Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
Kake-Petersburg Intertie 3
Permitting Requirements and Environmental Issues Overview Environmental and Permitting Issues in Common Along all alternative routes there would be the following resource issues and permitting requirements: Stream crossings — Anadromous streams crossed would require a permit from DNR--OHMP. The utility pole placement is expected to avoid streams but the maintenance roadway would likely be culverted or bridged. These roads and their associated culverts and drainages would be required to be placed and constructed per the TLMP transportation prescriptions. Avoidance of stream crossings where possible and minimization of impacts would be expected as part of the NEPA process. For those unavoidable locations, some sort of mitigation is generally required. Upgrading existing failing culverts, drainages, and other stream structures that would occur during project implementation could be counted as mitigation. Eagle nests — Eagles and their nests are under the protection of the US Fish and Wildlife service. Nest trees may not be removed and if construction would occur within a certain distance of a nest tree, construction windows may be applied as a permit condition or observers could be required during construction. Wrangell Narrows crossing - The Northern Route would cross the Narrows at its mouth while the Center -South and Center -North routes would cross near the old experimental fur farm south of Petersburg. The Wrangell Narrows is a major shipping channel for Alaska Marine Highways, cruise ships, and freight haulers. Some coordination with these entities would be expected during construction. National Environmental Policy Act Process Figure 3-1 diagrams the National Environmental Policy Act (NEPA) process as implemented by the U.S. Department of Agriculture/U.S. Forest Service (Forest Service Handbook, 1909.15, page 13 of 15; Approved: June 29, 2004). Kake - Petersburg Intertie Study 3-4 Final Report Permitting Requirements and Environmental Issues Overview FIGURE 3.1 NEPA Process Overview Proposed Action EIS Required May Fit in a Category (Chapter 20) for Exclusion Notice of Intent Does Not Fit USDA or Forest Fits USDA Forest Service Service Category or There Are Category and There AreNno +I Extraordinary Circumstances Extraordinary Circumstances Sco(Chapter 30) (Chapter 30) ping +II 1 Scoping and Environmental Environmental Analysis Analysis / Draft EIS Significant.Elffeots Need for EIS May Occur Uncertain Categorically Final EIS +f Excluded Environmental jAssessment Record of Decision (Chapter 40) (Chapter 20) Finding of No Significant Decision Memo Impact & Decision Notice If Required /(Chapter 40) (Cha ter 30) of Implementation Monitoring Under NEPA, if a project is not allowable under a categorical exclusion and there is uncertainty regarding the potential impacts, the project proponent can conduct an Environmental Assessment (EA). In some cases, if a corridor is a designated utility corridor, an EA could be considered adequate to verify that a proposed transmission line project is compatible with that designation. Kake - Petersburg Intertie Study 3-5 Final Report Permitting Requirements and Environmental Issues Overview However, under the current NEPA implementation protocols of the U.S. Forest Service, the EA and Environmental Impact Statement (EIS) processes are becoming more similar and the threshold for what could be significant is dropping70. The U.S. Forest Service recommends that a proponent expect their project be analyzed under the EIS process, thus removing the uncertainty of the overall process. A summary of agency requirements and associated costs is provided in Table 3-3. The estimated costs of technical analyses in support of the NEPA and permitting process are provided in Table 3-4. A summary of the estimated cost for the NEPA documentation process is provided in Table 3-5. 10 Personal communication D. Rogers, U.S. Forest Service with J. Gendron, CH2M Hill; July 20, 2005. Kake - Petersburg Intertie Study 3-6 Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-1 (Page 1 of 3) Comparable Land Use Designations and Affected Resources by Line Segment Resource K-S5 S"4 S4S3 S3-P2 P2-S2 S2S1 S1S S3-T5 Air Yes Yes Yes Yes Yes Yes Yes Yes Frederick Beach & Estuary Sound crossing Facilities Yes Yes Yes Yes Yes No No Yes Fire Yes Yes Yes Yes Yes No No Yes Fish Yes Yes Yes Yes Yes Yes 1 Yes Yes anadromous (#of stream crossings) 2 4 g q 12 0 3 12 resident (# of stream crossings) 7 7 10 6 29 0 3 17 Habitat area of concern Cathedral identified by ADF&G Falls Forest Health Yes Yes Yes Yes I Yes No No Yes Heritage Resources Yes No No No Yes No Yes Yes Lands NNF, TM, ML TM TM, ML TM NA NNF T OG, SM G� Mineral Minerals and Geology' Feature Type: Precious Recreation and Tourism Yes Yes Yes Yes Yes Yes I Yes Yes Riparian Yes Yes Yes Yes Yes No Yes Yes Rural Community Assistance Yes Yes Yes Yes Yes Yes Yes Yes Scenery Scenic Viewshed Soil and Water Yes Yes Yes Yes Yes Yes Yes Yes Subsistence Yes Yes Yes Yes Yes Yes Yes Yes Threatened and Endangered Species (and other protected Possible species) Eagles Yes Yes Yes Timber Yes Yes Yes Yes Yes No No Yes Trails Yes Yes Yes Yes Yes No Yes Yes Transportation Existing Existing Existing roads/ Eziads Existing roads/ Marine Roadless Roadless roads roads Roadless roads Roadless Highway Wetlands Yes Yes Yes Yes Yes No Yes Yes Portage Wildlife/Habitat area of concern gay Protewy identified by ADF&G Waterfowl Point Habitat Land Use Codes NNF = Non -National Forest TM = Timber Production ML = Modred Landscape SV = Scenic Veiwshed OG = Old Growth Habitat SM = Semi -Remote Recreation W W = Wilderness Kake - Petersburg Intertie Study 3-7 Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-1 (Page 2 of 3) Comparable Land Use Designations and Affected Resources by Line Segment kZ Resource T5-T4 T4-T3 T3-T2 T2-T1 TI-T T-S S5-T11 Air Yes Yes Yes Yes Yes Yes Yes Beach & Estuary Wrangell Narrows crossing Facilities Yes Yes Yes No Yes No Yes Fire Yes Yes Yes No Yes Yes Yes Fish Yes Yes Yes Yes Yes Yes Yes anadromous (#of stream crossings) z 5 0 0 0 2 3 resident (# of stream crossings) q 6 0 0 0 7 9 Habitat area of concern identified by ADF&G Cathedral Falls, Hamilton Creek, Big John Creek Forest Health Yes Yes Yes No Yes No Yes Heritage Resources No No Yes No No Yes No Lands ML, TM ML, TM, SV SM NA ML, TM NNF TM, OG, SV Minerals and Geology' Recreation and Tourism Yes Yes Yes Yes Yes Yes Yes Riparian Yes Yes Yes Yes Yes Yes Yes Rural Community Assistance Yes Yes Yes Yes Yes Yes Yes Scenery Scene Scenic Viewshed Scenic Viewshed Soil and Water Yes Yes Yes Yes Yes Yes Yes Subsistence Yes Yes Yes Yes Yes Yes Yes Threatened and Endangered Species (and other protected species) Eagles Yes Yes Timber Yes Yes Yes No Yes Yes Yes Trails Yes Yes Yes No Yes No Yes Transportation Existing roads/ Roadless Existing roads Existing roads Marine Highway Roadless Roadless (existing intertie) Existing roads Wetlands Yes Yes Yes No Yes Yes Yes Wildilfe/Habitat area of concern identified by ADF&G Land Use Codes NNF = Non -National Forest TM = Timber Production ML = Modified Landscape SV = Scenic VeWshed OG = Old Growth Habitat SM = Semi -Remote Recreation W W = Wilderness Kake - Petersburg Intertie Study 3-8 Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-1 (Page 3 of 3) Comparable Land Use Designations and Affected Resources by Line Segment Resource T11-T8 T8-T7 T7-T6 T6-T4 T3-T12 T12-T13 T13-W4 W4-W3 Air Yes Yes Yes Yes Yes Yes Yes Yes Duncan Beach & Estuary Canal crossing Facilities Yes Yes No Yes Yes No Yes Yes Fire Yes Yes Yes Yes Yes Yes Yes Yes Fish Yes Yes Yes Yes Yes Yes Yes Yes anadromous (#of stream crossings) 3 16 0 1 10 0 1 1 resident (# of stream crossings) T 78 0 2 13 0 2 3 Habitat area of concern identified by ADF&G Forest Health Yes Yes No Yes Yes No Yes Yes Heritage Resources No No No Yes No No Yes No Lends TM TM, OG, NA ML, TM ML, SV, NA SV SV, ML SM OG, NNF Minerals and Geology Mineral Feature Type: Polymetallic Recreation and Tourism Yes Yes Yes Yes Yes Yes Yes Yes Riparian Yes Yes Yes Yes Yes Yes Yes Yes Rural Community Assistance Yes Yes Yes Yes Yes Yes Yes Yes Scenery Scenic Scenic Scenic Viewshed Viewshed Viewshed Soil and Water Yes Yes Yes Yes Yes Yes Yes Yes Subsistence Yes Yes Yes Yes Yes Yes Yes Yes Threatened and Endangered Species (and other protected species) Eagles Yes Yes Timber Yes Yes No Yes Yes No Yes Yes Trails Yes Yes No Yes Yes No Yes Yes Epsting EAsting Transportation roads/ Roadless Roadless roads/ Roadless Roadless Roadless Roadless Roadless Wetlands Yes Yes Yes Yes Yes Yes No Yes Duncan Wildlife/Habitat area of concern Canal Salt identified by ADF&G Chuck Waterfowl Habitat Land Use Codes NNF = Non -National Forest TM = Timber Production ML = Modified Landscape SV = Scenic Veiwshed OG = Old Growth Habitat SM = Semi -Remote Recreation W W = Wilderness Kake - Petersburg Intertie Study 3-9 Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-2 (Page 1 of 3) Land Use Issues Segment to Designation/Resources Northern Center- North Center- South Woewodskl Tap T-S Non -national Forest Service Land. A combination of X private, Mental Health Trust, and Slate land ownership. Fish (# of crossings): Anadromous = 2 Resident = 7 Heritage Resources = Yes Eagle nests = Yes Non -national Forest Service Land. A combination of S-St private, Mental Health Trust, and State land ownership. In X the vicinity of the Sandy Beach public recreation area and would cross the City Creek Open Space. Fish (# of crossings): Anadromous = 3' Resident = 3 Heritage Resources = Yes Under water cable across mouth of Wrangell Narrows. S1-S2 DNR designated Unit PT-36; Habitat, harvesting, and i shoreline uses. Productive marine and avian resource area. Important wildlife viewing area. Essential fish habitat (EFH) analysis and Biological Assessment (BA) needed, marine mammals present including whales. Tongass National Forest; approximalely 124 acres of S2-S3 timber production, approximately 20 acres of old growth x habitat, semi-remole recreation, and scenic viewshed; some existing roads but roadless along Frederick Sound. Fish (# of crossings): Anadromous = 12• Resident = 29 Heritage Resources = Yes Eagle nests = Yes S3-S4 Approximately 75 acres timber production. X Fish (# of crossings): Anadromous = 8` Resident = 10 Heritage Resources = No Kake - Petersburg Intertie Study 3-10 Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-2 (Page 2 of 3) Land Use Issues Segment ID Designation/Resources Northern Center- Center- Woewodski North South Tap S4-S5 Approximately 116 acres timber production. X X Fish (# of crossings). Anadromous = 4 Resident = 7 Heritage Resources = No Land ownership includes USFS, Native lands, and a section of State select lands (DNR Unit U-05). The stale S5-K land is the Headwaters of Little Gunnuk Creek & Gunnuk X X X Creek, a portion of the municipal watershed. The route alignment is primarily to the south of the main portion of the headwaters along existing USFS logging roads. No old growth forest, approximately 42 acres of limber production. Fish (# of crossings): Anadromous = 2 Resident = 7 Heritage Resources = Yes Eagle nests = Yes T-T1 Non -national Forest Service Land —private owners and Mental Trust Lands. X X Tt-T2 Under water cable —not Tongass X X Essential fish habitat assessment needed for cable crossings. Potential biological assessment needed for Wrangell Narrows. T2-T3 USFS Log Transfer facility within the vicinity of potential alignment X X Fish (# of crossings): Anadromous = 0 Resident = 0 Heritage Resources = Yes Eagle nests = Yes T3-T4 Land use includes modified landscape and approximately 66 acres of timber production, X X Fish (# of crossings): Anadromous = 5 Resident= 6 Heritage Resources = No T4-T6 Land use includes modified landscape and approximately 5 acres of timber production. X Fish (# of crossings): Anadromous = 1 Resident = 2 Heritage Resources = Yes T6-T7 Under water cable —not Tongass X T7-T8 Land use includes semi -remote recreation and approximately 13 acres of timber production. X Fish (# of crossings): Anadromous = 16 Resident = 18 Heritage Resources = No Kake - Petersburg Intertie Study 3-11 Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-2 (Page 3 of 3) Land Use Issues SegmentlD Designation/Resources Northern Center- Center- Woewodskl North South Tap Land use includes semi -remote recreation, approximately T8-T11 15 acres of old growth forest and approximately 65 acres ol X timber production. Fish (# of crossings): Anadromous = 3 Resident = 7 Heritage Resources = no Land use includes scenic viewshed, approximately 4 acres T11-S5 of old growth forest and approximately 36 acres of timber X production. Fish (# of crossings): Anadromous = 3 Resident = 9 Heritage Resources = No T4-T5 Land use includes modified landscape and approximately 7 X acres of timber production. Fish (# of crossings): Anadromous = 2 Resident = 4 Heritage Resources = No Land use includes wilderness area, approximately 13 acres T5-S3 of old growth forest and approximately 8 acres of timber X production. Fish (# of crossings): Anadromous = 12' Resident = 17 Heritage Resources = Yes T3-T12 Land use includes scenic viewshed, modified landscape X and approximately 36 acres of old growth forest. Fish (# of crossings): Anadromous = 11' Resident = 3 Heritage Resources = No T12-T13 Under water cable of Tongass X Essential fish habitat assessment needed for cable crossings. T13-W4 Land use includes scenic viewshed. X Fish (# of crossings): Anadromous = 1' Resident = 1 Heritage Resources = No W4-W3 Land use includes scenic viewshed and modified landscape.. X Fish (# of crossings): Anadromous = 1' Resident = 2 Heritage Resources = No Kake - Petersburg Intertie Study 3-12 Final Report 42 0 U a m Y m U O N V 0a O C m cn r m c M a E m M M W a° J � QI >1 H C N m Q 0 E E y 0'3? m m a, m N N 8 Sr, m 2 n N W C C C m N mcC 0'6 E� m�m C~ NaLL0E C3 .0 'rU)=Tm-ON m 7E�`�cEEO myo �m0 L'o cEE 0�w'w=oaE-0O vLL'3M-w mN Qcam NTi Z O mO C .O_° 3c a $ E W E cm .a ¢ ° onac my° ma c ° w o 3Zr._ N N mvi m0N .. zc cm oN0N..Co - m-o d > � 0 c 0 wW �`�oa)CE O`15Q O'D i' 3 E 'p w r�oo, mom ccnt Ev«`S "'EEW aNa aZ u �mE u° of aaiaoccw m 10mcf0'mo cd'o, o.c 0 `o l6 pi c� wmammNE> E `o p 3a m E ALL va'a m - omcdNogi mom rn ` �'> Npt N of y mU) E€�QNE m` a7 tiQQv a c c m W .m. ._ at L'Z't a M LL Q a c)mE E `p T`- m M N C Q` C C Q N M DL.O i-c�3'Hmv O n C mw LCU =S m u>' U2 a m f/1 IL m W m N a N O L N NN G ° m C OI m 0 T m c t 0 3 u m Z Z Np.a Hm� m - c m > .��0 -Z my E m as- «_tea E 3 5 m m a �w U)> m 3E- `o n c m c Y L3 C C> y 4+ C Z N V y C N m m m 0 0° c a< iN} Q E az m % 0 3 .al 3 3 0 c° t Eu Oo. :; Emo °, "' m $ �' 2 T m °c Z O Lf O C c 0 oo o t 0 ' C a s 3 gyp° a d « N J= U "' n C E c c m ..°. r4- w o-�a S Zct E w E _ c N `m Z O CE Lmq LLLLLL a 0 N.°c .2` € CL o' i ii c 0 `j3j `m m 0 < d 0 0 a a z a c m u e ton° 0 �m n Kw f n �z�E > N c J aE ao L m M a s 76 a c m o g = o E o c O Q F m U m N N W N N c m U N O N N W m 4 g O C O LL e Q cm O N a U r V f0 d W d Q LL Q LL > > J L M M o v 'o r `a m ¢d_ E E 3 o C d w d m c o+Y :a o Z> m •Em a rn0c mm m •c d c¢° mO. Q _ oZo2 °EEC ` -0 a o c cao 02 o0 . my o° `8 Oom aE aoc o °• m o a E Ecc c +mod+ 00 ¢3.0m m, €cmv y ° mo o" d mad= II E 3 m V 0 = E mo. a, 0 an d p cE H�va€ ��' € '�' •Oa�`O 3 m ac mc2imna8 � $ Ica$ d � wd IQ N a 0 ' cn r Noo U E 2 � WLmyEa c =M c Q 00 cmda 0'c 0 O O o c w O pmc c UE ¢=Emm UE U z UII m u0i U w¢ ° d C d O II N H Y E m Y Lc O t C D O ¢ > U m 0 d 2 d O G C L N m N . ON>p A •° m y C spa o 9 d E 9 d .? m ooc U d 0 d d M 3 N O C U E d c 0 m e LL 10 co II 0 ¢ y LU -per L ++ CC y� d U d W m ui m 0 m m E . c o d c r w �•' U c d a a m in o O c L> m Q 2 8 `m c E p 7 m �: L" a U N d v (n OM c'G d a)LYJ rnN N A °_� d II d= m HV 'C C t 0Q c K ¢ f U F- .t.