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ALASKA PO~iER AUTHOR1TY
SUSITNA HYDROELECTRIC PROJECT
PROJECT OVERVIEW
FI I~AL DRAFT
fViARCH 12J 1981
Acres American Incorporated
Suite 329
The Clark Building
Columbia, Maryfanct 21044
Telephone (301) 992-5300
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ALASKA POWER AUTHORITY
SUSITNA HYDROELECTRIC PROJECT
PROJECT OVERVIEW
TABLE OF CONTENTS
Page
1 -INTRODUCTION .................... g ............................ •: ••••••••••••••••• , • • 1
2-THE DECISION PROCESS .•...•........•.••. o •. ~ ••• o....................... 4
3-ALASKA POWER AUTHORITY ... ~ •.....•.••.•.•. ~ .•...................•...•• ~ 5
I 4 -HISTORY OF THE SUSITNA PROJECT............................... . • • • . . • • • • 6
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5-ECONOMIC SCENARIOS AND PARAMETERS..................................... 9
6-MARKET AREA AND POWER DEMAND FORECASTS ...••....•..•.........•..•.. ~""" 12
7 -SUSITNA BASIN STUDIES..................................................... 13
7 .1 -Hydro 1 ogy ••••.•.•.••••••.•..••• ~ .................. , • • . . • • • . . . • • • .. • 13
7.2-Site Exploration and Geology •..............•....•...••......•••• 14
7.3-Seismic Considerations ................ ~ ........................... 17
7.4-Dam Site Selection .••••••.....•...•...•.....•.. ~ ..••...••..••••. 19
8 -GENERATION EXPANSION PLAN ....... 0 •• 8 ••• H ••••••••••••••••••••••••••• " .. ~ 20
9-SUSITNA HYDROELECTRIC DEVELOPMENT~···································· 23
10 -ENVIRONMENTAL PROGRAM ................................... w. • • • • • • • • • • • • • 25
11-ANALYSIS OF SOCIOECONOMIC IMPACTS ................ ~ .....•............... 27
12-ECONOMIC FEASIBILITY AND NET ECONOMIC BENEFlTS ......................... 28
13 -POWER AND ENERGY MARKET! NG ....... ., •......•..••............•••. ., . • . . . .. .. . 29
14 -PUBLIC PARTICIP!~TION PROGRAM............................................ 30
15-LICENSING AND PERMITTING PROCEDURES ...•.••..•.•...•........•.•...•.••• 31
16 -FINANCIAL FEASI BILl TV ANALYSIS .......................... , . . • . . • . . . . . .. .. • 31
17-SECURITY OF PROJECT COST AND REVENUE STRUCTURES ........................ 33
18 -ORGANIZATION AND MANAGE~1ENT........... . • • . . . • • . . • • . . . • . • . . . • . . . • . . . • • .. 34
19-IMPLICATIONS OF PROCEEDING .•... ~·········"*·························•· 35
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PROJECT OVERVIEW
SUSITNA HYDROELECTRIC PROJECT
1 -INTRODUCTION
Acres American Incorporated (Acres) was commissioned by the Alaska Power
Authority (APA) on December 19lt 1979, to conduct a detailed feasibility study of
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the Susitna Hydroelectric Project, evaluate the environmental consequences of rQ r....
any proposed development, and prepare a license application to be filed with the ,... .
Federal Energy Regulatory Commission (FERC) in the event that the State of
Alaska regards filing such an application as being in its best interests ..
"'If development eyer takes place in the Susitna River Basin (see Figure 1 for a
basin map annotated to show potential dam sites), it is likely that extensive,
costly and lengthy construction activity will occur there. Benefits of long
term and relatively low cost electrical energy may be possible.. Yet, permanent
alteration of the environmental setting in the Basin will be inevitable.
~~~-~A
The basis for a decision to proceed with the Susitna Hydroelectric Project
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requires that a variety of scientific,Aengineering, financial and economic
disciplines be brought together. Investigations and analysi_? in each of these
~ v...a~ v.A._
areas must necessarily be thorough and, further, should be eonsistenfZwit~
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.. A DAM. SITE
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t;~
FIGURE !
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state-of-the-art techniques. /\.Documentation of these activities tends to be
voluminous as vJell as highly technical in nature1 "J!ie pui"pose-e-f this Project
~~
Overview is/\.to provide a revie\'l of all major· aspects of the pro~fect and its
objectives~ determining in principle whether these can be met. In effect~ it
brings together complex issue's and detailed techn·ical results so that
decisionmakers within the State of Alaska and interested members of the p~blic
can assess results achieved to date and determine what the future course of
action should be with respect to the Susitna Hydroelectric Project.
