pass. The Southern Southeast Regional Aquaculture Association has established a rearing and trapping facility at the lake and outlet stream. Coho salmon smolts are reared in pens in the lake, then released into the lake for migration out to tidewater during the spring. When the adults return, they ascend a ladder into a single raceway, where they are quickly processed for shipment south. Water for the raceway and ladder is diverted from the head of the second (middle falls). A general arrangement of the SSRAA facilities is shown in the attached figure (it is a preliminary drawing and is not 100% accurate). Existing maps show the land at the lower end of the outlet stream to be state land; most of the lake itself, including the lake outlet, are shown to be National Forest. 2. USFS Report In the mid-1980s, the US Forest Service considered development of a small hydro facility at Neck Lake to provide power to a planned federal work center nearby. I have reviewed an incomplete copy of the 1984 USFS feasibility study report on the hydro facility. The USFS plan included: • A diversion at the lake outlet • ¼-mile of access road to the diversion structure • 1000 feet of 30” diameter steel penstock • A powerhouse containing the turbine, generator, and load-bank type control system. The report is not clear on the type of turbine (Francis, cross-flow, and pump-as-turbine were all considered). • 3,800 feet of 12 kV transmission line Neither the hydro facility or the work center were constructed. The arrangement proposed by the USFS was reasonable at the time, as the SSRAA facility did not exist, and the USFS would not need a FERC license. For any AP&T development to be economical, a FERC license must not be required (i.e. we must stay off federal land). In addition, the SSRAA operation must be accommodated. 1 3. Site Visit I visited the site on August 13, 2008. It was the final day of fish collection, and there were still a number of coho in the creek. I was shown around the SSRAA facilities by the on-site manager, Dolores Loukes. I then scrambled up the south side of the creek to view the stream above the upper falls, and took a number of photos of the creek, fish facility, and surrounding area. The SSRAA facilities are shown in the following photo. 4. Potential General Arrangement My preliminary ideas on a general arrangement for a hydro facility are as follows: Diversion Structure The diversion structure should be located above the upper falls to gain as much economical head as possible. Based on a stream profile shown in the USFS report, I estimate the water surface would be at about El 70. The suggested location is at the ledge in the river shown in the middle of the photograph below. 2 The diversion would consist of a low concrete sill on the ledge in the foreground, a fish screen, and a penstock intake. The fish screen and intake would be preassembled in 20’ shipping containers. The fish screen will be necessary to prevent the coho smolts reared in the lake from being ingested by the penstock. The fish screen bypass would be used to release water that would ultimately be diverted to the SSRAA fish collection facilities by the existing diversion; the fish collection occurs for only a couple of months in the summer when flows are typically quite high, so it does not make sense to try and use the diversion to SSRAA for generation. I would not recommend the diversion be located any further upstream because of the relatively low gradient in the stream above the upper falls; also, somewhere up there is the National Forest boundary. It could be located a bit downstream where the creek narrows before flowing over the upper falls, but I believe the wider location would be more advantageous. Access Road An access road about 400 feet long would need to be constructed to the diversion. With reference to first photograph, it would extend from the dumpster, up the hill to the left of the fence, and around the bend to the left. Note that there are surveyor’s flags in the forest in this area supposedly