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Home My WebLink AboutFalls Creek Low-Impact Hydroelectric Project Pre-Application Proposal - Feb 2008 - REF Grant 2195331Homer Electric Association, Inc. Corporate Office Central Peninsula Service Center 3977 Lake Street 280 Airport Way Homer, Alaska 99603-7680 Kenai. Alaska 9961 1-5280 Phone (907) 235-8551 Phone (907) 293-5931 FAX (907) 235-3313 FAX (907) 283-7122 PROJECT SPECIFIC INFORMATION In support of the ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION GRANT APPLICATION For FALLS CREEK PROJECT Prepared by: Homer Electric Association, Inc. February 11, 2008 2008-02-11 AEA Alt Energy Grant App - Falls Creek A Touchstone Energy' Caoperadvr ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. -- FALLS CREEK PROJECT PROJECT DESCRIPTION HBA is evaluating the potential for a small, low -impact hydro facility utilizing the water resources provided by Falls Creek. Falls Creek, which is located between elevations of approximately 500 ft and 3,800 ft MSL, flows into the Trail River adjacent to the Seward Highway, about 0.5 mi north of the town of Crown Point in Kenai Peninsula Borough, Alaska. The nearest major town is Seward, which is located approximately 26 miles south of Crown Point. A map of the project area is provided below. As part of an initial assessment, information gathering would be undertaken to assess the feasibility of constructing a dam to divert water from Falls Creek to a powerhouse. The proposed run -of -river project would have a siphon or gravity feed intake located approximately 2.5 mi upstream of the creek's confluence with the Trail River. The Falls Creek watershed is about 11 rrti2 and has an estimated average annual flow of 70 cubic feet per second (cfs).The project would generate power with approximately +/- 1,000-ft of head and have an anticipated generation capacity of about 5.0 MW. The powerhouse tailrace would be designed to carry the project flow to Falls Creek or the Trail River. The dimensions of the tailrace would be developed based on terrain and other pertinent information to be obtained during the study phase. The project would include 2 — 4 mi of new overhead transmission line employing one of two potential transmission options: 1) power generated at the powerhouse at low voltage would be transmitted to a remote transformer, where it would be converted to 115 kV and connected to the existing transmission grid or 2) power generated at the project would be transmitted directly to the grid from a step-up transformer near the powerhouse. The legal description and ownership of lands (ADNR 2006) within the proposed project boundary are provided in the table below. All land is referenced to the Seward Meridian. February 11, 2008 Page 2 of 6 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — FALLS CREEK PROJECT Township Range Section Ownership 4N 1E 16 USDA Forest Service 4N 1E 17 USDA Forest Service 4N i E 18 State 4N I North %2 of 19 State 4N lE North % of 20 USDA Forest Service 4N lE 21 USDA Forest Service 4N 1E 22 USDA Forest Service 4N 1E 23 USDA Forest Service 4N I 24 USDA Forest Service 4N 1E 25 USDA Forest Service 4N 1 W 13 Private 4N 1 W 24 Private 4N 2W 30 1 USDA Forest Service The project in its final form would likely consist of a dam or diversion dike, pipeline/penstock, powerhouse, access road, and transmission lines. All improvements could potentially affect a combination of federal, state, and private lands. No portion of the potential project area has been designated as a Wilderness Area, recommended for designation as a Wilderness Area, or designated as Wilderness Study Area. No portion of the project area has been included in the Wild and Scenic River System. Power from the project would be available to customers of Homer Electric Association and other areas served by the existing transmission grid. Power from the proposed project would be important to the citizens of the Kenai Peninsula and would be environmentally beneficial and cost effective as an alternative source of energy to offset fossil fuel generation. The power from the proposed project would reduce consumption of non-renewable carbon -based energy sources, thereby helping to improve air quality in Kenai Peninsula Borough PROPOSED STUDY PROGRAM The study program, which HEA hopes will culminate in the filing of a License Application with FERC, would be conducted according to the Commission's licensing