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
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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
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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
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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.