� U W m W c4 w c O �dj u Cd1 m CI S c p U) d x m W ¢ € m ,s 0 o 4Ni 20 5 a 0 -O 0 .Vi N d y 'Q m = S c Y o, m 0 c R o `m o Q m or c W z O d d E d d d i; a c W U +; o r c N N O ui Oi m o.a a Q LL 7 z >> N a`o 03`0 0 0 d m C LL M N o E L O DUC`° mSg qCCEO 'E O Ag NCml>0 �am > O NC LLCfycJ DO00) Em3"0 C T O O D C N y t 3 Q c p0ca N O m E`a0caE •c o Omm%urn D a ow m -m o NZ C Op' C= w 0 L1 0 E Cy O ONELm m� y m N ❑ U m a T? C T c mrvm •'' EN 01N3 E of FL00 J N mc'oi M N y O <°�'�c N O ci 0 J N N O N C O m Q m �. m O `O C m m !Y m C O U m N N 0$yNErn�.�y" yam$`o 0 21 N Q € ccEcoi�aQ C U$umi m 3 a O c O Q 0 NLL m O N m ~ N o O a E O y G y m c U C O w N Q D V r pNj C C m V C _ O ' Q � N O fl. N d cc O IL Q. C a O i= a 0- U cn m u _ Y C 0 Oa a m d 0a m Cc •� o D K m E f7 o o E a�i rn Q m m S. m 0 of m m w e w o ~ a o OI W a2 6 ay Q Om O OLL y r 0 w m C W N M D n m C m G rn a 0 E2 d m L o) C Q c E o d o? 00 i p O O C O O C U3 E 0 3 z E gi o€ > av p o.v 0 m m= m m= 3 0._ m 0 o'2 m o c y p _o c 5 m p ad+ �m N �n'$t aoa£ ., om oL m_dh nc c � zE �doNN � �C kc_m mEE C y��� 0 y C O_5 O ow C C T '0 C A0.� C OEM N> N N~ N pO Oj 020 ~i6 V C C O C_ O U E$ ti N E t U pCj N U !� °' p m E ?'� E'U Y i� O CN..N NOy p O 0 t C L D p p .0 p Z Z Z Apo= HC- d O C _ tp (Op _C ip top N 0 0 .E N C O N O N N10 S Na .E .E > nQ ^ E .cQ- p E •cp p I m p 2 C M o. ,= �0. Q 3 a a Y e C C 00 m p N a MO N N U C C lC0 2 C 'G O p C p N N p= O N p a O Q NE NE mm y-muU`-' Q « C C C C 'SC N C O C l0 N O C N L p 3 M N M N p W O :C p OC � 0. (p = w =a ="o�y s"o� o �;rn�a c�-00 N C O C O p Y 6 C p C m Y N m m C m d & o O N a Y Y U .V U y c m cc E F c C d ` y p ,y N cc C > Y N a > d Y c w E a o c > > d Ems! O (� E c t a U > Q J M co (D LL Y Y L 3 O C y uJ 0 yo U y0 y f9 N C N l) C69 C O O N LO N Y N II m L C Y N U V fA V f9 V O.T C tm h wN V m y a Y LL m m� m O C L oac A 61�N 69 C%j w a1 y LO m 64 Uit v vv` 0', crn .T 64 v ° �v m m i` o U � c L m a)Y MC) C N N z N .Y- N II C = II Y O v F9 v fA v •L m N C y 'm N to 3- c m 4 m U v m mm OII m LL c n. Q o �_ = a a.w y^yam v3mm° c ao Z U C O S M N mL C "O a C R) m p_ CL a •0N— m y 3L m. c m;? ° � Ev m m. .� V m NO_ L c m O� N- 3 a) ,d N d 0O�w OL'E m m may.. U U m N C DLL M= C- J d w M N E '-' y 0 0 z yp �D�WLL Q Q Bi Uvoio=� ma) m a° E 3�y0d w w IS m 0.0000 'a3 Q ro rnv +mc z z mM.v-0E u2 a; z Q 5 Jo' c �im J cm c c 'N m Jmmm •�f cO� yJ 2m m =O c m m o3 y ma N ({pp O. N L3 Mn U •C O O O. E O >. T C m*0 C U W C Ll, T �'j G O L c« d d m m la m 3 Q J S m m "O O « C m °- m fO H d m m F c m�>.wN 'C 'C E L N� 6 m =rn NNQ 'C O L C C? O L L L ,C�y$ �= m m 0 0 m:E N d 0. O U U8mo0 to cn coHEEoa LLE wy`o ai u m �e m� w Q C1 W li li ll tL 2 v n y la C LL )} k( ƒ\ k2 ul rl k0 v a� } « « k u 2 k! 0 ) 20 $ A _ § « LO r 0 q k tm k 0 c t c) 3 2 ) s ƒ {] % %/ \j/a ` i§ { 7( » \ �Ew -£m 0. ■0.a /ko} §j>f ■) % - _ - .9 #| =ir0 77\2 t©/( 7 ,! -}cE M/® ƒ}"\ k �§{ k) = f » )Q0 §f 00 !2 \S)/ > § -ƒf{ 220*a 9({) 6 - 2 \EE {e ) k/)) 2_ \ § w2(_ ��\av/ §§; / o) �� }0d0) E mo) �- d) k /§k§ / 2 20 f= 2 r02=i « R r LU«�) 7k� \)\)L \ ® `K f§ ° \) a kf k/ - |a r / })) ) jk k 7 R« « \ � LO & � _ � m ! u ) § f7a J a \ r ILO 0 k u §a « J & \ N LO 2 J �z i. ); 0 §){a �\ / 0 0 � ,|/ //± O§ §|-��` -0k| k/ D }k| _7 #0) o02a ©- o <{{k■ _ `fJ£ \k( 46}(0 §£0f) # 0 � ) `)$ kk ƒ(D §'C-Ia}J 3� �ƒA f\'Fa +k)22@� / & OL. � {m\/ §o { �/ >«CL f#kk ; ƒ© {km }/ ) ID t\Ei§§) �`] #t 20m- �k))]\)7 4.2s!; to: / \// G wu & A ! O C fn Q a c Y O C. A . m W O z N N dO m 4 iE II �� 0; p Ud >E 3% � y� C 0,0 'O C Y ° m U. 0 � � o c O ? ac W o �o �' NN d z U�LO 0 ° O E Y 0co Oo > w ow v m N N U) Y O N U. o U n N c 0 c d Q pY L O_ c 0 0 Z 7 � O :- _o Y y O r rod > E 32, w W O O O m O Y m U o LL W _ N c O N m oN ° o Y 0 -O a"o w 3dv toQ 'O c z N O h C N L m N 'O •_ W rn c mO-8 O �+ 0 -0 m C N 5 c _ fit N 'O Q O O av s��N>, N O r-. wc�c�E (0 N U O- m 0 L 0 _n U tU C N O a O N L l6 0. N O C p N 0 O L m m .c _ a0 N d E 3' mu).oL c c m O E� N'a)--'-- m o o c -0 10U O. C C C N �� d w c .O O m 0 0 w E c ig W O O. ' O. N IC N 'O m U G rL0-. O U O O n. ` UJ 'C N m m N 0 C 0 N m >+ C i.: m .d. mo a m' d S'�-pp'��E�EEmcm E c m �'ga°�ma�i=c10iMEL� >1 O. N, O N Of 0 0 N .0 0 N C C N 'O E N N 7 .�. C O W caicE'N>07€vc'oo ma)0 c.omp:g'0y E a to Q um �\ C 'O m m c 0 0= N m . N O. c O D 0 O-. O a O L ° N '0 `t 0 0 O_ m 0 c O U m E��v�°'c�Eo�c3 �vaxi� ocmoaNi�U�a�i cc IL�wc�o€°ymc �'4) c°;D�OEv��`-0 E a�i z m dc000acimd�i3"°'0 z xdoccom5,cm00 �E3w34�(DCo4 3 wm3mman�mE9 u o b a w c 3 I w LL O N Cl) v a) d C rn Lo d) a Y Y ud O IL` C O m c m E U V f") OD W ¢w F- Z 0 "D" 0 U a Y m E W 0Ln000LO n Ou C3� N N N N O N 0 0 0 m a c O m O _ y Ea. E c y O O _ > ccZ U O. m o m v E— 'E00.,c c E 2 mc o min °U� E rn > W m c C U U C 0 o a) .0 > [q dQd lqw 0 o h coo V,Loiv"' m w Z Z Z QZ Z LO o' o n N n M p m 'O C tl0! 0 0 W m m CL . E Q d w D Q m LLJ r C O N 0 a 0 a� � E E c O �< 0 z w cm c6Q w W 0 a*E E W Cp m d m C a C U m cnf aoiiii Y N O. E C a) c Z E c c W o E 0 w U3 Cl) O'V o OIn Oo 1 It N m W c m Q a) ac p` aa) C Q Z o 0 mrnco y c W Wa U O, L •- yK � pUpU O U d c N z WF n.0 iTw a O c c 0 G m E U O a m C ro n E p O � c Ok m O N N a a) Q d w m d a 0 3 U O W m W = m o� tl7 E W m a A 3 ww W 2 d w m'5 W L O c T c U m L O m U .L. C N a O EO a U EQ J a vi W Q Z III � r 0 o. d m c U. N m FIGURE 3.2 Prolevey Point Management Unit Description Pertinent to Northern Route j '1 P-02 I T r r.� I � I y Management Intent Unit P-02 (MTRS T.085S.,R.079E., Sections 10 and 15) Parcel is to be retained by the state and managed to preserve its viewshed and TJ habitat values. Land disposals are not appropriate because of the rugged topography and the difficulty of access, including water access since the prevailing winds make landing difficult. Resources/Uses for which Unit is to be Managed Name: Coastal plain and foothills north of Prolewy Point (Kupreanof Island) Parcel is directly adjacent to the mouth of Wrangell Narrows and is very visible from Petersburg, and to ferry/cruise ship routes. It acts as an important part of the northern viewshed for the community. Parcel Descriptions and Related Information: Acres: 600 Designations: Ru = Public Recreation & Tourism -Undeveloped Parcel consists of a flat coastal edge, but western edge slopes go up steeply upwards Petersburg Mountain. Coastal areas are directly affected by Frederick Sound storms, precluding easy marine access. Adjacent tidelands contain an extensive and very productive tideflat along Frederick Sound, wintering habitat for large numbers of waterfowl. Seals and other marine mammals use this area heavily. An extensive kelp bed runs along this shoreline which provides shelter for fish species. This parcel was selected under NFCG 298 for the purpose of Community Expansion. Adjacent uplands are designated Scenic Viewshed and in the northwest portion, Wilderness (Duncan Salt Chuck Wilderness). Other • Red triangles on map designate anadromous fish stream. • Yellow designated areas are privately owned • The drab green area within the dashed line is the Duncan Salt Chuck Wilderness area. Lighter green is Tongass National Forest Land • Purple is Mental Health Land. rn 5 N A �a a y j r g c` J W � 4 C� 1 1 a d c n � � A J p C ~ o A 6 E A m E p d c O Cm YA t Z q ' o E NC`d OI ❑Cm 9U N d Q a > . E . E aJa aw aSS�p w 0 0 0 w z 0 ym t0 fd0 H Jc0 c•i I I I I � am a � F a o� c m m as a n 4 R, Y k �I Lk G /1 94 C f 1 I f r t, 0 J ° N N 9 �o N � E Y 0 o c N° m 0 • =3nz� c i h ,� � m ,? _ p E `m Z 15 U U U LU i• z R, Ln M w M D . _ �.. . •. Ala.".. d r r3 N d a O � v •y • • N- ' S 17 C . '� • • � N . _• a 1=• r lovl� t tr 1 � d I�A►if-..v .a E > m j m n in E m m a° E E o G L ] _ > 7 O o E a > > > w 0 rn °' V S o J rC w J o� 5 o z.< Section 4 Estimated Costs of Construction Introduction The costs to develop and construct the KPTL have been estimated for each of the four primary route alternatives. The cost estimate is based on an estimate of the required material quantities as determined from a preliminary design I of the overhead sections of the line, planned submarine cable configurations, and substation and switchyard requirements. Labor costs have been estimated based on recent experience on similar projects as well as discussions with individuals familiar with transmission line construction in Southeast Alaska. The estimated unit costs of materials are based on quotes from vendors and recent experience with similar construction projects. The estimated costs of the KPTL alternatives as provided in this section of the report include all estimated costs of engineering and design, permitting, materials, equipment and construction. Primary components of each line (e.g. overhead lines, submarine cables) are identified separately in the cost estimate. Since the design of the KPTL is still preliminary, a contingency factor of 15% has been applied to all costs. As design proceeds and more precision can be used in estimating the costs, the contingency included in the total cost estimate can possibly be lowered. In any major project of this type, however, the actual cost of construction can very significantly from the engineer's estimate due to market conditions for the materials and services needed at the time of procurement. As an example, the labor cost of high voltage lineworkers is very high at the present time due to extensive demand for such services around the country. Metal prices are also very high at the present time. The cost estimates included in this report are based on the routing and technical information described in Section 2. Primary characteristics of the line are 69-kV, single -pole construction alongside existing roads where available. A 24 strand fiber-optic communication line is included along the entire length of all alternatives. Submarine crossings are to be made with single 3- phase, 4/0 copper dielectric cables with a single layer outer shield and steel armor. The 24 strand fiber-optic communication line is to be bundled in to the cable. It is expected that KWETICO, the owner of the transmission lines, will contract for all services of permitting, design, construction and construction management. The estimated costs of these services are included in the total cost estimate. In addition to the estimated direct costs of construction, indirect cost items have also been estimated. Included among the indirect costs are the estimated costs of permitting, engineering, surveys, structure staking, owner's administration, construction management and contingencies. For the purpose of this estimate, the owner's administration cost is assumed to be 5% of the total direct costs and the construction management cost is assumed to be 5% of the total direct cost. � � A preliminary design of the overhead transmission system was prepared using PLS-CADD design software. The PLS-CADD software determines the placement of transmission structures and the type of structures needed (tangent, small angle, light angle, medium angle and deadend). From this preliminary design the required material quantities have been derived. The PLS-CADD graphical layout drawings for the Center -South alternative are provided in Appendix C. Kake - Petersburg Intertie Study 4-1 Final Report Estimated Costs of Construction The estimated cost of permitting is based on the costs shown in Section 3 of this report. The assumed contingency amount of 15% has been applied to all direct and indirect costs. The cost estimate for each route alternative includes the estimated cost of constructing an access road along the transmission line route in areas where logging roads do not exist. For the Center - North Alternative that traverses the Wilderness Area, a smaller, access trail will be constructed. Clearing of trees and brush will be needed along the right of way for each route, however, in areas where the line will be built along existing roads, the clearing requirement will be greatly reduced. The estimated cost of clearing is $9,000 per acre, assuming the sale of merchantable timber. For the Northern Alternative where the amount of merchantable timber is estimated to be greater, the cost of clearing is estimated to be $6,000 per acre12. The estimated cost of access road construction is $165,000 per mile in forested areas and $190,000 per mile in muskeg areas. This cost includes clearing of a 60 foot -wide right-of-way, a total 14 foot -wide road with a 10-12 foot -wide gravel covered surface and a road bedding made with typar or filter fabric. The estimated cost of access trail construction is $85,000 per mile in forested areas and $110,000 per mile in muskeg areas. The total area to be cleared and the length of road and trail construction for each route alternative are shown in the following table. TABLE 4-1 Estimated Right -of -Way Clearing and Road Construction Requirements and Costs Area to be Cleared (acres) Access Road Construction (miles) Forested Area Muskeg Area Total Access Trail Construction (miles) Forested Area Muskeg Area Total Route Alternative Center- Center- Southern Woewodski South North Northern Woewodski Tap 90 77 236 5.7 5.7 7.5 2.0 13.2 7.7 4.7 6.7 11.4 Estimated Clearing and RoadtTrail Construction Costs ($000) Clearing $ 810 $ 693 Access Roadlrrail Construction Forested Areas 941 1,341 Muskeg Areas 1,425 1,117 Total $ 3,176 $ 3,151 13.0 9.3 22.3 180 26 10.7 1.8 13.8 3.7 24.5 5.5 $ 1,416 $ 1,620 2,730 1,766 1,767 2,622 $ 5,913 $ 6,008 234 297 703 $ 1,234 It should be noted that the Woewodski Tap Alternative is a relatively short length of line that taps either the Center -North or Center -South route at a point just west of Wrangell Narrows and 72 Specific estimates for the value of merchantable timber are very preliminary at this point. The value of timber to be removed from the right of way is subject to market conditions at the time of removal. Depending on the market conditions, it may be more cost effective to leave timber along the side of the right of way rather than remove it. Kake - Petersburg Intertie Study 4-2 Final Report Estimated Costs of Construction will deliver power to a potential mining facility on Woewodski Island. The Woewodski Tap Alternative does not provide a transmission connection between Kake and Petersburg. The estimated total costs for each alternative are summarized in the following table. TABLE 4-2 Estimated Comparable Costs of Development and Construction for Each Route ($000) Overhead Line Clearing and Road Construction Submarine Cables Switchyards and Substations Subtotal - Direct Costs Indirect Costs Contingency (15%) Total Costs Route Alternative Center- Center- Southern Woewodski South North Northern Woewodski Tap $ 14,225 $ 18,903 $ 17,257 $ 21,145 3,176 3,151 5,913 6,008 3,696 1,891 4,515 3,397 1,340 1,340 1,340 1,340 $ 22,437 $ 25,285 $ 29,025 $ 31,890 $ 3,839 $ 4,546 $ 4,603 $ 4,891 3,941 4,475 5,044 5,517 $ 30,217 $ 34,306 $ 38,672 $ 42,298 $ 2,237 1,234 2,347 150 $ 5,968 $ 1,256 1,084 $ 8,308 As shown in Table 4-2, the lowest cost alternative is the Center -South Alternative while the highest cost alternative is the Southern Woewodski Alternative. The estimated cost of the Center -South Alternative shown in Table 4-2 is approximately 30% higher than