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Succeeding sections are arranged to present the framework within which the
~~ t,~) ~
Susitna Study ..n.. conducted A and ~ilej;e·liminary results achieved after the first
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full year of effort. Section 2 describes the decision process ~~reqtlif>~ s~
two reports which APA must make to the Legislature. The~at~re and the role of
t..O API\ ~ addressed in Section 3. After a brief history of the Susitna Project is
presented at Section 4, Sections 5 through 13 consider technical, economic,
environmental and marketing aspects. An introduction to the important public
part.;cipation program follows at Section 14. Licensing and permitting is
described in Section 15. Financial matters, including financial risks, are
discussed in Sections 16 and 17. Section 18 describes the organizational
arrangements necessi\ry for effective project implementation. A final section
(19) reviews the implications of proceeding with the work after the first
decision point on March 31, 1981.
A detailed appendix to this overview has been prepared~ It contains a complete
chapter to correspond to each of the sections appearing herein. Copies of the
detailed appendix have been furnished to APA and to its external review panel.
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In addition to this project overview, a second major document bears upon the
March 31, 1981, decision process. The Development Selection Report (some of
t '"c. a..r (> OV?v~
which is enpap~~lat~-ed in Sections 7, 8 and 9 below) provides the detailed basis
upon which a recorrmendation has been made by Acn=s to APA regarding the proposed
site on which the 1981 program will focus.
2 -THE DECISION PROCESS
_,...,.,. ... --· •.. ,
Two important decision points have. been designated by~· ·This
legislation requires that~~ subm1t~a preliminary
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report to the Governor and to the State Legi s1 ature "recommending whether work
should continue on the project." 0 A second decision point, also explicitly
legislated, occurs in April 1982, when APA must submit a secon~ report
recommending whether work should continue on the Susitna Hydroelectric Project
and other viable alternatives. It is important to note that neither of these
~ decision points is intended to produce a corrrnitment to construct a project.
Indeed, construction of dams and other facilities in the river channel is not
possible until or unless an FERC license is awarded.
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In addition to work being ~~by the Acres team, several other ongoing
activities bear upon the decision making process. A separate comprehensive
study of alternative ~tisfying future Railbelt energy and load
projections\.~~aeeemp."J-4-sl!etf by an independent consulting firm under
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contract to the State of Alaska. The Susitna project y.:i-11 represent"' one of
many possible alternative.s considered in that effort.. Other alternatives
include, but are·nQt necessarily limited to, thermal energy (particularly coal
c
fired, since Alaska is richly endowed with significant undeveloped coal
resources), wind, solar, non-Susitna ·hydropower, and tidal power (for which a
preliminary assessment of potentials and constraints is now underway). In
addition, APA has contracted with a major consulting firm specializing in
electrical transmission to consider an intertie between Anchorage and Fairbanks. ~is lattei'" project may be beneficial irrespective of whether the Susitna River
Basin is ever developed, ~t?the results of the study will necessarily be
important to the analysis of transmission faci.lities-required for a Susitna
Project.
3 -ALASKA POWER AUTHORITY
APA was created 1n 1976, by action of the State Legislature, as an autonomous
branch of the Alaska Department of Commerce and Economic Development. The basic
miss-ion of this agency is to develop energy generation projects (excluding
nuclear) in an economical manner. Governed by a Board of Directors, APA employs '
tc:s
an Executive Director and a staff which carr~ out day-to-day activities.
Directors of Ertginef;rin.[, Finance, and Public Participation assist the Executive -..........._
"•1 .......... ~.
Director i ·performing his functions~ The staff also includes a full-time
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Native Inspector, an Administrative Assistant, and Project Engineers and other
supporting personnel .. An organization chart is provided as Figure 2.
As of the end of 1980, APA was engaged in six reconnaissance studies, four
design projects, tt-10 license application submi~tals, five construction projects, .
and eleven feasibility studies (Susitna being the largest).
Procedures adopted by APA for the Susitna study include the formation of a
Steering Corrmittee to ensure that interested State and Federal Agencies are kept
informed throughout the course of the work and to provide a vehicle whereby
their concerns and recommend at ions can be taken into account as the studv ..
~.regresses. Heavy emphasis is also placed on the opinions and concerns of the
public and an aggressive Public Participation Program is conducted.
4 -HISTORY OF THE SUSITNA PRO,JECT
Because of its strategic location between Anchorage and Fairbanks, the Susitna
River has long been regarded as worthy of consideration for development of its
hydroelectric pote·ntial. Shortly after World War II, the U.S. Bureau of
Reclamation (USSR) did an initial Territory-wide reconnaissance~ noting the vast
hydroelectric potential in Alaska, and placing particular emphasis upon the
perceived advantages of a Susitna Hydroelectric Project.
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. BOARD OF
DIRECTORS
. .
EXECUTIVE
DIRECTOR ..
NATiVE DIRECTOR OF DIRECTOR OF DlRECTOR OF ADMlNISTRATL~£
PUBLIC
-iNSPECTOR FlNANCE ENGiNEERING PARTICIPATION ASSISTANT
..