demarking the National Forest boundary; they indicate they are for witness points, and it is not clear exactly where the boundary is. According to the National Forest maps, the boundary should not be anywhere close. Getting the National Forest boundary clarified should be an early task if we pursue this site. Penstock The penstock would be about 350 feet long, and 24 to 36 inches in diameter, depending on what capacity we want to install. Because of the low head, just about any material would work 3 (HDPE, PVC, steel, ductile iron, or fiberglass). SSRAA’s piping is ductile iron. The penstock would follow the road for much of its length, but would deviate just above the SSRAA facilities. Powerhouse The powerhouse would be located between the SSRAA facilities and the creek, where there is room and reasonably good access. The area is shown in the photo below (the powerhouse would be on the grassy area on the right side of the photo). I envision the powerhouse being containerized also, with a lower 20’ container housing the turbine-generator set(s), and an upper container housing the controls. To avoid false attraction of the returning salmon, I believe the powerhouse and the SSRAA facilities should discharge back to the stream through a common structure, which would probably require rebuilding the lower portion of the existing fish ladder. Using a number of pump-as-turbine generating sets with a load-bank control system seems like a reasonable approach for this site. Cornell Pump (Vancouver, WA) markets some of their pump equipment for use as turbines; Canyon Industries seems to be their representative for the generation market. Based on my initial inquiry, they recommend their 10TR1 unit, which would have a discharge of 8.5 cfs, an efficiency of 80%, and an output of 32 kW when operating at 55 feet of net head. Canyon indicated each unit would cost about $40,000. With a vertical shaft orientation, as many as four of these units could be housed in a single 20’ container. 5. Generation Based on over 7 years of streamflow data for the site (1960-67), an installation with four 10TR1 units would be able to generate at full capacity (128 kW) about 84% of the time; less output 4 would occur frequently in late summer and occasionally in winters. There would almost always be enough generation for the Whale Pass loads, and usually enough if the lodge reconnects. I have not made a cost estimate of the arrangement, but it likely would be relatively expensive because of the need to accommodate SSRAA’s operation and because of the small load to be served. Grant funds would likely be required for it to be practical for us. 6. Next Steps Glen Martin has been directed to apply for a non-jurisdictional determination from FERC for this site. As part of that application, we should determine as best we can the National Forest boundary. As noted above, the standard Forest Service map shows the boundary to be quite a ways away from the SSRAA facilities, but there is flagging in the forest near the SSRAA facilities that would indicate the boundary is much closer than shown on the map. Assuming that we can stay off National Forest land, then we should also acquire detailed topographic mapping to allow completion of a preliminary design; because of the small area required, mapping can be by conventional surveying rather than LIDAR or photogrammetry. 5 6 PROJECT SCHEDULE Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3PHASE I: ReconnaissancePHASE II: Resource Assessment, Feasibility Analysis, Conceptual DesignTopographic MappingConceptual DesignEnvironmental SurveysGeotechnical InvestigationsPHASE III: Final Design and PermittingPermit Application PreparationPermit Application ProcessingFinal DesignPHASE IV: ConstructionMobilizationAccess RoadIntakePenstockGenerating Equipment ProcurementPowerhouseUpgrade Transmission LineTesting and Start-UpLEGEND: <-- Procurement and off-site fabrication <-- On-site constructionNECK LAKE HYDROELECTRIC PROJECTDESIGN AND CONSTRUCTION SCHEDULEQ42008 2009 2010 2011 LETTERS OF SUPPORT RESUME’S … … … … … COST WORKSHEET  Renewable Energy Fund   Application Cost Worksheet For Neck Lake Hydro Project 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. 