regulations. Potential Study Program Elements Engineering and feasibility • Hydrology • Bathymetry • Stream gauging • Dam stability and soils tests and analysis (if needed) • Preliminary design, i.e., unit type and size • Tunnel/pipeline alignment • Evaluation of transmission line route February 11, 2008 Page 3 of 6 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — FALLS CREEK PROJECT • Financial analysis Environmental Studies • Fish species composition • Fish habitat assessment • Rare, Threatened and Endangered (RTE) species inventory • Vegetation • Wildlife • Recreation • Cultural • Aesthetics • Project effects analysis Stakeholder Consultation HEA will consult with potential stakeholder entities (i.e., agencies, NGOs, Native Corporations, and communities) early in the study phase to ensure that all significant concerns are addressed and planned for in the studies in anticipation of the licensing process for the Falls Creek Project. MANAGEMENT & TECHNICAL CAPACITY Homer Electric Association is a well established railbelt electric cooperative that has been serving its members since 1945. The cooperative operates and maintains both fossil fuel and hydroelectric generation facilities, including the 120MW Bradley Lake Hydroelectric Plant. Its management and staff are well prepared to oversee the development of this small hydro facility from its conception through construction and operation. Where needed, HEA will contract with qualified firms and consultants to conduct the engineering, studies and detailed design associated with the project. PRECONSTRUCTION COST ESTIMATES & FINANCING It is generally recognized that initial capital costs for alternative energy projects are significantly higher than comparable fossil fuel generation assets, though the long-term benefits of alternative energy projects can be substantial. Denali Commission and AEA funding can help to offset some of these initial project screening and capital costs and contribute to the economic and social viability of an eventual project. HEA is strategically planning to expand its generation portfolio to include renewable energy sources. This application is one result of implementing this planning effort. The purpose of this long-term vision is to provide more consistently priced, environmentally responsible energy to balance the traditional generation resources currently available. One of the stated elements of the proposed study program is to develop a financial analysis or model for the project. This will be one of the first tasks undertaken by HEA along with further February 11, 2008 Page 4 of 6 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Bonner Electric Association, Inc. — FALLS CREEK PROJECT engineering feasibility study. The table below details the preconstruction costs that lead to a FERC license application. PRECONSTRUCTION STUDY PROGRAM ELEMENTS Budget Feasibility Evaluation (Financial & Engineering Models) $ 100,000.00 Initiate Stakeholder Consultation $ 30,000.00 Prepare and file Pre -Application Document (PAD) $ 20,000.00 FERC Scoping $ 20,000.00 Proposed Study Plan (PSP) $ 20,000.00 Revised Study Plan (RSP) $ 20,000.00 Initiate Field Studies $ 200,000.00 Complete Field Studies $ 25,000.00 Additional/Supplementary Data Collection $ 25,000.00 Draft License Application. $ 20,000.00 File License Application $ 20,000.00 Total Proposed Study Program $ 500,000.00 The estimated cost of conducting studies, investigations, tests, surveys, mapping and developing plans and specifications for the proposed project is $500,000. AEA funding requested here will support the feasibility evaluation listed above. Preconstruction funds will initially be drawn from a combination of grant funding and internal financing. Other options may be explored depending on the results of the preconstruction assessments. PRELIMINARY COSTS & BENEFIT -COST ESTIMATE A preliminary benefit -cost estimate is provided in the spreadsheet on the next page. Assumptions pertaining to power production, construction, financing and avoided costs are noted at the top of the analysis. The costs and savings are brought to present worth in 2008 for comparison. The benefit -cost ratio for this project is estimated at 1.95. This paragraph will briefly describe the costs considered in the analysis. Once the project is past the preconstruction phase and has entered a FERC licensing process, an additional one million dollars is allocated for