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(M]£lffi~& 0 §@&@@@ SUSITNA JOINT VENTURE
INTRA-OFFICE MEMORANDUM
LOCATION Anchorage DATE --~N~o~vL9~emwb~e~r~64,~1~9~8~4~-----
TO ~.JUMBER 40.17 I 5
FROM
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W.M. Dyok Page 1 of 2
Susitna Hydroelectric Project
SUBJECT A 1 a ska Pub 1i c Uti 1 i ties Cnmmi s si on Ruling on
Economic Life of Combustion Turbines
The Power Authority, in its comments on the Federal Energy Regulatory
Commission (FERC) Draft Environmental Impact Statement of May 1984,
states that the economic life of combustion turbines used in, the Power
Authority's economic analysis is 20 years (page 8-3 or Volume 3
Appendix I-Fuels Pricing and Economics). The economic life is revised
from that used by the Power Authority for the economic studies conducted
in the License Application. "The reduced lifetime for combustion
turbines ref, t:>Cts a current Alaska Public Utilities Commission ruling."
(Alaska Power J~uthority, 1984).
Based on the above statement, on October 24, 1984, FERC requeoted a copy
of the Alaska Public Utilities Commission (APUC) ruling requiring a 20
year life for combustion turbines.
The basis for the Power Authority's statement in the Appendix on Fuels
Pricing and Economics is the Battelle report on Existing Generating
Facilities and Planned Additions for the. Railbelt Region of Alaska
(Battelle, 1982). The following quote is from Page A.2 of the report:
"The following lifetimes have been assumed for the various
types of generating units. These lifetimes are the same as those
assumed by Acres American Inc. (1981), with the exception of the
lifetime for natural-gas-fired gas turbines. Acres uses a 30-year
lifetime, while a 20-year lifetime l'lill be assumed in this analysis.
This reduced life time was selected to more accurately reflect the
current Alaska Pub lie Utilities Commission ruling that the useful
depreciated life of a simple-cycle gas turbine is 16 2/3rds
y~ars .. "
To obtain a copy of this ruling, I contacted Mr. Michael Tavella,
utilities engineer for the Alaska Public Utilities Commission. He
informed me that the commission has not made a formal ruling on. the
useful life of a simple-cycle gas turbine. He did say that in Alaska the
lJ.seful life of a simple-cycle gas turbine is about 16-20 years. Th~
reason for this is that gas turbines are base loaded in Alaska, whereas
in the lower 48 states they are generally used for peaking. This reduces
the useful life of a gas turbine from about 30 years to 20 years.
Mr. Tavella thought a 30 year life would be too high for Alaskan
conditions. However, Chugach Electric Association depreciates simple
cycle gas turbines over 30 years if the Rural Electr1fication
420221/11
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li0&00{g& 0 ~00&®@@ SUSJTNA JOT NT VENTURE
INTRA-OFFICE MEMORANDUM
Anchorage November 6, 1984
LOCATION DATE ---------------
File 40.17.5
TO NUMBER ---------------
FROM
W.M. Dyok
Susi tna Hydroelectric Project
Page 2 of 2
SUBJECT
Alaska Public Utilities Canmj.ssion Ruling on
Economic Lire of Combustion Iuro1nes
AChninistration loans for the gas turbines are based on 30 years.
According to Mr. Tavella, other utili ties such as Anchorage Municipal
Light and PCY.Yer use a useful life or 20 years for simple cycle gas
turbines. The APUC accepts 20 years as the useful decpreciated life of~
simple-~cle gas turbine.
References
1 • Alaska Power Authority, Coounent s on the Federal Energy Regula tory
Commission Draft Environmental Impact Statement of May 1984, Volume
3 Appendix I -Fuels Pricing and Economics, August 1984.
2. Battelle Pacific Northwest Laboratories, Existing
Facilities and Planned Additions for the Railbelt Region
Volume VI, Prepared for the Office of the Governor, State
September 1982.
. 420221/11
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