1,000 MWh per year maximum generation Unit depends on project type (e.g. windspeed, hydropower output, biomasss 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 diesel generators ii. Rated capacity of generators/boilers/other The 3 diesel generators have a combined rated capacity of 330 kW iii. Generator/boilers/other type Diesel generators iv. Age of generators/boilers/other Installed 1995 v. Efficiency of generators/boilers/other Average efficiency for power plant = 11.31 kWh/gal b) Annual O&M cost i. Annual O&M cost for labor $23,000 ii. Annual O&M cost for non-labor $90,000 fuel, $1,000 other c) Annual electricity production and fuel usage (fill in as applicable) i. Electricity [kWh] 306,000 kWh ii. Fuel usage (if system is part of the Railbelt grid, leave this section blank Diesel [gal] 25,000 gallons Other iii. Peak Load 63 kW iv. Average Load 49 kW v. Minimum Load 35 kW vi. Efficiency 11.31 kWh/gal vii. Future trends Use of electricity may increase with less expensive rates 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 RFA AEA 09-004 Application Cost Worksheet Page 1  Renewable Energy Fund   3. Proposed System Design a) Installed capacity 128 kW b) Annual renewable electricity generation i. Diesel [gal or MMBtu] ii. Electricity [kWh] 1,000 MWh maximum capability, 300 MWh w/ current load 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 $2,219,000 (est. cost of Phase IV) b) Development cost $221,000 (est. cost of Phases I, II, and III) c) Annual O&M cost of new system $20,000 d) Annual fuel cost $0 5. Project Benefits a) Amount of fuel displaced for i. Electricity Approx. 25,000 gallons per year ii. Heat iii. Transportation b) Price of displaced fuel $3.22/gal (average 2008 fuel price) c) Other economic benefits d) Amount of Alaska public benefits AP&T ratepayers would save $15,000,000 over the 50 year life of the Project. The Alaska public would save $7,300,000 over the 50 year life through reductions in the cost of the PCE program. 6. Power Purchase/Sales Price a) Price for power purchase/sale N/A; AP&T is the public utility for this community. RFA AEA 09-004 Application Cost Worksheet Page 2  Renewable Energy Fund   7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio 4.62 for AP&T, 3.75 for Alaska public Payback 8.5 years for AP&T, 28.5 years for Alaska public RFA AEA 09-004 Application Cost Worksheet Page 3 Discount Rate 0.0% 12.0% Net Present Value of Costs to AP&T without Neck Lake Diesel Fuel 16,305,000$ 1,235,000$ Variable O&M 3,633,000 277,000 Total 19,938,000$ 1,512,000$ Net Present Value of Costs to AP&T with Neck Lake Neck Lake Depreciation 488,000$ 81,000$ Regulated Return 1,338,000 365,000 O&M 2,337,000 238,000 Subtotal - Neck Lake 4,163,000$ 684,000$ Diesel Fuel 184,000$ 9,000$ Variable O&M 584,000 59,000 Subtotal - Diesel 768,000$ 68,000$ Total 4,931,000$ 752,000$ Net Benefits 15,007,000$ 760,000$ B/C 4.60 2.11 Discount Rate 0.0% 4.2% 12.0% Net Present Value AP&T Savings 14,877,000$ 3,969,000$ 806,000$ Estimated PCE Savings (49%) 7,290,000$ 1,945,000$ 395,000$ Project Cost 1,952,000 1,952,000 1,952,000 B/C 3.73 1.00 0.20 Analysis for AP&T Analysis for State of Alaska NECK LAKE HYDROELECTRIC PROJECT ECONOMIC ANALYSIS SUMMARY OF COSTS AND BENEFITS NECK LAKE HYDROELECTRIC PROJECTECONOMIC ANALYSISGeneral Inflation 2.75% O&M ($000) 20$ AP&T RateDiscount Rate 12.00% AP&T Cost ($000) 488$ Savings ChangeDiesel Generation AP&T Rate 12.00% Nominal 14,877$ $48.01Fuel Inflation 3.75% AEA Cost ($000) 1,952$ NPV@12% 804$ 2.86$ Efficiency (kWh/gal) 11.9 AEA Rate 12.00%Var O&M ($/kWh) 0.08$ Project Life, years 50Min. O&M ($000) 5$ Regulated Rate of Return 10.75%300.0 MWh 285.0 MWh600.0 MWh 570.0 MWhGeneration Sales Diesel Total Fuel O&M Total Rate Neck Lake Diesel Total Fuel O&M Depre- ciation Regulated Return O&M Rate2007306 255 306 306 24 20083.22 307 256 307 307 25 2009 3.34 309 258 