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Home My WebLink AboutPtarmigan Lake-Creek Hydroelectric Project Alternative Energy Grant Proposal - Feb 2008 - REF Grant 2195335Homer Electric Association. Inc. Corporate Office Cetttr;d Peninsula Service Center 1977 hak, Street 280 Airport WaN Horner, Alaska 99603-7090 Kent€i, Alaska 9961 Phone 19071235-9551 11Itom; (907) _'83-4W 1 FAX 19(17) 2 5-3313 1'AN (907)-M-7I2? PROJECT SPECIFIC INFORMATION In support of the ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION GRANT APPLICATION For PTARMIGAN LAKEICREEK PROJECT Prepared by: Homer Electric Association, Inc. February 11, 2008 2008-02-11 AEA Aft Energy Giant App - Ptarmigan Lake ATouchstone Energy' Cooperative : ALTERNATIVE ENERGY GRANT PROPOSAL PRE CONSTRUCTION APPLICATION Homer. Electric Association, Inc. — PTARMIGAN LAKE/CREEK PROJECT PROJECT DESCRIPTION HEA is evaluating the potential for a small, low -impact hydro facility utilizing the water resources provided by Ptarmigan Lake/Creek. Ptarmigan Lake, which is located at an elevation of approximately 800 ft MSL, flows into Ptarmigan Creek approximately 2.25 mi upstream of the Seward Highway, about 2.5 mi southeast 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 proposed project area is provided below, The Ptarmigan Lake watershed is about 32 mi2, and the lake has an approximate surface area of 815 acres. Ptarmigan Creek, which discharges into Kenai Lake, has an average annual flow of 111 cubic feet per second (cfs). The project would generate power with approximately 235 ft of head and have an anticipated generation capacity of about 4.0 MW. As part of an initial assessment, information gathering will be undertaken to assess the feasibility of constructing a dam andfor diversion dike to raise the surface elevation of Ptarmigan Lake to increase storage for generation. The proposed project would have a siphon (or gravity feed) intake in Ptarmigan Lake, near the point at which it flows into Ptarmigan Creek. Water would be conveyed from the intake through a pipeline or penstock that would lead to a powerhouse. The powerhouse would be located near the bank of Ptarmigan Creek and would discharge into Ptarmigan Creek or Kenai Lake. The powerhouse tailrace would be designed to carry the project flow to Ptarmigan Creek or Kenai Lake. 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 February 11, 2008 Page 2 of 7 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — PTARMIGAN LAKE/CREEK PROJECT 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. Unshaded rows pertain to the lake outlet and creek. Shaded rows include sections for the entire Lakeshore. Township Range Section Ownership 4N lE South % of 19 State 4N lE South % of 20 USDA Forest Service 4N. 1E 27 ". USDA Vorest Service 1E'' 28 iJSDATorest-Service "_ 4N 1E 29 USDA Forest Service 4N lE 30 State 4N 1E 31 USDA Forest Service oresYService. FSDATbrest Service 3,5 USDA Forest Service ". . 4N 1W 25 Municipal 4N 1 W 36 USDA Forest Service The project in its final form would likely consist of a dam, 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 February 11, 2008 Page 3 of 7 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — PTARMIGAN LAKE/CREEK PROJECT • 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 • 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 Ptarmigan Lake ! Ptarmigan 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 February 11, 2009 Page 4 of 7 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — PTARMIGAN LAKE/CREEK PROJECT 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 engineering feasibility study. The table below details the preconstruction costs that lead to a FERC license application. PRECONSTRUCTION STUDY PROGRAM ELEMENTS Budeet 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 Seeping $ 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 Ptarmigan Lake I Ptarmigan Creek 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 page 7. 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 1.93. 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 4.OMW project are estimated at $3,500IkW, or approximately $14,000,000. The cost of this construction capital is amortized over a thirty year period. Operations & Maintenance (0&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 $35,114,669. February 11, 2008 Page 5 of 7 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — PTARMIGAN LAKE/CREEK PROJECT The project savings are estimated as HEA's avoided cost of purchasing power produced by natural gas at $8.29/MMBtu 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 $67,788,522. February 11, 2008 Page 6 of 7 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — PTARMIGAN LAKE/CREEK PROJECT 6 jd j N l�OisV y - � t�i to Noma I° Ay N rm Nl r 1 - 7 [ N 1 `� l ICSI � H- d •f m pY f r -fl �IdOCb ti. 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