the estimated cost of the Southern Alternative as provided in the 2003 Intertie Study 3. Reasons for the higher estimated cost in this study are the inclusion of constructing access roads, much higher material and freight costs, higher labor costs and the inclusion of explicit construction camp costs. The Woewodski Tap Alternative, which is only a spur line to interconnect the Center -South or Center -North Alternative to a potential mining facility on Woewodski Island includes the cost of building an overhead line on Woewodski Island to the expected site of mine processing and ore handling equipment. The cost estimate for this alternative does not include the cost of a substation on the island, however. The cost of a substation would be expected to be home by the mine itself. Detailed cost estimates for the route alternatives are shown in the following tables. " The Center -South Route in this study is the same as the Southern Route from the 2003 Intertie Study. The estimated cost of the Southern Route alternative in the 2003 Intertie Study was $23,073,700. Kake - Petersburg Intertie Study 4-3 Final Report Estimated Costs of Construction TABLE 4-3 (Page 1 of 2) Estimated Cost of Project Development and Construction Kake- Petersburg Transmission Line Center -South Alternative Estimated Cost Overhead Line Material and Freight Poles $ 1,828,000 Conductor 860,000 Insulators 352,000 Guys and Hardware 290,000 Fiber Optic Cable (ADSS 24 Strand) 565,000 Other Subtotal - Materials $ 3,885,000 Labor $ 6,870,000 Incidental and Other Direct Costs Camp Cost $ 770,000 Rockdrills and Blasting Materials 350,000 Equipment and Tools 559,000 Fuel and Maintenance 580,000 Barge and Landing Craft 150,000 Air Transportation 70,000 Helicopter Use 281,000 Mobilization and Demobilization 410,000 Bond and Insurance 300,000 Subtotal - Incidental and Other Direct Costs $ 3,470,000 Subtotal - Overhead Line $ 14,225,000 Clearing and Road Construction Clearing with Timber Credit $ 810,000 Road Construction - Forested Areas 941,000 Road Construction - Muskeg Areas 1,425,000 Subtotal $ 3,176,000 Submarine Cable - Wrangell Narrows T1-T2 Cable - 3-4/0 copper bundled, 69-kV, 24 fiber strands $ 355,000 Outer Armor Cable Shell 45,000 Installation 251,000 Marine Survey 60,000 Engineering 40,000 Mob/Demob 900,000 Termination Facilities 240,000 Subtotal $ 1,891,000 Submarine Cable - Duncan Canal T6-T7 Cable - 3-4/0 copper bundled, 69-kV, 24 fiber strands $ 689,000 Outer Armor Cable Shell 45,000 Installation 621,000 Marine Survey 65,000 Engineering 45,000 Mob/Demob 200,000 Termination Facilities 240,000 Subtotal $ 1,805,000 Kake - Petersburg Intertie Study 4-4 Final Report Estimated Costs of Construction TABLE 4-3 (Page 2 of 2) Estimated Cost of Project Development and Construction Kake - Petersburg Transmission Line Center -South Alternative Petersburg Tap Switchyard Civil Site Prep & Foundations $ 90,000 Ground Grid and Fencing 42,000 Bus Works 42,000 Control Cable and Conduit 44,000 SCADA and Control Interface 40,000 Sectionalizing Switch (2) 85,000 Breaker& CT 92,000 Relaying, PT 48,000 Revenue Metering 46,000 Shunt Reactor and Disc SW - Subtotal $ 529,000 Kake Substation Civil Site Prep & Foundations $ 135,000 Ground Grid and Fencing 42,000 Bus Works 34,000 Control Cable and Conduit 36,000 SCADA and Control Interface 40,000 Fuses/Switches 40,000 Transformer-69/12.5-kV, 2.5 MVA, Relaying, LA, etc. 210,000 Voltage Regulators/Bypass Switches 34,000 Recloser/Disconnect Switch 34,000 Relaying PT 36,000 Installation Labor 40,000 Station Service and Battery 130,000 Subtotal $ 811,000 Total Direct Costs $ 22,437,000 Indirect Costs Alignment Survey $ 125,000 Final Engineering 600,000 Permitting 655,000 Structure Staking 125,000 Geotechnical Surveys 90,000 Construction Management (5% of Direct Costs) 1,122,000 Owners Administration (5% of Direct Costs) 1,122,000 Subtotal - Indirect Costs $ 3,839,000 Contingency -15% 3,941,000 Total Project Cost $ 30,217,000 Kake - Petersburg Intertie Study 4-5 Final Report Estimated Costs of Construction TABLE 4-4 (Page 1 of 2) Estimated Cost of Project Development and Construction Kake - Petersburg Transmission Line Center -North Alternative Estimated Cost Overhead Line Material and Freight Poles $ 2,583,000 Conductor 995,000 Insulators 497,000 Guys and Hardware 410,000 Fiber Optic Cable (ADSS 24 Strand) 661,000 Other - Subtotal - Materials $ 5,146,000 Labor $ 9,708,000 Incidental and Other Direct Costs Camp Cost $ 1,088,000 Rockdrills and Blasting Materials 350,000 Equipment and Tools 790,000 Fuel and Maintenance 610,000 Barge and Landing Craft 150,000 Air Transportation 70,000 Helicopter Use 281,000 Mobilization and Demobilization 410,000 Bond and Insurance 300,000 Subtotal - Incidental and Other Direct Costs $ 4,049,000 Subtotal - Overhead Line $ 18,903,000 Clearing and Road Construction Clearing with Timber Credit $ 693,000 Road Construction - Forested Areas 941,000 Road Construction - Muskeg Areas 380,000 Trail Construction - Forested Wilderness 400,000 Trail Construction - Muskeg Wilderness 737,000 Subtotal $ 3,151,000 Submarine Cable - Wrangell Narrows T1-T2 Cable - 3-4/0 copper bundled, 69-kV, 24 fiber strands $ 355,000 Outer Armor Cable Shell 45,000 Installation 251,000 Marine Survey 60,000 Engineering 40,000 Mob/Demob 900,000 Termination Facilities 240,000 Subtotal $ 1,891,000 Kake - Petersburg Intertie Study 4-6 Final Report Estimated Costs of Construction TABLE 4-4 (Page 2 of 2) Estimated Cost of Project Development and Construction Kake - Petersburg Transmission Line Center -North Alternative Petersburg Tap Switchyard Civil Site Prep & Foundations $ 90,000 Ground Grid and Fencing 42,000 Bus Works 42,000 Control Cable and Conduit 44,000 SCADA and Control Interface 40,000 Sectionalizing Switch (2) 85,000 Breaker & CT 92,000 Relaying, PT 48,000 Revenue Metering 46,000 Shunt Reactor and Disc SW - Subtotal $ 529,000 Kake Substation Civil Site Prep & Foundations $ 135,000 Ground Grid and Fencing 42,000 Bus Works 34,000 Control Cable and Conduit 36,000 SCADA and Control Interface 40,000 Fuses/Switches 40,000 Transformer-69/12.5-kV, 2.5 MVA, Relaying, LA, etc. 210,000 Voltage Regulators/Bypass Switches 34,000 Recloser/Disconnect Switch 34,000 Relaying PT 36,000 Installation Labor 40,000 Station Service and Battery 130,000 Subtotal $ 811,000 Total Direct Costs $ 25,285,000 Indirect Costs Alignment Survey $ 125,000 Final Engineering 600,000 Permitting 1,078,000 Structure Staking 125,000 Geotechnical Surveys 90,000 Construction Management (5% of Direct Costs) 1,264,000 Owners Administration (5% of Direct Costs) 1,264,000 Subtotal - Indirect Costs $ 4,546,000 Contingency -15% 4,475,000 Total Project Cost $ 34,306,000 Kake - Petersburg Intertie Study 4-7 Final Report Estimated Costs of Construction TABLE 45 (Page 1 of 2) Estimated Cost of Project Development and Construction Kake - Petersburg Transmission Line Northern Alternative Estimated Cost Overhead Line Material and Freight Poles $ 2,340,000 Conductor 901,000 Insulators 454,000 Guys and Hardware 371,000 Fiber Optic Cable (ADSS 24 Strand) 599,000 Other Subtotal - Materials $ - 4,665,000 Labor $ 8,794,000 Incidental and Other Direct Costs Camp Cost $ 986,000 Rockdrills and Blasting Materials 371,000 Equipment and Tools 615,000 Fuel and Maintenance 615,000 Barge and Landing Craft 150,000 Air Transportation 70,000 Helicopter Use 281,000 Mobilization and Demobilization 410,000 Bond and Insurance 300,000 Subtotal - Incidental and Other Direct Costs $ 3,798,000 Subtotal - Overhead Line $ 17,257,000 Clearing and Road Construction Clearing with Timber Credit $ 1,416,000 Road Construction - Forested Areas 2,730,000 Road Construction - Muskeg Areas 1,767,000 Subtotal $ 5,913,000 Submarine Cable -Wrangell Narrows S1-S2 Cable- 3-4/0 copper bundled, 69-kV, 24 fiber strands $ 1,914,000 Outer Armor Cable Shell 68,000 Installation 1,226, 000 Marine Survey 87,000 Engineering 80,000 Mob/Demob 900,000 Termination Facilities 240,000 Subtotal $ 4,515,000 Kake - Petersburg Intertie Study 4-8 Final Report Estimated Costs of Construction TABLE 4-5 (Page 2 of 2) Estimated Cost of Project Development and Construction Kake - Petersburg Transmission Line Northern Alternative Petersburg Tap Switchyard Civil Site Prep & Foundations $ 90,000 Ground Grid and Fencing 42,000 Bus Works 42,000 Control Cable and Conduit 44,000 SCADA and Control Interface 40,000 Sectionalizing Switch (2) 85,000 Breaker & CT 92,000 Relaying, PT 48,000 Revenue Metering 46,000 Shunt Reactor and Disc SW Subtotal $ 529,000 Kake Substation Civil Site Prep & Foundations $ 135,000 Ground Grid and Fencing 42,000 Bus Works 34,000 Control Cable and Conduit 36,000 SCADA and Control Interface 40,000 Fuses/Switches 40,000 Transformer-69/12.5-kV, 2.5 MVA, Relaying, LA, etc. 210,000 Voltage Regulators/Bypass Switches 34,000 Recloser/Disconnect Switch 34,000 Relaying PT 36,000 Installation Labor 40,000 Station Service and Battery 130,000 Subtotal $ 811,000 Total Direct Costs $ 29,025,000 Indirect Costs Alignment Survey Final Engineering Permitting Structure Staking Geotechnical Surveys Construction Management (5% of Direct Costs) Owners Administration (5% of Direct Costs) Subtotal - Indirect Costs Contingency -15% Total Project Cost $ 125,000 ' 600,000 ✓ ��j49D00 ,-769;OOtid 125,000 v 90,000 1,451,000 1,451,000 $ 4,603,000 5,044,000 $ 38,672,000 Kake - Petersburg Intertie Study 4-9 Final Report Estimated Costs of Construction TABLE 4-6 (Page 1 of 2) Estimated Cost of Project Development and Construction Kake - Petersburg Transmission Line Southern Woewodski Alternative Estimated Cost Overhead Line Material and Freight Poles $ 2,718,000 Conductor 1,487, 000 Insulators 523,000 Guys and Hardware 431,000 Fiber Optic Cable (ADSS 24 Strand) 840,000 Other - Subtotal - Materials $ 5,999,000 Labor $ 10,215,000 Incidental and Other Direct Costs Camp Cost $ 1,145,000 Rockdrills and Blasting Materials 520,000 Equipment and Tools 1,004,000 Fuel and Maintenance 862,000 Barge and Landing Craft 150,000 Air Transportation 100,000 Helicopter Use 300,000 Mobilization and Demobilization 450,000 Bond and Insurance 400,000 Subtotal - Incidental and Other Direct Costs $ 4,931,000 Subtotal - Overhead Line $ 21,145,000 Clearing and Road Construction Clearing with Timber Credit $ 1,620,000 Road Construction - Forested Areas 1,766,000 Road Construction - Muskeg Areas 2,622,000 Subtotal $ 6,008,000 Submarine Cable - Wrangell Narrows W2-W3 $ 1,592,000 Submarine Cable - Duncan Canal W5-W6 $ 1,805,000 Kake - Petersburg Intertie Study 4-10 Final Report Estimated Costs of Construction TABLE 4-6 (Page 2 of 2) Estimated Cost of Project Development and Construction Kake - Petersburg Transmission Line Southern Woewodski Alternative South Mitkof Tap Switchyard Civil Site Prep & Foundations $ 90,000 Ground Grid and Fencing 42,000 Bus Works 42,000 Control Cable and Conduit 44,000 SCADA and Control Interface 40,000 Sectionalizing Switch (2) 85,000 Breaker & CT 92,000 Relaying, PT 48,000 Revenue Metering 46,000 Shunt Reactor and Disc SW Subtotal $ 529,000 Kake Substation Civil Site Prep & Foundations $ 135,000 Ground Grid and Fencing 42,000 Bus Works 34,000 Control Cable and Conduit 36,000 SCADA and Control Interface 40,000 Fuses/Switches 40,000 Transformer-69/12.5-kV, 2.5 MVA, Relaying, LA, etc, 210,000 Voltage Regulators/Bypass Switches 34,000 Recloser/Disconnect Switch 34,000 Relaying PT 36,000 Installation Labor 40,000 Station Service and Battery 130,000 Subtotal $ 811,000 Total Direct Costs $ 31,890,000 Indirect Costs Alignment Survey $ 126,000 Final Engineering 600,000 Permitting 761,000 Structure Staking 125,000 Geotechnical Surveys 90,000 Construction Management (5% of Direct Costs) 1,595,000 Owners Administration (5% of Direct Costs) 1,595,000 Subtotal - Indirect Costs $ 4,891,000 Contingency -15% 5,517,000 Total Project Cost $ 42,298,000 Kake - Petersburg Intertie Study 4-11 Final Report Estimated Costs of Construction TABLE 4-7 (Page 1 of 2) Estimated Cost of Project Development and Construction Kake - Petersburg Transmission Line Woewodski Tap Alternative Estimated Cost Overhead Line Material and Freight Poles $ 277,000 Conductor 129,000 Insulators 52,000 Guys and Hardware 44,000 Fiber Optic Cable (ADSS 24 Strand) 86,000 Other - Subtotal - Materials $ 588,000 Labor $ 1,042,000 Incidental and Other Direct Costs Camp Cost $ 142,000 Rockdrills and Blasting Materials 53,000 Equipment and Tools 85,000 Fuel and Maintenance 104,000 Barge and Landing Craft 27,000 Air Transportation 18,000 Helicopter Use 59,000 Mobilization and Demobilization 73,000 Bond and Insurance 46,000 Subtotal - Incidental and Other Direct Costs $ 607,000 Subtotal - Overhead Line $ 2,237,000 Clearing and Road Construction Clearing with Timber Credit $ 234,000 Road Construction - Forested Areas 297,000 Road Construction - Muskeg Areas 703,000 Subtotal $ 1,234,000 Submarine Cable - Wrangell Narrows T12-T13 Cable - 3-4/0 copper bundled, 69-kV, 24 fiber strands $ 556,000 Outer Armor Cable Shell 45,000 Installation 506,000 Marine Survey 60,000 Engineering 40,000 Mob/Demob 900,000 Termination Facilities 240,000 Subtotal $ 2,347,000 Interconnection at T3 (Load Break Switch) $ 150,000 Kake - Petersburg Intertie Study 4-12 Final Report Estimated Costs of Construction TABLE 4-7 (Page 2 of 2) Estimated Cost of Project Development and Construction Kake - Petersburg Transmission Line Woewodski Tap Alternative Mine Substation Civil Site Prep & Foundations $ Ground Grid and Fencing Bus Works Control Cable and Conduit SCADA and Control Interface Fuses/Switches Transformer Voltage Regulators/Bypass Switches - Recloser/Disconnect Switch - Relaying PT _ Installation Labor _ Station Service and Battery - Subtotal $ _ Total Direct Costs $ 5,968,000 Indirect Costs Alignment Survey $ 45,000 Final Engineering 150,000 Permitting 400,000 Structure Staking 35,000 Geotechnical Surveys 30,000 Construction Management (5% of Direct Costs) 298,000 Owners Administration (5% of Direct Costs) 298,000 Subtotal - Indirect Costs $ 1,256,000 Contingency -15% 1,084,000 Total Project Cost $ 8,308,000 Kake - Petersburg Intertie Study 4-13 Final Report Section 5 Example Project Development Schedule Introduction The KPTL construction cost estimates provided in Section 4 include the estimated costs of several activities prior to actual construction. Included among these activities are preliminary design, geotechnical surveys, permitting and environmental studies, and final design. The actual time required to perform these activities and when they would be performed will depend on a number of factors. An example development schedule has been prepared to indicate what activities would be performed and what the activity duration would be for development of the KPTL. An integral part of the development of any project requiring a significant degree of grant funding is the pursuit and approval of funding sources. The time required for this effort cannot be reliably predicted. In addition, there will be a number of permits and approvals needed to construct the Interties as indicated in Section 3 of this report. The time required to obtain the necessary permits is often influenced by the degree of public support or opposition to the projects. Further, various commercial arrangements will be needed to allow for the effective utilization of the Interties. Such arrangements would include power sales agreements and contracts. Permitting and Environmental Studies The preparation of certain information needed