309 309 26 2010 3.47 310 259 310 310 27 2011 3.60 312 260 312 312 28 1 2012 3.73 313 261 313 313 98 29 127 0.486 312 1 313 0$ 6$ 10$ 52$ 22$ 91$ 0.346$ 36$ 0.139$ 2 2013 3.87 315 263 315 315 102 30 132 0.503 313 1 315 0$ 6$ 10$ 51$ 23$ 90$ 0.344$ 42$ 0.159$ 3 2014 4.02 316 264 316 316 107 31 137 0.520 315 2 316 1$ 6$ 10$ 50$ 24$ 90$ 0.341$ 47$ 0.179$ 4 2015 4.17 318 265 318 318 111 32 143 0.539 316 2 318 1$ 6$ 10$ 49$ 24$ 90$ 0.339$ 53$ 0.200$ 5 2016 4.32 320 267 320 320 116 33 149 0.558 318 2 320 1$ 6$ 10$ 48$ 25$ 90$ 0.336$ 59$ 0.221$ 6 2017 4.48 321 268 321 321 121 34 155 0.577 319 2 321 1$ 6$ 10$ 47$ 26$ 90$ 0.334$ 65$ 0.243$ 7 2018 4.65 323 269 323 323 126 35 161 0.598 321 2 323 1$ 7$ 10$ 46$ 26$ 89$ 0.332$ 72$ 0.266$ 8 2019 4.83 324 271 324 324 132 36 168 0.619 322 2 324 1$ 7$ 10$ 45$ 27$ 89$ 0.330$ 78$ 0.289$ 9 2020 5.01 326 272 326 326 137 37 174 0.641 324 2 326 1$ 7$ 10$ 44$ 28$ 89$ 0.328$ 85$ 0.313$ 10 2021 5.20 328 273 328 328 143 38 181 0.663 326 2 328 1$ 7$ 10$ 43$ 28$ 89$ 0.327$ 92$ 0.337$ 11 2022 5.39 329 275 329 329 149 40 189 0.687 327 2 329 1$ 7$ 10$ 42$ 29$ 89$ 0.325$ 100$ 0.362$ 12 2023 5.59 331 276 331 331 156 41 196 0.711 329 2 331 1$ 8$ 10$ 41$ 30$ 89$ 0.323$ 107$ 0.388$ 13 2024 5.80 333 278 333 333 162 42 204 0.736 330 2 333 1$ 8$ 10$ 40$ 31$ 89$ 0.322$ 115$ 0.414$ 14 2025 6.02 334 279 334 334 169 44 213 0.763 332 2 334 1$ 8$ 10$ 39$ 32$ 89$ 0.321$ 123$ 0.442$ 15 2026 6.25 336 280 336 336 176 45 221 0.790 333 3 336 1$ 8$ 10$ 38$ 33$ 90$ 0.320$ 132$ 0.470$ 16 2027 6.48 338 282 338 338 184 46 230 0.818 335 3 338 1$ 8$ 10$ 37$ 33$ 90$ 0.319$ 141$ 0.499$ 17 2028 6.72 339 283 339 339 192 48 240 0.847 337 3 339 2$ 9$ 10$ 36$ 34$ 90$ 0.318$ 150$ 0.529$ 18 2029 6.98 341 285 341 341 200 50 249 0.877 338 3 341 2$ 9$ 10$ 35$ 35$ 90$ 0.317$ 159$ 0.560$ 19 2030 7.24 343 286 343 343 208 51 260 0.908 340 3 343 2$ 9$ 10$ 34$ 36$ 90$ 0.316$ 169$ 0.591$ 20 2031 7.51 344 287 344 344 217 53 270 0.940 341 3 344 2$ 9$ 10$ 33$ 37$ 91$ 0.316$ 179$ 0.624$ 21 2032 7.79 346 289 346 346 227 55 281 0.973 343 3 346 2$ 10$ 10$ 31$ 38$ 91$ 0.316$ 190$ 0.658$ 22 2033 8.08 348 290 348 348 236 56 293 1.008 345 3 348 2$ 10$ 10$ 30$ 39$ 92$ 0.315$ 201$ 0.693$ 23 2034 8.39 350 292 350 350 246 58 305 1.044 346 3 350 2$ 10$ 10$ 29$ 40$ 92$ 0.315$ 213$ 0.729$ 24 2035 8.70 351 293 351 351 257 60 317 1.081 348 3 351 2$ 10$ 10$ 28$ 42$ 93$ 0.316$ 224$ 0.766$ 25 2036 9.03 353 295 353 353 268 62 330 1.120 350 3 353 3$ 11$ 10$ 27$ 43$ 93$ 0.316$ 237$ 0.804$ 26 2037 9.37 355 296 355 355 279 64 343 1.159 351 3 355 3$ 11$ 10$ 26$ 44$ 94$ 0.316$ 250$ 0.843$ 27 2038 9.72 357 298 357 357 291 66 357 1.201 353 4 357 3$ 11$ 10$ 25$ 45$ 94$ 0.317$ 263$ 0.884$ 28 2039 10.08 358 299 358 358 304 68 372 1.244 355 4 358 3$ 12$ 10$ 24$ 46$ 95$ 0.317$ 277$ 0.926$ 29 2040 10.46 360 301 360 360 317 71 387 1.288 357 4 360 3$ 12$ 10$ 23$ 48$ 96$ 0.318$ 291$ 0.970$ 30 2041 10.85 362 302 362 362 330 73 403 1.334 358 4 362 4$ 12$ 10$ 22$ 49$ 97$ 0.319$ 307$ 1.014$ 31 2042 11.26 364 304 364 364 344 75 419 1.382 360 4 364 4$ 13$ 10$ 21$ 50$ 97$ 0.321$ 322$ 1.061$ 32 2043 11.68 366 305 366 366 359 78 437 1.431 362 4 366 4$ 13$ 10$ 20$ 52$ 98$ 0.322$ 338$ 1.109$ 33 2044 12.12 368 307 368 368 374 80 454 1.482 363 4 368 4$ 13$ 10$ 19$ 53$ 99$ 0.324$ 355$ 1.158$ 34 2045 12.57 369 308 369 369 390 83 473 1.535 365 4 369 4$ 14$ 10$ 18$ 55$ 100$ 0.325$ 373$ 1.210$ 35 2046 13.04 371 310 371 371 407 86 492 1.590 367 4 371 5$ 14$ 10$ 17$ 56$ 101$ 0.327$ 391$ 1.263$ 36 2047 13.53 373 311 373 373 424 88 513 1.647 369 4 373 5$ 14$ 10$ 16$ 58$ 103$ 0.329$ 410$ 1.317$ 37 2048 14.04 375 313 375 375 442 91 534 1.706 370 4 375 5$ 15$ 10$ 15$ 59$ 104$ 0.332$ 430$ 1.374$ 38 2049 14.57 377 314 377 377 461 94 555 1.767 372 5 377 6$ 15$ 10$ 14$ 61$ 105$ 0.334$ 450$ 1.433$ 39 2050 15.11 379 316 379 379 481 97 578 1.830 374 5 379 6$ 16$ 10$ 13$ 62$ 106$ 0.337$ 472$ 1.493$ 40 2051 15.68 381 318 381 381 501 100 602 1.895 376 5 381 6$ 16$ 10$ 12$ 64$ 108$ 0.340$ 494$ 1.556$ 41 2052 16.27 382 319 382 382 523 104 627 1.963 378 5 382 7$ 16$ 10$ 10$ 66$ 109$ 0.343$ 