:
.. FlNANClAL ENGINEERING PUBLlC OFFICE
PARTICIPATION
STAFF ·STAFF CLERICAL STAFF
ALASKA POWER AUTHORITY ORGANIZATION
. FIGURE 2
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The U.S. Department of Interior (of which USBR was a part) undertook
geotechnical and other field investigations and, in 1961, proposed authorization
of a two-dam system on the Susitna River. This report was later updated in 1974
by the Alaska Power Administration (also a part of DOI) and the desirability of
proceeding with the project was reaffirmed.
The U.S. Army Corps of Engineers (COE) was also active in hydropower
investigations in Alaska in the 1950's and 1960's. Focusing its initial
attention on the Rampart Project on the Yukon River, the COE found by the early
1970 • s that the environmental consequences and 1 imited market for Rampart power
militated against its oevelopment. The 1973 energy crisis rekindled interest in
hydropower development and the COE was commissioned by the U.S. Congress in 1974
to conduct a pre-feasibility study of the Susitna Project. The results of this
effort were first referred to the Office of Management and Budget in 1976 ..
Further geotechnical work followed and a new COE report was issued in 1979~
·The State of Alaska itself commissioned an assessment of t.he Susitna Project by
the Henry J. Kaiser Company in 1974.
Although differences appeared in the various proposed development schemes~ all
of the foregoing organizations· were unanimous in recommending that-Susitna
hydroelectric potential be developed.
After APA was formed, the State of Alaska elected to proceed independently with
a major feasibility study. A detailed Plan of Study was distributed widely in
February 1980. Subsequent modifications, some of which were occasioned by
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statements of publ1c concerns, were directed by APA itself as well as by the
State Legislature. Salient features of the Plan as it now stands are these:
-The development of electrical energy demand forecasts has been accomplished
independently by the Institute for Social and Economic Research (ISER),
University of Alaska •
The study of alternatives, as noted earlier$ is being accomplished separately
from the Susitna Study.
The Public Participation Program is handled by APA itself rather than by Acres
as originally proposed.
-Major tasks have been designated to handle each facet of the work. These
tasks include such activities as load forecasting, surveys and field support
activities, hydrology, seismic studies, geotechnical investigations, design
studies, environmental studies, transmission studies, development of cost
estimates and schedules, licensing activities, finance and marketing studies,
public participation and administration. Each task is further subdivided into
subtasks so that more than 150 separately defined study activities wi11 be
completed prior to submitting a license app.lication to FERC in June 1982--if
affirmative decisions are made at the March 1981 and Aprii 1982 milestones.
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5 -ECONOMIC SCENARIOS AND PARAMETERS
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The viability of a Susitna Hydroelectric Project depends to a gr·eat extent on
the costs of generating electrical energy by alternative means. Thus, for
example, if the cost of natural gas from the Cook Inlet area rises more rapidly
in future years than the general inflation rate, it is likely that utilities
will turn to sources other than gas for future expansion of generating systems.
Hydropower might then enjoy a more favorable position. Conversely, if certain
fuel prices rise less rapidly than the general inflation rate, hydropower may
not necessarily represent an economical choice for future system expansion.
Other factors will also affect Susitna viability. For example~ demographic
variables, energy demand, uni_t labor costs, other commodity prices, overall
price inflation~ and interest and discount rates must be projected. An economic
analysis was conducted so that, to the extent possible, logical and
norl-contradictory views of the world would emerge. No matter how carefully such
an analysis is cond~cted, however, it is necessarily imprecise simply because it
depends upon the prediction of an uncertain future. Thus a range of values
bounding each selected parameter was selected as the basis for testing the
sensitivity of a Susitna Project to possible deviations from most likely
v a1 ues.
Forecasts of world energy balances indicate a worldwide shortfall in oil
supplies within ten years. By 1990, the United States is expected to be
importing 16 percent of its energy needs (an improvement over the 22 percent
level of 1978}. It is likely that fossil fuel prices in the U.S. will continue
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to escalate at rates on the order of t\'IO. to four percent above the overall
inflation rate. Gas and oil price escalation will be at the upper end of this
range, with coa1 escalation somewhat less. Fuel prices in Alaska will generally
reflect market prices in the United States and abroad, less the cost of getting
Alaskan fuels to the market.
Insofar as prospects for economic growth in Alaska are concerned, three
different economic scenarios were developed by ISER. The lowest assumes only
modest population and emplo,Yment growths at just over two percent. The highest
forecasts these values at closer to four percent. If the volume of State
government expenditures varies significantly from current levels, these ranges
will be broadened.
Opportunity values and escalation rates in Alaska in dollars per million Btu
(where a Btu is a unit of energy) were selected as follows:
Natural Gas
Coal
Oil
$/Mi 11 ion Btu
Opportunity
Value
$2.00
$1.15
$4.00
1980 -2005
·c:scalation in
excess of norma 1
inflation
3.98%
2.93%
3.58%
Exclusive of inflation, a real interest and discount rate of three percent was
adopted as most likely.