in the permitting process, such as route diagrams and technical descriptions, will necessitate that certain engineering work be accomplished fairly early in the process. The expected duration of permitting activities for the KPTL is approximately two years. In order to expedite the development process, it would be recommended that preliminary engineering and route alignment activities be conducted concurrently with early permitting work and environmental studies. Engineering Related Activities The project development approach outlined below is based upon construction being undertaken by a contractor(s) using plans and technical specifications prepared by an engineering firm experienced with overhead transmission line design. Major equipment and materials would be obtained by KWETICO with installation performed by a construction contractor. An engineering firm, working as the Owner's Project Engineer would manage and oversee specialty engineering services. Various activities related to the engineering function of project development are described in the following paragraphs. Selection of Project Team Typically owners select a Project Manager (with appropriate experience) and contract with specialty firms to provide the required services. Engineering and related specialty areas include: Kake - Petersburg Intertie Study 5-1 Final Report Example Project Development Schedule • Project Management • Preliminary and Final Engineering • Engineering survey • Geotechnical Investigations • Easements, Land Rights, property survey • Logging and Clearing Specialist • Construction Specialist The engineering team would be charged with developing and implementing a detailed work plan, schedule and budget to accomplish the Project on schedule and within budget. Alignment Definition One of the first tasks required to move the Project forward will be to refine the conceptual design and the selected route. Construction, operation and maintenance issues will be discussed in detail with the owner and the owner's operating personnel to identify project requirements. During this phase a transmission line design engineer and other specialists would initiate a detailed review of the route identifying any routing concerns or route improvements. This work will require coordination with the environmental and permitting specialist knowledgeable with the area. Incorporating input from the various specialists, a specific alignment will be selected. Selection of the specific alignment will consider: • Specific site locations of Tap, Substation, Submarine Crossings • Alignment of logging road • Location of clear -cuts, size of trees • Location of Muskeg • Terrain elevation differences • Environmental or cultural avoidance areas • Location of eagle trees • Location of good soils for structure stability • Visual Concerns Engineering Survey An engineering survey will be obtained once a specific alignment is identified in the field and tied down with specific coordinates. The engineering survey will locate physical features in plan and determine elevations along the alignment within the defined corridor. Plan/profile drawings will be developed from the field survey. There are several types of surveying methods which could be utilized on a project such as the Interties. One which may prove economical while also providing great flexibility in allowing Kake - Petersburg Intertie Study 5-2 Final Report Example Project Development Schedule adjustments during preliminary design without requiring follow-up visits for additional surveys is LIDAR (Light Detection and Ranging). LIDAR, in summary, uses a laser and receivers mounted generally on a helicopter to scan an area from low altitude and collect survey data. The helicopter has airborne global positioning system (GPS) capability and also ties into ground stations established at about every 25 mile radius. The laser sends out several thousand pulses per second and the returns are collected by the receivers mounted on outriggers. The data is collected as a series of X,Y,Z points tied to a reference grid such as State Plain Coordinates. The huge amount of data collected in the field is filtered and reduced into separate files such as ground, existing structures, existing wires and vegetation. These files can then be imported into design programs such as PLS-Cadd. In PLS-Cadd, the designer can create a surface wire -frame model from which profiles can be cut once the alignment is established. Because of the very dense coverage, (points are separated by a couple of feet within a 200' to 1,000' wide corridor) the surface model will result in very precise profiles. Refinements may be made to enhance the alignment following a review of the plan/profile drawings. Preliminary Engineering Much of the preliminary engineering work needed for the KPTL has been accomplished as part of this study. The objective of the preliminary design task is to finalize design criteria and to complete sufficient design calculations to determine the general layout and sizing of major facility components. Preliminary engineering will proceed simultaneously with the alignment definition phase. The preliminary design phase will include additional system studies and discussions with the owner's operating personnel to refine and determine: • System protection plan • 1-lines of system • Equipment and conductor sizes • Voltage drop and power flow • Appropriate insulation • Need for reactors Preliminary engineering will also determine all of the detail design parameters and will result in issuance of a Basis of Design documenting design requirements such as: • Codes and Standards • Clearance requirements (horizontal and vertical) • Conductor tension limits • Sag/tension data • Physical loading requirements • Overload capacity factors • Grounding requirements Kake - Petersburg Intertie Study 5-3 Final Report Example Project Development Schedule • Clearing requirements • Right-of-way constraints • Framing requirements • Guy and anchor requirements Geotechnical Investigations Subsurface soils investigations will be required at the major equipment locations (substation, termination locations and tap points). Experienced geotechnical personnel will review the entire route and observe road cuts and perform excavation of test pits along the route. Using the data collected tempered with experience, a subsurface profile will be developed identifying the subsurface profile and key avoidance areas. Final Design Final design will involve the completion and documentation of design calculations, special analysis, development of construction drawings, development of construction and material specifications, and development of final material lists. During final design, specific pole locations, framing, pole size, guy leads and anchor types will be determined for each structure along the alignment. Locations will be staked and field reviewed. At the major equipment locations, structures, foundations, grounding, and fencing will be sized and designed as appropriate. Initiate Construction and Material Procurement Contracts This function would involve the preparation of bid documents and specifications for vendors and suppliers to base bids for materials and construction services. Much of the material needed for the overhead portions of the Intertie can be obtained relatively quickly. The submarine cables would require a longer lead time and in particular, delivery of the cables and arranging for installation could require more than a year. Flexibility in the schedule with regard to the cable procurement could significantly affect the delivered and installed cost of the cable. In general, it is expected that the procurement of materials and construction services would be conducted through the solicitation of bids and award of contracts to vendors and contractors early in the year in which construction is expected to commence. The first year of construction activity is not expected to require significant material deliveries so a full year of lead time on material manufacturing and delivery would be allowed for in the schedule. Kake - Petersburg Intertie Study 5-4 Final Report Example Project Development Schedule Construction Activities A two-year construction duration is expected for the KPTL. The major activities to be undertaken in each year are as follows: Year 1 • Alignment clearing • Construction of work pads, as required • Construction of other key components, as appropriate Year 2 • Line construction • Installation of submarine cables • Substation and switchyard construction The actual time required to install the submarine cables is quite short, possibly just a few days. As such, they can be installed at anytime in the second year of the construction period, potentially at the very end of the process just before energization of the line. Total Project Development Schedule Assuming that funding were available, or at least reasonably assured, and arrangements needed to proceed with the KPTL were approved, it is estimated that a 3.5 to 4.0 year development and construction schedule could be accomplished for the KPTL. Kake - Petersburg Intertie Study 5-5 Final Report Section 6 Power Supply Evaluation and Economic Analysis Power Supply Evaluation Overview Hydroelectric generating facilities and diesel generators provide nearly all of the electric power generation in Southeast Alaska 14. Elsewhere in Alaska, natural gas and coal are used to provide a significant portion of the electrical power supply; however, these fuels are not commercially available in Southeast Alaska. The State and federal government, as well as certain communities and utilities have developed the existing hydroelectric generating plants in Southeast Alaska. Hydroelectric facilities require specific site conditions and generally have high initial development costs. The effective costs of hydroelectric development can be made even higher by the need to construct projects larger than the present electric loads require. This can create a surplus energy generation capability from hydroelectric plants, sometimes for a significant length of time. The availability of diesel fuel, the ease of installing diesel generators in a wide range of capacities and relatively low initial costs have made diesel engine generators the generator of choice in most remote locations including Southeast Alaska. The operating and maintenance (O&M) expenses associated with diesel generators, however, often make them more costly than hydroelectric generation plants in the long run. Potential interruptions in fuel delivery, the susceptibility of fuel prices to wide variation, noise and air pollution issues are other negative aspects of diesel generation. Where available, hydroelectric generation is typically preferred to diesel generation. The primary purpose of the KPTL will be to transmit power generated at the Four Dam Pool Power Agency's Lake Tyee hydroelectric project to Kake where diesel generation is the only source of power supply. At the present time, significant additional hydroelectric energy capability is available at the Lake Tyee project. If a mining operation is established at Woewodski Island, the KPTL can be extended to permit power transmission to the mine. It is not known what arrangements would be made to supply power to the Woewodski mine, however, it is expected that power from the Lake Tyee project, to the extent available, would be sold to the mine. New hydroelectric projects could potentially be developed in the interconnected area. With the KPTL and the Swan-Tyee Intertie, a much larger regional power supply system would exist that would allow for better utilization of existing generating resources as well as encourage development of the most cost effective new hydroelectric facilities available in the region. 14 In the past, pulp mills in Ketchikan and Sitka used production waste materials as a boiler fuel to drive steam turbines. Kake - Petersburg Intertie Study 6-1 Final Report Power Supply Evaluation and Economic Analysis The electric power requirements of all the interconnected load centers involved with the KPTL are important to the evaluation of the KPTL feasibility. Projections of power requirements have been compiled for Kake, Petersburg, Wrangell, and Ketchikan, all of which currently rely upon the output of the Lake Tyee project or will be connected to Lake Tyee through the construction of new transmission facilities. Estimated power requirement projections have also been developed for the Woewodski mine, based on the estimated power requirements of the Kennecott Mining Company - Greens Creek Mine (KMC-GC) near Juneau. The KPTL will be used to transmit hydroelectric energy that is either surplus to the needs of the interconnected Four Dam Pool members (Petersburg, Wranrll and Ketchikan) or from interconnected hydroelectric plants to be built in the future' . Consequently, it is important to evaluate the availability of the surplus generation and identify potential new hydroelectric resources that can be developed to economically provide additional energy to the interconnected systems, as needed, in the future. Although transmission lines are generally very reliable, power deliveries over the KPTL will need to be considered interruptible. As such, local generation sufficient to supply loads if the transmission lines are down due to unplanned outages or maintenance will continue to be needed in Kake and at the Woewodski mine. It is also important to note the commercial and contractual arrangements that are in place that could potentially limit the availability of power resources for sale to other utility systems. For example, the Lake Tyee project is owned and operated by the FDPPA and its output is sold to Petersburg and Wrangell pursuant to the Four Dam Pool Power Sales Agreement. Petersburg, Wrangell and eventually Ketchikan when it is interconnected, will always have first priority to the output of the Lake Tyee Project pursuant to the Power Sales Agreement. Power Requirements Electric power requirements have been projected for KPTL interconnected utilities for a ten-year projection period. For Kake, the power requirement projections are based on assumed growth rates applied to recently experienced loads. Power requirements for Ketchikan, Petersburg and Wrangell have been compiled from previously prepared Four Dam Pool planning studies. As previously indicated, the power requirements for the Woewodski mine have been estimated based on representative power requirements of the KMC-GC mine. The existing loads of the utilities are shown in Table 6-1. 