517$ 1.621$ 42 2053 16.88 384 321 384 384 545 107 652 2.034 379 5 384 7$ 17$ 10$ 9$ 68$ 111$ 0.346$ 541$ 1.688$ 43 2054 17.51 386 322 386 386 568 111 679 2.107 381 5 386 7$ 17$ 10$ 8$ 70$ 113$ 0.350$ 566$ 1.757$ 44 2055 18.17 388 324 388 388 593 114 707 2.182 383 5 388 8$ 18$ 10$ 7$ 72$ 114$ 0.353$ 593$ 1.829$ 45 2056 18.85 390 326 390 390 618 118 736 2.260 385 5 390 8$ 18$ 10$ 6$ 74$ 116$ 0.357$ 620$ 1.903$ 46 2057 19.56 392 327 392 392 644 122 766 2.342 387 5 392 9$ 19$ 10$ 5$ 76$ 118$ 0.361$ 648$ 1.980$ 47 2058 20.29 394 329 394 394 672 126 798 2.426 389 5 394 9$ 19$ 10$ 4$ 78$ 120$ 0.366$ 677$ 2.060$ 48 2059 21.05 396 331 396 396 701 130 831 2.513 391 6 396 10$ 20$ 10$ 3$ 80$ 122$ 0.371$ 708$ 2.142$ 49 2060 21.84 398 332 398 398 731 134 865 2.603 392 6 398 10$ 20$ 10$ 2$ 82$ 125$ 0.375$ 740$ 2.228$ 50 2061 22.66 400 334 400 400 762 138 900 2.697 394 6 400 11$ 21$ 10$ 1$ 84$ 127$ 0.381$ 773$ 2.316$ 19,291 16,305 18,341 950.31184 19291.23714,877$ 48.01$ General Neck LakePower RequirementsLoad HydroYCYearLoad Growth CostsGenerationDieselFuelCost($/gal)Year0.5%Without Neck LakeGenerationCostsDieselWith Neck LakeRate ChangeNeck LakeAP&T TotalAP&T SavingsPage 1 of 1 GRANT BUDGET FORM Alaska Energy Authority ‐ Renewable Energy FundBUDGET SUMMARY: NECK LAKE HYDROELECTRIC PROJECTMilestone or TaskFederal FundsState Funds (Proposed AEA Grant) AP&T FundsOther FundsTOTALSPhase 1 ‐ ReconnaissanceSite reconnaissance $3,500$3,500Phase 2 ‐ FeasibilityTopographic mapping$14,000 $6,000 $20,000Conceptual design$14,000 $3,500 $17,500Geotechnical investigations$20,000 $5,000 $25,000Environmental surveys $34,000 $8,000$42,000Phase 3 ‐ Design and PermittingPermit applications and processing $26,000 $7,000$33,000Final design $64,000 $16,000$80,000Phase 4 ‐ ConstructionConstruction management $66,000 $16,000 $82,000Mobilization $108,000 $27,000 $135,000Access road $44,000 $10,000 $54,000Diversion structure $427,000 $106,000 $533,000Penstock $184,000 $45,000 $229,000Powerhouse $555,000 $139,000 $694,000Tailrace $105,000 $24,000 $129,000Transmission facilities $291,000 $72,000 $363,000Total $0 $1,952,000 $488,000 $0 $2,440,000BUDGET INFORMATIONRFA AEA09-004 Budget Form Renewable Energy Fund RFA AEA09-004 Grant Budget Instructions Page 1 of 4 Grant Budget Instructions Information concerning the proposed budget needs to be provided on the attached form. The Budget Summary (upper portion of the form) is to provide information on the funding for the entire project by tasks. The applicant is to provide amounts and identify the source of all funds that will be used to complete this project. The tasks should represent major units of work that will need to be completed on the project. At a minimum they should represent the phases discussed in the application (Reconnaissance, Feasibility, Design and Permitting, or Construction). Tasks may also represent subtasks under a specific phase. For example, under Conceptual Design phase, a separate permitting task could be noted. The Budget Categories (lower portion of the form) is to provide specific budget information for the grant funds being applied for. Budget information for the other funds to be used to complete the project need only be provided if that additional information is currently available. Allowable costs for a grant include all reasonable and ordinary costs for direct labor and benefits, travel, equipment, supplies, contractual services, construction services, and other direct costs identified that are necessary for and incurred as a direct result of the project. A cost is reasonable and ordinary if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. 