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6 -MARKET AREA AND POWER DEMAND FORECASTS
The forecasting methodology employed by ISER relied upon an end-use model rather
than on the extraopolation of past trends as the basis for projecting future
demand. As its name implies~ an end-use model consider-s electricity consumption
in terms of end use in various sectors of the economy. In the residential
sector~ for example, electricity consumption is largely attributed to space
heating, refrigerators, water heaters, lights~ cooking ranges~ and certain other
major appliances. Knowledge of the number, type, and expected changes in
households can lead to assessment of future residential demand for electricity.·
The annual growth in total Railbelt Utility Sales ranged from 2.8 percent to 6.1
percent in the lowest and highest economic growth scenarios respectively. These
values may be compared to an actual average annual rate of 15.2 p2rcent for the
period 1940 to 1978 and to 11.7 percent for the 1970*s. Figure 2a illustrates
alternate demand forecasts.
Peak load forecasts were derived by applying historical load patterns by sector
to the ISER demand forecasts. Peak loads are expected to increase at
approximately the same percentage as total electrical energy· demand for each of
the selected ranges.
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-13
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LEGEND
HES ·GH : HIGH ECONOMIC GROWTH + HIGH GOVERNMENT EXPENDITURE
HES ·GM : HIGH ECONOMIC GROWTH + MODERATE GOVERNMENT EXPENDITURE
MES-GM : MODERATE ECONOMIC GROWTH+ MODERATE GOVERNMENT EXPENDITURE
LES-GM : LOW ECONOMIC GROWTH+ MODERATE GOVERNMENT EXPENDITURE.,'
LES··Gt. : LOW ECONOMIC GROWTH+ LOW GOVERNMENT EXPENDITURE /
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~r~--------~--------~'--------~~--------~·--------~~ ________ _.J 1980 1985 1990 1995 2000 2005 2010
YEAR
AL •. ERNATIVE UTILITY SALES FORECASTS
12a FIGURE 2a
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If more extreme measures are taken (probably through legislative action rather
than voluntary efforts), some potential for further energy conservation and for
load management could lead tr a lower forecast than the lowest noted above. An
extreme low forecast was selected for sensitivity tests in later analysis.
7 -SUSITNA BASIN STUDIES
During the past year, a massive field data collection effort got underway.
Operating primarily out of a base camp constructed at the Watana site,
investigative teams were eng~ged in environmental data collection, survey
activities, geotechnical exp1oration, geological mapping, seismological
investigations and hydrological and climatological data collection.
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7.1 -Hydrology
Gaging stations and weather monitoring stations were added to the net\vork
which had been installed and operated by State and Federal agencies in prior
years. Information collected at new r_tations has been useful in correlating
data obtained there wi~h longer term records at older stationso
The Susitna River exhibits two distinct seasons of flow.. High spring and
surrmer flows (produced by snow and glacial melt and heavy rainfall)
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contribute about 90 percent of the annual total between May and October.
The winter flow is relatively low and most of the smaller tributaries do not
sustain flow during the coldest months. Figure 3 illustrates flow data at
Gold Creek. Based on data collected to date, initial determinations have
been made of probable maximum floods and design floods vAlich must be safely
passed by dams that might be constructed on the Susitna. In add it ion, of
course, hydrological data was used to _estimate probable average and firm
energy outputs from potential developments. It is worth noting that less
than 20 percent of the total Susitna River flow into Cook Inlet is
contributed by the Susitna and its tributaries above Gold -creek.
Significant contributions downstream occur from the Chulitna~ Talkeetna, and
Yentna Rivers. Figure 4 displays percentage composition of total flow by
major tributary.
Ice formation, both in potential reservoirs and downstream of possible dams,
continues to be studied, for it must be dealt with during ~onstruction and
its impacts during operation must be determined.
7.2 -Site Exploration and Geology
The Susitna Basin has a complex geology. Studies have been made of the
region in general and detailed infonnation was collected at particular dam
sites and potential sites (borrow areas) for materials with which to
construct the project. Three core holes per site were drilled at Watana and
Devil Canyon during 1980; 15 auger ho 1 es were placed to explore borrow
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,·i~50,000
30,000
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-
MAR
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SEASONAL· DlSTRIBUTIONS OF FLOW IN THE·
SUSITNA RIVER AT GOLD CREEK
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WETTEST YEAR tt962
,.,
.AVERAGE· YEAR
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FIGURE 3
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CHULITNA RIVER
YENTNA RIVER
::::::
SUSITNA RIVER
DEVIL
CANYON SIT£
WATANA
SITE
16 o/oJ~!
. 20°/0 ] GOLD CREEK
TALKEETNA RIVER
SO o;..,. ::::: PARKS HIGHWAY BRIDGE lltlliti'i .... ll GAGING STATION"
SUSITNA GAGING STATION
..