licensing, further studies and detailed design. Preliminary construction capital costs for this S.OMW project are estimated at $3,5001kW, or approximately $17,500,000. The cost of this construction capital is amortized over a thirty year period. Operations & Maintenance (O&M) costs are based on HEA experience and are escalated over the life of the project. All these costs are brought to a 2008 present worth value of $43,562,152. The project savings are estimated as HEA's avoided cost of purchasing power produced by natural gas at $8.291MMBtu in 2007 dollars. The avoided cost of power is escalated by 5% per year over the project life and then brought to a present worth in 2008 equal to $84,735,652. February 11, 2008 Page 5 of 6 U ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — FALLS CREEK PROJECT U ,a GI O G aU +n q tie '<,� '�'-, 4 , •-. ui.� Q.�..�..Ui r�i �_�iz - o � m C Y C f� y� - � � H /•}, Nf W H 64 ^W H � 4 - 63 ` a1 49 N- bii Hi �w tin � Hf 6I � ' DIN 0 v O F 1[% W 401 f?.T N itY I[a A- 6a � lD ry O0 O' Nrz 4tl �l H ' HH(Ao N ' 4 ��CJ gyQ �r ttVV tV a00M rV. 0p'.b Pl �.�N N (?ADM O'00 {A to h-M'0,��.0 4-r I[) RI'rt4o'a 1�O(�Ii 10.a Q. 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The specific nature, scope, terms, conditions and Iil itations of the authority granted by this Certificate, as amended to date, are set fort/t iz the appendix hereto and in the folloi, ing orders) of the Commission which, by this reference, are incorporated in and made a part hereof as though fully set forth, herein. Docket No. Dsla of Orcizr March 11, 1965 P-65-23 April 1, 1965 U_7-69 (1) September 16, '1966 IN IV17'6-08S THEREOF, the undersigned rnembers }of the Comm'ission7Z have executed this. Certificate of public Convenience and Necessity at Anchorage, Alaska on this 12th day of T}ecetnbey 19 72 ti �y'ti �il��klx �,��tl�Itt: ii{i�ici� C�Tnntntis�iaitl . f ! i /I 1k3CF19E#t1� /J/J !• lM[M arri3 . APPENDIX A Certificate of Public Convenience and Necessity No. 32 granted to 140MR ELECTRIC ASSOCIATI0N, INC. r DESCRIPTION OF SERVICE AREA: Township 9 North, ranges 8, 4 9, 10 and 11 West Township 8 forth, Ranges 8, 9, 10, 11 and 12 West ` Township 7 North', Ranges 8,• 9., 10, 11 and 12 West Township 6 North., Ranges 7, .8, 9, 10, 11 and 12 West Township•5 North, Range 5 West, Sections 1 through 24, and 26 thorough 35 Township North, Ranges 6, 7, 8, 9, 10, 11 and 12 West i Township 4 North, Ranges S, 6, 7, 8, 9, 10, 11 and 12 Ifest � Township 3 North, Ranges 10, 11 and 12 West Township 2• North, Ranges 11 and 12 -West Township .1 North, Ranges 11, 12 and 13 West Township 1 South, Ranges 11, 12, 13 and 14 Writ Townshi-p 2 South, Ranges 11, 12, 13 and 14 best Township 3 South, Ranges 11, 12, 13, 14 and 1S West Tow"hip 4 South-, Ranges 10, 11, 12, 13, 14 and 15 19est Township 5 South, Ranges 10, 11, 12, 1.3, 1.4 and 15 Nest Township 6 South, Rariges 11, 12., 13, 14 and 15 West Toiqnship 7 South, Ranges 11., 12 and 13 West Township 8 South, Ranges 12, 13, 14 and 15 West Township 9 South,'Ranges 12, 13, 14, 15 and 16 West Township 10 South, Ranges 15 and 16 West `All the above with reference to the Seward Meridian.. � CHRONOL0GY: Original Cortificato granted 5/11/65 First Revision'4/1/65 Second Revision 9/16166, (P-65-23) Third Revision 11/17/7x, (U-72-69(l)) Homer Electric Association, Inc. Corporate Offivv Cenir'd t'c:•ninsala Svr%ice 1. elitel- .�€)�� Lakk' SIrCCt _'.;III A11wl `VII If) Ill11i1a1 90(i(I .`]0 I1 Ivi'l3III..'��;I�� WY, � �1 I'IEII R2 4-iS5 I �'�1�111C (1)Ll1) 2��' CERTIFICATE OF GENERAL MANAGER OF HOMER ELECTRIC ASSOCIATION, INC. IN SUPPORT OF GRANT APPLICATION I am the General Manager of Horner Electric Association, Inc. (the "Cooperative"). I am authorized by the Board of Directors of the Cooperative pursuant to Board Policy 203, and by formal action of the Board of Directors of the Cooperative at a special meeting held on January 31, 2008, to certify as follows: 1. The Board of Directors of the Cooperative has authorized the application for project funding to which this certificate is attached. 2. The Board of Directors of the Cooperative has authorized the undersigned to represent the Cooperative for the purposes of the application. 3. The Cooperative is in good standing with respect to any existing credit and federal tax obligations. ti Dated at Kenai, Alaska, this #"day of February, 2008. Bradley P. Janor-ITle General Manager A ,,uLh,(,,m- Fn,-rQ}' C-U�It1CrFlffYC