1. Allowable Cost Allowable costs are only those costs that are directly related to those activities necessary for the completion of the proposed project. The categories of costs and additional limits or restrictions are listed below: a. Direct Labor and Benefits Include salaries, wages, and employee benefits of the Applicant’s employees for that portion of those costs that will be attributable to the time actually devoted by each employee to, and necessary for the project. Direct labor costs do not include bonuses, stock options, other payments above base compensation and employee benefits, severance payments or other termination allowances paid to the Applicant’s employees. b. Travel, Meals, or Per Diem Include reasonable travel expenses necessary for the Project. These include necessary transportation and meal expenses or per diem of Applicant employees for which expenses the employees are reimbursed under the Applicant’s standard written operating practice for travel and per diem; or, the current State of Alaska Administrative Manual for employee travel. c. Equipment Include costs of acquiring, transporting, leasing, installing, operating, and maintaining equipment necessary for the Project, including sales and use taxes. Subject to prior approval of the Authority’s Project Manager, costs or expenses necessary to repair or replace equipment damage or losses incurred in performance of work under a grant may be allowed. However, damage or losses that result from the Applicant’s Renewable Energy Fund RFA AEA09-004 Grant Budget Instructions Page 2 of 4 employees, officer’s, or contractor’s gross negligence, willful misconduct, or criminal conduct will not be allowed. d. Supplies Include costs of material, office expenses, communications, computers, and supplies purchased or leased by the Applicant necessary for the project. e. Contractual Services Include the Applicant’s cost of contract services necessary for the Project. Services may include costs of contract feasibility studies, project management services, engineering and design, environmental studies, field studies, and surveys for the project as well as costs incurred to comply with ecological, environmental, and health and safety laws. f. Construction Services For construction projects this includes the Applicant’s cost for construction contracts, labor, equipment, materials, insurance, bonding, and transportation necessary for the project. Work performed by the Applicant’s employees during construction may be budgeted under direct labor and benefits, project management or engineering. Major equipment purchases made by the Applicant may be budgeted under equipment. g. Other Direct Costs In addition to the above the following expenses necessary for the project may be allowed. Net insurance premiums paid for insurance required for the grant project; Costs of permits and licenses for the grant project; Non-litigation legal costs for the project directly relating to the activities (in this paragraph, “non-litigation legal costs” includes expenses for the Applicant’s legal staff and outside legal counsel performing non-litigation legal services); Office lease/rental payments; Other direct costs for the project directly relating to the activities and identified in the grant documents; and/or Land or other real property or reasonable and ordinary costs related to interests in land including easements, right-of-ways, or other defined interests. The Applicant is reminded to include sufficient funds for the management of the project, as the Authority may terminate the grant or assume the project management responsibilities if it is determined by the Authority that the Applicant is not providing adequate project management on its own. 2. Specific Expenditures Not Allowed Ineligible expenditures include costs for overhead, lobbying, entertainment, alcohol, litigation, payments for civil or criminal restitution, judgments, interest on judgments, penalties, fines, costs not necessary for and directly related to the grant project, or any costs incurred before the beginning date of the grant. This is not intended to be a complete list of all ineligible expenditures. Overhead costs described in this section include: salaries, wages, applicable employee benefits, and business-related expenses of the Applicant’s employees performing functions not directly related to the grant project; Renewable Energy Fund RFA AEA09-004 Grant Budget Instructions Page 3 of 4 office and other expenses not directly related to the grant project; and costs and expenses of administration, accounting, human resources, training, property and income taxes, entertainment, self-insurance, and warehousing. 