COOK INLET
AVERAGE ANNUAL FLOW DISTRIBUTION
WlTHIN THE SUSITNA RIVER BASIN
16 FIGURE 4
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areas; and approximately 28,000 feet of seismic lines were run.-While
geotechnical data gathered to date has generally confirmed the suitability
of Watana and Devil Canyon si-tes for dam construction., a geotechnical
program has been designed for 1981 further to define the nature of the sites
and to answer questions about certain subsurface features which could
influence the type and precise 1 ocat ion of dams and other project features.
7.3 -Seismic Considerations
The Upper Susitna. River Basin is a seismically active area. Thus, a major
seismic program was started in 1980. A micros~ismic rtetwork of 10 stations
was installed and operated to collect microearthquake data for the region.
Potential faults and lineaments were identified by air and ground
reconnaissance, satellite imagery, airborne remote sensing and aerial
photography. A detailed screening of all identified features resulted in
the selection of 13 for further study in 1981.
On the basis of the current state of knowledge, the Denali Fault (65 km
north of the s·ites) and the Benioff Zone (60 km underground below the sites)
are regarded as the most 1 i kely severe seismic hazards. Figure 5
illustrates the seismic setting. Initial estimates of maximum credible
earthquakes from these features suggest a magnitude of 8. 5 on the Richter
Scale. Dam design to safely witnstand ground accelerations associated with
such an event is within the state of the art.
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ALASKA
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TALKEETNA
MOUNTAINS
CHUGACH
----
----•GLENNALLEN --
MOUNTAINS
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PRINCE
WILLIAM
SOUND
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MOUNTAINS
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A study of Reservoir Induced Seismicity (RIS) was also initiated in 1980.
RIS may be caused by the increased weight of water in a new reservoir or by
lubrication and hydraulic action upon highly stressed rock. Based on
evidence gathered to date, an RIS event will not exceed the maximum credible
earthquake that could be associated with a fault. Thust RIS is not likely
to affect the determination of design earthquakes.
:::;
7.4 -Dam Site Selection
A total of 12 dam sites was considered in the site se1ection process
(See Figure 2.1). By combination of two or more sites as a system, the
total bas·in potential C?J.n be developed in a variety of 111ays. A detailed
screening of individual sites and logical combinations of sites permitted
elimination of those whose relative costs were high or whose obvious
environmental disadvantages were large. Pr·eliminary layouts were devel.oped
for each of the most promising sites.
Candidates selected for further analysis in generation planning and for rrore
thorough environmental consideration included the Watana and Devil Canyon
dam sites (the combination found most suitable by the COE in the 1976 and
1979 studies);o High Devil Canyon (favored by Kaiser in 1974) and Vee; and a
combination of a Watana dam, a relatively low re-regulation dam midway
between Watana and Devi 1 Canyon and a tunnel from the low dam with a
downstream portal onear Devil Canyon. Within these groups, further
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variations were studied in terms of alternative dam types and heights and
possible schedule variations.
8 -GENERATION EXPANSION PLAN
The current generation system in the Railbelt is primarily based upon thermal
power. Natural gas is used heavily in the Anchorage area, oil fired units
predominate in Fairbanks, and several small coal-fired plants operate at Healy
and in the Fairbanks area. Hydroelect, .c energy, primarily from the Eklutna
project, also contributes a small portion of the current Railbelt electric
<' genera~ ion.
The present system wi 11 evq 1 ve in future years as demand increases and as old
units reach the end of their useful lives. Regardless of \'Jhether or not a
Susitna Project is ever developed, new system additions will be needed. For
planning purposes, it was assumed that the Bradley take Project (now being
pursued by the COE) and certain thermal units now under construction will be on
line by the early 1990's. New capacity is necessary after 1992, but the amount
a,nd type to be added in any particular year will vary as a function of the
demand and peak load forecasts.
A generation planning exercise was conducted to determine how each of the
potential Susitna developments might fit into future Railbelt generation
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systems. The General Electric Optimum Generation Program (OGP) was the primary
tool used for this purpose. In 3.ddition to Susitna and present and planned
capacity, major alternatives including coal fired plants, gas turbines, gas
fired combined cycle plants, and the ten best non-Susitna hydroelectric sites
were considered as candidates for future expansion. On an economic basis, it
\'las determined that all of the possible developments noted in paragraph 7.4
produced total generation system present worth costs which were less than the
ieast cost system without Susitna. Of the total sets considered, the
Watana-D·evil Canyon combi'nation was favored economically. In the case of the
most likely ISER forecast, the most appropriate time to bring an initial 400 MW
Watana project on line was found to be 1993. Figure 6 provides a system energy
comparison for the mi d-1 oad forecast for a base case thermal systen and for a
Watana/Devil Canyon development (Susitna 3AE).