15 Other existing hydroelectric facilities used to supply power to Petersburg and Ketchikan are fully utilized. Kake - Petersburg Intertie Study 6-2 Final Report Power Supply Evaluation and Economic Analysis TABLE 6-1 2003 Energy Loads (MWh) Energy Sales (MWh) Energy Reqs. 3 Peak Firm Non -Firms Total (MWh) (kW) Petersburg 36,063 - 36,063 40,803 8,010 Wrangell 19,299 3,169 22,468 23,541 3,670 Ketchikan 145,121 - 145,121 154,730 27,600 IPEC - Kake 2,051 474 2,526 2,877 684 1 Data shown for Kake is for 2004.. Non -firm, or interruptible energy sales can be curtailed under certain circumstances. Sales shown are to. the Silver Bay sawmill in Wrangell. Energy requirements are the summation of total generation and total power purchases. The basis for and assumptions used in preparing the projected power requirements for each of the load centers are described in the following paragraphs. Petersburg and Wrangell Petersburg and Wrangell are both municipally owned electric utilities interconnected with each other by the Lake Tyee transmission line. Petersburg Municipal Power & Light Petersburg Municipal Power & Light (PMPL) provides electric service to the residents and businesses of Petersburg and the surrounding area. In its fiscal year 2003, PMPL sold 36,063 MWh of electric energy to its 1,333 residential, 347 harbor, 284 small commercial, and 30 large commercial electric customers. Energy sales to a large seafood processing facility in Petersburg represented approximately 15 percent of PMPL's total energy sales in 2003. Total revenues from sales of electricity in 2003 were $3,989,602 representing average unit revenues of 11.06 cents per kWh. The total system peak demand was 8.01 MW and total energy requirements were 40,803 MWh in 2003. PMPL owns and operates the 2.0 MW Blind Slough hydroelectric project with an average annual energy generation capability of approximately 11,500 MWh. PMPL fully utilizes the output of its own hydroelectric facility each year and purchases power from Lake Tyee to supply its remaimm power supply requirement. PMPL has 6.6 MW of reliable diesel generation capacity' . Diesel generation is the most costly of PMPL's power supply resources and is typically only needed when the Lake Tyee project is unavailable due to maintenance or repair activities. "Although PMPL has 10.1 MW of installed capacity at its diesel powerplant, 3.5 MW of this capacity is in poor condition and unreliable. Kake - Petersburg Intertie Study 6-3 Final Report Power Supply Evaluation and Economic Analysis Total PMPL energy requirements in the past few years have remained relatively steady although some decrease has been seen since 2001. In the near future, total energy requirements are forecasted to increase slightly at an average annual growth rate of 0.5 percent for the medium growth rate scenario. Contributing to near term load growth is a large, electrically -heated community swimming pool that will become operational in 2006. Wrangell Municipal Light & Power Wrangell Municipal Light & Power (WMLP) provides electric service to the residents and businesses of Wrangell and the surrounding area. In its fiscal year 2003, WMLP sold 19,299 MWh of electric energy to its 1,050 residential, 481 small commercial, four large commercial, one industrial and one municipal electric customers. An additional 3,169 MWh of interruptible energy was sold to the Silver Bay sawmill in 2003, WMLP's largest electric customer. Total energy sales to the sawmill represented approximately 14.4 percent of WMLP's total energy sales in 2003. The combined energy requirements of two seafood processors represented another 9.5 percent of WMLP's total energy sales in 2003. Total revenues from sales of electricity in 2003 were $2,229,341, excluding revenues from interruptible sales, representing average unit revenue of 11.55 cents per kWh. Energy sold by WMLP to the sawmill is purchased from the Four Dam Pool Power Agency at a reduced, interruptible rate. The total system peak demand was 3.67 MW and total energy requirements were 23,542 MWh in 2003. WMLP owns and operates 8.4 MW of diesel generation capacity. Typically, WMLP supplies its entire power supply requirement from the Lake Tyee project although some diesel generation is used when the Lake Tyee project is unavailable due to maintenance or repair activities. WMLP and PMPL purchase power from Lake Tyee through the Four Dam Pool Power Agency. Total WMLP energy requirements in the past few years have remained relatively steady although some decrease has been seen since 2001. In the near future, total energy requirements, net of interruptible energy sales, are forecasted to increase slightly in 2004 and remain constant for the remainder of the forecast period. Although the Silver Bay sawmill is presently operating, its continued operation is uncertain and no interruptible power sales to the sawmill are included in the forecast of WMLP energy sales for fiscal years 2005 and beyond. Forecasted Power Requirements Electric loads in Petersburg and Wrangell have been projected recently with regard to studies of the Tyee-Swan Intertie. Loads in Petersburg are assumed to increase at average annual rates of 0.5%, 0.0% and 2.0% for medium, low and high forecast scenarios, respectively. Loads in Wrangell are assumed to increase at average annual rates of 0.5%, 0.0% and 1.0% for medium, low and high forecast scenarios, respectively. In the medium and low load growth scenarios no energy sales are assumed to be made to the sawmill in Wrangell. For the high growth scenario, it is assumed that energy sales to the sawmill will be 5,000 MWh per year. Forecasted loads for Wrangell and Petersburg are summarized in the following table. Kake - Petersburg Intertie Study 6-4 Final Report Power Supply Evaluation and Economic Analysis TABLE 6-2 Petersburg and Wrangell Projected Energy Requirements - Medium Growth Scenario 2005 2006 2007 2008 2009 2014 Energy Requirements (MWh) Petersburg40,060 40,260 40,460 40,660 40,850 41,900 Wrangell 20,480 20,580 20,690 20,790 20,900 21,420 Total 60,540 60,840 61,150 61,450 61,750 63,320 Less: Petersburg Hydro 3 Less: Minimal Diesel 4 Net Requirement on Tyee s (11,000) (11,000) (11,000) (11,000) (11,000) (11,000) (800) (800) 800 800 (800) (800) 48,740 49,040 49,350 49,650 49,950 51,520 ' Assumes average growth in energy requirements of 0.5% per year. 2 Assumes average growth in energy requirements of 0.5% per year and continued closure of the sawmill. 3 Estimated average annual generation from PMP&L's Blind Slough hydroelectric project. 4 Estimated diesel generation needed for backup and maintenance purposes. s Projected net energy requirement of PMP&L and WML&P on the Lake Tyee hydroelectric project. Ketchikan Ketchikan Public Utilities (KPU), a municipally owned electric utility, is the second largest electric utility system in Southeast Alaska. KPU obtains the majority of its power supply from KPU-owned hydroelectric projects and the Swan Lake project, a Four Dam Pool Power Agency project. In most years, KPU's electric loads exceed the available hydroelectric generation capability and diesel generators must be used to supply the net power requirement. The FDPPA is presently constructing the Swan-Tyee Intertie to gain access to the surplus generation capability of the Lake Tyee project 17. The electric requirements of KPU will affect the net generation available to Kake from the Lake Tyee project. KPU provides electric and telephone service to the residents and businesses of Ketchikan and the surrounding Ketchikan Gateway Borough and provides water service within the city limits. In 2002, KPU sold 144,269 MWh of electric energy to its 5,625 residential, 1,051 commercial, 13 industrial and 482 other electric customers. Of the total energy sales in 2002, approximately 40 percent, 45 percent and 11.6 percent were to residential, commercial and industrial customers, respectively. Total revenues from sales of electricity in 2002 were $12,760,361 representing average unit revenues of 8.84 cents per kWh. The total system peak demand was 24.2 MW and total energy requirements were 154,700 MWh in 2002. KPU owns and operates 11.7 JAW of hydroelectric generating capacity at three separate facilities located relatively close to Ketchikan and 23.0 MW of diesel generation capacity located in its Bailey Powerplant. The average annual energy generation capability of the KPU-owned " Construction of the Swan - Tyee Intertie began in 2004 but was discontinued later in the year pending acquisition of additional funding to complete the project. Neither the FDPPA nor the interconnected municipal utility systems can predict when or if construction will begin again. Approximately one more year of construction is needed to complete the project. Kake - Petersburg Intertie Study 6-5 Final Report Power Supply Evaluation and Economic Analysis hydroelectric facilities is 68,460 MWh. In general, KPU fully utilizes the output of its own hydroelectric facilities each year and purchases power from Swan Lake to supply its remaining power supply requirement. Diesel generation, which is the most costly of KPU's power supply resources, is used as needed to supplement the output of the KPU hydroelectric facilities and Swan Lake. With completion of the proposed Swan — Tyee Intertie, KPU will purchase power from the Lake Tyee project to supplant nearly all of its expected diesel generation in the near to mid future. Electric loads are assumed to increase at average annual rates of 0.7%, 0.2% and 2.0% for base, low and high forecast scenarios, respectively. KPU's forecasted electric requirements are summarized in the following table. TABLE 6-3 Ketchikan Public Utilities Projected Energy Requirements — Medium Growth Scenario 2005 2006 2007 2008 2009 2014 Energy Requirements (MWh)' 155,990 157,080 158,180 159,290 160,400 166,090 Less: KPU Hydro 2 (68,460) (68,460) (68,460) (68,460) (68,460) (68,460) Less: Swan Lake (69,000) (69,000 (69,000) (69.000) (69,000) (69,000) Net Requirement 4 18,530 19,620 20,720 21,830 22,940 28,630 ' Assumes average growth in energy requirements of 0.7% per year. 2 Estimated annual energy generation from KPU-owned hydroelectric projects assuming average precipitation levels. a Estimated annual generation from the Swan Lake hydroelectric project assuming average precipitation levels. ° Projected net energy requirement to be provided from diesel generation, new hydro project generation or the Lake Tyee hydroelectric project, assuming that construction of the Swan-Tyee Intends is completed. Kake Electric service is provided to the residents and businesses of Kake by IPEC. In 2004, there were 268 residential customers, 54 commercial customers and 11 public facility customers in Kake. Average monthly energy consumption of about 425 kWh per residential customer in 2004 is significantly lower than that experienced in larger cities in Southeast Alaska. In Juneau, Ketchikan, Sitka and Petersburg average monthly energy consumption is approximately 840 kWh, 840 kWh, 920 kWh and 830 kWh, respectively 18. The low residential energy consumption in Kake is a reflection of the high retail cost of power, which averaged 38.7 cents per kWh' to residential customers in 2004. Commercial rates are also in this range and undoubtedly function to significantly limit electrical consumption by commercial customers. rs Based on 2003 sales data for Ketchikan, Sitka and Petersburg and 2002 sales data for Juneau. 19 The effective rate to residential customers was lowered by the State's Power Cost Equalization (PCE) program to approximately 22 cents per kWh in 2001 for the first 500 kWh purchased each month. Although the PCE program provides a significant subsidization of residential power costs, it also provides an incentive to limit power consumption to 500 kWh per month or less. It should also be noted that the funding of the PCE program is granted by the State legislature on an annual basis and no guarantees can be provided with regard to its continuation in the future. Kake - Petersburg Intertie Study 6-6 Final Report Power Supply Evaluation and Economic Analysis The number of electric customers in Kake has dropped 9.0% since 2000. Although total annual energy sales remained relatively constant between 2000 and 2003, energy sales to residential and commercial customers continued to decline through this period. In 2004, the closure of Kake Foods, a seafood processing facility, contributed to an overall 32% drop in energy sales in Kake in 2004. The interruptible energy sales rate in Kake has been approximately 18.3 cents per MO. While in operation, Kake Foods had purchased a significant amount of interruptible energy from IPEC. Annual energy sales by customer class for the period 2000 through 2004 are shown in Figure 6-1. 4,500,000 4,000,000 3,500,000 22 3,000,OOe L < 1,500,000 1,000,000 500,000 FIGURE 6-1 Annual Energy Sales in Kake by Customer Class (kWh) 2000 , 2001 2002 2003 2004 M Residential []Commercial O Public Facilities O Interruptible 1 For the purpose of this analysis, the number of residential, commercial and public facility customers served in Kake has been assumed to increase at an average annual rate of 1 % per year. Energy use per account is assumed to increase at 0.5% to 1.0% per year. Some construction activities are expected in Kake during the summer of 2005, however, there has been nothing indicated at the present time that would cause a significant increase in electric energy requirements. 20 IPEC is currently seeking an increase in the intenruptible energy sales rate. The interruptible rate shown does not include the fuel cost surcharge, presently 7.57 cents per kWh. Kake - Petersburg Intertie Study 6-7 Final Report Power Supply Evaluation and Economic Analysis If the KPTL and other factors21 contribute to the lowering of IPEC's retail rates, electric consumption could increase even further. There may also be opportunities to sell additional energy to customers that may be using their own generators at the present time, however, the amount of energy that this would represent is not known. With the KPTL, IPEC may be able to offer an economic incentive power sales rate to new commercial/industrial customers that might encourage economic development in the Kake area and increase energy sales. The economic incentive rate would be tied to the incremental cost of purchased power over the KPTL and could be significantly lower than 1PEC's current interruptible rate. The impact of an economic incentive rate on Kake energy sales cannot be predicted and consequently, is not reflected in the analysis at the present time. The projected power requirements for Kake are summarized in the following table. Energy Sales (MWh) Residen8al Commercial Interruptible' Public Facilfties Other Total Sales Increase %3 Station Service(Ovm Use Street Lights Losses TABLE64 IPEC — Kake Service Area Projected Energy Loads and Capacity Requirements Historical Projected 2002 2003 2004 2005 2006 2007 2008 2009 2014 1,498 1,487 1,373 1,402 1,432 1,462 1,492 1,524 1,686 886 640 535 537 540 543 545 548 562 1,370 1,444 474 479 484 489 494 499 524 210 144 144 140 144 148 151 153 168 3,964 3,714 2,526 2,558 2,599 2,641 2,682 2,724 2,941 4.4% -6.3% •32.0% 1.3% 1.6% 1.6% 1.6% 1.6% 1.5% 62 82 69 37 38 38 39 39 42 80 80 80 60 80 80 80 80 80 185 200 202 202 205 208 212 215 231 Total Generation (MWh) 4,291 4,076 2,877 2,877 2,922 2,967 3,013 3,058 3,294 Loss % of Gen. 3 4.3% 4.9% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% Peak Demand (kW) 1,016 969 684 684 695 706 717 727 783 Loadfactor4 48.2% 48.0% 48.0% 48.0% 48.0% 48.0% 48.0% 48.0% 48.0% Assumes interruptible sales will remain relatively constant in the future. 2 Increase in totalsales over previous year. 3 Distribution losses and energy unaccounted for. Projected losses based on recent experience. 