3. Match and Cost Sharing If the Applicant is providing a match, it is should be detailed either as a specific dollar amount or as a percentage of the total project budget. The type and amount of matching contributions should be discussed in the application under section two. Cost sharing or matching is that portion of the Project costs not borne by the Authority. The Authority will accept all contributions, including cash and in-kind, as part of the Applicants’ cost sharing or matching when such contributions meet the following criteria: Are provided for in the Project budget; Are verifiable from the Applicant’s records; Third party costing sharing contributions are verifiable (with a letter of intent or similar document); Are not included as contributions for another state or federally assisted project or program (i.e., the same funds cannot be counted as match for more than one program); Are necessary and reasonable for proper and efficient accomplishment of the Project or program objectives; Are allowable costs; Are not paid by the State or federal government under another award, except for authorized by the State or federal statute to be used for cost sharing or matching; Must be incurred within the grant eligible time period. Any match proposed with the application will be required in the Grant award and the Grantee will be required to document the use of the proposed matching funds or in-kind contributions with their request for reimbursement. 4. Valuing In-Kind Support as Match If the Applicant chooses to use in-kind support as some; or, its entire match, the values of those contributions will be reviewed by the Authority at the time the budget is approved. The values will be determined as follows: The value of real property will be the current fair market value as determined by an independent third party or a valuation that is mutually agreed to by the Authority and the Applicant and approved in the grant budget. The value assessed to Applicant equipment or supplies will not exceed the fair market value of the equipment or supplies at the time the grant is approved or amended. Equipment usage will be valued based on approved usage rates that are determined in accordance with the usual accounting policies of the recipient or the rates for equipment that would be charged if procured through a competitive process. Rates paid will not exceed the fair market value of the equipment if purchased. Renewable Energy Fund RFA AEA09-004 Grant Budget Instructions Page 4 of 4 Rates for donated personal services will be based on rates paid for similar work and skill level in the recipient’s organization. If the required skills are not found in the recipient organization, rates will be based on rates paid for similar work in the labor market. Fringe benefits that are reasonable, allowable, and allocable may be included in the valuation. Transportation and lodging provided by the Applicant for non-local labor will not exceed the commercial rates that may be available within the community or region. 5. Grant Disbursements Applicants are reminded that they must request disbursement of grant funds in the form and format required by the Authority with appropriate back-up documentation and certifications. This format will be provided by the Authority. The back-up documentation must demonstrate the total costs incurred are allowable, and reflect the amount being billed. Documentation must include: A summary of direct labor costs Travel and per diem reimbursement documentation Contractor or vendor pay requests Invoices Timesheets or check copies to document proof of payment must be available for audit purposes at the Applicants place of business. Payment of grant funds will be subject to the Applicant complying with its matching contribution requirements of the proposed grant.