Although somewhat higher in cost and lower in total energy production, the
Watana-Tunnel combination was found to be a viable option in comparison to the
best non-Susitna system. Some environmental advantages may be ascribable to the
tunnel project, particularly since it offers an opportunity to preserve the
Devil Canyon gorge essentially in its natural state. It is important to note,
however, that the Watana dam project is a necessary first stage in the tunnel
concept just as it is in the Watana-Devil Canyon combination.
Preliminary studies of tidal power potential have commenced .. Tidal power
development, if fo.und feasible., would necessarily lag the earliest possible
Susitna development simply because time-consuming detailed environmental and
engineering investigations would have to be undertaken before a license
application could be submitted to the FERC. Tidal power characteristics and
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ENERGY
(GWH)
ENERGY
(GWH)
I~OOCr--------r------~--------r-------~-------~--------~-------
6,000
;:.
. ..
~"'
4,000
--=--------:--
2,000
........ 0 1980 1985 1990 1995. 2005 2000 2010
YEAR
THERMAL
10,000 r----.,-----,-----,...-----,:-----r-----r-----
8,000
6,000
",000 1------1'----
2,000
0 1980
NATURAL
GAS
TURBINES
I
1985 1990
YEAR
1995
SUSITNA 3AE
2000 2005
SYSTEM ENERGY COMPARISON
MID LOAD FORECAST
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2010
FIGURE 6
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costs will be available by mid-1981 as an input to the independently conducted
Railbelt Alternatives Study. For generation planning purposes in the Susitna
study, it has been assumed that tidal power generation is not available in 1993
when Watana could be brought on line economically.
A series of sensitivity tests was run to determine how variations in k~
parameters would affect the choice of favored plans. These tests generally
demonstrated that the Susitna Hydroelectric Project is robust through a
reasonable range of fuel costs, fuel escalation rates, real interest rates, and
the like.
9 -SUSITNA HYDROELECTRIC DEVELOPMENT
Based on the generation p 1 anni ng studies and pre 1 imi nary environment a 1 analysis,
the developments s e 1 ected for primary study and des i gn activities during 1981
are at Watana and Devil Canyon. Should continuing analysis of the tunnel~
particularly in the environmental area, confirm clear advantages which in the
opinion of the State of Alaska offset the higher costs and lower energy
associated with that scheme, a shift to that plan can be accommodated because
the Watana development is a common first stage for both plans.
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The conceptual design for Watana presently consists of a rockfill dam with
maximum height of 870 feet and with upstream and downstream slopes sufficiently
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flat to withstand the design earthquake. The spi11way arrangement m·ust be
such as to discharge design floods (1 in 10,000 year events) without damage and
must permit s?..fe discharge of the maximum probable flood. In addition, spillway
design mus~ be such that nitrogen supersaturation problems downstream are kept
below acceptable limits for fish survival.
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The conceptual design for Devil Canyon currently includes a thin arch concrete
dam approximately 650 feet high. Spillways at Devil Canyon must meet the same
criteria as noted above for Watana.
Alternative arrangements for the major dams and spi 11 way structures remain to be
studied further to optimize the design of each development~
Intake structures at both dams will be designed with multi-level draw-off
arrangements to facilitate selection of desired downstrean water temperatures.
Underground powerhouses are currently planned at both dams, though surface
facilities can be accommodated if geotechnical and economics investigations
indicate that such facilities are preferable to underground caverns. As
currently conceived, the initial installation at Watana will develop about 400
MW of power and the facility will be planned to permit installation of an
additional 400 MW after downstream regulation is provided (either by a Devil
Canyon reservoir or by construction of a somewhat smaller dam midway between
Wat ana a;fJ Dev i 1 Canyon, as is required in the t unne 1 concept) • · ·~·
<:.'
Alternative access routes have been defined and a pub 1 ic workshop wi 11 be held
in the spring of 1981 to solicit comments. One of the routes under
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consideration would offer controlled access since its terminus would be at the
Alaska Railroad rather than at an existing highway.
Cutrent studies indicate that it is possible to complete the Watana dam by 1993
if an FERC 1 i cense to construct the dam and access roads are av ai 1 able by 1986.
Alternatively, construction equipment may be brought into the site overland from
the Denali highway in the winter of 1985 and access road work may parallel
on-site construction with some cost penalty.
The Oevi 1 Canyon dam can be brought on-1 i ne within about 6 1/2 years after the
start of construction if access routes exist at that time.
A transmission line study is currently underway. This work is being coordinated
with the study team involved in the ongoing intertie study. As currently
envisaged, transmission facilities would parallel the Susitna River from the dam
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sites to Gold Creek, at which point li~es would' extend north and south to
Fairbanks and Anchorage, respectively.
10 -ENVIRONMENTAL PROGRAM
A major environmental investigation program got underway in 1980. In addition
to necessary exhaustive field data co_llection, effort was devoted in particular
to two other major components: (1) addressing major environmental concerns
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including those expressed by government agencies (at Federal, State, and local
1 eve 1) and the general pub 1 ic, and (2) env i ronmenta1 part ici pat ion in the
design process with a view toward avoiding ~r minimizing impacts by making
design decisions which account for environmental concerns from the statt.