4 Ratio of average demand to peak demand on an annual basis. Projected loadfactor based on recent experience. Potential Woewodski Mining Facility At the present time, there are no definitive plans for development of a mining facility on Woewodski Island. Olympic Resources and Bravo Ventures have indicated that they expect to continue to assess the viability of mineral reserves on Woewodski Island. If it were determined that a viable mining operation would be feasible, it is expected that several facilities would be constructed on the island to process the ore and prepare it for shipping, house equipment, offices, 27 IPEC continues to pursue restructuring of its debt repayment which could contribute to lower retail rates. Kake - Petersburg Intertie Study 6-8 Final Report Power Supply Evaluation and Economic Analysis maintenance facilities and service quarters, and provide local utility services. In addition, dock facilities, fuel storage and handling facilities and ore loading facilities will be needed. In the past, most new mining facilities in Alaska have constructed a diesel -fueled powerplant on site. The on -site powerplants have been necessary because of the remote location of the mines, the high cost to build transmission interconnections, the general unavailability of lower cost power for purchase and the need for a highly reliable power supply that can best be provided with local generation. An example is the Kennecott Mining Company Greens Creek (KMC-GC) mine on Admiralty Island near Juneau. The KMC-GC mine was constructed with its own diesel fueled powerplant although some consideration was made during its early development to purchase power from Alaska Electric Light and Power (AELP). The on -site powerplant was deemed to be the best power supply alternative at the time, however, AELP is presently negotiating to interconnect the mine to AELP's system and sell surplus hydroelectric generation to the mine. The proximity of Woewodski Island to the existing Tyee-Wrangell-Petersburg power system and the availability of surplus hydroelectric power from the Lake Tyee project could make the interconnection of a mining facility to the local power system a good power supply option if a mine were to be developed. As a result, the KPTL study has included two primary route alternatives that would deliver power to Woewodski Island. The economic analysis also includes the potential impact on KPTL feasibility if a mining operation were interconnected to the local regional power supply system. For the purpose of this analysis, it has been assumed that a mining facility on Woewodski Island would have a 5,000-kW electric demand. This is in the range of but somewhat smaller than the 7,500-kW estimated electric load of the KMC-GC mine. Total annual energy requirements are assumed to be 35,000 MWh indicating an 80% loadfactor. Initial operation of a potential Woewodski mining facility has been assumed to be 2012 for this analysis. Representatives of the Woewodski mining interests have indicated that eight to ten years is a reasonable assumption of the time before a mine could become operational. Availability of Hydroelectric Generation Based on the foregoing projections of power requirements and the generating capabilities of the existing hydroelectric facilities, the net hydroelectric generation available for sale to Kake and a potential Woewodski mining facility can be estimated. It is important to note that hydroelectric generation capability is shown as an annual average. Actual generation can vary significantly from year to year based on local precipitation and other factors. Lake Tyee Project The generating capability of the 20-M W Lake Tyee project is presently committed to Petersburg and Wrangell. The Swan-Tyee transmission Intertie, currently under construction, will provide Ketchikan with access to generation from the Lake Tyee project that is surplus to the needs of Petersburg and Wrangell. Several estimates of the annual energy capability of the Lake Tyee Kake - Petersburg Intertie Study 6-9 Final Report Power Supply Evaluation and Economic Analysis project have been developed in the past; however, the loads connected to the project have never been large enough to evaluate how well the estimates compare with actual performance. Generally, it has been estimated that under average water conditions, the annual energy generation capability of the project is about 128,000 MWh. Hydroelectric generation is highly variable from year to year depending on local precipitation and other environmental conditions. As previously indicated, the average annual estimated energy generation capability of the Lake Tyee project is 128,000 MWh. Under dry, low water conditions, the energy generation is estimated to be 112,700 MWh whereas it could be as high as 154,800 MWh. The following table summarizes the energy generation available from the Lake Tyee project assuming average annual energy generation of 128,000 MWh from the project. TABLE 6-5 Estimated Hydroelectric Energy Generation Available From the Lake Tyee Project- Medium Growth, Average Water (MWh) 2005 2006 2007 2008 2009 2014 Lake Tyee Generation' 128,000 128,000 128,000 128,000 128,000 128,000 Energy Requirements 2 PetersburgMrangell 48,740 49,040 49,350 49,650 49,950 51,520 Ketchikan - 20,720 21,830 22,940 28,630 Net Energy Available 3 79,260 78,960 57,930 56,520 55,110 47,850 Assumed generation for purpose of this analysis. Actual generation will vary from year to year. Based on medium growth scenario, see Tables 6-4 and 6-5. Assumes completion of Tyee-Swan Intertie in 2007 Estimated annual generation from the Lake Tyee project available to Kake. As shown in the previous table, the net energy generation available from the Lake Tyee project in 2008 is 56,520 MWh assuming average water conditions and medium load growth in Petersburg, Wrangell and Ketchikan. This is more than enough needed to meet the energy requirement of 3,058 MWh in Kake in the same year. By 2014, available energy from Lake Tyee is 47,850 MWh and, as loads continue to increase in Petersburg, Wrangell and Ketchikan, the available energy from Lake Tyee will continue to decline. Further, in dryer than average conditions, the available energy from Lake Tyee will be less than shown in Table 6-5, potentially by as much as 16,000 MWh in any particular year. If energy generation is not available from Lake Tyee, IPEC will need to use its diesel generators in Kake to supply the necessary power requirement. As loads continue to grow in the interconnected region, however, new hydroelectric generation facilities could be constructed. The cost of power from these new facilities will potentially be higher than the cost of power from the Lake Tyee project. u Alternative energy generation estimates are typically derived using the lowest and highest measured streamflow, data of record at the project location. Kake - Petersburg Intertie Study 6-10 Final Report Power Supply Evaluation and Economic Analysis It is also important to note that the estimated surplus energy capability of the Lake Tyee project is sufficient to supply the assumed load of the potential Woewodski mining facility of 35,000 MWh per year. Potential New Hydroelectric Generation Facilities A number of new hydroelectric projects have been studied that could serve the Petersburg, Wrangell, Ketchikan, and Kake areas. Costs of these projects, as well as other factors including location, generating capacity, interconnected loads and the availability of better alternatives have precluded development of these projects. The development of a transmission interconnection system could make development of some of these projects economically and technically feasible at some later date. Hydroelectric projects that have been identified, the community they are closest to, and their estimated capacity and annual energy generation, include the following: • Lake Tyee Third Turbine23 — Petersburg/Wrangell; 10 MW, 1,000 MWh annually • Cascade Creek Project24 - Petersburg; 35 MW; 165,000 estimated MWh annually • Thomas Bay Project25 (Ruth Lake, Scenery Lake) — Petersburg; 30 MW, 174,000 MWh • Sunrise Lake — Wrangell; 4 MW; 12,200 MWh annually • Anita - Kunk Lake — Wrangell; 8 MW, 28,200 MWh annually • Virginia Lake— Wrangell; 12 MW, 42,700 MWh annually • Thoms Lake — Wrangell; 7.3 MW, 25,600 MWh annually • Whitman Lake — Ketchikan; 4.6 MW, 19,600 MWh annually • Connell Lake—Ketchikan; 1.9 MW, 11,640 MWh • Lake Grace26 — Ketchikan; diversion to Swan Lake project, 72,200 MWh annually • Mahoney Lake — Ketchikan; 9.6 MW, 45,600 MWh annually • Triangle Lake27 — Metlakatla; 3.9 MW, 16,900 MWh annually Of the projects indicated in the preceding list, several are farther along in the development process than others. The City of Ketchikan is presently working to license the Whitman Lake project so that it can be designed and constructed. In the past five years, the Cape Fox Corporation has undertaken licensing and design activities with regard to the Mahoney Lake but has been unable to secure necessary power sales agreements to support further development of the project at the present time. Tollhouse Energy is pursuing development of the 35-MW " A third turbine at the Lake Tyee project would not provide much additional annual energy generation. Rather, this turbine would allow for greater operational flexibility and greater capacity output at certain times. 24 The Cascade Creek project, as proposed by Tollhouse Energy, is one component of the larger Thomas Bay hydroelectric project identified by Hosey & Associates in a study for the City of Petersburg dated December 1985. The Cascade Creek project is the Swan Lake portion of the overall Thomas Bay potential development. " As proposed in the Hosey & Associates study, water from Scenery Lake and Ruth Lake could be diverted to the Swan Lake (Cascade Creek) portion of the overall Thomas Bay project development for additional power output. " The Lake Grace is located within the Misty Fjords National Monument and would require an act of congress if a hydroelectric project were to be developed. z A relatively short overhead and submarine transmission system would be needed to interconnect the electric systems of Ketchikan and Metlakatla Power & Light. Kake - Petersburg Intertie Study 6-11 Final Report Power Supply Evaluation and Economic Analysis Cascade Creek project and has indicated an interest in marketing the power output of the project to Canadian interests. This would require development of significant new transmission lines interconnecting the TWP system to BC Hydro. In addition to the projects listed above, Coast Mountain Hydro Corporation, a Canadian company, has proposed to develop the 115-MW Forrest Kerr hydroelectric project at the confluence of Forrest Kerr Creek and the Iskut River approximately 25 miles northeast of the Alaska -Canada border. The project will be run -of -river and the power output is to be sold to BC Hydro. At the present time, the BC Hydro transmission system only extends as far north as Meziadin Junction. A I I0-mile long 138-kV transmission line is proposed to be constructed from Meziadin Junction to the Forrest Kerr Project. Several mines in the general vicinity of the Forrest Kerr Project are looking to purchase power from BC Hydro so the new transmission line will have multiple uses. Coast Mountain Hydro indicates that it has the necessary permits for the project and is presently in the process of final design. Several contracts are in place to supply the turbines and pipeline and provide certain major civil works although funding for the project has not been fully arranged yet. See the map in Appendix B for a general location of the BC Hydro transmission system, the Forrest Kerr project and the Alaska power system. Use of Oil -Fired Generating Facilities Although it has been indicated that only hydroelectric generation would be transmitted over the KPTL, power generated at diesel power plants in Petersburg or Wrangell could be transmitted just as well. The use of diesel generators from outside Kake, however, would need to acknowledge the additional cost associated with transmission losses as well as the cost differential between surplus hydroelectric power and diesel generation. In some cases, it could be less costly to purchase out -of -area diesel generation than run local generators. This will need to be factored in to the contracts for power supply services. Economic Analysis of Interties Introduction and Assumptions An economic analysis has been conducted to determine if the benefits to be realized with the KPTL are greater than the costs of operating the KPTL and purchasing power from hydroelectric resources. Benefits will be achieved through the offset of diesel generation costs at Kake. Costs related to the KPTL are direct costs of operations and maintenance (O&M), certain incremental administrative and general (A&G) costs ofKWETICO, renewals and replacements (R&R) and the costs of purchasing power from the Four Dam Pool to serve Kake loads. The economic analysis has also been extended to evaluate the costs and benefits associated with serving loads at a potential mining facility on Woewodski Island. For the Woewodski mine, the costs of purchased power, and KPTL O&M and administrative costs are compared to the cost of local diesel generation on Woewodski Island. In preparing this analysis, several assumptions have been made. The most significant of these assumptions are: Kake - Petersburg Intertie Study 6-12 Final Report Power Supply Evaluation and Economic Analysis • Capital costs of the KPTL are to be grant funded meaning that there will be no capital recovery component associated with the KPTL. This assumption applies to the KPTL itself as well as the tap -line to be built to supply the Woewodski mine. • Base year (2005) delivered fuel prices are $1.80 per gallon in Kake decreasing by 10% in 2006 and increasing by 3% per year thereafterZs. Since fuel prices are highly variable and subject to radical changes, the impacts of alternative fuel price assumptions have been considered in a sensitivity analysis. • O&M and A&G costs will escalate at the assumed annual inflation rate of 2.5% per year. • Existing generation capacity will be maintained for emergency backup in Kake and at the Woewodski mining facility. Resulting net O&M costs will be significantly lower than if the generating units were operated to supply full load. • K WETICO, the owner of the KPTL will contract with others to provide maintenance on the KPTL systems. Administrative costs associated with ownership and operation of the KPTL will be minimal. • A reserve fund will be established to collect monies for major maintenance and repairs in the future. The reserve fund will also serve as a self-insurance fund since transmission lines are generally not insurable. • The cost of purchased power from the Four Dam Pool Power Agency will be inclusive of all transmission and delivery charges to the point of delivery, expected to be at the new switchyard interconnection point near Petersburg. • Energy losses over the KPTL will be 2% of the transmitted power to Kake and the Woewodski mining facility, based on engineering estimates. The economic analysis estimates the power production costs for Kake and the Woewodski mine that will be offset if the KPTL is constructed. These "benefits" are then compared to the costs of power purchases and KPTL operation to determine if the benefits of the KPTL exceed the costs. To be economically feasible, the Southeast Conference has indicated that the KPTL will need to show positive benefits on its own, i.e. the costs of the KPTL will be borne entirely by the users of the line and not melded in with other KWETICO transmission lines. To protect the interests of electric consumers, the total costs incurred by IPEC must be lower with the KPTL than without to show economic justification for the KPTL. It should be noted that costs of operation that are the same with or without the KPTL