The environmental studies are divided into nine specific study components:
-Fisheries
-Wildlife
-Land Use
-Archaeological (Cultural Resources)
-Recreation
-Plant Ecology
-Corridor Selection
-Socioeconomic (See paragraph 11 below)
-Management and Coordination
At least one more year of data must be collected in each area before detailed
impact statements can be prepared and proposals developed as appropriate for
mitigative measures. Even so~ no evidence has been discover~d to date to
indicate environmental impacts which are so severe as to conclusively rule out
the possibility of developing the Susitna River for hydroelectric power
production.
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Certain environmental impacts on fisheries experienced at other major
hydroelectric projects will be absent from or less severe at the Susitna Project
if it is ever constructed. These include:
{a) No direct blockage of fish migration or escape will re<;ult from the dam
itself.
(b) No significant river diversions resulting in low flows in the diverted
river will occur.
(c) Regulation is being factored into design to eliminate significant daily
fluctuations in flow.
(d) Nitrogen supersaturation wi 11 not be augmented by numerous reservoirs such
as are found on the Columbia River. In addition, design studies will
incorporate the latest available technology to reduce the· occurrence -of
such phenomena.
11 -ANALYSIS OF SOCIOECONOMIC IMPACTS
A major socioeconomic study_program was launched in 1980 with the objectives of
describing existing socioeconomic conditions, forecasting future conditions if
no Susitna Project is built, and determining which conditions are most likely
to be impacted by a Susitna development.
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Major efforts have been devoted to development of socioeconomic profiles during
1980. The 1981 work will focHs upon preliminary assessments of impacts which
implementation of the reco1Tll1ended development plan could cause.
12 -ECONOMIC FEASIBILITY AND NET ECONOMIC BENEFITS
The analysis of the net economic benefits of the recommended development plan
will be developed within the framework of traditional methodology~ The general
procedure considers the total costs associated with the project {construction~
operat·ing, maintenance, transmission, etc.). Benefits are the avoided costs of
providing the equivalent power and energy from the next best alternative
generating source ..
A preliminary life-cycle cost analysis has been conducted for the recommended
development plan as well as for ·other alternatives surviving the initial site
screening process. This economic analysis assumed a three percent discount rate
in real terms (i.e., the cost of money is assumed to be three percent higher
than actual inflation rates during the planning period). In 1980 dollars, the
present value costs .of the recommended hydroelectric development (operated
during an assumed useful life of at least 50 years) were less than half the
costs of the best thermal generation alternative.
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A shorter period of analysis extending only to 2010 (consistent with the period
used in the ISER forecasts) was considered in the generation planning effort.
Even in this case, favorable net benefits accrued for all load forecast ranges.
More precise values for life-cycle and forecast-period net benefits wi11 be
determined as cost estimates are developed in detai 1 for the optimized
development plan in 1981.
13-POWERAND ENERGY MARKETING
Whereas it can be shown that the Susitna Hydroelectric Project would be
economical in the long term, it is nonetheless true that the relatively high
capital cost of a major hydroelectric project can lead to difficulties in
-0 financing the project or in marketing power and energy during the first few
years of operation.
Preliminary financial studies have been conducted to determine the probable
nature and extent of the problem of high front-end loading as well as to
identify potential strategies for alleviating it. These studies will continue
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in 1981. Insofar as marketing is concerned, it is assumed that the maximtm cost
Railbelt utilities would pay at any given time for Susitna power and energy is
equal to or less than the avoided cost of producing power and energy by the
best 9-Vailable alternative mean~~.
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14 -PUBLIC PARTICIPATION PROGRAM
An aggressive public participation program was initiated for the Susitna
Hydroelectric Project. Conducted directly by APA, major objectives are:
-To distribute ·information to the publi"c,
-To solicit information from the public, and
To ensure that public input is fully considered in the decision-making
process.
Community meetings, workshops, an action system to ensure that response is
provided to every comnent or question written by the public!) newsletters and
mailing lists are vehicles by which these objectives are satisfied.
Of particular note is the fact that public comment and concern has directly
influenced the course of the Susitna study. Such major changes from original
·study plans as the commissioning of a separate and independent alter-natives
study, the addition of a sociocultural study and an increased level of study for
alternativ~ developments in the Susitna Basin were largely prompted by public
concerns.
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The high level of activity in the Public Participation Program is expected to
• . 0 cont1nue throughout the course of the study.
15 -LICENSING AND PERMITTING PROCEDURES ----7~-------------------------
Regulatory requirements at Federal, State and local levels tend to be
voluminous, complex, and time-consuming for any major power development. For
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the first several years, satisfaction of t~egulatory requirements will be the
controlling factor on the schedule for final completion of a Susitna project.