are not included in the analysis. Examples of these costs are capital recovery on existing generation plant and fixed O&M charges. " 1PEC's actual cost of generation fuel for its Kake operation averaged approximately $1.49 per gallon in 2004. The price of fuel has increased substantially in early 2005, averaging $1.92 per gallon in the first quarter and was as high as $2.22 per gallon in April before dropping to $1.99 per gallon in June 2005. Kake - Petersburg Intertie Study 6-13 Final Report Power Supply Evaluation and Economic Analysis Projected Cost of Existing Diesel Generation IPEC owns and operates diesel generators in Kake to supply the full power supply requirement of the local community. Total installed generation capacity is 2,585 kW in Kake supplied with three generating units. The primary cost in operating the diesel generators is the cost of fuel, which represented well over half the total power production costs in IPEC's system over the past three years. Without the need to operate their diesel generators except in emergency situations, IPEC should be able to reduce the O&M costs associated with the diesel generating units. The need for maintenance activities, lubricants and other consumables will be substantially reduced and maintenance and operating personnel can be assigned to other activities. Based on a review of IPEC's production costs, it is estimated that the variable O&M cose9 is about 3.0 cents per kWh. For the purpose of evaluating the potential costs and benefits associated with a mining operation on Woewodski Island, it is assumed that a diesel -fueled power plant would be installed and used to provide the full power requirement of the mine if the KPTL is not constructed. The variable O&M cost for this powerplant is assumed to be about 1.5 cents per kWh, comparable to the O&M cost for the existing powerplant at the KMC-GC mine. KMC-GC presently has a staff of four to operate its powerplant and also pays a monthly fee for a maintenance contract on the oil- fired combustion turbine installed at the mine powerplant. In addition to the offset of fuel and O&M costs, IPEC will benefit from the extension in operating life of its existing generators in Kake if the KPTL is constructed. Without the KPTL, continued regular operation of the existing generators would require their eventual replacement or major overhaul. For the purpose of this analysis, it has been assumed that without the KPTL, IPEC will install a 1,000-kW replacement generator in 2015 and another 1,000-kW replacement generator in 2020 at a present day cost of $400,000 per unit. With the KPTL, the cost of these new generators would be avoided. The cost of generation fuel is a critical factor in the cost of power production for IPEC. Fuel prices in Kake in April 2005 were reported at $2.22 per gallon, significantly higher than the average fuel price of $1.49 per gallon incurred in 2004. Fuel prices in IPEC's Hoonah service area typically average 20-30 cents more per gallon than in Kake30. It is not expected that diesel fuel prices will stay at the current high level, however, it is not expected that they will decrease to price levels experienced before 2004. Consequently, for the purpose of this analysis, the price of diesel fuel has been assumed to be $1.80 per gallon in Kake in 2005, reduced by 10% in 2006 and increased by 3.0% per year thereafter. This long-term increase assumption allows for the increase in fuel prices at a rate of 0.5% per year over the assumed rate of general inflation of 2.5% per year. ' Power production costs are often characterized as variable, those costs that are directly associated with each unit of operation, and fixed, costs that are not avoidable. The costs of operations personnel are considered fixed for IPEC's Kake service area. ao IPEC operates fuel storage tanks in Kake that allow for barge deliveries of fuel in large enough quantities to obtain somewhat lower prices when compared to other locations where truck delivery is needed. Kake - Petersburg Intertie Study 6-14 Final Report Power Supply Evaluation and Economic Analysis The following tables show the projected variable cost of power production over the next ten years at Kake, based on continued use of oil -fired generation. It is important to note that the variable cost of production is not the full cost of power production, but rather is the cost that could be directly avoided if the KPTL were constructed. TABLE 6-6 Projected Variable Cost of Power Production with Diesel Generation (PEC — Kake Service Area 2006 2007 2008 2009 2014 Energy Requirements (MWh)2,877 2,922 2,967 3,013 3,058 3,294 Fuel Price ($/gallon) 2 $ 1.80 $ 1.62 $ 1.67 $ 1.72 $ 1.77 $ 2.05 Power Production Cost ($000) Fuel Cost 3 $ 378 $ 346 $ 361 $ 378 $ 395 $ 493 Variable O&M 4 86 90 94 97 101 123 Subtotal $ 464 $ 436 $ 455 $ 475 $ 496 $ 616 Replacement Cost 5 - - - Total Production Cost $ 464 $ 436 $ 455 $ 475 $ 496 $ 616 (¢/kWh) 16.1 14.9 15.3 15.8 16.2 18.7 ' See Table 6-4. 2 Assumes decrease in fuel prices of 10% in 2006 and annual increases of 3% thereafter. 3 Based on average fuel usage of 13.7 kWh per gallon. 4 Estimated variable O&M cost of 3.0 cents per kWh based on IPEC identified production cost items of miscellaneous power generation expenses, generator overhaul and maintenance expenses, maintenance supervision and maintenance salaries and miscellaneous. Does not include generation salaries and costs associated with maintenance of structures. Assumed to increase annually at the assumed rate of general inflation. 5 No replacement of generation plant is expected in Kake until after 2014. As previously indicated, it is not known at the present time if or when a mining facility will be developed on Woewodski Island. The following table provides an estimated cost of power production based on diesel generation assuming a mine becomes operational in 2012. TABLE 6-7 Projected Variable Cost of Power Production with Oil -Fired Generation Assumed Woewodski Island Mining Facility 2012 2013 2014 2015 2016 2021 Energy Requirements (MWh)' 35,040 35,040 35,040 35,040 35,040 35,040 Fuel Price ($/gallon) 2 $ 1.93 $ 1.99 $ 2.05 $ 2.11 $ 2.18 $ 2.52 Power Production Cost ($000) Fuel Cost 3 $ 5,021 $ 5,171 $ 5,327 $ 5,486 $ 5,651 $ 6,551 Variable O&M 625 640 656 673 690 780 Subtotal $ 5,646 $ 5,811 $ 5,983 $ 6,159 $ 6,341 $ 7,331 Replacement Cost 5 - - - Total Production Cost $ 5,646 $ 5,811 $ 5,983 $ 6,159 $ 6,341 $ 7,331 (¢/kWh) 16.1 16.6 17.1 17.6 18.1 20.9 ' Assumed to be a 5-MW load at an 80% annual loadfactor Kake - Petersburg Intertie Study 6-15 Final Report Power Supply Evaluation and Economic Analysis 2 Assumes fuel prices to be the same as in Kake. 3 Based on average fuel usage of 13.5 kWh per gallon. " Estimated variable O&M cost of 1.5 cents per kWh, increased annually at the assumed rate of general inflation. s No replacement of generators will be needed during this period. KPTL Annual Costs A number of regular maintenance activities will be needed to inspect the KPTL condition and make necessary repairs. Generally, these activities will be relatively minor, particularly in the early years of KPTL operation. Structures, guys, insulators, conductors and submarine cable terminations will need to be inspected visually and a program to regularly clear trees and brush from the right of way will need to be established. It is expected that KWETICO, as owner of the KPTL, will contract out the regular inspection and maintenance activities to local utilities or other providers of this kind of service. The final design of the KPTL is expected to include relatively short "ruling spans" which should reduce maintenance costs and the likelihood of damage due to various environmental factors. Further, a significant portion of the KPTL is expected to be located adjacent to USFS roads which will make access much easier and keep maintenance costs lower than would be experienced if the KPTL were located in remote locations. Much of the route of the KPTL will include a full service access road to provide regular access for maintenance. All of the planned, regular maintenance activities for the KPTL will be scheduled during the summer months when access to the line is not restricted by weather conditions. Periodically, access to the KPTL will be needed in the winter to make repairs to the line necessitated by damage caused by falling trees or other factors. If the KPTL were located adjacent to roads maintained all year, winter time access will be relatively straightforward. Indications from local residents would indicate, however, that snow cover in the general vicinity of the proposed KPTL routes will not generally be a significant deterrent to winter access, even on the KPTL access road which is not expected to be plowed in the winter. Consequently, the annual cost of maintenance for the KPTL is not expected to be noticeably different for the KPTL located adjacent to year around maintained roads or along the planned maintenance road. Depending on the availability of maintenance equipment in Kake, it may be necessary to purchase certain maintenance vehicles and equipment for workers to use when maintenance is needed. Included in this equipment inventory would be two all -terrain vehicles, two trailers, two flatbed trucks, and two maintenance buildings. The estimated cost of this equipment is $975,000 and one set would be stationed on the Lindenberg Peninsula while the other is stationed in Kake. Arrangements with IPEC may make it possible for KWETICO to rent necessary equipment from IPEC as available. The estimated costs of maintaining the KPTL are expected to increase somewhat over time as clearing requirements increase and the system gets older. The estimated costs of O&M for the KPTL are provided in Table 6-8. Basic assumptions used in the development of the O&M estimate include the following: Kake - Petersburg Intertie Study 6-16 Final Report Power Supply Evaluation and Economic Analysis • The existing Forest Service roads will be maintained by the USFS. The additional roads that are added in the respective KPTL route estimate(s) will be maintained by KWETICO and are reflected in the KPTL O&M cost estimate. • The O&M estimates provided in Table 6-8 represent the routes estimated and studied in the "Center" corridor of the study area. The O&M costs do not reflect the heavily forested areas of either the Southern or Northern routes. • The values represented for "Tree Trimming" are the costs to remove and manage the danger trees that are expected to be an issue in the early years. In the later years management of growth in the vicinity of the KPTL will be the focus. • IPEC has standby generation in Kake which should be maintained to support scheduled and unscheduled circuit outages. The standby generation will also minimize the need for costly outage restoration in bad weather or emergency response and increase reliability. • The road network will permit access to most of the structures year around. Special maintenance equipment (track vehicle with trailer) with covered storage has been budgeted for the areas identified on the KPTL route map identified as Nodes T2 and K. • The proposed design of the KPTL has focused on minimizing O&M costs by providing maintenance personnel the use of a road network that will allow access to the KPTL. The KPTL has been located adjacent or close to the road network to facilitate ease of construction and access for O&M. • Should the Sitka Transmission "Tie Line" be completed to Kake the maintenance and reliability of the O&M budget should be re-evaluated. TABLE 6-8 Kake - Petersburg Transmission Line Estimated Annual O&M Costs Years 1-5 Years 6-10 Years 11-15 Years 16-20 Maintenance of Equipment $ 30,000 $ 35,000 $ 45,000 $ 60,000 Tree Trimming -*K 55,000 60,000 70,000 80,000 Overhead Line Inspections 10,000 15,000 20,000 25,000 Regular Repairs/Replacements 25,000 35,000 45,000 45,000 Submarine Terminal Inspections 5,000 10,000 10,000 10,000 Switchyard Maintenance 10,000 10,000 10,000 10,000 Miscellaneous 20,000 20,000 20,000 20,000 Total $ 155,000 $ 185,000 $ 220,000 $ 250,000 Unit Cost (0/kWh) 5.0 6.0 7.1 8.1 ' Unit cost of O&M assuming energy sales of 3,100 MWh to Kake. If the Woewodski Tap is built, the additional annual O&M cost is estimated to be approximately $50,000. If the mining facility is developed and the Woewodski Tap is built these additional costs will be borne by the mining facility. In addition, the mining facility would be expected to Kake - Petersburg Intertie Study 6-17 Final Report Power Supply Evaluation and Economic Analysis pay a pro rata share (based on annual energy sales) of the annual KPTL O&M expense since the KPTL will be an integral component in delivering power to the Woewodski mine. KWETICO, will incur certain expenses related to policy oversight, accounting, general administration and management. These costs would be expected to be paid by all users of the KWETICO transmission system. The following table provides the estimated administrative costs of KWETICO for the KPTL based on the current budget for KWETICO associated with the Juneau -Greens Creek transmission line. TABLE 6-9 Estimated Annual KPTL Administrative Costs' Annual USFS Road Easement Fee $ 10,000 Submarine Cable Easement Fee 10,000 Directors and Officers Liability Insurance 2 4,500 General Liability Insurance 2 5,000 Accounting and Audit Expenses 2 5,000 Legal Fees 2 5,000 Miscellaneous 3,000 Contingencies 3,000 Total $ 45,500 Unit Cost (¢/kWh) s 1.47 Based on KWETICO currently projected costs. 2 Assumes cost sharing with Juneau -Greens Creek transmission line. s Unit cost assuming 3,100 MWh sales to Kake. O&M and administrative costs are expected to be recovered through charges to IPEC and the Woewodski mine that are directly proportional to the power transmitted. The charges could be included as part of the wholesale cost of power. In addition to O&M and administrative costs, a charge related to the accrual of reserve funds to pay for major repairs to the KPTL should be included in the costs charged to IPEC and the Woewodski mine. These costs are not expected to be significant in the early years of KPTL operation and are in lieu of a depreciation charge. The reserve fund charge is also a means for "self -insuring" the KPTL since transmission lines are generally not insurable. As a basis for the amount of this repair and replacement (R&R) reserve that should be established, the estimated cost of a major repair or replacement of a significant system component can be used. It can also be reasonably assumed that with a new system, the timing of such a major repair or replacement would be several years in the future. For the KPTL, a reserve requirement of $1.0 million has been estimated based on the cost of a major submarine cable repair. Annual deposits of $46,000 for the KPTL would be needed to build up the reserve fund balance to these amounts within 15 years with accrued interest at 5% per year. Kake - Petersburg Intertie Study 6-18 Final Report Power Supply Evaluation and Economic Analysis Cost of Purchased Power With the KPTL, power is expected to be purchased from the Four Dam Pool Power Agency (FDPPA) by IPEC for use in Kake. At the present time, the FDPPA firm power sales rate to the members of the Four Dam Pool is 6.8 cents per kWh. This rate could increase somewhat in the future but is expected to remain relatively constant for the next few years. Discussions with FDPPA management indicate that power could possibly be sold to IPEC at a rate that is comparable to the existing firm power sales rate. A major consideration, however, are the tax implications to the FDPPA if power is sold to entities that are not municipally -owned utilities31. If sales of power to IPEC were to negatively affect the interest rate benefits presently realized by the FDPPA, the power sales rate to IPEC would potentially need to be higher than the current firm power sales rate. There is some possibility that IPEC could be sold power at an interruptible power sales rate because of the possibility of interruption in availability 32. The Four Dam Pool has sold power to certain customers on an interruptible basis in the past at lower rates than the firm power sales rate. For purposes of this study, it has been assumed that power can be purchased from the Four Dam Pool by IPEC at 6.8 cents per kWh through 2029. This cost would include delivery charges to Petersburg33 Although power should be available from the Lake Tyee Project to sell to a potential mining facility on Woewodski Island, the power sales rate is uncertain. The rate would most likely need to be higher than the 6.8 cents per kWh firm power sales rate charged to the FDPPA members. The rate cannot be predicted at this time, however, so 6.8 cents per kWh has been assumed for purpose of this analysis. Estimated Savings with the KPTL Based on the foregoing, the cost of power to IPEC and the Woewodski mining facility with the KPTL has been projected. This cost includes the cost of purchased power and the costs of KPTL O&M and administration allocated to each line. The costs with the KPTL have then been compared to the costs without the KPTL to determine the net savings to IPEC and the Woewodski mine associated with the KPTL. The cost of power with the KPTL and the estimated savings in each load center are shown on an annual basis in the following tables assuming that the KPTL is constructed and begins operation in 2009. An additional case has been run assuming that the Woewodski mine begins operation in 2012. Until the Woewodski mine begins operation, IPEC will need to cover the full operating cost of the KPTL. 31 In 2004, the FDPPA issued tax-exempt revenue bonds in an amount consistent with the projected percentage of its total energy sales to Wrangell, Petersburg and Ketchikan, all municipal utilities. Since a portion of the FDPPA energy sales is to cooperative utilities, taxable bonds were also issued at the same time. If the ratio of FDPPA energy sales to taxable and tax-exempt agencies changes, the FDPPA may be restricted as to what type of entity it sells power to. A legal analysis will be needed to fully define this issue. " As indicated previously and shown in Table 3-8, it is expected that the fall power requirement of Kake can regularly be supplied from the Lake Tyce project for several years to come, but cannot be fully guaranteed. 33 Energy losses from Lake Tyee to the KPTL tap point near Petersburg are also expected to be effectively included in the power sales rate. Since the metering point for power sales to Kake is to be at the tap point, energy losses between the tap point and Kake will need to be included as a cost to IPEC. Kake - Petersburg Intertie Study 6-19 Final Report Power Supply Evaluation and Economic Analysis TABLE 6-10 Projected Cost of Power and Savings with the KPTL IPEC - Kake Service Area (Without Woewodski Mine) Energy Requirements (MWh)' Energy Purchased (MWh) Y Purchased Power Price (¢/kWh) s Annual Costs with KPTL ($000) Purchased Power KPTL O&M s KPTL A&G a KPTL R&R Total Annual Costs with KPTL Unit Cost (01kWh) a 2009 2010 2011 2012 2013 2018 3,058 3,104 3,151 3,198 3,246 3,496 3,119 3,166 3,214 3,262 3,311 3,566 6.8 6.8 6.8 6.8 6.8 6.8 $ 208 $ 211 $ 214 $ 217 $ 221 $ 238 171 175 180 184 189 255 50 51 53 54 55 63 46 46 46 46 46 46 $ 475 $ 483 $ 493 $ 501 $ 511 $ 602 15.5 15.6 15.6 15.7 15.7 17.2 Savings with KPTL ($000) 9 $ 21 $ 35 $ 49 $ 65 $ 80 $ 167 Savings (¢/kWh) 10 0.7 1.1 1.6 2.0 2.5 4.8 Breakeven Cost of Power (¢/kWh) 11 7.3 7.8 8.2 8.6 9.1 11.4 NPV Savings (2009-2028)($000) $ 1,257 Discount Rate 6.0% ' See Table 6-4. z Includes estimated transmission losses of 2% between Petersburg and Kake. 3 Estimated price of power purchased from the Four Dam Pool Power Agency. ° Estimated cost of power purchased from the Four Dam Pool Power Agency. e KPTL O&M cost as shown in Table 6-8 fully allocated to IPEC. Assumes 0&M costs increase annually at the assumed rate of general inflation. e KPTL A&G cost as shown in Table 6-9 fully allocated to IPEC. Assumes A&G costs increase annually at the assumed rate of general inflation. r Annual deposit to KPTL R&R fund to establish a $1.0 million balance in 15 years with accrued interest at an assumed 5% interest rate. Cost is fully allocated to IPEC. 8 Total Annual Costs divided by Total Energy Requirement. 9 Total Production Cost for the diesel generation case (see Table 6-6) less Total Annual Costs with KPTL. 0 Savings with KPTL divided by Total Energy Requirements. " Estimated price for purchased power over the KPTL that could be paid and produce no annual savings. As shown in Table 6-10, the estimated savings to IPEC in 2009, the first year of KPTL operation is $21,000. Table 6-10 also shows that the average charge for electric service in Kake could potentially be reduced by 0.7 cents per kWh with the KPTL 34. Annual savings with the KPTL are expected to increase each year primarily due to assumed increases in the cost of diesel fuel that the KPTL will offset. In 2018, the projected savings are 4.8 cents per kWh. Over the first twenty years of KPTL operation, 2009-2028, the net present value of savings to IPEC with the KPTL is $1,257,000, assuming a 6% discount rate3s 34 Due to the effects of the State Power Cost Equalization program, any savings in 1PEC's cost of power due to the KPTL would not necessarily show up in reductions in the effective charges for residential electric service. Rather, the amount of subsidy from PCE provided to IPEC would be reduced. " The discount rate for IPEC is based on 1PEC's cost of capital, which is generally a relatively low interest rate of 5%- 6%. Kake - Petersburg Intertie Study 6-20 Final Report Power Supply Evaluation and Economic Analysis If a mining facility were developed on Woewodski Island and power sales to the mine began in 2012, the costs of operating and maintaining the KPTL could be shared between IPEC and the mine. With a mining operation, the net present value savings to IPEC with the KPTL over the period 2009-2028 would be $3,778,000. The net present value savings to the Woewodski mine with the KPTL would be $21,195,000 over the 17 year period, 2012 through 2028, assuming an 8% discount rate. This is nearly double the estimated cost to construct the Woewodski Tap, meaning that the mine could pay to construct the Woewodski Tap and would still realize significant benefits it could purchase power from the FDPPA at 6.8 cents per kWh. A significant benefit to IPEC with the KPTL will be the ability to establish economic incentive rates for new large commercial/industrial electric consumers. As long as regular retail energy sales remain relatively stable in Kake, the fixed costs of IPEC's distribution system and the KPTL will be recovered through normal rates. Consequently, an economic incentive rate based on the incremental cost of purchased power (6.8 cents per kWh in the above table) plus a nominal margin could be established36. This rate would need to be negotiated on a case by case basis and should have a time limit to it (e.g. 5-10 years), but could be used to attract new commercial activity to the Kake area. Economic incentive rates have been used in recent years by Sitka and other utilities. Sitka has surplus hydroelectric generation capability and has recently implemented an interruptible energy sales rate to commercial customers to encourage greater electricity sales. The interruptible energy sales rate is less than the normal commercial energy rate. The savings estimated for IPEC's Kake service areas could, but would not necessarily be transferred directly through to a reduction in rates for electric service in Kake. IPEC presently charges the same rates for all of its service areas37 based on the combined costs of the entire system. The estimation of IPEC's power rates is beyond the scope of this study. The State's Power Cost Equalization program would also affect how much of the Intertie provided savings would be realized by residential consumers in Kake 38. The PCE program is funded each year by the State legislature and its funding magnitude as well as its continuation is uncertain. Sensitivity of Results to Alternative Assumptions As previously indicated, a number of assumptions have been made in preparing the comparative economic analysis used to determine the benefits of the KPTL. Principal among the variables with significant impact on the results are load growth in Kake, future diesel fuel prices and future inflation. Alternative assumptions for these variables could potentially produce significantly different results. For each of the alternative cases in Table 6-11, it is important to note that only "The Four Dam Pool Power Agency would also need to be involved in any discussions of additional energy purchases for economic incentive purposes if a special interruptible energy purchase rate were to be pursued. IPEC has indicated that it may need to establish rates in each service area based on the cost of service in the respective areas, at the request of the Regulatory Commission of Alaska (RCA). " Essentially, the PCE program provides a subsidy to residential electric consumers. The amount of the subsidy is based on the local cost of power production. According to the program formula, if the cost of power production decreases, as it does when fuel prices drop, the magnitude of the subsidy would also decrease. The amount of the subsidy is also a function of the legislatively approved contribution to the program each year. Kake - Petersburg Intertie Study 6-21 Final Report Power Supply Evaluation and Economic Analysis the specifically identified assumption is changed. All other assumptions remain the same as provided in the base case. Detailed annual costs for each scenario are provided in Appendix F. TABLE 6-11 Comparison of Savings with the KPTL using Alternative Assumptions IPEC — Kake Service Area (Without Woewodski Mine) Annual Cost of Power (¢/kWh)' 2009 2014 Without Without 30-Year NPV Savings KPTL With KPTL KPTL With KPTL with KPTL 2 Base Case 3 16.2 15.5 18.7 16.9 $ 1,257,000 High Fuel Price ° 20.4 15.5 24.5 16.9 $ 3,565,000 High Kake Loads a 16.2 12.9 18.7 13.6 $ 3,683,000 No Load Growths 16.2 16.2 18.7 18.6 $ 420,000 ' Estimated annual cost of power production based on the cost of fuel and diesel generator O&M for the "Without KPTL" scenarios and based on the cost of purchased power and KPTL 0&M for the "With KPTL" scenarios. 2 Estimated cumulative present value savings of KPTL benefits between 2009 and 2028 to January 2005. Assumes discount rate of 6%. 3 Based on assumptions used in Tables 6-6 and 6-10. " Assumes 2005 fuel cost of $2.00 escalated at 4.0% per year thereafter. s Assumes large commercial and interruptible energy loads will increase in 2009 to the approximate level experienced in 2002. After 2009, energy consumption for all customer Gasses is assumed to increase 2% per year. Note that the fuel costs assumed in this case are the same as used in the Base Case. 6 Assumes energy loads in Kake remain the same as expedenced in 2004 throughout the projection period. Kake - Petersburg Intertie Study 6-22 Final Report Section 7 Other Factors Integration With Southeast Alaska Intertie System The KPTL is an important part of the previously defined Southeast Alaska Intertie System. Initially, the KPTL will serve as a component of the southern Southeast Alaska Intertie System that will interconnect the communities of Ketchikan, Petersburg, Wrangell, Kake and Metlakatla. The KPTL will offer the potential of providing transmission service to mining loads on Woewodksi Island. Eventually, the KPTL will serve as a vital link in the transmission interconnection to Sitka and eventually to Juneau. The connection to Sitka could offer additional hydroelectric resources to the southern Southeast Alaska communities. The Southern Woewodski Route Alternative of the KPTL provides the additional benefit of a potential interconnection to Prince of Wales Island and Alaska Power Company's electric system. With the Southern Woewodski Alternative, the KPTL would be located on the southern end of Kupreanof Island. A submarine cable to Prince of Wales Island from this location could potentially be preferred to the previously proposed submarine cable between Ketchikan and Prince of Wales Island. The Woewodski Tap Alternative could also be used as a potential connection point to Prince of Wales Island. Integration with BC Hydro System BC Hydro owns and operates a very large electric power system in British Columbia, Canada. BC Hydro's 138-kV transmission system in the vicinity of Southeast Alaska presently extends only as far north as Meziadin Junction just northeast of Stewart, B.C. A I I0-mile long 138-kV transmission line is proposed to be constructed from Meziadin Junction to the Forrest Kerr Hydroelectric Project located approximately 25 miles from the Alaska border on the Iskut River. Several mines in the general vicinity of the Forrest Kerr Project are looking to purchase power from BC Hydro so the new transmission line will have multiple uses. It has also been speculated that BC Hydro may be considering the possibility of extending its transmission system as far north as Dease Lake about 130 miles north of the Forrest Kerr Project. Dease Lake is relatively close to the Stikine River. Tollhouse Energy, the prospective developers of the Cascade Creek Hydroelectric Project near Petersburg, has proposed the concept of constructing a transmission line up the Bradfield Canal to interconnect with BC Hydro's system at the Forrest Kerr Project. The purpose of this line from Tollhouse's perspective would be to provide Southeast Alaska with access to other power markets. Tollhouse indicates that it could provide power to BC Hydro from the Cascade Creek Project to meet obligations of the Bonneville Power Administration (Bonneville) to supply a certain amount of power to Canada pursuant to an international exchange agreement. This exchange agreement requires Bonneville to supply power to BC Hydro in compensation for the additional generation realized by the hydroelectric generators on the Columbia River resulting Kake - Petersburg Intertie Study 7-1 Final Report Other Factors from upstream water storage projects located in Canada. Tollhouse Energy has indicated that it has had preliminary discussion with Bonneville and BC Hydro on this matter. At the present time, there are no plans to develop a transmission line to interconnect BC Hydro and Southeast Alaska. BC Hydro has conducted technical studies and prepared cost and schedule estimates related to its options in extending its existing transmission system north on the Canadian side of the border. Kake - Petersburg Intertie Study 7-2 Final Report ►DM71 Electric Load Flow and Design Configuration Analysis Southeast Alaska Intertie Project Kake — Petersburg Intertie Prepared by Commonwealth Associates, Inc. Kake - Petersburg Intertie Study Final Report