The most significant initial regulatory requirement is the necessity to obtain a
license from the Feder a 1 Energy Reg u 1 a tory Commission ( FERC) . Sho u 1 d project
feasibility be established and a decision made to proceed with the work, current
plans call for submittal of an application in mid-1982 and for receipt of a
license by early 1985.
A detailed analysis of licensing and permitting requirements was conducted early
in the course of the work in 1980 and a blueprint was drawn up to ensure that
critical regulatory schedules can be met.
16 -FINANCIAL FEASIBILITY ANALYSIS
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The purpose of the financial feasibility analysis is to establish the "envelope"
within which the staging~ design and operating configurations of Susitna are
amenable to market financing based upon reasonable assumptions concerning
financial markets and the inclinations of investors over the next 20 to 30
years.
A computer model which had been developed earlier for financial analysis of
major capital intens·ive projects was modified to tailor it specif·;cally to
unique Susitna Project needs. Using this model~ it is possible to analyze the
effect on financial feasibility of variations in input assumptions. These
inputs include phasing of construction outlays, scheduling of major project
stages~ energy and power production during initial years, pricing and returns on
rate base, contingency provisions~ guarantees and taxes and financial market
conditions.
Initial model runs indicate that options do exist for financing the project.
Work during 1981 will focus on financial feasibility of the optimized
development selection and will take account of advice from financial consultants
recently selected by APA.
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17 -SECURITY OF PROJECT COST AND REVENUE STRUCTURES
Decision-makers in financial and credit markets and at regulatory agencies need
to be convinced that the probability of unforeseen ev~ts• seriously distorting
the objectives of APA and its planners is sufficiently remote that investors
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will willingly commit substantial resources to the Susitna ProjectF Thus, a
financial risk analysis will be conducted prior to submittal of a license
application to the FERC. Particular influences to be considered include:
-Capital/Costs
-Cost escalation
-Cost overruns
-Delays
-Probability of noncompletion
Serious outages during operation
Failure of revenue from power resources
-Regulatory risks
In conjunction with the financial risk analysis~ strategies and procedures will
be developed to minimize the likelihood of unacceptable risk in each category.
At the same time, a technical risk analysis will be conducted--both to promote
requisite investor C')r(fidence and to demonstrate that proposed i)roject elements
are safe, reliable, relatively maintenance free, environmentally acceptable and"
generally consistent with stated purposes.
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18 -ORGANIZATION AND MANAGEMENT
Project contra 1 structures, po 1 ici es and procedures have been deve-loped and put
in place to ensure that continuing project act·ivities are in the best interests
of the State of Alaska and it$ populace. The Executive Director of APA serves
as Project Manager for the State of Alaska. He is assisted Jn turn b.y a project
staff which includes Assistant Project Managers for Technical Output and
Schedule and for Budget and Finance. A Project Engineer within APA devotes his
full-time attention to monitoring and coordinating project work.
Within the Acres org~nization) a Project Manager is responsible for direction of
the activities of a large group of technical personnel. He is assisted by a.
Deputy Project Manager, a Technical Study Director, and a Resigent Managet {in
Anchorage).
External Review Panels have been established both at APA 1 s level and at Acres•
level to provide an independent check on the adequacy and accuracy of completed
and proposed study activities.
Major subcontractors assisting Acres in the performance of its work include:
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-R&M Consultants, Incorporated
Cook Inlet Region Incorporated in association with Holmes and Narver
Terrestrial Environmental Specialists
-Woodward Clyde Consultants
-Frank Moolin and Associates
-Robert W. Retherford Associates
Other Alaskan firms providing transportation, supplies, and logistical
support
19 -IMPLICATIONS OF PROCEEDING
The Governor of Alaska and the State Legislature will receive a report on or
before March 30, 1981, wherein APA must recommend whether work· should continue
on the Susitna Hydroelectric Project. APA has selected five particular issues
for detailed consideration. Conclusive proof that any one of these issues
presents an insurmountable barrier would lead to a recommendation by APA to
terminate the study. Briefly summarized, the issues are as follows:
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-Are the forecasts too low to require any major generation additions over the
next 30 years?
-Are seismic risks so great that safe development cannot occur?.
.... Are anticipated environmental losses unacceptable?
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-Is there a significantly lower-cost set of alternatives M'lich will satisfy
demand forecasts through the year 2010?
-Are there financial mechanisms available that can ensure acceptable power
costs?
No barriers have been discovered during the initial year of study vmich would
lead to an affirmative answer to any of the listed questions. Even so,
definitive answers have not yet been developed for all of the issues.
Continuing the study would provide the State with an opportunity to make sound
decisions in the future as to whether Susitna hydroelectric potential should
ultimately be developed. Terminating study efforts at this time would result in
avoiding the significarJt costs of further investigation and analysis on
r "t ..lUSl na.
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